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50th Anniversary of Manned Space Flight

BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

...Marching towards a common future

WEDNESDAY, OCTOBER 12, 2011

Diplomacy The proposed union will comprise of former Soviet countries to build a bridge between Europe and Asia

Putin bats for ‘Eurasian Union’ In a signature foreign policy initiative, Russian Prime Minister Vladimir Putin has pitched for creating a Eurasian Union. Irina Filatova

reuters/vostock-photo

the moscow times

Unveiling his first major foreign policy initiative as he prepares to return to the Kremlin as the president next year, Prime Minister Vladimir Putin has called for the creation of a "Eurasian Union" of ex-Soviet countries that could serve as “a bridge”between Europe and Asia. The new union would further integrate the economies of existing customs union members Russia, Belarus and Kazakhstan and gradually expand to include Kyrgyzstan andTajikistan, Putin said in an article published Tuesday in Izvestia. "We won't stop with this and have set an ambitious goal to reach the next, higher level of integration — the Eurasian Union," he wrote. The Eurasian Union, which is supposed to become "a powerful supranational body" and "an effective bridge between Europe and the dynamic Asia-Pacific region," will welcome accession of other countries, with the CIS nations having a priority, said Putin. But Putin, who once famously described the collapse of the Soviet Union as “the

greatest geopolitical catastrophe of the 20st century” rejected Soviet Union-like imperial ambitions. "It's naive to try to restore or copy what has already been left in the past, but tight integration on a new political, economic and value basis is the requirement of the time," he said.The union will be a part of "a greater Europe with common values of freedom, democracy and market laws," which will provide a

faster integration into Europe for its members, Putin said. He advocated creating a free trade zone between Russia and the European Union, which he voiced in his article published in Germany's Sueddeutsche Zeitung late last year. In the Izvestia article, Putin reiterated that Russia and Europe could form a free trade zone stretching "from Lisbon toVladivostok". The article indicates that the

focus of the Kremlin's foreign policy is likely to move to strengthening ties with former Soviet countries after Russia has a new president next year, said Tatyana Stanovaya, a France-based analyst with the Center for Political Technologies. This issue is currently the No. 2 priority because President Dmitry Medvedev is largely focusing on the "reset" with the US and the treaty on reducing the nucle-

Russian Prime Minister Vladimir Putin announced last month that he will contest the presidential elections next year.

ar weapons, Stanovaya said. But Putin's spokesman Dmitry Peskov said the integration of the post-Soviet region does not negate the reset with the US, since these are two priorities of Russia's foreign policy. "Both these vectors can be developed simult a n e o u s l y a n d independently," he said. Putin's article is "sort of a presidential manifesto” aimed at outlining his initiatives after he returns to the Kremlin, said Alexei Portansky, a professor of the global economy and policy department at the Higher School of Economics. The idea of the Eurasian Union is not new, but it is likely to take a while before implementing this initiative, since the customs union has yet to prove its ability to work properly, he said. "The economic crisis in Belarus in June proved that the customs union isn't working the right way yet," he said. The customs union has been operating as a free-trade zone since July 1 when internal customs controls were removed at the borders of its member-countries. Putin, however, stressed that the Eurasian Union could be crucial for bolstering the global economy, as "the process of creating post-crisis models for global development is progressing with difficulties". The Doha round of interna-

tional trade talks "has almost stalled, and there are objective obstacles inside the World Trade Organization, the very principle of freedom of trade and the markets' openness is facing a serious crisis," he said. First Deputy Prime Minister Igor Shuvalov, Russia’s chief negotiator for joining the WTO and currently on a trip to the U.S. voiced hope that Russia will complete its entry into the WTO this year. Putin said earlier this year that Russia would not fulfill the obligations that come with the WTO accession until after joining the body. The main obstacle for accession is Georgia's position requiring that Russia remove customs points on borders with North Ossetia and Abkhazia, Stanovaya said. Georgia is already a WTO member and has the right to block Russia from joining. U.S. Trade Representative Ron Kirk, who met Shuvalov inWashington, has expressed his hope that "remaining issues, including satisfactory resolution of bilateral discussions between Russia and Georgia, would be addressed constructively and in a manner enabling Russia to meet its objective of concluding the WTO negotiations by the end of the year," according to a statement issued after their meeting.

Defence ties India to spend $35bn on 5Gen fighter jets; joint training exercise of Indian and Russian sailors set to resume

Nerpa on the way, Gorshkov by Dec 2012 viktor litovkin RIBR

When he visited Russia recently, Indian Defence Minister A.K. Antony struck all the right notes: he honoured the World War II veterans by laying a wreath at the memorial and travelled to Zhukovsky in the Moscow region where he saw a demonstration of prototypes for the fifth-generation T-50-1 and T-50-2 fighter jets.The highlight of his visit was delegation-level talks with his Russian counterpart Anatoly Serdyukov that ended with the two sides deciding to strengthen interactions be-

tween their armed forces, defence industry enterprises and research agencies. They also signed a protocol for the development of bilateral relations and military and technical cooperation between the two countries. High on Antony's agenda was the creation of a joint project of the Fifth Generation Fighter Aircraft (FGFA), which has the potential to become the largest joint defence programme between the two countries in the years to come. Antony expressed willingness to spend about $35 billion over 20 years to induct 250-300 FGFA's starting from 2020, of which 214 will enter the service first.The talks touched upon the 10-year lease of the K-152 Nerpa multi-role nuclear submarine which will be transferred to the com-

mand of an Indian crew by December this year. The two sides also discussed the plan to transfer the Vikramaditya aircraft carrier (known as Admiral Gorshkov in Russia) to the Indian Navy which, according to sources, will happen in December, 2012. The aircraft carrier is more than 85 percent complete. The Russian side has agreed to expedite refitting work on the aircraft carrier INS Vikramaditya and work on the MiG-29K aircraft to achieve complete synchronisation with the aircraft carrier. “Our bilateral militarytechnical cooperation is now on the even track,”said Antony at the end of the talks. "There is a strong impulse, both at the level of the government and among the people of India, to further

