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BUSINESS REPORT

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

WEDNESDAY, MARCH 14, 2012

Elections A majority of voters felt confidence in his personal record that ensures their well-being and the power of country

NEWS IN BRIEF

Decoding Putin's second coming Vladimir Putin's victory in the presidential poll was a foregone conclusion. But the jury is still out on what makes him tick? VLADIMIR BABKIN RIBR

China is reportedly to begin extending loans in yuan to BRICS countries in another step towards internationalising the national currency and diversifying from the US dollar.The Chinese Development Bank wants to sign a memorandum of understanding with the country's partners from BRICS group of developing countries on increasing yuan-denominated loans, while partners increase loans in their national currencies, a financial newspaper reports, citing people familiar with the talks. The move aims to increase trade volumes between the five emerging economies. RIBR

United Russia party. On the night after the end of the poll, the authorities brought tens of thousands of people on to the streets to celebrate Putin’s victory. The opposition, however, has a different take. On March 5, the losers agreed to check the minutes of the voting returns at ten polling stations in Moscow. Numerous violations were reported throughout the day on the Internet and discussed by Russian voters. LDPR leader Zhirinovsky is sure that fraud can be proved and then “we will say that we do not recognise these elections.” Agrees high-profile protest leader Alexei Navalny: “What will take place is not an election, and we must demand free elections to the State Duma within a year and free presidential elections within two years,” he said in an interview with RBC Daily. Shortly after the election, the opposition before the elections, the promised to bring out upto Right Cause, a liberal party, half a million protesters in spoke out in support of Putin. Moscow and about 200,000 “We see that he has taken on in St Petersburg. But the protesters are unboard all the main initiatives of [our] party aimed at eco- likely to achieve their goals. nomic and political liberali- In addition to substantial sation,” it argued. The so- electoral support, Putin has called anti-establishment the wherewithal to keep his opposition has also agreed to campaign promises.Accordcooperate with the authori- ing to Sberbank experts, with ties. Another important fac- the price of oil at $95 per bartor that worked in Putin’s fa- rel, millions of Russians will vour was the absence of a get wage and pension rises promised by Putin without strong opponent. “In terms of the arrange- straining the state budget. If ments for monitoring the he gave promises and kept voting process, the elections them, let him rule, people of the Russian president on would think.They will prob4th March can be a model for ably be in the majority, other countries to emulate,” though not as overwhelming says Andrei Isayev, an offi- a majority as the official eleccial of the pro-government tion returns show.

Vikramaditya sea trials to begin on May 29 Sea trials of the aircraft carrier will begin on May 29 and will be carried out in the Barents Sea for 2-3 weeks. Then the trials of the vessel’s aircraft complexes will be held over the period of 3.5 months.The former Russian aircraft cruiser Admiral Gorshkov – now calledVikramaditya – will be passed to the Indian Navy on December 4, 2012. The contract for modernisation of aircraft-carrying cruiser Admiral Gorshkov for Indian Navy was sealed in 2004. Other major deliveries of naval equipment to India include the delivery of two Talwar class frigates and a modernised Kilo class diesel electric submarine. ARMS-TASS

REUTERS/VOSTOCK-PHOTO

Vladimir Putin has done it again. Not that there was ever a grain of doubt that he will return to reclaim the Kremlin. After the controversial victory of the ruling United Russia party in the parliamentary elections in December 2011, followed by mass protests, there was a sense that Putin would have to assert his right to rule the country in a second round of voting.Yet, barely a month ahead of the presidential election, all the opinion surveys, including those conducted by pollsters who could hardly be suspected of being pro-government, predicted a comfortable victory for Putin on 4th March. And thus on March 4, when Putin won the elections with an overwhelming majority, the sense of history was unmistakable. Speaking from Manezhnaya Square, the famous site in Moscow loaded with nationalist passions, Putin appeared emotionally shaken, tears streaming down his face, thanking the Russian people for reposing faith in him.There was emotion, drama and passion in his victory speech, giving some clue to what makes him resonate with Russians despite allegations of despotism. In the run upto the election, one might have thought that Putin’s rating was growing solely owing to the powerful administrative re-

China planning yuan loans to BRICS: Report

Vladimir Putin declaring victory late Sunday, on March 4, before thousands of supporters on Manezh Square in Moscow.

source of his campaign. Valery Fyodorov, the head of the All-Russian Center of Public Opinion Studies, said diplomatically that the voters were swayed by“the candidate’s communicative policy.” Indeed, the media widely covered the prime minister’s “working trips”, most of which looked very much like campaign rallies, published his long programme articles and showed films about his services to his country. Opponents claim that Putin’s campaign headquarters and the media were presenting campaign materials in the guise of news programmes. But a vigorous campaign alone does not explain Pu-

tin’s victory.A key factor was probably the confidence felt by the majority of voters in the leader’s character, his personal record that ensures their improved well-being and the country’s power. People had made up their minds about him long before the election campaign. “Putin has not only been in power for many years, but also for many years been proving his effectiveness, and that is the main criterion by which voters judge a politician,” opines Director of the Public Opinion fund Alexander Oslon. “More and more people note his dynamism, growing competence and lack of bad habits. But what struck me most was

that 50% of the population were unwilling or unable to find any faults with him at all,” says Andrei Milekhin, president of the Romir research outfit, on the result of a recent opinion poll.“During Putin’s time, my wife and I have raised four children, they have all got university degrees, we all have our own homes. And we have nine grandchildren,”writes a man who calls himself Serdjio, commenting on another proPutin article on Izvestia’s website. Such naïve and laudatory, but sincere comments outnumber critical chatter on the Web. Some of his recent opponents also presented Putin with electoral gifts. Shortly

