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50th Anniversary of Manned Space Flight

BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

...Marching towards a common future

WEDNESDAY, SEPTEMBER 14, 2011

Mapping Officials to leave city centre for new district that will encompass 160,000 hectares; cost estimates vary

A new address for Russian 'babus' Moscow is poised to be more than double in size, with an ambitious plan to create a new area for the city’s bureaucrats.

Moscow’s expansion zone

ANTON MAKHROV RIBR

BP out, Exxon strikes Arctic deal with Rosneft Rosneft, Russia's largest oil producer, has turned to US oil major Exxon Mobil for expertise and technology after attempts to partner with British Petroleum for deepsea exploration in the Arctic fell through in May. Under a landmark deal inked in late August, Exxon Mobil and Rosneft pledged to spend $3.2 billion on deep-sea exploration in the area of the Arctic called the Kara Sea, as well as in the deep waters of the Black Sea. Exxon described the areas as "among the most promising and least explored offshore areas globally, with high potential for liquids and gas". RIBR

Russia to manufacture 1,000 5G jets by 2050

AFP/EASTNEWS

A new area for government offices and staff is set to be built on the outskirts of the Russian capital that will cover 160,000 hectares and expand the capital’s boundaries to create a‘Greater Moscow’.The idea, which was announced by President Dmitry Medvedev at the St Petersburg Economic Forum in June, has now evolved with Moscow’s mayor Sergei Sobyanin unveiling detailed plans for creating the bigger city in a year’s time. The new bureaucratic centre is to be built on a 160,000 hectare (395,000 acre) plot in the south-west region. The current boundaries of Moscow encompass 107,000 hectares, so the new area will, in effect, be more than double its size. Within it, 45 million square metres of offices and 60 million square metres of housing are to be created – the equivalent of what Russia usually builds in two years. The local governments of Moscow and the Moscow Region have already approved the ambitious project.And an international competition for developing the concept of Greater Moscow is soon to be announced. It’s not the first time the capital of a major city will be recreated to accommodate the government staff. Brazil, for example,built its capital from scratch in the middle of the jungle. The move helped to sever the corrupt nexus be-

NEWS IN BRIEF

Officials hope that moving government offices out of the city centre will help ease Moscow’s famous traffic snarls.

tween government officials and members of the elite classes, by replacing them with people who had no connections to old, often criminal, schemes. Government offices are also relocated for more practical reasons, such as streamlining administration. That’s why France created its high-rise district, La Défense, on the edge of Paris. Medvedev seems to be thinking more along the lines of streamlining rather than replacing officials, as the proposed site is within commuting distance of central Moscow. The move will also help to relieve traffic congestion in the city.

It’s not clear how much the new city for bureaucrats would cost.“The cost is not yet known because there are no concrete projects,” is all Sobyanin would say. Finance Minister Alexei Kudrin, however, feels that the relocation would virtually“cost nothing”.He said the movement of the bureaucratic staff would free up premises, property and other assets in the city centre. If these buildings were reused effectively, the cost could turn out to be zero. But Konstantin Kovalyov, managing partner with the estate agents Blackwood, says that the final bill will be hefty.“Every government official needs 12-15 square me-

tres, each costing $3,000.And one has to bear in mind that the officials will be accompanied by secretaries and staff who need space too. So it may cost between $50,000 and $100,000 to relocate a single government official.” The president of the Moscow Architects’ Union pointed out, “Top federal executive bodies are not only about the offices in which the bureaucrats sit. Housing, a social and transport infrastructure, and commercial services are needed too.” As in most cases when offices are relocated, it is always inconvenient for some staff. A bureaucrat spoke for many others when she said,“I personally like the atmosphere

of the old Moscow city centre and would prefer not to move out.” A recent survey published by the Levada Centre says 61% of Moscow citizens support the idea of moving government offices out of the city centre, while 26% object. But equal numbers approve of and object to Moscow expanding in size (both 41%). The other survey respondents were undecided. Some Muscovites can't help seeing the funny side of the development. Residents of the suburban south-west districts of Moscow joke that soon their homes will be located in the city centre. Previous attempts to build a replica of La Défense in Mos-

cow met with little success. In 2005, the cabinet of Yuri Luzhkov, the then Moscow mayor, announced a plan to build an administrative district on an 800-hectare plot of land north west of the city's business centre. This plan entailed shifting around 100 industries out of the area, with the project cost estimated to be a whopping $80bn. Not surprisingly, it never got off the ground. This time round, planners may have plenty of time to avoid repeating the same mistakes. According to the Property Market Indicators analytical centre, the president’s grand scheme will take at least 10 to 15 years to come to fruition.

Russia will produce at least 1,000 fifth-generation fighter aircrafts by 2050 as a part of the Russian-Indian PAK FA (Prospective Airborne Complex of Frontline Aviation) programme, Igor Korotchenko, director of the Centre for Analysis ofWorld ArmsTrade (CAWAT), said. According to CAWAT, the Russian Air Force expects to order between 200 and 250 units. India’s order is projected to be 250 aircrafts, India’s Ministry of Defense said. Two prototypes are already undergoing flight-testing, and two more PAK FAs are scheduled for testing by the end of 2011, says the head of Russia’s United Aircraft Corporation. RIA Novosti

India to get upgraded Mi-17 combat copters The Indian Air Force will receive a more powerful,modified version of the Mi-17 combat helicopter within next two to three weeks. Sources say that the first units will be stationed at a central airbase in southern Punjab. The delivery of the first helicopter was initially scheduled for last March. India has ordered 80 helicopters.The $1.35 billion contract was signed in 2008 with FSUE Rosoboronexport, Russia’s major exporter of weapons and military equipment, India’s Ministry of Defense reported.The IAF plans to use the Mi-17s for special missions, such as transporting troops and equipment,search and rescue operations, and emergency evacuations. Arms-Expo

Rebels with a cause A new kind of grassroots activism responds to public disdain for corruption and kindles hopes for change