strengthen our special strategic partnership, which is based on mutual trust and complementarity of interests," he stressed. Russian negotiators noted that Antony raised issues such as delays in the delivery of military equipment, weapons and spare parts. They also talked about the latest postponement of the transfer of three Talwar class Type 1135.6 frigates to the Indian Navy and agreed to a revised delivery schedule. India will now receive the Teg in April 2012, theTarkash in September 2012, and the Trikand in June 2013. Serdyukov apologised his guests for failing to hold the training exercises this year when Indian ships arrived in Vladivostok and explained that this was due to the situation arising out of the tsu-

nami that struck Japan and the Fukushima nuclear power plant accident. Issues regarding the resumption of joint training exercises for Indian and Russian sailors, as well as joint exercises for soldiers and special commando units were raised. “The Navy's General Staff is preparing such exercises,” said Serdyukov.“Once everything is ready, we will strike an agreement with our Indian counterparts and announce the dates for these manoeuvres. They are extremely useful for us." As for the modernisation of the SU-30MKI fighters for use with BrahMos missiles, the Sukhoi Company is ready to carry out such research and development activities, but it requires several aircraft from the Indian Air Force. Defence ties get a boost. press photo

India and Russia focused on removing irritants and putting bilateral defence ties on the fast-track during Defence Minister A.K. Antony’s visit to Russia.

News in Brief India aiming to double tourists from Russia India is planning to increase the flow of tourists from Russia to 240,000, double the 2010 level. The visa procedure will be simplified, saidTourism Minister Subodh Kant Sahai. At least 30% of those who visit India go back again. Sahai, who met his Russian counterpartVitaly Mutko in Moscow, said that the two countries had decided to hold an Indian-Russian Tourism Forum to ease travel. The forum will be held under the auspices of the India Tourist Office, which is due to open in Moscow on 1st October. India and Russia have also decided to hold tourist road shows in both countries.RIBR

Sachin, the face of Kaspersky IT brand

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Russian computer security solutions provider Kaspersky Lab has named ace cricketer Sachin Tendulkar its brand ambassador. Beginning October, Tendulkar will represent the Kaspersky brand in India and other regional markets around the world. "The youth of this nation looks up to Sachin Tendulkar as a huge inspiration.We are excited to be associated with the cricketing maestro," Kaspersky Lab Managing Director (Asia Pacific) Harry Cheung said. RIBR

Construction giant to set up company in India Novosibirsk bridge-building and largescale construction firm Sibmost, controlled by Albert and Vladislav Koshkin, is going to set up a sister company in New Delhi before the end of the year. Sibmost has already won three tenders for constructing roads, bridges and infrastructure facilities in a consortium with India's Era Group.“The company is not actually building anything in India yet, we are just providing engineering support for the tenders”,said Koshkin. The company’s president did not divulge the share ratio in the Sibmost consortium, but says that the Indians have a dominant stake at the moment. RIA Novosti

NMDC keen to buy stake in Yakutia coal company After talks on acquiring Kolmar from the ONEXIM Group fell through, NMDC, India's state-owned mineral producer, has launched negotiations on purchasing a controlling stake in theYakut coal mining company Erchim-Tkhan from the En+ Group of Oleg Deripaska, owner and CEO of Basic Element. En+ has put the company up for sale because it wishes to focus on its coal projects in Tyva and Eastern Siberia. NMDC Chairman Rana Som has said that his company might buy a 45–70% stake in Yakutia’s OOO Erchim-Tkhan. RIBR


BUSINESS REPORT

Companies

in association with rossiyskaya gazeta, russia Wednesday, OCTOBER 12, 2011

energy

Investment Steel giant to set up 3 mn tonnes per annum plant in Karnataka with NMDC

Severstal high on India plan Alexei Mordashov, the CEO of Severstal, is upbeat about his $2 billion-a-year expansion plan and his project in India. Kirill Mikhailov

Fired by a burning ambition to be among the world’s five top steelmakers, Russian giant Severstal is now looking east towards emerging markets. India is the new promised land as Severstal and India’s state-run NMDC get ready to sign an agreement to set up a three million tonnes per annum steel plant in Karnataka. The two firms will sign a 50:50 JV agreement in December. Severstal CEO Alexei Mordashov has announced that investment in the project would reach $2 billion in the initial stages, with the original capacity of 2.5 million tonnes expandable to 5 million tones. Severstal, which used to focus its overseas expansion strategy on the developed markets in Europe and America, has now identified Russia, India, and Brazil as the most attractive locations for steelmaking.“We have selected India, a rapidly growing market complete with sources of raw materials and opportunities for vertical integration,”said Mordashov. The joint venture between the Russian and Indian firms, the first such partnership between the two countries, would produce auto grade and electrical steel to meet the rising demand for specialised steel products in the country, says NMDC chairman Rana Som. According

press photo

the moscow times

By 2016, Severstal aims to be among the world's top five steelmakers.

to NMDC, the Karnataka government has already allotted 2,500 acres of land to the company for the project. Interestingly, Mordashov, who is driving a $2 billion-ayear expansion programme at Severstal, is investing in new projects just as ArcelorMittal, the world’s largest steelmaker, is shutting down plants to weather a slump in demand. Russia's second-biggest steelmaker will double capacity at its Columbus plant in Mississippi when it starts a $505 million mill this

month. It also plans to bring $756 million of new output online at its Dearborn, Michigan, plant by the end of 2011, and complete a $600 million mini-mill in Balakovo, Russia, in 2013. Severstal has followed competitors in tapping emerging markets, where demand has outpaced expansion elsewhere. Besides the mammoth India project, the company also plans to spend $3.5 billion at the Putu Range in Liberia and $2 billion at the Amapa iron-ore project in Brazil.