Severstal eyes mid-sized steel-makers in India Severstal, Russia's second-largest steel producer, is scouting around for potential acquisitions in India with a focus on midsized steel makers, one of the firm's top executives told Reuters. Speaking on the sidelines of a Handelsblatt steel conference, ThomasVeraszto, senior vice president for strategy and corporate development, said steel assets had become more attractive following the recent cyclical downturn in the sector. "In India we don't expect any major mergers and acquisitions. What we are looking at is potential acquisition of targets in mid-tier players who are already in the industry but who are limited in scale," he said. RIBR

INTERVIEW VLADIMIR FINOV

Mahindra & Mahindra plans plant in Russia

'India can be a driver of GLONASS in the world'

Indian automaker Mahindra & Mahindra plans to open a plant in Russia with the support of a distributor of its subsidiary company SsangYong.The project will be realised within two years; it is not known yet what car models will be manufactured there.“Our negotiations with the Russian distributor of SsangYong (Sollers Company) on the assembly of Mahindra cars are at the very beginning now, we are deciding what cars will be assembled in Russia,” said Pawan Goyenko, president of the company. “Now it is too early to say anything, but it may take us two years,” he said. RIBR

FROM TRAFFIC MANAGEMENT AND NAVIGATION TO TELEMATICS, THE INDIAN MARKET IS GROWING

In what way is India benefiting from GLONASS? The first is government to government relations; that is regarding the launch of GLONASS satellites and getting access to the military signal of GLONASS.Another cooperation is in making commercial usage of GLONASS signals for India and its people. This includes the development of the telematics business, the utilisation of GLONASS signals from receivers and other technologies developed in Russia. What are the main verticals that GLONASS is focussing on in India? Right now, the Indian government is quite active in the

implementation of ITS, Intelligent Transport Systems, in various cities of India including Delhi, Mumbai, Bangalore and Chandigarh. At GLONASS, we are looking at working on the passenger transport system and passenger information system for buses, including intercity buses. Another vertical is infrastructure development for companies that have heavy machineries outside cities in very remote areas, where the machinery needs to be managed properly. Another very big, but unorganised sector, is logistics companies. Transportation and logistics companies, many of which are small and medium enterprises, have trucks and fleets of their own but don’t have the ability to efficiently manage them. Would an ordinary passenger on a local bus in India benefit from this system or are we mainly looking at it from the point of view of the authorities that run the buses? This is mainly used between the control room and the drivers so that the buses are always going on time and not bypassing stops, but passengers would also receive information about when the

next bus would come to the stop. They should be able to see that information in the bus stops and can even see this information on their mobile phones. This kind of service is already available in Russia and is in the stage of pilot implementation in Mumbai. Is there any plan for the Indian Railways? The Indian Railways is starting to implement GPS-based LED boards for coaches, which again will provide some kind of information about when the train will come to the station. Some projects are also going on in the development of anti-collision systems for the railways, where locomotives can be tracked on the basis of GPS again. We have already developed and implemented a train management system in Russia. We offered the Indian Railways this solution. But so far, my experience has been that the Indian Railways and they tend to adopt new technologies quite slowly. I don’t mean this is as a criticism, but in passing through applications, approvals, trials, before the technology will be implemented, it may take up to

three years.We do have a solution, which we are happy to offer. How else would India benefit by using GLONASS technology vis-a-vis GPS for instance? Glonass is implementing all the applications that GPS has and at GLONASS, we are offering a dual system GLONASS-GPS. All applications that use GPS can be replaced with GPS-GLONASS. Would using GLONASS prove more economical for India? Economically, there is not much of a difference. We are not saying that it will be less expensive, but we will be able to provide greater reliability, accuracy and security. What are the opportunities and challenges that GLONASS sees in India? To some extent, chaotic traffic is not an obstacle and is actually a reason for implementing ITS systems. The biggest challenge is the competition from low-cost manufacturers who don’t care about the quality or reliability of the product, but prefer to complete only on the price level. They are flooding the

Russia, India to jointly restore Roerich museum ITAR-TASS

Most foreign investors in India complain about poor infrastructure and chaotic traffic but NIS GLONASS, Russia’s national navigation services provider, sees it as an opportunity. It was the lead sponsor for the IntelligentTransport Systems India conference recently held in Delhi.Vladimir Finov, Managing Director and CEO of NIS GLONASS India Operations, shares his insights on the company’s prospects in the Indian market.

Vladimir Finov, Managing Director and CEO of NIS GLONASS’ India operations (inset). Proton-M carrier rocket with DM booster and three Glonass satellites.

market with cheap, unreliable products that are ruining the market. That’s an area that we don’t want to enter. We are not going to compete on price. We are going to compete on quality of service and support and feature-wise. What about GLONASS participation in the Intelligent Transport Systems India conference? Many public transportation corporations participated in the conference, including those of Delhi, Bangalore. They shared their experiences in implementing these pilot projects. We presented our solutions, which are well-proven in Russia and were implemented in Moscow and other cities and some pilot projects in India.