Out of the woods, a new opposition lights the fire

RIBR

Not many knew about Evgenia Chirikova, a resident of Khmiki in the Moscow Region outside her circle of friends and family. But the 34-year-old mother of two has now transformed into one of Russia’s best known activists crusading against ecological degradation. The narratives differ, but the story of Chrikova should strike a chord in India which has recently witnessed huge mass protests led by Anna Hazare, a 74-year-old Gandhian activist who became a national icon after the parliament agreed to accept his demands for a stronger anticorruption legislation. Armed with three college degrees, Chirikova ran a small business with her engineer husband, and had no interest in politics.“I didn’t think it was possible to change anything, so politics seemed a senseless endeavour,” she says. The turning point came in her life after the Moscow

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It's the bureaucrats who turned me into an opposition leader and a citizen, says Chirikova Activists have created a new opposition in Russia, focused on solving real problems was using that money to destroy my habitat.” Chirikova gathered local residents together and spoke out in favour of rerouting the highway; ecologists later came up with 11 alternative routes. Bureaucrats reacted to this initiative with bewilderment, while many local residents were suspicious: an international multimilliondollar project had never been

stopped by concerns over a forest before.“The Khimki administration didn’t understand what we wanted,” she explains.“‘If you want to live in the woods,”they said, “go to Siberia.” During the conflict over the Khimki Forest, 10 activists were injured by unknown assailants. Chirikova, too, received anonymous threats, but she refused to give up. “It’s the bureaucrats who turned me into an opposition leader. I became a citizen very late, at 30,” she says. During his presidency, Prime MinisterVladimir Putin approved the construction of the highway in 2009. That same year Chirikova, with the opposition’s support, ran for mayor of Khimki on a single platform – the rerouting of the highway. She came third, but the views of her supporters show that there is a demand in Russian society for specific problems to be solved, says Alexei Mukhin, head of the Centre for Political Information. “That’s why traditional opposition movements, afraid to switch from slogans to actions, are losing popularity,” he adds.The fight for Khimki Forest ended in a decision to narrow the route from 600m

Roerichs’ Tataguni dream set to turn real

PHOTOSHOT/VOSTOCK-PHOTO

VLADIMIR RUVINSKY

city government decided to bulldoze the forest by her house to build a highway to St Petersburg. She became interested in the forest after her second daughter was born. “Suddenly I had time to look around, and I realised that while I was working and paying taxes, somebody else

To reverse the decline in Russia’s population, parents with three children or more will be given free plots of land .The measure was introduced in an amendment to the national Land Code signed by President Dmitry Medvedev. The size of the plot will be decided by local governments. In some regions, it could be upto 1,500 square meters. In an address to the nation in November, Medvedev unveiled a slew of proposals that will help support families with many children, and help to reverse the decline in the population of 142.9 million (2010 census), down from 145 million in 2002. RIBR

PHOTOXPRESS

Growing outrage at both ecological damage and the erosion of civil rights has bred a new type of activist, providing an alternative to traditional opposition.

Have more children, get free plots of land

Alexei Navalny (left), a lawyer and blogger, has become Russia's celebrity anti-corruption crusader. Evgenia Chirikova entered politics to protect a forest near her home from a highway project.

(1,970ft) to 100m (328ft), and prohibit commercial construction on either side of the highway. One of the people who doubted Chirikova’s chances of success was Alexei Navalny, a lawyer and blogger who has become famous for fighting corruption in state companies. Several years ago, he was a member of the liberal party Yabloko, and worked on a committee to protect Muscovites.“People came to me complaining about the construction of a highway in Khimki,” he says. “My answer then was that it was senseless to get involved. " Today, he is an active supporter of the Khimki movement, and helps members make sense of the competi-

tions to build the highway, in which, according to Elena Panfilova, head of the Russian branch of Transparency International,“corruption is a large component”. Navalny became famous through actions rather than words, defending the rights of minority shareholders in large state companies. He and she are the same age; neither of them are affiliated with any political party; both prefer to work independently as activists, attracting supporters from across the political spectrum. They are a new kind of opposition in Russia,orientated toward solving real problems, says Nikolai Petrov of the Moscow Carnegie Centre.“If with Evgenia it’s the transfor-

mation of a civil position from a private protest, then Alexei targets political activity at the outset,”he said. Mukhin says both Chirikova and Navalny “have the image of a popular leader responding to public despair”. They are now ready to share their experience. In June, they participated in a fourday workshop in the Khimki Forest that attracted more than 3,000 people of all political shades. The workshop aimed at creating a dialogue between different political and civil forces, and to“give Russian citizens real knowledge about how to defend their honour, dignity and rights in this country”. The organisers want the workshop to be an annual event.

FROM PERSONAL ARCHIVES

A recent verdict by India’s Supreme Court has cleared the decks for developing the Roerichs’ Tataguni Estate in Karnataka into a museum-cum-art gallery.The court verdict has also brightened the possibility of fulfilling the iconic Russian artist Svetoslav Roerich's vision of the estate as a cultural-cumnatural reserve open to all. "The Roerich family’s spiritual and cultural heritage represents one of the bridges, connecting Russian and Indian nations with invisible but ever so strong links," said Alexander M. Kadakin,Russian ambassador to India.Russia is ready to participate in the the setting up of the Tataguni memorial, which could be modelled after the Roerichs’ Northern Estate in Naggar, KulluValley. RIBR

ber 28 Septem

in THE TIMES OF INDIA

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IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA WEDNESDAY, SEPTEMBER 14, 2011

Enterprise Matharu Harjinder Singh owns 20,000 hectares of land in Samara; breeds rare 103 Australian cows

Breeding golden calves on Russian land, the Indian way A Russian-born Indian entrepreneur has turned rearing of rare breeds of cattle into a booming business in Samara region.