As Severstal ramps up production, ArcelorMittal is cutting back to counter surplus capacity in Europe. The company idled plants in Luxembourg, France and Germany last month as orders from the European c o n s t r u c t i o n i n d u s t ry dropped amid economic stagnation. While ArcelorMittal and Severstal both sell steel in Europe and the United States, Severstal benefits from lower expenses at its Russian mills, where the average cost of steel-slab out-

"We believe we should follow the trend of the market and be more focused on Asia."

Industry Demand for titanium from aviation giants like Boeing and Airbus set to soar by 2014

Making it: Indian spins Titan-ium success story in Russia elena krovvidi ribr

Dr Jugendra Singh Raghav has always thrived on challenges. Managing director of Stork International, GmbH and Chairman of titanium alloys producer Uralredmet, his office bears the impress of multiple cultures and reflects a mind that straddles tradition and modernity with ease. There is an Egyptian painting on one wall and a symbolic picture of the American dollar-ruled business world on the other. And then there is a statue of Shiva on his desk - a vivid reminder that even for the head of a multinational corporation it’s important to remember who he is and where he came from. Raghav came to study to the PFUR (Peoples' Friendship University) in 1979. He recalls his student days with warmth and nostalgia. He was also impressed by hospitality towards foreigners, especially Indians, in the Soviet Union. “One of my first memories was sharing a large loaf of bread and butter with his three roommates. Students and staff were very friendly,”he says with a smile. “Also we Indians are used to drinking tea with milk and

in those years sometimes one couldn’t get milk in the shop. But I got a lot of support from students and staff at PFUR, and this friendly attitude helped me to overcome a lot of difficulties on my way,”he reminisces. After graduation, he got a PhD degree in agro-bioch e m i s t ry a n d p l ay e d around with the idea of staying at the university and teaching his favourite subjects. But it turned out destiny had a different trajectory for him. “In the 1980s a lot of Indian

"One of the challenges of the industry is that the titanium market is very volatile." companies were interested in Indian graduates to help promote Indian businesses in the Soviet Union. I worked with them for a while which helped me to get contacts of different Soviet enterprises.” Finally, he got a job at Uralredmet company. It wasn’t a good time for the titanium market.“The only hope for us at that time was to fix exports. Western companies often mistrusted Soviet enterprises for some reason, and in this way foreign businessmen like me served good acting as bridges between

both sides, and so we began supplying titanium ligatures to the USA, using modern equipment and new technologies,”recalls Raghav. One of the challenges of the industry is that the titanium market is very volatile and dependent on purchase orders, says Raghav, who has been now in the titanium business for over two decades. He believes in productive cooperation between private companies and the state, in which private enterprises conduct business rationally and pay attention to reducing expenses. This arrangement will work only when there is no shortage of purchase orders from the state. The partnership with VSMP-AVISMA corporation, the world's largest manufacturer of titanium ingots, therefore, proved to be beneficial to both parties. One of the key problems Russian titanium market faces is that there is no longer diversification as it used to be in the Soviet times when a company could get, for example, titan ligatures from Tajikistan and titanic iron-ore from the Ukraine, says Raghav. After the collapse of the Soviet Union production is in different countries and Russian titanium companies often have to buy raw materials from Sri-Lanka, Vietnam, Mozambique and other countries, resulting in delivery

WEBSITE of the embassy of the Russian Federation in India www.rusembassy.in

put is about $400 a tonne, compared with as much as $600 a tonne in Europe, said Dmitry Smolin, an analyst at UralSib Capital. Both steelmakers plan to boost investment in mining as they seek to avert rising raw-material costs. Severstal has snapped up iron-ore mines in Brazil and Liberia. “Because of very clear fundamentals, we believe we should follow the trend of the market and be more focused on Asia,” said Mordashov. Severstal may not be as resilient to market volatility as Mordashov's comments suggest, UralSib's Smolin said, citing decisions to backtrack on bullish investments in the past. "I have a strong 'deja vu' with September 2008 when Severstal last presented its strategy," Smolin said. "The company was then convincing investors of great prospects in the developed markets in Europe and the United States. Afterward, Severstal had to reshuffle its asset portfolio and is now presenting plans which may again be based on more bullish market fundamentals than the ones shared by its global rivals." By 2016, Severstal aims to be among the world's top five steelmakers by earnings before interest, tax, depreciation and amortization. "Of course, we can't predict the future," Mordashov said. "Investment activities could be significantly undermined in case of a negative development in the economic situation. But we don't see it yet."

Glonass navigation up and ready to go The successful launch of the 24th satellite into the orbit marks a turning point in operationalising Glonass, the alternative to GPS. Alina Lobzina

the moscow news

anton churochkin

Jugendra Singh Raghav, a Russia-educated businessman, has turned the volatile titanium business into a success story.

Dr Jugendra Singh Raghav.

problems and other kinds of issues. But Raghav is optimistic about surmounting these problems. One of his company’s priorities is developing the chlorum method because it guarantees good quality titanium and also is more ecofriendly than the sulfate method that is mostly used. But this depends to a large extent on the possibility of cooperating with big players in the titanium market such as DuPont and Crenex and their readiness to share the chlorum method technologies. But the future looks promising.“There is sufficient demand for titanium in the aviation industry from big corporations such as Boeing and Airbus,”he says.“At the moment there appears to be a slight delay in their purchase orders but we do expect more orders from Airbus 380 and Boeing Dreamliner in particular,”he says. “But I hope they will

sort it out by 2014 and the number of purchases will increase.” He is full of bright ideas for galvanizing the titanium business. First of all, he thinks the problem of dependency on raw materials should be addressed. And as he puts it his dream would be to have their own material basis for producing molybdenum, vanadium and other raw materials. A diehard optimist, Raghav is set for 2014 when the aviation industry’s demand for titanium is expected to go up. But it’s not just business ambitions that obsess him all the time. He loves his alma mater and is one of the organisers of the EDU project which provided financial support to students from Southwest Asia and African countries wishing to study in Russia.This is his way of saying thank you to an institution which he says proudly has made him what he is today.