Where do you see GLONASS’ India operations in the next few years? We are speaking about solutions for traffic management, navigation and telematics on the basis of GLONASS and GPS together. The GLONASS signal is very much promoted and developed all over the world. Apple iPhone already has GLONASS support. Sony Ericcson, Nokia and others have plans to implement GLONASS in their smartphones this year. So this technology is becoming acceptable worldwide. India has a choice: either be on the backseat or be a driver of this technology in the world, outside Russia. Prepared by Ajay Kamalakaran

© RIA NOVOSTI

The International Roerich Memorial Trust (IRMT) executive committee in Shimla has decided to start urgent joint repair and restoration work with India on the Roerich family house museum in the Kullu Valley, Sergei Karmalito, senior counsellor at the Russian embassy in New Delhi, told RIA Novosti. The restoration work can begin as early as this spring on the house where celebrated Russian artist Nicholas Roerich and his family lived, which is now a museum. "An approved scheme of works drawn up jointly by Russian and Indian architects will be used for this,”said the diplomat.The Indian side has expressed an interest in involving leading Russian restoration specialists in the project to give expert evaluations and to make the necessary proposals for repairs on the house museum. RIA Novosti


Politics

BUSINESS REPORT in association with rossiyskaya gazeta, russia Wednesday, MARCH 14, 2012

Diplomacy Leaders of emerging economies to consider proposals like Development Fund, Infrasructure Investment

Building a new world The 4th BRICS summit in New Delhi on March 29 will focus on global governance reforms and map out a new geography of cooperation.

The 4th BRICS Academic Forum brought together 60 delegates representing academic institutions, think tanks and expert community from the five emerging economies of Brazil, Russia, India, China and South Africa in New Delhi on March 4-6. From the macro discussions on global governance, financial architecture, security and greater coordination, the discussions today focus on the substantive, on experience sharing, on creating institutions and linking up existing ones. In the fourth year of the BRICS (South Africa joined last year), the group has come of age. This is attested to by two facts. First, the experts from the four countries have signed an agreement to step up their interactions which till now have been sporadic and on the sidelines of the Leaders Summit and two, the wide-ranging recommendations that the experts forum has submitted for the consideration of the Leaders at the summit in New Delhi demonstrate the limitless possibilities for the grouping. The Forum’s recommendations to the 4th BRICS Leaders Summit to be held in New Delhi on March 29 seek to set

Photoshot/Vostock-photo

Samir Saran Vivan SHaran

BRICS Friendship Cities and Local Governments Cooperation Forum in Sanya (Dec 2011, China).

the global agendas for governance and sustainable development. The theme for this year’s Academic Forum was “Stability, Security and Growth”and culminated in 17 policy recommendations which centred on key priorities for BRICS in governance, socio-economic development, security and growth. Varied themes were addressed, including the articulation of a common vision for the future; a framework to re-

The Forum explored two distinct sets of engagement. One set of engagements is through research and initiatives that are“Intra-BRICS” in nature.These involve experience sharing across social policy, resource efficiency, poverty alleviation programmes, sustainable development ideas, innovation and growth. The second set of engagements and outcomes pertain to interaction of BRICS with

spond to regional and global crises; climate change and sustainable resource use; urbanisation and its challenges; improving access to healthcare; scaling up and implementing new education and skilling initiatives; the conceptualisation of financial mechanisms to support and drive economic growth; and finally sharing technologies, innovations and improving the cooperation across industrial sectors and geographies.

other nations, external actors and groupings at various multi-lateral forums and institutions.These are reflected in the recommendations pertaining to climate policies, Rio +20, financial crisis management, traditional security threats, terrorism and other new threats and global challenges around health,IPR and development. There were heated debates on issues such as the possible institutionalisation of a BRICS Develop-

ment Bank and an Infrastructure Investment Fund that could assist in the development aspirations of the BRICS and other developing countries.The discussions on the setting up on new,credible institutions to initially supplement and eventually substitute existing financial institutions such as the World Bank and IMF reflect the strong desire of BRICS to move ahead and away from the traditional development agendas of 20th century institutions that are today incapable of reflecting some of the realities and aspirations of the 21st century. The BRICS Leaders would do well to replicate the cohesiveness of the BRICS academics in the articulation of their vision for creating sustainable economies, ecologies and societies. Similarly the promotion of cultural cooperation, establishing innovation linkages, sharing pathways to universal healthcare a n d m e d i c i n e fo r a l l , strenghthening indigenous knowledge are all recommendations that are timely and appropriate. While sceptics may still dismiss the possibility of BRICS being“rule-makers”,it is unlikely that they will not influence“rule-making”processes. The incubation period is over, and it’s time now to set the bar high.The BRICS have indeed created a“new geography of cooperation”and opportunities are boundless. Samir Saran is Vice-President and Vivan Sharan an Associate Fellow at the Observer Research Foundation. The ORF hosted the 4th BRICS Academic Forum)