Get easy loans on low interest

IRINA CHECHURINA

As you go into the village of Novy Kutuluk, where the office of Matharu Harjinder Singh’s company RosBiznesInvest is located, there is a large Russian Orthodox cross. And at the centre of the village, there is a banner with a portrait of Guru Baba Birsa Singh. Below the portrait, Singh has inscribed his mission statement: “Our programme is aimed at transforming all uncultivated land into a prosperous farm, which will benefit all people, no matter what their nationality, race or religion”. Singh’s tryst with agriculture has an interesting back story that mixes divine guidance, grit and hard work. He was destined to be a farmer in Russia; his guru had predicted long time ago, and the prediction has come more than true. In November 2008, just after the first snow of the year, Singh went to the Samara Region, and bought two derelict farms along with 2700 hectares of weedcovered land and a herd of 500 cows, each one producing just two litres of milk. He brought farmers from Punjab and hired locals to work on the land. They cleaned out all the cattle pens, erected new wooden

FROM PERSONAL ARCHIVES

RIR

Making it big: Matharu Harjinder Singh at his farm in Samara. Australian cows can be seen grazing in the background.

outbuildings, equipped it with modern technology, drilled wells, and put water troughs in each cowshed. The farm employs 40-50 people in winter and around 100-110 in the summer. Today, the two farms owned by the RosBiznesInvest, Vostok and Neprik, have 20,000 hectares of land, 3000 Kalmyk cattle, 90 mares of the New-Altaisk breed and New-Altaisk breeding stallions. But Singh’s pride and joy is

Today, the Russian government is helping to develop agriculture in a big way, says Singh He plans to start a chain of family-run farms and create the biggest livestock company in Russia

his herd of 103 Australian cows – these cows have not existed in Russia for some time (each one costs around $7000). He had brought this herd over from the Green Continent in December last year. A one-way ticket (on a ship that leaves once a month for Novorossiysk, and then by road on eighteen-wheelers) came to around $3500 for each cow. But Singh is confident his investment will more than pay off. “We are going to

meet the “golden” calves. These hornless cattle roam free around the green pastures of the Volga; unlike last year’s drought, this summer has been good for the meadow grass.” “Mandolong cattle are ideally suited for the hostile Russian climate, where the temperature ranges from -30ºC in winter to +40ºC in summer. Over two months, our young animals put on 150 kilograms in weight. And today, the steers are al-

Aviation New jet will include an upgraded pilot cockpit, new radar and can carry BrahMos missile

Armed with 5G jet features, Super Sukhoi on the way... With Russia's help, Indian Air Force is set to transform Su-30MKI fighter jets into the near invincible 'Super Sukhoi' in a joint venture.

See video at indrus.in AP

substantially upgraded prototypes. Fedorov did not specify the cost of the modernisation, highlighting that the companies were still negotiating. Su-30MKI jets are a part of two major moderniSERGEI PTICHKIN RIBR sation programmes, one of The Su-30MKI fighters, de- which aims to adapt the Suployed by the Indian Air 30MKI to BrahMos superForce, will be upgraded with sonic missiles, while the certain fifth generation air- other seeks ways to achieve craft characteristics to con- a dramatic improvement in vert it into a“Super Sukhoi”, the fighter’s performance. Alexy Fedorov, President of India will see its fighters Irkut Corporation of Russia modernised within the announced during the framework of the so-called MAKS 2011 international Super programme, which aviation show held in Mos- involves introduction of an cow recently. The IAF cur- upgraded pilot cockpit, new rently deploys about 100 Su- radar and several structural 30MKI fighters, with plans elements enhancing the jet’s to increase their number to stealth features that make it 230 aircrafts. Bangalore- less visible to the enemy.The based Hindustan Aeronau- upgrade will cover all airtics Limited (HAL) holds a craft employed by IAF, inproduction certificate for creasing the Su-30MKI’s manufacturing the fighters weapons load and list. and will be in-charge of up- The modernised Su-30MKI grading the SU-30MKIs to is reported to be able to carry 5G Super Sukhoi jets. The under its body one BrahMos modernisation will embrace missile, which is expected to the aircraft in IAF’s military weigh less than its landbases, fighters waiting for based and naval counterdelivery to India and the jets parts.The Russia-India joint that HAL will be manufac- venture Brahmos Aerospace turing. The United Aircraft Private Limited, Sukhoi Corporation and HAL have Holding and HAL are jointly signed a deal on creating engaged in developing the

Su-30MKI jet will be armed with BrahMos missiles by 2012.

airborne version of the missile. Sivathanu Pillai, CEO of the joint venture, said he hoped to see BrahMos missiles launched from the aircraft in late 2012. According to reports, the IAF plans to upgrade 44 Su30MKI fighters to equip them with BrahMos missiles. Ruslan Pukhov, director at the Centre for Analysis of Strategies and Technologies, believes that mounting BrahMos missiles on Su-30s

will add export value to both the weapon and its carrier. As various modifications of Su-30 jets are in service with many armed forces all over the globe, transforming these highly-manoeuvrable air fighters into fully-fledged missile carriers appears promising – an idea that Dr Pillai supports to the hilt. The Super Sukhoi project, therefore, will allow the latter to transition swiftly to fully capable 5th generation

fighter jets. The cost of the modernisation remains uncertain but the price tag could be around $1 billion. The HAL is optimistic about its participation in the development of technology for the Fifth Generation Fighter Aircraft (FGFA). The prototype of this aircraft, the T-50 PAK FA, was exhibited at the MAKS 2011 air show. India will be one of three countries in the world, alongside the US and Russia, to have fifthgeneration fighters. HAL chairman Ashok Nayak, who visited MAKS 2011, confirmed that his company’s participation in the design of the FGFA was “the right thing to do”.In December 2010, Russia and India signed an agreement on preliminary designing of the aircraft, estimating the project at $295 million. The initial design will take approximately 18 months. The Indian model’s main difference will be a two-man crew. “HAL hopes to complete the initial design and move further,” Nayak said, adding that the use of Indian components would be determined later. The IAF will be the first foreign customer to buy the new jet. India has announced plans to buy 250300 fighters of this type, with the first deliveries expected in 2016-2017. The cost of the project is likely to exceed $35 billion. Russia will buy approximately the same number of the aircraft.