Russia’s Glonass navigation system is poised to be operational. The new Glonass-M satellite was blasted into orbit from the Plesetsk space airfield soon after midnight (Oct 3) and joined the group of 23 navigation satellites in orbit, taking their number to 28. Four more satellites will join the navigation system by the end of the year, Information Satellite Systems “Reshetnev Company”, the spacecraft manufacturer, said. They are a part of the modernisation programme that begun in 2011 to bring the Soviet era system up-todate. The Russian navigation system now has all satellites it needs to become fully functional, and space experts promise to work on quality. The last of three Glonass-M satellites has been sent to the Baikonur cosmodrome in Kazakhstan for launch in the fourth quarter of 2011. A fourth satellite is currently undergoing electric tests. “Just two-three years ago, Glonass was able to pinpoint positioning to within 30-50 meters, today we are talking about 5-6 meters, and in twothree years, we will be able to do so within one meter,” Nikolai Testoyedov, chief design engineer at Reshetnev Company, told Rossiyskaya Gazeta.

Russia in the times of india India Every last Wednesday REPORT

Russia’s energy strategy has India, APR on radar Arun Mohanty Specially for RIBR

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ussia, the world’s second largest oil exporter and a natural energy super power, is now looking to the Asia-Pacific region and the fast-growing economy of India to diversify its hydrocarbon exports. Under Russia’s energy strategy covering the period upto 2030, the share of European market in energy export will steadily decline. The share of eastern energy market in Russian energy export of liquid hydrocarbons would grow from 6 to 25% while the share of natural gas export would grow to 20%. The European Union makes no secret of the fact that its increasing import dependence on Russia has to be kept within limits. The energy strategy stipulates that energy exports to AsiaPacific could reach 105 million tonnes. The strategy envisages that towards the end of projected period, oil and gas exp o rt s t o A s i a s h o u l d amount to one third and one sixth of the total crossborder supplies of these hydrocarbons respectively. While only 3% Russian energy exports goes to Asia at the moment, it would reach 30% by 2030. The plan includes building an oil pipeline linkingYurubchenko–Tokhomskoye oil and gas fields in Krasnoyarsky krai, and Talakanskoye andVerkechenskoye oil fields inYakutia with the existing oil pipeline that runs from West Siberia to Angarsk.The East SiberiaPacific region pipeline linking Taishet to Nakhodka would be one of the major transport channels for exporting Siberian oil to the Asia-Pacific region. India and Russia are special and privileged strategic partners, and one of the strong pillars of their strategic partnership is bilateral cooperation in the vital energy sector. Import, mostly from the volatile region of Middle East, account for 75% of India’s energy needs, and it is likely to grow to 85 to 90%. According to the International Energy Agency, India would be the third largest energy consumer in the world by 2025 after the US and China. Russia, India’s trusted strategic partner

for many decades, is destined to play a vital role in ensuring New Delhi’s energy security in coming decades. The former Soviet Union played a major role in bolstering India’s energy sector by building tens of hydropower stations, developing coal industry, finding oil in Indian soil and helping in setting up India’s energy major ONGC. Indo-Russian energy cooperation acquired new dimensions in the post-Soviet period. India has invested $2.8 billion in the Sakhalin energy project, controlling 20% stakes in the venture and has purchased Imperial Energy, a London-listed oil major in Tomk region. These are India’s largest investments abroad. Nord Imperial, a subsiadiry of Imperial Energy, has been among the companies that submitted applications to bid for developing Russia’s Trebs and Titov oil deposits in the Arctic. India has been eying energy projects at Timon Pechora basin and Vancour in the East Siberia. It is also considering an option to invest $1. 5 billion to $1.7 billion used for an opportunity inYamal pen-

Under new strategy, Russia's energy exports to Asia will go up from 3% to 30% by 2030. insula that houses one-fifth of global natural gas reserves, offered by Russian firm Navatek. ONGC, GAIL, and Petronet LNG Ltd. are among leading India's state-owned companies keen to invest in Russia. GAIL plans to invest Rs 7000-8000 crore in Yamal-Nanets region and has the option to market the LNG or even bring back to India. Novatek has a 51% stake in OAO Yamal LNG, which has the licence for exploration and development of the South Tambeyskoye field located in the northeast of theYamal peninsula. The Russian energy strategy towards the Asia-Pacific region clearly mentions India as one of the important target countries along with Japan, China, and Korea. India has to carefully take note of Russia’s hydrocarbon vision, particularly towards the Asia-Pacific region, if it wants to have a strong presence in Russia’s massive energy sector.

More power to trade with Asia The Russian-Singaporean Business Forum has pitched for closer trade and integration between Russia and Asian countries.

“In this regard, a deeper cooperation between Russia and Asia is totally natural, because to maintain the growth rates that we see now, Asia badly needs raw matenikita dulnev rials. Russia is ready to supriBr ply those resources,” he What should be Russia’s pointed out. place in the future global Russia can safely bet on the construction of new and economic order? This question was on the modern oil refineries, the agenda of the 6th Russian- production of alternative enSingaporean Business ergy, and infrastructure upForum, which took place in grades, said participants. It should simultaneously crelate September. Anton Rakhmanov, manag- ate transparent conditions ing director of CJSC Troika for doing business and invest Dialog, told ITAR-TASS that in human capital. in the context of the current Turning Russia into a key regrowth slowdown in mature gional financial center was economies,“the natural re- among important ideas that sponse is to increase as much emerged from the forum. as possible foreign trade and Russia has become much mutual integration between more active in the Asian Russia and Asian countries.” markets in recent years.