Foreign Policy India will be closely watching Putin's China moves; economics to dominate Russia's external relations

No shift: India-Russia ties special Vladimir Putin's return to Kremlin marks a continuity in Russia's foreign policy. India can expect stronger bilateral ties with Moscow. Manish Chand

Specially for RIBR

The global image of Vladimir Putin may have taken a dent after a wave of popular demonstrations that whipped up speculation of a “Russian spring”, but in India he is much esteemed for forging a privileged strategic partnership with New Delhi after the chaos and drift of theYeltsin era. Indian Prime Minister Manmohan Singh was quick to congratulate Putin on his election victory, describing him as “a special friend of India.” In his message, Manmohan Singh said he“deeply appreciated the personal commitment and attention that you have brought to

nurturing the India-Russia strategic partnership over the last 12 years.” The prime minister’s message had a ring of familiarity with an old time-tested friend and indicates that India is not expecting any dramatic changes in Russia’s foreign policy under Putin’s third presidential term, specially when it comes to the solidity of the multi-faceted bilateral relationship Putin’s third term will also coincide with a renewed momentum in bilateral ties. Putin’s India policy will build upon the successful 12th summit in Moscow in December last year when India and Russia signed a clutch of pacts and decided to accelerate their ties in areas ranging from nuclear energy, defence and space to education, culture and trade. In January, Russia handed over K-152 Nerpa nuclear-powered at-

On March 6, shortly after the election results were officially announced, Putin told journalists in Moscow that there will be no dramatic changes in Russia’s foreign policy. However, India will be closely watching how Putin recalibrates its relationship with the West and the US as there is a certain unease in New Delhi with his combative anti-West rhetoric ,which was reflected in his pre-election speeches.“Overall, Putin sees this world as an extremely risky and hostile environment. Success is only possible if based on use of power and this must be real “hard”power. Russia is reckoned with and respected only when it is strong and stands firmly on its feet,”says Fyodor Lukyanov, editor-inchief of the magazine Russia in Global Affairs. India, however, sees a resurgent Russia as a balancer in global poli-

tack submarine to the Indian Navy on a lease of 10 years. There are also joint efforts to scale up bilateral trade which is less than $10 bn. The India-Russia relations are, therefore, safe in the

India-Russia ties are safe in Putin's hands. There will be realism in Moscow's global relations. hands of Putin II. India is a key strategic partner in the Asian-Pacific Region, said Putin in a much-quoted article on foreign policy in Russian daily Moskovskie Novosti in late February. Russia has traditionally enjoyed friendly relations with India, “which the leaders of our two countries have classified as a privileged strategic partnership.”

tics, but given its burgeoning relationship with the US, New Delhi is hoping that Moscow’s reset with Washington continues apace. India will also be watching Putin’s moves towards China as he sees Beijing as critical to his plan to develop Siberia and the Far East and Moscow’s strategic and economic goals in the Asia-Pacific region. By and large, one can expect greater realism in Russia’s foreign policy as Putin seeks to leverage Moscow’s external relationships to create a modernised, innovation-focused economy and delivers on his poll pledges to satisfy his domestic constituency. The economic imperative is thus going to dominate in Russia’s international relations – a trend that is going to get greater salience with Moscow’s entry into the WTO and Putin’s pet project

of the Eurasian Union. Pushing for a more robust multipolarity in international relations will be a defining theme of the third incarnation of the Putin presidency. Putin has pointed out that the growing economic clout of the BRICS nations gives them a critical role in reshaping the global governance system. It’s not clear yet who will represent Russia – Medvedev or Putin - at the March 29 BRICS summit in New Delhi, but one can expect a renewed call by Moscow to create a more democratic world order and fresh reassurances about taking the crucial India-Russia strategic partnership to new heights. Manish Chand is Senior Editor with IANS and a New Delhi-based writer on international affairs.

Economy Markets welcome Putin's return as sign of continuing stability, but will be closely monitoring likely protests

Investors are positive after Putin’s convincing victory, but they will be closely watching how he reduces non-oil and gas deficit. Tai Adelaja

russia profile

Prime Minister Vladimir Putin's convincing victory in Russia's presidential election will foster political stability and lessen political risks, say analysts and rating agencies. The only dissenting voice was Fitch Ratings', which threatened in early March to downgrade the country's ratings unless the incoming government resorts to fiscal tightening that

significantly reduces non-oil and gas fiscal deficit. Of prime concern to investors is the wave of middleclass anti-Putin protests, which many see as continuing well after the elections. Thousands of protesters gathered in Moscow on March 5 to protest election results hours after the Central Election Commission reported that Putin won in the first round. The final results of the elections are due to be announced on March 17, but Putin's inauguration will take place only on May 7. "Bearing in mind the aftermath of the parliamentary elections, the markets will

anxiously monitor the scale and the mood at the [postelection] rally,”say analysts at VTB Capital. Other analysts believe that Putin’s convincing victory would take the wind out of the sails of the protest movements.“The clear-cut victory should help draw a line under the protest movement in its current form, which should be greeted with relief by investors," said ChrisWeafer, chief strategist at Troika Dialog. “The election results will undoubtedly positively affect the foreign investor’s mood and risk appetite,”says Ovanes Oganisian, a strategist at Troika Dialog.

ap

Post-poll business barometer positive A Russian voter mulling his choice in the presidential polls.