Brimming with big ideas, Matharu Harjinder Singh says he owes his success to the Russian government's agriculture-friendly policies. “Today, the government in Russia is really helping to develop agriculture. It’s plain to see – this project is running on 40% borrowed money," he says. "But at the moment, it is a good time for farmers to get a loan, the interest rate of the Russian Agricultural Bank is 13%, and if you deduct all the subsidies that we get from the government, it works out at 6%, and the annual credit is just 4%. We also leased all the equipment, everything is made in Russia.” “Despite the weather conditions, Russia is really a good place to develop an agricultural business – there’s a lot of land."

ready putting on as much as 2.5 kg in 24 hours,” says a proud Singh. “In the next few months we are planning to bring over another 500 of these cows, as well as 30 breeding bulls,” says Singh. Clearly, Singh has big plans for the future, but is not someone here just to make a quick buck. “We’ve definitely made good living quarters for the Indian workers out of the old bakery,” says the farmer entre-

preneur. He has made it a point to provide well for farm workers. They stay in a hostel, and are given a packed lunch. So far the only Russian food the Indian workers eat is semolina porridge (they have something similar in India), and they are gradually starting to try other Russians specialities. The Indian workers are served a special menu of chicken and vegetables. Brought up in Russia, Singh is, however, in a different league. “I’m actually very Russian in my outlook, as I was born and raised in Moscow. My father worked there as a presenter of Indian programmes on Russian radio. I went to a Russian school, though admittedly one with a focus on English. And then, much to my parents’ annoyance, when they were away in India (he smiles slyly), I married a Russian girl. But I have to say that now I am always with my parents, I divide my time between Samara and Moscow, where they live”. Matharu Singh, who studied in the Peoples’ Friendship University of Russia, h a s n ow m a d e a n i m a l breeding his core business. In the next few months, his farm is going to become an approved breeding centre for Australian and Kalmyk breeds, allowing Singh to send its purebred animals and spermatic material to regions other than Samara. “We are planning to increase the Kalmyk herd to 4000, and the Australian cattle herd to 6000. Our Mandolong herd is the only one in the whole of Russia”. Besides raising cattle, Singh continues to breed horses. He has about 100 New-Altaisk horses and plans to buy six four-year-old stallions in the Altai region. All this success has whetted Singh’s appetite for busi-

ness. He is brimming with big ideas. It includes opening the first tea-packing factory in the region, which could happen as early as autumn. The big project which is set to come to fruition this year will be setting up of a chain of family-run farms, each with 300 cattle. The company will oversee the building and day-today running of the farms, and deal with the maintenance side of things. Singh makes no bones about his ambitions; “We want to become the biggest livestock company in Russia. Today, there is a similar farm in Krasnodar, which has about 10,000 cattle. We would like to develop quickly and successfully.We have huge plans, but we are not going to hurry. As they say, everything in its own time.” There is, however, a skilled manpower crunch. Singh says although his company pays a reasonably attractive wage of 15,000 roubles ($535) per month, hiring locals is not easy.“So we invite specialists from India from Punjab state.They are good, honest, hard-working guys; they understand that farm work doesn’t adhere to a regular timeframe.”“In the year they have been in Russia they have done a good job of learning Russian and have got used to the cold weather. For young Indians, it is a chance to gain work experience in another country, and work towards their future,” he says. But all this success hasn’t got to his head. His friends often say to him,“Raju, why don’t you hire managers, you’re the boss”.And sitting behind the wheel of his car, he will answer,“Even if I am president, I’ll go where I have to go.”And on the way, he manages to chat up everyone he meets and find out how they are getting on.

INVESTMENT

US stock is down, Russian economy on an upswing Tim Gosling

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RIBR

rowth is slowing in the western world and Europe faces the very real possibility of second banking crisis. Investors are running for cover but have few places to hide. Gold prices have risen to record levels and the Swiss franc followed suit, making both assets look very overpriced. But Russia has been largely overlooked and is probably one of the safest markets in the world today, say analysts. "The Russian economy looks better and better, but markets have little faith in the Russian macro picture and have largely overlooked it,” says Alexei Devyatov, an analyst with Alfa Bank. While the Russian economy has been hurt by the slowing growth in the developed markets in recent months, its economy has been recovering, underscored by the recovery of crediting and the construction sector. Credits to both companies and consumers grew strongly in

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July, up by 18% and 27% year-on-year respectively making banks profitable again. "Banks’ profit for the first seven months [of this year] has already come close to the result for all of 2010,” says Mikhail Kovrigin, Deputy Head of the Bank of Russia's Banking Regulation and Supervision Department.“I think the figure

"The economy looks better and better, but markets have largely overlooked it." will be exceeded as of the end of September.” Although Russia’s budget remains heavily dependent on the price of oil, its consumer spending has become the key economic driver in recent years. And construction also unexpectedly accelerated in July, with the volume of construction up strongly by 17.8% year-on-year, according to analysts at Alfa Bank. Pre-crisis construction was the second most important

economic driver after consumer spending but building activity has been at a standstill for most of the last two years. H o w e v e r, w h a t r e a l ly spooked investors was the downgrade of the world’s safest asset – American treasury bills by ratings agency Standard & Poor’s at the start of August. While the USA’s sovereign bonds are looking like an increasingly risky investment, Russia’s debt is looking safer and safer. Russia’s hard currency reserves have recovered almost all the ground they lost during the worst of the crisis, it is amongst the least like countries to default on its debt in the world. The US today has $14.7 trillion of debt, which is rising by $1 million per minute, equivalent to just over 100% of GDP. However, it only holds about $90 billion of cash reserves, which means each $1 of debt is backed by 0.6 cents. Russia, however, has foreign exchange reserves of $540 billion (as of the end of August), equivalent to just 11.2% of GDP -enough to back every $1 of external debt with $1 of cash.