r 26 Octobe

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BUSINESS REPORT

Opinion

in association with rossiyskaya gazeta, russia Wednesday, OCTOBER 12 2011

RIC: How to evolve into An Asian Trading Region Samir Saran Nandan Unnikrishnan

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t a recent interaction in Moscow with scholars and editors, there was an interesting discussion on finding ways to significantly increase the economic interaction between Russia and India and, more specifically, change the nature of the G2G-driven bilateral trade. We suggested that for a paradigm shift in our trade volumes (less than $ 10 bn currently), the two countries would need to work for an Asian Trading Region shaped and steered by Russia, India and China. Until then, Russia and India would remain prisoners of perceptions and perceived geographical distance. We argue that the only sensible architecture would need to be fundamentally driven by and emerge out of the RIC arrangement. Even though the RIC was conceptualised as a club of the Big 3 in Asia and had more political overtones than economic reality, the vocabulary of cooperation emanating from previous RIC forum allows enough leeway to work towards the formation of an Asian Economic Zone beginning with an Asian Trading Region, largely driven by Russia, India and China. The then Russian Prime Minister Evgeny Primakov first voiced the idea of a RussiaIndia-China (RIC) Trilateral Forum publicly in December 1998. It was believed to be driven by a desire to create a countervailing influence to the US. In the 1990s, the motivations driving the three countries in the RIC, however, changed. If Primakov’s fear in 1998 was a hegemonic US, by

2005, Russia was more concerned about China and its possible duopoly with the US - the G2 scenario. Therefore, Russia was keen to support multilateral initiatives,which involved China, but kept the US out. RIC fitted the bill perfectly. It was also the age of clublateralism and therefore the RIC was an opportunity for India to get into an influential circle. Today, a multi-polar or polycentric world is emerging. China has emerged as an alternate power centre and no longer requires props like the RIC. Similarly, Russia is now less nervous about the emergence of a G-2. It is enjoying

the“reset”in its relations with the US and has become a little more wary about China’s spectacular rise in stature. Moscow, like New Delhi, also realises that its efforts to restructure and modernise its economy will succeed only if it is able to convince the West to buy into this effort. While China-India trade is at historic highs (at over $ 60 billion), India is also focusing on developing its ties with the US and the EU. RIC appears stymied by the proliferation of groupings like the SCO, BRIC, and BASIC and does not as yet offer a unique‘agenda’ to differentiate it. And most importantly, the three

countries consider the US much more important than any other bilateral or multilateral relationship. Therefore, the“glue”that held the RIC together is drying up. Is RIC now irrelevant? Is it time to bury this body? The answer has to be an unequivocal “NO”. So can regional trade and economics be that ‘glue’? Russia and India have recognised the arrival of the yuan as a global currency and it is likely that in the coming months, India also decides to denominate some of its reserves in yuan. Russia is already engaged in yuan-based trade. That over $130 billion of trade takes place among

the three countries also places weight of volume behind the grouping. Irrespective of political ambitions and differences, RIC appears to be the only format, which can help to create a truly AsianTrading Region. The contiguous land mass, the size of the three economies and the growing levels of consumption provide a basis to make this trading region viable and worth investing in. The energy and transport corridors may be the place to start.Would India consider providing access to the Indian Ocean to China? And through China for Russia? Would it be beneficial to open land and pipeline routes

to Central Asia and Russia through China? Would these not create mutual dependencies between the two countries that would offset some of the key imbalances that exist today? India helps de-risk China its current hydrocarbon and trade flows through the Indian Ocean,while China offers alternatives to routes that would require India to traverse Afghanistan and Pakistan. At the opportune time,can Russia and China be a part of the IPI and TAPI? Can China extend pipelines from Central Asia and Russia to India? The participation of the three countries in these pan-continent pipelines also reduces the political risk. The biggest gainer would, however, be Russia. They would have a market for their resources outside of the EU and China.Without a cooperative arrangement or transport infrastructure, large volumes of Russian resources may have only one buyer China. Russia and China have already established significant cooperation in the area of energy. It is time that India becomes a part of this equation and the three countries start the process of developing an Asian Gas Grid.The first steps could be modest.Russia could ship some of its piped gas landing in China through the Chinese eastern board to India, a step both symbolic and political and a harbinger of Asian trilateral trade. Over the years, it could result in the grid that a former Indian petroleum minister strongly advocated and a gas market in the region that could evolve its own price and commercial dynamics. The next stage could be jointly owned SEZs in Russia’s Far East with each of the countries within the SEZ enjoying privileges of the home country.This could also be the experiment to test the free movement of men, material and ideas across Asia. Samir Saran and Nandan Unnikrishnan are vice presidents at the Observer Research Foundation, New Delhi.

Syria Veto: Avoiding Libya 'crusade'? Roland Oliphant

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ussia supported new UN sanctions on Iran. It abstained from a vote on a Libya nofly zone. And it firmly vetoed a Western-backed condemnation of the Syrian government's crackdown on protesters. Moscow's decision to exercise its veto in the UN Security Council has angered Washington and its allies and raised questions about whether the Kremlin was adopting a tougher foreign policy in the months before a presidential election expected to be won by Prime Minister Vladimir Putin. But analysts say that Russia's seemingly hardening stance

on UN resolutions targeting its allies — who incidentally are also major buyers of Russian weapons — signalled a return to a well-established Kremlin line. In Moscow, the Foreign Ministry countered criticism over its Syria veto by announcing that it would host two Syrian opposition delegations this month and condemning President Bashar Assad's crackdown as "unacceptable." The ministry also repeated its earlier criticism of Western powers for using Russia's abstention on the Libya no-fly zone to launch airstrikes that helped overthrow leader Muammar Gaddafi's government. "We have warned from the beginning that efforts to turn what happened with the UN resolution on Libya into a

model for action by Western coalitions — NATO — is absolutely unacceptable," said ministry spokesman Alexander Lukashevich. He insisted that Russia had not become an "advocate" for the Assad regime, saying Russia's misgivings about the Europeandrafted resolution on Syria had been "repeatedly ignored." Russia and China both used their Security Council vetoes to block adoption of the resolution proposed by Britain, France, Germany and Portugal, saying it was“one sided” and smacked of an“ultimatum.”The European countries responded that they had done everything possible to come up with a draft acceptable to Russia, including removing all references to sanctions, ruling out the