Analysts also contend that investors may count on a more congenial investment climate if Dmitry Medvedev takes the prime minister's seat. Putin confirmed last week that he will appoint Medvedev as premier once he resumes the presidency. Peter Westin, chief equity strategist at Aton brokerage,

says the composition of the new government, assuming it includes liberal-minded individuals like Alexei Kudrin and Mikhail Prokhorov, could boost support for market-friendly reforms. According to Fitch Ratings, if Putin delivers on his poll promises to hike wages and increase spending on the

military and health sectors, this could cost $160 billion, or 8 percent of projected GDP over his six-year term. "Rapid growth in spending has widened Russia’s non-oil and gas fiscal deficit to 10 percent of GDP, and pushed up the fiscal breakeven oil price to around $117 per barrel for 2012," it says.

expert's view

Mounting non-aligned BRICS initiative on Syria Melkulangara Bhadrakumar

Strategic-culture.org

R

ecent media reports suggest the intriguing possibility that ‘non-alignment' is likely to gain currency once again as the core tenet of India's foreign policy. But, is India truly ready for ‘nonalignment’? For ‘non-alignment’ is not only a doctrine but also a quality of the mind – of being creative and innovative while being reflective – that differentiates it from mundane ‘neutrality’ or passivity. But, is the Indian establishment in a frame of mind to be creative? The crisis in Syria shows that Russia and China are creatively adapting the tenets of ‘non-alignment’ to the prevailing world order. This has brought the two countries closer together than at any time in modern history. They share a common aversion toward the Cold-War era‘bloc mentality’. They share an abhorrence of the use of force to settle differences. Both are staunchly wedded to international law and the United Nations Charter – and, indeed, the primacy of the UN itself – as the guiding principles in the conduct of inter-state relations involving countries big and small. Syria, thus, becomes an engrossing test case where theWest and its hangers-on would find itself pitted against the doctrine of‘nonalignment’ for the first time in a post-Cold war setting. The‘non-aligned’countries have a big role to play in making a peaceful transition possible in Syria. If India joins hands with Russia and China in an endeavor in search of peace and reconciliation, the prospects of success will remarkably improve. Other influential voices in the world community – the ‘silent majority’– will also feel encouraged to express their deep disquiet about what is happening in Syria so soon after the West’s bloody war in Libya. The Syrian situation has all the pre-requisites of mediation by an entity of impartial, well-meaning nonaligned countries so that the civil war and the horrendous bloodshed and an-

archy that stare in the face can still be avoided. Russia and China are already playing a role, although the West and the “pro-West” Arab camp (masquerading as the Arab League) constantly frustrate their efforts.That is why India joining hands with Russia and China at this juncture could make a critical difference. The credentials of these three countries are perfect: all three are stakeholders in a stable, secure Middle East region. They enjoy cordial ties with all the countries of the region, which may be currently finding themselves in discord (exacerbated by outsiders) over one issue or another – be it Saudi Arabia and Qatar or Syria, Iraq and Lebanon. Their intentions toward the Arab people have never been hegemonistic. What Syria acutely needs is an Arab narrative – not a roadmap drawn up by Nicolas Sarkozy or David Cameron. Oil and geopolitics have surged to the fore as the principal narratives. Even ‘Islamism’ is being carefully tem-

If India joins hands with Russia and China, it will make a crucial difference to transition in Syria. pered to suit the demands of geopolitics! This is a ripe moment to mount a ‘non-aligned’ initiative on Syria. Unfortunately, there has been so far no initiative from Moscow, Beijing or New Delhi to explore the possibilities of such an initiative. While Moscow and Beijing are increasingly coordinating their stance over Syria, the fact is they are overwhelmingly on their own on the diplomatic plane.The forthcoming summit of the BRICS on March 28-29 at the Indian capital offers an occasion to propose a‘non-aligned’agenda for the resolution of the Syrian crisis. Perhaps, BRICS could constitute a working group. India, as the chairman of the BRICS grouping, should take the lead. M K Bhadrakumar is a former Indian diplomat who has served in Islamabad, Kabul, Tashkent and Moscow.

Between the Lines

A story of two Putins: Which one will prevail? Ben Aris

Specially for RIBR

A

fterVladimir Putin was first elected president in 2000, journalists spent the next six months trying to figure out who he was. Not one, but two Putins quickly emerged. The first is better known to foreigners.This is the political Putin, who nixed the popular elections of regional governors and drove the oligarchs out of the Kremlin. Putin’s image of strongman reached its zenith with the jailing of Mikhail Khodorkovsky, the former owner of oil companyYukos, in 2003. By the start of Putin’s second term in 2004, he was fully in control of the country and imposed an enduring political stability in Russia. Although the political Putin has been demonised in the Western press, Russians welcomed him as a muchneeded change after the chaos of theYeltsin era. But the second Putin is much better known to the locals, and he is the reason why so many people still vote for Putin in national

elections.This is the economic Putin. They remember Putin for slashing income taxes to a flat rate of 13 percent and corporate taxes to 24 percent. He introduced a federal treasury system that put the center back in control of the nation’s finances and the average incomes has recorded a 16-fold increase to $800 from a mere $50 a month. Then he launched the Gref plan of liberal reforms, which together with rapidly rising oil prices, led to a sustained economic boom that transformed the Russian economy. Now, as Putin is poised to re-take his old job, pundits find themselves asking the same question again as they did in those first months of 2000:“Who is Mr.Putin?”Is he a leader who can guarantee Russia’s stability and economic growth as the country searches for a new growth model, or is he someone the West should fear on the international stage? The obvious answer is that nothing has changed and Putin will continue to be the person he has been for the last 12 years: a politician prickly on the political front, but progressive on the economic one.