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in association with rossiyskaya gazeta, russia Wednesday, SEPTEMBER 14 2011

BrahMos ‘gold standard’ for defence projects be carried by a wide range of naval platforms, including most existing and future surface ships. The Indian Navy also plans to deploy BrahMos on submarines and, possibly, on land-based patrol aircraft. Clearly, it wants to make BrahMos its core weapon.The new missile’s long range (upto 280 km), high speed and powerful warhead will give Indian fighters not just a military advantage but absolute dominance over Pakistan’s ship groups and create a significant deterrent to China’s navy. Another major customer is India’s land forces, which are buying BrahMos missiles in the mobile land-based configuration. Finally, the Indian Air Force is awaiting completion of research and development for an air-launched version of BrahMos, to be deployed primarily on Su-30 MKI fighters, with first deliveries expected in 2012. Currently, the Sukhoi Design Bureau is carrying out research and development to deploy the air-launched version of the missile on the Su-30 MKI. Today, BrahMos missiles and their Russian analogue, the Yakhont, are arguably the most powerful non-nuclear anti-ship weapons deployed in Russia and India and Su-30 MKI is the only suitable carrier. The Russian Air Force plans to order 28 Su-30 SM fighters, which will be techni-

Konstantin Makiyenko

Odnako magazine

andrey popov

T

here has been a lot of talk recently about growing competition in India’s arms market, which is crucial for Russia. In Soviet times, Russia supplied some 75-80% of the weapons for India’s Army, Air Force and Navy. But now, as India’s economy grows, it is opting increasingly for more expensive western armaments. Back in the 1980s, German and French supplies brought India submarines and Mirage 2000 fighters and, in 1990, Israel broke in, making India one of its biggest sales markets. Finally, the last ten years have seen a surge in Indian-US military and technical ties, with US’s sales of military transport and antisubmarine aircraft nearing $10 billion. In this situation, the best way for Russia to retain its dominant position in India is to revise the trade paradigm of military and technical cooperation,thus shifting the focus to joint projects based on risksharing partnership,whereby the parties invest jointly in the creation, production and promotion of products. Today, Russia and India have two joint defence projects,including the BrahMos programme for designing, producing and

marketing supersonic stealth cruise missiles, and a project for building the MTA multirole medium transport aircraft. During Russian President Dmitry Medvedev’s visit to India in December 2010, a contract was also signed to design India’s version of the Fifth Generation Fighter Aircraft (FGFA). The BrahMos project can be seen as the‘gold standard’for joint military manufacturing

programmes,effectively combining commercial profit for Russian and Indian partners, a tangible improvement in the combat ability of the Indian Army, Navy and Air Force, and the development of new technologies, which is particularly important for India. Perhaps the project’s most valuable result is the accumulated experience of resolving difficult legislative, organisational and financial problems.

In the future, this experience will be used for new joint programmes, including the FGFA project. What makes this programme so unique is that India is, in fact, buying one of its first standardised weapon systems that can be deployed by all three armed services - the Army, the Navy and the Air Force. The Indian Navy was the first customer for the BrahMos missile, which can

cally similar to the Indian version. The acquisition of BrahMos missiles, therefore, would come in very handy. From a military and technical perspective, this would mean acquisition by the Russian armed forces of the hugely effective Su-30 SM-BrahMos system, which would revolutionise the alliance of forces, for example, in the Black Sea region. And politically, it would underline the joint nature of the project. The Indians are extremely concerned about any symbols of their industrial and technological progress and acquisition by Russia of Indian products would be very much appreciated in a country that pays billions of dollars for Russian weapons. The success of the BrahMos programme has boosted Russia’s chances of promoting its air and naval platforms in the Indian market. So the Rubin Design Bureau is creating a special version of a new Project 677 (Аmur class) submarine to carry BrahMos antiship missiles as its main weapon system. This raises the submarine’s chance of winning India’s tender for six submarines worth upto $10 billion. And last but not least, the BrahMos Aerospace joint venture has become a vehicle for further Russian-Indian projects, on an even larger scale and with greater Indian participation. The company is known to be already working on a new hypersonic missile. Konstantin Makiyenko is deputy director of the Center for the Analysis of Strategies and Technologies, Moscow.

Global economy needs fresh ideas Stanislav Mashagin

Specially for RIBR

T

he global system of credit ratings no longer works. For years, these ratings deterred states from excessive borrowing, caused them to curtail social programmes and public spending, and encouraged them to raise taxes, but Standard & Poor’s downgrade of the credit rating of the United States has not had the intended effect. Since the downgrade, demand for U.S. bonds, far from diminishing, has risen, while the interest rate has dropped. Obviously, the greatest beneficiary from this latest change in the rules of the game is the US itself. It is now absolutely clear that the U.S. Treasury Department can continue to borrow as much as it likes and to print money, and neither ratings, nor proposed legislation, nor

fear of losses will prevent players in the global markets from buying the U.S. dollar. For one thing, they depend on it for assessing value and payments. Moreover, U.S. Treasury bonds represent cash for financial institutions and major players – they are liquid, denominated in dollars, and they bring in interest. I subscribe to Warren Buffet’s simple idea that the U.S. credit rating is still AAA and there is no reason to change it, because U.S. Treasury bonds must be paid for in U.S. dollars, which the Federal Reserve can print in any amount.There is a real question about the cost of these dollars.We can already sense the answer, as the value of money is rapidly changing. The process started by the U.S. will draw China, Europe, Russia and other states into a devaluation race if they want to keep their economies competitive. As often happens, this is both

good news and bad news. The good news is that the current world financial and economic model can survive for a very long time without major upheavals. The bad news is that you and I will have to pay for this stagnation. By devaluing money, states gradually reduce real incomes, thus hurting everyone, and above all, the poor. Any ideas about changing the very infrastructure of world finance – such as creating a central bank of central banks or replacing the dollar as the universal means of evaluation with gold or a basket of five main currencies – may be sound, but they are unrealistic, not only because of the resistance from the U.S. elite, but also due to the disparities in the positions of the other major countries. Robert Zoellick, the head of the World Bank, said in an interview recently that hard times lie ahead for the world economy, and that the cur-

rent situation is different from the one the world faced in 2008. “The world is involved in a change of the international financial system, with such countries as China coming to the fore,” said Zoellick. Although China does not count for much on its own, China and the U.S. today are two sides of the same coin: they will either fall together or emerge from the crisis together, and China still has a margin of strength. China is, at long last, lifting restrictions on ownership of its debts via Hong Kong for foreign investors and appears to be loosening the link between the yuan and the U.S. dollar, which may provide world players with an alternative measure of value and a saving instrument before this year is out. This scenario is bolstered by the attention the Chinese government is focusing on its domestic market, the development of which makes the

country less dependent on external demand and reduces its involvement in the world economic downturn. But most importantly, economists and advisers everywhere should look at the root causes of the economic turbulence throughout the world. The modern concept of economic development and scientific and technological progress has exhausted itself. There is no longer any need to create anything new. There are already cars, planes, houses, telephones and computers that make life comfortable and livable. Their further improvement is only of marginal use to the consumer. This means that, until we work out a new development paradigm, there can be no serious growth. So far, new ideas and creation of a new economy are possible in some areas such as medicine, ecology, space exploration and the oceans. But these areas need to be“made” interesting in order to get

people involved. As economist M. Khazin says, the current situation “consigns the most active and energetic people to a fairly bleak scenario: Increasingly, the idea is sneaking into the heads of many people that there is no room for them in this life.” Psychologists speak about loss of the man’s role as a pioneer, thus charting new courses. Today people provide fertile soil for religious cults and extremism rather than innovation. But people hold the answer to the current situation. If the world is to continue to develop economically, it is vital to change society, create new values and motives that can, on their own, provide the basis for further economic growth. Social technologies must today take pride of place.