use of military force and calling instead on "all sides" to reject violence. Kremlin spokesman Alexei Pavlov reiterated concerns voiced by UN ambassadorVitaly Churkin that the Syria resolution was “based on a philosophy of confrontation” and failed to urge the country's opposition to disassociate itself from “extremists” and start negotiations. Analysts said Russia was following its normal foreign policy line after the "strange and untypical" decision to abstain from the vote on Libya. "What Russia did in Libya was an exception," said Fyodor Lukyanov,editor-in-chief of the Russia in Global Affairs magazine. "After they saw how quickly the no-fly zone turned into full-scale military action, they returned very

firmly to the line of avoiding anything that could lead to unintended consequences." Russia and China both abstained from the March 17 vote on Resolution 1973, which paved the way for military action against Libya. Putin quickly accused NATO of using the abstention to launch a "crusade" in Libya, eliciting a sharp rebuke from President Dmitry Medvedev, and sparked speculation of a rift between the two. There were strong reasons for Russia's reluctance to back a regime change in Syria, said Timofei Bordachyov, director of the Center for Comparative European and International Studies at the Higher School of Economics. "Russia's relationship with Assad's Syria is much closer than its relationship with Libya under Gadd-

afi was," he said.Among other things, Syria hosts Russia's only naval base in the Mediterranean — and it’s the only one outside the former Soviet Union — at the port of Tartus. And there are also strong financial links. The Russian embassy in Damascus reported exports to Syria worth $1.1 billion in 2010 and investment in the country valued at $19.4 billion in 2009. According to data from Moscow Defense Brief,Russia has more than $4 billion in active arms contracts with Syria, including for MiG-29 fighters, Pantsir surface-to-air missiles,artillery systems and anti-tank weaponry. Roland Oliphant is Russia Profile magazine political analyst.

Why investors should cheer Putin presidency

P

rime Minister Vladimir Putin's announcement on September 24 that he would run for the presidency in 2012 has sparked new worries about the fate of Russia’s democracy and civil society, since Putin is all but certain to return to the Kremlin for a sixyear term, and possibly another six-year term after that. But a third presidential term for Putin is far from all doom and gloom. Here are five reasons for foreign investors to cheer Putin’s announcement at the United Russia convention and his remarks a day earlier at the same event. 1.The end of uncertainty.The lack of clarity from Putin and President Dmitry Medvedev on who might run has bewildered investors for months, if not years. Repeated promises of a continuation of current policy clashed with what seemed to be conflicting statements from Putin and Medvedev about domestic political reforms, foreign policy and the tricky subject of who would run for president.With just five months left until the election, the 2012 riddle looked positively embarrassing, especially in contrast to a developed democracy like the US where opposition hopefuls are already jostling to take on President Barack Obama more than a year before the vote. 2.The US-Russia“reset”will continue. While Medvedev and his more liberal policies have been credited widely with improving ties with Washington, it is now clear that it was Putin who was behind engineering the reset. The economic reset already appears to be bearing fruit, with an agreement for Russia’s entry into the World Trade Organization just around the corner. A reset of sorts has also taken place with the European Union, and there is reason to expect economic relations to continue to flourish during a Putin presidency. 3. Stability. If Putin has proved anything during his 11 years in power, it is that he is a strong leader interested in bringing stability to Russia. However, his means of ushering in stability and maintaining it have bred corruption and raised worries about the state of democracy. But at the same time, the investment climate has markedly improved from the chaotic 1990s, with, among other things, the passage of key legislation and regulations that allow investors to work within an understandable — if often violated — legal framework, a demonstrably greater effort by the authorities to act on investors’ concerns, and a steady increase in the standard of living that has led to growing consumer demand. Predictability is an important part of stability, and Putin is reliably conservative on political and security issues, and

Jai Ho! Forget New York twang, get New Delhi 'desi' drawl Rakesh Krishnan Simha specially for riBr

W

eb 2.0 is the one millionth word in the English language. According to the Global Language Monitor in Texas, US, the word refers to the second generation of the World Wide Web. For a word to officially enter the lexicon, it has to be used in books or on the internet 25,000 times. However, not many know the Hindi word ‘Jai Ho’ (Be Victorious) is the 999,999th word.

English is the language that Shakespeare used and George W. Bush abused. Now Indians are giving it their own flavour. Professor David Crystal,a top linguist, says people will effectively have to learn two varieties of the language – one spoken in their home country, and a new kind of Standard English which can be internationally understood. The English spoken in countries with rapidly-booming economies, such as India, will increasingly influence this global standard, he says. “In future, users of global Standard English might re-

place the British English. I think it's going to rain with the Indian English,” argues Crystal, the honorary professor of linguistics at the University of Wales, Bangor. “In language, numbers count. There are more people speaking English in India than in the rest of the native Englishspeaking world combined. Even now, if you ring a call centre, often it's an Indian voice you hear at the end of the phone.As the Indian economy grows, so will the influence of Indian English,” he says. “There, people tend to use the

present continuous where we would use the present simple. For example,where we would say: ‘I think, I feel, I see,’ a speaker of Indian English might say:‘I am thinking, I am feeling, I am seeing’.This way of speaking could easily become a part of global Standard English.” The sheer weight of numbers is moving the odds in India's favour.At least 600 million Indians are able to read and write English. Fuelled by a throbbing economy and a rapidly growing higher education sector (where the medium of discourse is largely

English), a bold new dialect is taking shape in India, giving tough competition to the ‘proper’British. For this growing Indian English dialect, or Hinglish, as it is sometimes called, to find acceptance by the rest of the world, India first has to become a world player. According to Julian Assange, Indians form the largest group of financial contributors to Wikipedia; daily texting exceeds the numbers in the UK and US; 2.5 billion people watch Indian movies compared with 1.5 billion who prefer Hollywood (Mithun

Chakraborty’s popularity among Russian baby boomers remains unchallenged) and Indian movies are increasingly catering to an international market. India is a linguistic bridge between the major first-lan-

guage dialects of the world, such as British and American English, and the major foreign-language varieties, such as those emerging in China and Japan. China is the closest competitor for the English-speaking record with