BUSINESS REPORT

Technology

in association with rossiyskaya gazeta, russia Wednesday, MARCH 14 2012

Nuclear Power The world's most powerful laser station in Sarov will help produce atomic weapons and new generation supercomputers

Russia chases superlaser dream Alexander Yemelyanenkov ribr

The world’s most powerful dual-purpose laser station, UFL-2M, is set to be created near the Sarov Federal Nuclear Centre in Russia's Nizhny Novgorod region. The ambitious project will cost $1.5 billion and will be the size of two football pitches and as high as a ten-storey apartment block, outside the tightly guarded Sarov nuclear Closed Administrative and Territorial Entity. Academician Rady Ilkayev, scientific director of the Russian Federal Nuclear Centre, the All-Russian Research Institute of Experimental Physics, told RIBR that the design power of the laser facility is 2.8 megajoules, which is higher than the similar facility in the USA and the one currently being built in France.“The purpose of the scientific complex under construction is to work in the field of thermonuclear fusion, and this research has both defence objectives and future civilian applications,”he explained. “So even when we’re choosing the location, we need to think about how to avoid creating artificial barriers to the participation of foreign specialists in joint research and experiments.” Russia's Los Alamos Here in the nuclear centre in the secret city of Arzamas-16, which in the days of the USSR did not exist on the map, the world’s most powerful hydrogen bomb was developed in the 1950s under the direction of acade-

mician Andrei Sakharov. An unusual information stand appeared at that time in the US’ Los Alamos National Laboratory, where Robert Oppenheimer and an international team of scientists and engineers created the first atomic bomb in the world. “What is Arzamas-16?”asked the title.And then came the answer: “It’s the Russian Los Alamos.” Today, the scientific centre in Sarov is engaged in supporting the reliability and safety of the country’s nuclear arsenal.This is where new highly accurate weapons are being developed, research is being conducted for peaceful uses of atomic energy, and various branches of science are being developed. Over 18,000 people work, including physicists, mathematicians, engineers and programmers, in the nuclear centre. Russia has over ten similar closed cities, where top scientists create secret technologies and“products” for military and peaceful purposes – from micro sensors to strategic missiles. Arzamas-16 changed its name to its present one – Sarov – only in 1992, after a visit by Boris Yeltsin, the first president of Russia.“Russia needs you, and it will not abandon you,” said Yeltsin after signing a decree to create the Russian Federal Nuclear Centre, the All-Russian Research Institute of Experimental Physics. The secret cities of Arzamas-16 and Chelyabinsk-70 were renamed Sarov and Snezhinsk respectively. A new chapter Two decades afterYeltsin, Vladimir Putin now re-elected as the president of Russia visited the Russian nuclear weapons centre on a similar

Closed cities: High-tech hub Apart from Sarov and Snezhinsk, there are eight more nuclear closed administrative and territorial entities in Russia. They are a focal point for scientific research, design and production organisations connected with the development, testing and manufacture of various types of nuclear weapons and control systems for them, and also for enterprises engaged in uranium enrichment, industrial production of isotopes and handling irradiated nuclear fuel. These cities, carefully guarded by internal security forces, are places where more than half a million Russians live, work, study, build beautiful homes and create new families. You can only come here on business or to visit someone if you have special permission. This applies to all, including foreigners.

AFP/eastnews

Russia is set to build the world's most powerful laser station at $1.5 bn, that could surpass similar facilities in the US and France.

A Sarov nuclear museum staffer cleans a model of the first Soviet nuclear bomb, tested in 1949. Behind sits a model of the 1st thermonuclear bomb.

Sistema-Sarov Technopark: Where future is now The Sarov Technopark was set up in 2004 with the involvement of AFK Sistema, Rosatom and the administration of Nizhny Novgorod Region. One of the first residents was the Intel company – the first buildings were put up to meet its requirements. Now, the science park owns a set of buildings and structures with an area of about 11,500

square metres. There is a plan to increase it more than fivefold to 60,000 square metres – by 2015. The residents of the scence park include more than 30 Russian and international high-tech companies. According to Sergei Kiriyenko, Rosatom has already invested 1.5 billion roubles in the science park’s infrastructure and plans

to invest the same again in 2012–2014. At the end of 2011, there was an additional issue of shares in the Sarov Science Park. They were bought in equal shares (of 25 per cent plus one voting share) by Rosatom and Rusnano, who paid 200 million roubles for their stakes. AFK Sistema continues to hold 50% minus two voting shares.