his predecessors. Third, the US attitude is not quite clear. The Russian proposal creates an opportunity for progress. And it would be in everyone’s interest to make some. But East Asia is too important, especially in light of China’s growing influence, andWashington does not want to lose the initiative.The question is whether the US will interpret the Russian proposal as an attempt to seize the initiative. China should not object, be-

cause it welcomes anything that can reduce tensions and consolidate the status quo. For Russia, this Korean project is a real chance to enhance its position in Asia, which will be its main goal in the next few years. Moscow enjoys the advantage of being viewed as a neutral force and this suggests that progress is possible.

Stanislav Mashagin is deputy director general of the investment firm Ursa-Capital.

Fyodor Lukyanov

ria Novosti

A

ny foreign trip by the reclusive North Korean leader Kim Jong-il arouses a great deal of interest, as he practically never leaves his country. Therefore, his recent visit to Siberia was an extraordinary event. Since the first half of the 1990s, when the North Korean nuclear programme became a global issue, negotiations have gone through different stages but the basic model has remained unchanged. Outside forces have always perceived Pyongyang as an aberration that survived the collapse of socialism and a clear threat to its neighbours. In turn, North Korea has continued to project an image of extravagant

outcast that is capable of anything, because its top leaders feel this is the only way to protect the regime against pressure and potential overthrow. North Korea has been building up its potential in the most ostentatious way so

For Russia, the new Korean gas pipeline project is a real chance to enhance its position in Asia. as to prevent anyone from even being tempted to test its strength. Western countries and South Korea pursued a carrot-and-stick policy. But the pressure only radicalised the regime, even though the country needed economic assistance to stave off a disaster. North Korea quickly learned

that blackmail can do the trick. However, the belief that North Korea is intimidating others to extract economic benefits has led Washington and Seoul down the wrong road. Under the current model, North Korea is promised lavish aid in exchange for renouncing its nuclear and missile programmes.This could have worked 15 years ago. But since the late 1990s, after the events in Afghanistan, Iraq and Libya, Pyongyang has viewed its nuclear weapons as the only guarantee of its security rather than as a bargaining chip. North Korea’s relations with the international community is, therefore, caught in a vicious circle. Russia has proposed a new approach that would change the paradigm. The construction of a gas pipeline from

Russia to the south of the Korean Peninsula would change Pyongyang’s status.A sponger prone to blackmail could become a partner in a major project, as was the case with Ukraine in relation to Russia and Georgia to Azerbaijan. North Korea would get not only gas, but also transit fees. But, most important, it will be brought into a system of economic interdependence that could drastically change the atmosphere in the region. Many obstacles remain. First, Pyongyang’s behaviour follows some logic (contrary to views in the West), its vigilance bordering on paranoia carries the risk of surprises. Second, Seoul may not be happy about the deal. South Korea would also stand to gain from the project, but its government headed by Lee Myung-bak is highly critical of the reconciliation policy of

andrey popov

Russia's Korea pipeline: can it be Game-changer?

Fyodor Lukyanov is chief editor of the magazine“Russia in Global Affairs”.

Stop 'Russia break-up' scare Leonid Radzikhovsky

rossiyskaya gazeta

A

s the elections for the State Duma draw nearer, Russian politicians are trying to conjure up a scare that Russia will fall apart if there is a change of government. After the seismic events from 1917 to 1991, Russians are once bitten, twice shy, when it comes to the collapse of regimes. Add to that our subconscious guilt about our vast, underdeveloped areas, and it’s clear why the fear of the disintegration of Russia holds the same place in society today that nuclear war used to hold in the sixties and seventies. Clearly, it's a scare tactic. One of the predictions is that one or more regions or republics will withdraw from the Russian Federation, thus leading to its collapse. But there is currently no legal way for a region to withdraw from Russia. Seceding from Russia is also impossible geopolitically.The vast majority of Russia’s regions and republics are surrounded by the Russian Federation. Those that have an external border are surrounded by former Soviet republics or China – neither of which would risk a war with Russia to support a separatist republic. Everything that China needs is easily purchased in Russia, and war would be too costly. And most of Russia’s regions are subsidised by the federal government,so independence from the Russian budget would not be advantageous. Russians like to grumble about Moscow, but they wouldn’t dream of seceding from Russia. So long as Russia has a central government, individual regions cannot break off. But what if we did away with the central government? Then, will the country dissolve completely? The answer is No. It would not be legal to dissolve an entire country. In contrast to the Soviet Union, Russia is

not a union of different states, so a total collapse of the government would not follow the 1991 model, but rather the 1917 model, which involved the dismantling of all laws. Of course, nobody supports this course of action. There would be total economic chaos in the territory of“the former Russia”. Economic turmoil would force millions of people to flee, but to where? This scenario would be a repeat of the years from 19171920, but with nuclear warheads, leading to irreversible destruction of the state of Russia. For Russia to dissolve in 1917, it required the illegitimate rise to power of extremists who sparked a civil war. Are there any extremists today who might seize power in Moscow and make life impossible for its people? There are none among the legiti-

Politicians are trying to conjure up the scare of Russia breaking up. It's an empty scare tactic. mate political parties. What about Nazis? Anarchists? Just someone crazy? Individual fanatics can’t just take over, as the army and intelligence agencies are there to stop them. And the people of Russia are not prone to collective suicide. That’s why I think all this talk of the collapse (or self-dissolution) of Russia is nothing more than vicious fraud. It’s not a threat to us. The real threat is the continued deterioration of our basic social institutions – healthcare, education and the government apparatus. But why think about that? It’s more glamorous to espouse theories about the apocalypse, and easier, too, as it doesn’t require any action. Leonid Radzikhovsky is a political commentator for Rossiyskaya Gazeta.