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.

patriotic and fairly pro-business on economic issues. 4. TheYukos takeover won’t be revisited. Many investors have long ago stopped fretting over the merits of the state’s legal assault on former Yukos CEO Mikhail Khodorkovsky and its takeover of his Yukos oil company. But worries have persisted that the scandal might be revisited and the assets might be redistributed again.A Putin presidency promises to lay lingering investor’s jitters to rest. The assets that were seized from Yukos and awarded to state-owned Rosneft will stay put. One wonders in retrospect whether Putin gave U.S. energy giant ExxonMobil a heads-up on his plan to return to the Kremlin when he blessed its multibillion-dollar deal with Rosneft on Aug. 30. The agreement gives legitimacy to Rosneft, and by extension to Putin, in its ownership of formerYukos assets. 5. Better investment climate. Pundits are debating whether Medvedev would make a better prime minister or,perhaps, chief justice in the Constitutional Court or State Duma

A Putin presidency should assure investors that the Yukos takeover won't be revisited.

In power for 11 years, Putin has proved that he is a strong leader who brought stability to Russia. speaker. But no matter where Medvedev lands,investors can hope that he will be in a position to push ahead with the modernisation, anti-corruption agenda that was the hallmark of his presidency. Putin is set to carry on with this mission.“We must speak openly about the dependence of our economy on raw materials, about the dangerous level of social inequality,violence,corruption, about the feeling of injustice and vulnerability that people feel when they are dealing with government bodies, courts and law enforcement,”Putin said.“All this,unfortunately, continues,” he said.“We can and must overcome these problems.” We may never know whether the Medvedev presidency was little more than a charade. But it’s now obvious that Putin deserves to sit in the Kremlin.He has always called the shots and made the decisions, and the only place for the CEO of Russia is in the CEO’s office overlooking Red Square. Originally published in The Moscow Times.

some 220 million speakers of English, but China does not have the English linguistic environment seen in India. Plus, there is history. Every Indian knows about the massive British loot (again, a Hindi word) from India, but less well-known is the large number of words from Indian languages that entered English. A small selection: Atoll, avatar,bandana,bangle,bungalow, cash, cot, cummerbund, dinghy, guru, jackfruit, jute,karma,khaki,mongoose, juggernaut, jungle, loot, mango, mugger, pajamas, polo,pundit,sentry,shampoo, swastika. In the 21st century, it seems certain that the New Delhi drawl rather than the New York twang will be rolling off people’s tongues. Rakesh Krishnan Simha is a New Zealand-based writer.


BUSINESS REPORT

Heritage

in association with rossiyskaya gazeta, russia Wednesday, OCTOBER 12, 2011

Architecture Brainchild of Stalin, Gothic buildings looms high

Three of the seven skyscrapers: Hotel Ukraina (right), the Ministry of Foreign Affairs (to the left of the hotel), the building on Kudrinskaya Square (extreme left). geo photo

Seven Sisters, emblems of Soviet grandeur, light up Moscow skyline rir

From time to time, the Soviet man, raised in the spirit of atheism, needed messages from on high. Fortunately, he had the inspirational Pioneer camp Artek in the Crimea, the Exhibition of Economic Achievements in Moscow, and the famous Moscow Metro — heralds of the communist paradise on earth, which would arrive one fine day, despite all the burdens of grey socialist work days. Soon after the end of World War II, in defiance of all doubters, a grandiose new architectural project was launched. Joseph Stalin,“the father and friend of all Soviet architects” as he was called at their All-Union Congress in 1946, embarked on a colossal construction project designed to convince the Soviet people and the whole world of the victorious Soviet power’s increased selfawareness. In early 1947, the Council of Ministers adopted a resolution for the construction of seven“skyscrapers”.On September 7, that same year, during the celebration of Moscow’s 800th anniversary, at exactly 1:00 pm, the first stone was laid in a special ceremony. The first Moscow skyscraper was completed in 1949, followed every three-five years by another (all but one of the remaining six). Later known as the “seven sisters”, these buildings became famous as monuments of “StalinistGothic” and the defining symbols of Moscow: Moscow State University (240 m.) on Sparrow Hills remained the tallest building in Europe until completion of the Exhibition Center at Frankfurton-Main in 1990; the Foreign Ministry; the Ministry of Transportation; two residential buildings; the Hotel Ukraine; and the youngest of the sisters, the Hotel Leningrad (135 m.). In the post-war period, these symbols of a new era, glowing with magnificence, seemed like fantastic emblems of triumph and beacons of a resurgent country proclaiming its greatness to the world. “We can!”That was their architectural slogan, trumpeted from a coun-

The skyscrapers: height and number of floors.

An oasis of opulence, Hotel Ukraina is reborn Hotel Ukraina, once the largest hotel in Europe, has re-opened after renovations. The iconic hotel is set for its 55th birthday bash in 2012. Alyona Tveritina riBr

For Muscovites, Hotel Ukraina has always been special. Unlike the closed ministries and residential buildings with their concierges, this hotel was open to anyone who wanted to walk in and admire panoramic views of Moscow. Legendary cosmonaut Yuri Gagarin fell in love with Ukraina since he first strolled into its lobby in 1961. There used to be an observation deck on the 29th floor. Today, it is gone, but on the very top floors, you will now find several fashionable restaurants popular with Moscow’s most fastidious diners. Used to lavish praise, the Ukraina, when it opened in 1957, was the largest hotel not only in the USSR, but

also Europe. And to this day, it is considered Moscow’s tallest hotel. The spectacular views begin unexpectedly on the very first floor. Without leaving the main lobby, one can see the gleaming golden domes of the Kremlin churches and tourists sailing up and down the Moscow river on river