Interview Denis Kovalevich

mission. The results of work on the“supercomputer technologies and grid systems” project were presented to Putin. The centre is creating not only a new generation of supercomputers for the requirements of the nuclear weapons industry, but also high-performance compact computers for civil applications.“The Russian Federation does not intend to give up a single means of safeguarding its security, including against tactical nuclear weapons,” he said while

stressing on the need to maintain Russia’s nuclear and strategic stability. Moving beyond perimeter The Sarov science park is being considered as one option for the location of the world’s biggest UFL-2M research laser facility. Created several years ago in proximity to the nuclear weapons centre by AFK Sistema on a public-private partnership basis, it has become a kind of “window on the market” – for the top secret nuclear re-

search institute and its unique developments. “Today, our objective is to convert many of the nuclear centre’s developments to commercial purposes,”says Valentin Kostyukov, director of the Federal Nuclear Centre. “Projects that are in demand in the market,primarily those for civilian purposes, will be implemented in the science park.We are now actively cooperating with the aerospace, aircraft and motor vehicle building, hydro-electric power and oil and gas sectors. We are creating a super-powerful laser facility and supercomputers capable of modelling highly complex devices and physical processes.” For a long time, Russia and its nuclear weapons centres in Sarov and Snezhinsk, unlike the US’national nuclear laboratories, did not have powerful supercomputers, but now they have caught up with their competitors.“The aggregate performance of the supercomputers at the two federal nuclear centres in 2011 was 2 petaflops and is comparable with the USA’s nuclear weapons industry,” Sergei Kiriyenko, the head of Rosatom, said at recent hearings in the Federation Council. The Sarov centre is currently operating a supercomputer capable of more than 1 petaflop, and it intends to increase its supercomputer power to 1 exaflop by 2018–2020. The nuclear centre is currently launching commercial production of supercomputers. Having received 1.6 billion roubles to develop the technologies, the centre plans to produce 30 machines by the end of the year, including some especially powerful ones with a performance of 1 trillion operations per second.

Energy India PM blames foreign-funded NGOs for stir

Manmohan set to bust Kudankulam deadlock

'My job is to launch a new tech wave'

With experts' panels declaring the Kudankulam plant safe, the Indian government is resolved to break the stalemate soon.

Skolkovo Innovation Centre to interface with foreign nuclear Radiation experts

Shweta chand

Before joining Skolkovo, you were working on strategic development issues for the Rosatom, including its energy sector. When did you think of developing new markets? Preliminary estimates indicate that the range of technological know-how in the nuclear industry that can be used outside the energy markets include no less than 500 products and technologies. They formed the foundation of the new “Radiation Technologies”technological platform that was approved by a special commission of the Russian government and adopted for implementation as one of the priorities. What are the main areas of work for the Nuclear Technologies Cluster at Skolkovo? There are four strategic areas in the Nuclear Technologies Cluster’s work.They are: radiation technologies (technologies based on radiation);

ing. It is therefore important for us that as many people and individual companies as possible base their longterm strategies on this technological platform. That's what my work is all about. The aim is essentially to launch a wave, not simply to support two or three projects, even if they are very promising.

How did the Skolkovo centre, rather than Rosatom, become the coordinator for the “Radiation Technologies” technological platform? More than 70 organisations are currently engaged (as part of this platform) in radiation technologies in Russia. Rosatom is one of the players, but by no means the only one.Yes, of course, it is potentially a most powerful investor, and one that can assemble the final product. But Rosatom’s specific role means it cannot support “small”companies that are worth, say, $1 million.We are “preparing the ground”, supporting the creation and development of new projects and companies that leading global technological corporations will then be able to include in their technological chains by buying them or entering into cooperation with them – by any means possible. There is virtually no one to cooperate with in this field on the scale of a major corporation – the first shoots are only just appear-

What steps are needed to launch this wave? In essence, it’s a question of paving the way for a decision to launch a new industry. International experience shows that on an average it takes from five to ten years to prepare for such a decision. For example, Singapore launches a new industry once every seven years. And I understand and see Skolkovo’s opportunities in this context as“action research”. When our grants committee takes a decision to allocate money to one project application or another, to support one start-up or another, it is an opportunity to evaluate the viability of the company that has applied.You cannot check this analytically.You have to give people a real opportunity, so that they can try, go on some kind of journey, run into obstacles. And what does the status of being a Skolkovo partner give to your foreign partners? First, it gives foreign companies the opportunity to set

Denis Kovalevich, Executive Director, Nuclear Technology Cluster.

Radiation technology markets In terms of market maturity, radiation technologies can be divided into three categories: - established markets with extensive application globally (nuclear medicine, safety and non-destructive monitoring systems). – markets that are being established and need to develop a legal and regulative framework (disinfection of agricultural and food produce

and sterilisation of medical products). – unestablished markets with experimental application of radiation technologies, which are at the research and development stage: construction (increasing cement strength), environmental protection (cleaning sewage, processing solid household waste), and in the chemical and petrochemical industries.

up their own R&D centre in Russia, on the Skolkovo innovation city site. They can set it up without bureaucratic delays and in an extremely short time. Second, by entering into a partnership with one of the Skolkovo “startups”, they can gain the status of an exclusive partner with Russia in the field of innovation.The Skolkovo centre for developing and commercialising new technologies is an exclusive story of innovation in Russia. And by coming in, the foreign company acquires a special status to help position it in Russia.