Timing: Let's Leave business alone Ben Aris

Specially for RIR

H

ow much involvement should the state have in the e c o n o my o f a n emerging market? While most agree that the private sector is the most efficient manager, academics say that during the transition period, state involvement is crucial. “All emerging markets follow a similar pattern,”Professor BernardYeung of the National University of Singapore said during a presentation at the European Bank for Reconstruction and Development in Kazakhstan in May. “At the start of the process,the state has to engage in a big push to get the wheels of commerce turning, because it is the only entity with the resources to do anything. But once the economy is up and running, it must step back and adopt more of a nurturing strategy.” Agreed Professor Sergei Guriev, director of the New Economic School in Moscow: "When the economy is healthy, the state should give the job of driving economic growth to entrepreneurs and small- and medium-sized enterprises." Yeung added that a key element of nurturing was “creative destruction”– where inefficient companies go out of business to allow their resources to be put to better use elsewhere. But this is where it

starts to get tricky, because government lobbies and vested interests swing into action to protect companies from being downgraded or sold off. It can be argued that Russia’s economy has already reached the point where its government can afford to become less involved. A survey found that since 1991, levels of both income and consumption per household have soared. Those sectors that have benefited from the retail boom are the clear winners, and the state now needs to do little more than nurture them. However, not all manufacturing sectors are self-sufficient. While the state’s involvement in the power and automotive sectors of the economy has been very successful,the shipping,aviation and metallurgy sectors have a way to go. Relaunching the privatisation process, the Kremlin is planning to raise upto one trillion roubles ($30 bn) in the next three years. The stakes are high: in the aftermath of the economic crisis, slower growth of about 4% may not be fast enough to stop the downslide in the ageing infrastructure. Even if the government stays on course, it still has to get the speed of transition – from the big push to nurturing – correct, which will not be easy. Ben Aris is the editor and publisher of Business News Europe.

All articles appearing on this page do not necessarily reflect the opinions and views of the editors of Rossiyskaya Gazeta and Russia India Business Report.


Heritage

BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA WEDNESDAY, SEPTEMBER 14, 2011

Milestones From 13 stations in 1935 to 182 in 2011, Metro also attracts thousands as an underground museum; plans to add another 120 km track by 2020

A ride across passages of history - Moscow Metro rolls on

cow’s underground.A symbol of Russia's victory,he was omnipresent in the late 1940s. After his death in 1953 and the denunciation of Stalin’s personality cult, his images were gradually withdrawn from the Moscow Metro. “Architecture developed along the same lines, both above and below the surface. Anything that emerged above ground had a reflection underground. It is equally true that vice versa never occurred: good architecture underground but bad architecture above the ground,”says Nikolay Shumakov, chief architect of the Moscow Metro.The first metro stations, up until the mid-1950s, were

diers, farmers, students and other Soviet people.You can even find a frontier guard with a dog and rub its nose for good luck.You may also note that all the figures (except pioneers) are either sitting or bent, which engendered the sad joke --“Any Soviet man is either in jail or on his knees.” 1955 heralded the end of the good times for Russian architecture –- both underground and above ground -- after the Communist Party issued a decree "On elimination of extravagance in design and construction.” Dull stations, without any stucco work,mosaics, original columns or other“unjustified”elements, were built under the slo-

Revolution Square station (built in 1938) is close to the Red Square area. There are 72 sculptures in the station, depicting the people of the Soviet Union, including soldiers, farmers, athletes, writers, industrial workers and school children.

Baroque and Beautiful: Built in 1952, Komsomolskaya station is located on the Circle Line of the Moscow Metro. it is beautiful and wears a busy air. This station with its arched yellow ceiling shows marked influence of the Baroque style, with intricate medallions decorating the ceiling.

Timebends: Whispers from past Stalin period (1930s-1950s) Ploshchad Revolutsii (1938), Mayakovskaya (1938), Paveletskaya (1943), Novokuznetskaya (1943), Novoslobodskaya (1952), Prospekt Mira (1952), Kievskaya (1954), etc. Khrushchev period (1950s – 1980s) Novye Cheryomuchki (1962), Ryazansky Prospekt (1966),

Global awards: list is endless...

Tverskaya (1979), Konkovo (1987), etc. Post-perestroika period (2000s) Vorobyovy Gory (2002), Park Pobedy (2003), Sretensky Bulvar (2007), Slavyansky Bulvar (2008), Strogino (2008), Volokolamskaya (2009), Dostoevskaya (2010), Maryina Roshcha (2010), etc.

Sokolniki station (Grand Prix, Paris World Exposition 1937), vestibule of the Krasnye Vorota station (Grand Prix, Paris Exposition 1937), Mayakovskaya (Grand Prix, 1939 New York Wold’s Fair), Kropotkinskaya (Grand Prix), Komsomolskaya Koltsevaya (Grand Prix, 1958 Brussels World’s Fair).

ALAMY/LEGION MEDIA

In 2002, the development of Metro entered third stage, symbolising renaissance.