Moscow's tallest hotel has been refurbished. It is now owned by the Rezidor group. boats. This landscape, embracing the very center of the city was immortalised in 1977 when it was recreated as a diorama. The three-year renovation followed a change in management: the Ukraina now belongs to the Rezidor group and operates under the Radisson Royal brand. The hotel’s layout and interiors have changed, although the old trimmings made of nat-

ural and traditional materials remain — marble, Karelian birch, onyx. The number of rooms has decreased, however, from the record 1000 plus. Still, the charm of old Moscow remains, set off by the boutiques featuring luxury brands. Massive crystal chandeliers adorn the lobby. The spirit of the Stalinist era is unobtrusively palpable everywhere. In the green glass lampshades and the hush in the library where, next to volumes of Marx and Engels, stand state-of-theart notebooks for hotel guests. Paintings by Soviet artists hang on the walls of the corridors, halls and rooms. The Ukraina owns some 1200 paintings, the most famous by Russian artists Vasily Polenov, and Alexander Deineka.“Many of our foreign guests have expressed a desire to buy these paintings,”said Natalia Kalinina, who has worked with the Ukraina’s management for more than 30 years.

THE numbers

206 1200 10 itar-tass

Tino Kyuntsel

try that lay in ruins, a country faint from hunger, a country most of whose residents still had to live in cramped communal apartments. The supervision of the skyscrapers’ construction was initially entrusted to the notorious KGB chief Lavrenty Beria (who would be executed in 1953). Beria was also in-charge of creating a Soviet atomic bomb. Thousands of prisoners from the Gulag and German prisoners of war helped in constructing these towering high-rises. A different technique was used for every building to stabilise the ground under the foundation. The costs didn’t matter. Around 2.6 billion Soviet rubles were spent on Moscow State University alone. At current exchange rates, it would amount to around $650 million, more than two billion rubles set aside to rebuild the war-ravaged Stalingrad from 1946 to 1950. Roughly the same amount was spent on the construction of the other six “sisters”. These monumental skyscrapers built in the style of neoclassicism surround the center of the city like a fortress wall. All were built according to one stylistic conception: a dominating central tower which, like an Aztec pyramid, narrows in stair-like stages to the top, and is flanked, in a more or less strict order, by wings. The plan of the buildings may vary, as may the lavish decorations of the towers, the statues and bas-reliefs. Each skyscraper represents a set of architectural quotations and borrowings from various styles and tendencies, from the Renaissance and baroque to Russian church architecture. Clearly, Stalin’s tastes, known for his preference for Gothic, loomed large in the minds of architects. They didn’t always manage to please him: the Foreign Ministry was not originally designed with a spire, but the dictator insisted. So as not to violate the building’s statics, a special light-weight construction had to be perched on top with supports descending five floors made the same color as the skyscraper. After Stalin’s death in 1953, the architects asked the new General Secretary, Nikita Khrushchev, for permission to undo this Stalinist act of despotism. But Khrushchev refused. He wanted the spire

alamy/legion media

Built by Stalin as emblems of victory and symbols of a new era, the seven colossal skyscrapers still stand out amid new high-rises.

Moscow State University on Sparrow Hills (left picture); the Ukraina hotel interior (right).

on the Foreign Ministry to remain as a “monument to Stalin’s stupidity”. Contemporaries were immediately struck by the resemblance of these Stalinist-Gothic monuments to certain American precursors, such as the Manhattan Municipal Building completed in 1914. Given this resemblance, it was hard to make the necessary ideological case. A dialectical explanation was required here: capitalist temples of trade were studied in detail and used as a foundation, the object being to give them a completely new

meaning. The shape of the Municipal Building in New York City was determined by the high price of land; this in turn deprived many of the apartments of natural daylight since they face a dark inner courtyard. Needless to say, the Soviet man, standing at the head of all city-planning projects, deserved better. Stalin’s death marked an end to the principle that “the eye should delight” as quickly as the “father and friend of all architects”had disposed of the Soviet avant-garde in the 1930s. Khrushchev declared war

on Stalinist extremes in city planning. Now everything would be sacrificed to functional understatement. Rapid construction of mass housing had begun, leading to many city dwellers getting separate apartments for the first time in their lives. In the Russian mind, however, Stalinist skyscrapers still equal quality, while Khrushchev’s matchboxsize apartments equal quantity. The construction of the Stalinist-Gothic skyscrapers was completed under Khrushchev. But the most impressive skyscraper of all

meters is the height of the Ukraina hotel, including the 73-meter-long spire. The total area building is more than 88 thousand square meters.

paintings hung on the walls of the corridors, halls and rooms. The most famous are by Vasily Polenov and Alexander Deineka.

meters is the diameter of a unique decorated ceiling with the name 'Celebration of Labor and the Harvest in Hospitable Ukraine'.

(number eight), which was supposed to be located next to Red Square and soar up to 275 meters, was buried. Instead, on the foundation of this would-be administrative building, the Rossiya was built, the largest hotel in Europe. Fate was not kind either to the classical model of“Stalinist Empire”architecture: the Palace of the Soviets.The construction of this 420-m tower to be crowned with a 100-m statue of Lenin was suspended d u r i n g t h e wa r. W h e n Khrushchev learned how much it would cost to complete the construction, he

supposedly said: “Better build chemical combines instead.”In place of the Palace, an enormous outdoor heated swimming pool was built. In the 1990s, the pool was replaced by the Cathedral of Christ the Savior. (The original cathedral had been pulled down by Stalin in 1931.) Today, the “seven sisters” have somewhat lost their old lustre. In the two residential buildings the elevator breaks from time to time while the residents, members of the intelligentsia in the first case, pilots and cosmonauts in the second, must

make their peace with the fact that their new neighbors are hardly high society. The central building at Moscow State University with its marble staircases and rich interior furnishings and special aura remains very grand, but many of the rooms in the dormitory badly need repair. The hotels have managed best to adapt to the postSoviet era. Opened in 1954, the Hotel Leningrad with its view of Moscow’s three train stations was revamped in 2006-2009. Today, it is a five-star hotel managed by the Hilton chain.

Oct 2011, Russia&India Business Report  
Oct 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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