GETTY IMAGES/FOTOBANK

The richly-decorated underground was an ideological move to eulogise the young Soviet country.

gan “Kilometres at the expense of architecture”.Things were the same above the ground, where entire cities were built of commonplace five-storey apartment blocks, all looking the same, nicknamed‘Khrushchevkas’after the then leader, Nikita Khrushchev.To get a sense of this period’s architecture, see the few stations built in the 1960s-1980s like Tverskaya, Kitay-Gorod and Kolomenskaya. In 2002, with the reconstruction of the Vorobyovy Gory station, the development of the Moscow Metro entered a third stage, which could be defined as ‘renaissance’. The platform of the station offers a splendid view of the Moskva River, the Luzhniki Olympic Complex and the Academy of Sciences building. Architectural canons of the 1930s-1940s were once again in use in the design of underground stations. By the same token, artists once again become involved in decorating the stations. As such, the Sretensky Bulvar station boasts silhouettes of Pushkin, Gogol, and Timiryazev and Moscow sights; the Dostoevskaya station is decorated with black-and-white panels featuring the main characters from Dostoyevsky’s novels The Idiot,Demons,Crime and Punishment, The Brothers Karamazov, and the Maryina Roshcha station flaunts its pastoral mosaic landscapes. In 2004, Russia's first monorail transport system was launched into service – an elevated track (running 6 to 12 metres above the ground) in the northern part of Moscow, linking the All-Russian Exhibition Centre and the Timiryazevskaya metro station. The evolution of the Moscow Metro goes on. It’s still a work in progress, with ambitious plans to move the Moscow Metro even closer to passengers over the next ten years, not just by adding an extra 120 km to its total track.“We want to strip the stations of everything we can,” says Nikolai Shumakov.“We are trying to show the passengers their very framework, what the metro is made of. Cast iron and concrete are beautiful.”

THE NUMBERS

7 mn

People travel by metro every day, the highest figure in the world. The most loaded stations serve 100-150,000 passengers daily.

310

km is the total length of 12 Moscow metro lines. 182 stations serve almost 10,000 trains. Average length of a trip is 13 km.

41,6

km/h is average Moscow metro train speed. Minimal headway of 90 seconds. Moscow metro is the world’s leader in the volume of traffic and reliable transportation.

Modern and trendy: Vestibule of Sretensky Boulevard metro station, which opened only recently, has been built in the modernist style.

Joy ride: Read Gogol, Dante or savour art With any luck, you can ride in a retro train, a moving art gallery or a library.The trains are actually a part of the general traffic (i.e., they do not run to any special schedule) and are used on certain lines. The Reading Moscow Train, an ordinary train on the face of it, features extracts from literary works for adults and children. Each wagon has its own selection, from children’s fairy tales to Gogol. Circle Line. The Poetry in Metro Train carries an exposition, updated

this year, dedicated to Italian poets Dante Alighieri, Francesco Petrarch, Giacomo Leopardi, etc. All the poems are featured in two languages, Russian and Italian. Filevskaya Line. The Sokolniki Retro Train looks exactly like the first Moscow Metro train, both inside and out. Painted brown, it has padded seats, typical wall decorations and retro lamps. Sokolnicheskaya Line. The Aquarelle Train (see picture) looks like a cabinet painted with flowers and

REUTERS/VOSTOCK-PHOTO

RIBR

Lying at a depth of 5 (Pechatniki station) to 80 metres (Park Pobedy station),the history of the last eight decades unfold before your eyes, carved out of marble and granite and built in iron and glass – revealing the tastes, ideas, dreams, hopes and disappointments of the previous generations and contemporaries. The Moscow Metro dates back to 1931, when its construction first began,although engineers Pyotr Balinsky and Evgeny Knorre submitted their first designs to the Moscow City Duma as far back as 1902.“His speeches carried a strong temptation: like a true demon, he would promise to cast Moscow down to the bottom of the sea and raise it above the clouds”,a journalist for the Russkoye Slovo newspaper commented on Balinsky’s idea.Yet the Duma,made up of rich people, did not bite the bait: after all,they all lived in the centre of the city and never rode overcrowded trams. After five failed proposals before the Duma, the Moscow Metro finally threw open its doors on May 15, 1935, 18 years after the revolution, and carried the first passengers on its moving staircases, escalators, and the padded seats of its new wagons (unlike the wooden seats in trams). The first metro line – from Sokolniki to Dvorets Sovetov (now known as Kropotkinskaya) -- was 11 km long and had 13 stations.Now, the Moscow Metro has a track of over 300 km with 12 lines and 182 stations.The city’s development outline for 2020 envisages that, by then, another 120 km will have been added to the existing routes. For the first 20 years of its history, the Moscow Metro was named after Lazar Kaganovich, the “iron commissar” and Stalin’s right hand man, who was incharge of c o n struction of the

conceived and built as luxurious“palaces for the people”, great architecture for a great state. Art historians insist that the richly-decorated underground was a deliberate ideological move to eulogise the young Soviet country.Stations built between 1937 and 1955 are characteristic of the first architectural period. Everything completed at this time is worthy of special attention. For instance, look at the ceiling at Mayakovskaya and Novokuznetskaya stations to see mosaic panels based on designs by artist Alexander Deineka – 24-Hour Soviet Sky and Heroic Labour of the Soviet People on the Home Front.The mosaics were assembled by famous mosaic artistVladimir Frolov, author of the mosaic icons in St. Petersburg’s Church of the Saviour on Blood.The Ploshchad Revolutsii station was decorated with 76 bronze sculptures of workers, sol-

ITAR-TASS

ALYONA LEGOSTAYEVA

first stage of the metro (incidentally, he personally blew up the Cathedral of Christ the Saviour in December 1931 as a part of the Proletarian Capital project). In 1955, however, the Metro was renamed after Vladimir Lenin. Although Russia has long since changed its political track,you can still find the images of the former leader at over 10 stations, including, for instance, busts of Lenin at Belorusskaya and Komsomolskaya stations,impressive mosaics at Baumanskaya and Kievskaya stations, a tile panel in the passage between the Borovitskaya and Biblioteka Imeni Lenina stations. By a bitter irony of fate, Lenin’s full-face and side-face images decorate the Tsaritsyno (translated as theTsarina’s Estate) station (dubbed Lenino up until 1990) – images of the very person who ordered the shooting of the royal family.You will not, however, find any images of Stalin in Mos-

GETTY IMAGES/FOTOBANK

The Moscow Metro breathes history; in this transit place, you will find Lenin cruising with Tolstoy, Pushkin and countless common Russians.

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fruit on the outside. Inside, it is an art gallery featuring art reproductions from theVyat-

ka Apollinary and Viktor Vasnetsov Art Museum. Arbatsko-Pokrovskaya Line.

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September 2011, Russia&India Business Report  
September 2011, Russia&India Business Report  

Russia&India Business Report is a monthly publication brought out by Rossiyskaya Gazeta, that is published in association with The Economic...

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