So this project has the support of the Russian leadership? Not just that, although it is important. The Skolkovo team has experience and understanding of how to work with administrative barriers in the context of modern Russia, how to solve customs problems and much more. Today, we need real projects, real cooperation and new partners.That is why Skolkovo and its Nuclear Technologies Cluster received the right and an official mandate from Russia to represent the Radiation Technologies platform.

Six months after the Fukushima radiation last year, a group of protesters mysteriously started targeting the Russia-built Kudankulam Nuclear Power Plant (KNPP) in Tamil Nadu, raising questions about the safety of the nuclear facility. The plot has only thickened as more than 200 days later, the agitators appear to have no intention of giving up their movement which is led by the People’s Movement Against Nuclear Energy,a coalition of anti-nuclear activists. But all is not lost: the past few weeks have shown an increasing momentum for resolving the deadlock, with Indian Prime Minister Manmohan Singh throwing his full weight behind the nuclear project. In February, the mild-mannered prime minister, who earlier managed to pull off the India-US nuclear deal in the face of an unrelenting opposition, showed a similar decisiveness when he intervened and blamed foreign-funded US and Scandinavian NGOs for stoking the anti-KNPP agitation.The message was clear: the Indian prime minister, as he had promised then Russian president Dmitry Medvedev in Dec 16 last year, was determined to get the Kudankulam power units rolling. Meanwhile,a four-member expert group set up by the Tamil Nadu government to assess the safety infrastructure of the KNPP has submitted its report.“We have re-

ap

technologies for creating new properties in materials; technologies for designing, constructing, modelling and engineering complex technological devices and systems; technologies for engineering, instrument building and new electronics. These are all to a greater or lesser degree spin-offs from the nuclear programme.

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ribr

The $25 billion global market for new radiation technologies (radiation management technologies) is growing at the rate of 10% per year and is set to surpass the nuclear energy services market. Denis Kovalevich, Executive Director of the Skolkovo Innovation Centre’s Nuclear Technologies Cluster, talks about the prospects for international science and business cooperation opening up in this field in Russia.

A group of protesters, including fishermen, have been agitating against the Russia-built Kudankulam atomic plant.

viewed all concerns raised by the protestors in our report. We also analysed the central expert group committee's report, which has answered all 44 questions raised by the protestors. We found the report satisfactory,”said Srinivasan, a former chairman of the Atomic Energy Commission and a member of the panel. The experts’ group is understood to have concluded that the KNPP was well-equipped to withstand natural calamities,be it earthquake or tsunami. The state government committee was preceded by a 15-member Experts Group set up by the Indian government which after examining the plant in the context of Three Mile Island, Chernobyl and Fukushima accidents,declared the plant safe. Government sources indicate that the first 1,000 MW unit of the KNPP will be opened as soon as the project's safety audits have been completed. According to the Nuclear Power Corporation of India, the two units are“99% and 94%”ready, and it is estimated that the first unit can be up and running within six to eight weeks.“I am hopeful

of moving forward.The expert committees have done their job. Safety issues have been addressed. The plant's first unit can be in working order once we are able to move in the required staff,”says Srikumar Banerjee,secretary at the department of atomic energy. “The plant has been idle and so the AERB will lay down guidelines.Once these are followed, the plant will generate power,”says Banerjee. Another factor that is expected to spur the resolution of the stalemate is an acute power crunch facing Tamil Nadu, which is set to become more severe in the coming summer months. “My hunch is that the Tamil Nadu government will take a decision as early as possible” on the project, V.Narayanasamy, Minister of State in the Indian prime minister’s office, said recently. There is a strong likelihood that the impasse will be broken soon. In many ways, the Kudankulam agitation is a test case for India’s ambitious nuclear energy plans as it goes on to increase tenfold atomic energy to 40,000 MW by 2020.


BUSINESS REPORT

Society

in association with rossiyskaya gazeta, russia Wednesday, MARCH 14, 2012

Demography Mother capital not enough to halt shrinking numbers

Russia's population is shrinking dramatically as not many find it practical to have big families. It's time for concrete steps to avert a demographic disaster. Elena lininskaya RIBR

The demographic crisis in Russia is getting alarming by the day. At the beginning of the 21st century, depopulation in Russia amounted to almost 700,000 people per annum. If nothing is done to check this downslide, the Russian population is set to plummet from 143 to 107 million people by 2050. In his campaign,Vladimir Putin, who has won the polls by a resounding majority, promised an efficient strategy to increase the population to 154 million.“The historical price of choice between action and passiveness is almost 50 million human lives for the next 40 years,”said Putin. However,Valery Elizarov of the Centre of demographic research, Moscow State University, is not convinced. “For the timeframe till 2050, it’s possible to give well-

grounded forecasts only of reducing the speed of depopulation and not of population growth,”he says. Young people in Russia are sceptical about the government’s family support policies. They are unhappy with the lack of decent accommodation, awfully small “maternity capital” and the money paid for the duration of the pregnancy leave. Moreover, there is a dearth of facilities for children such as kindergartens and hobby

erina, a mother of a five-yearold son.“Accommodation is a big deal,” rues Ekatrina. “The government advises us: take a real estate loan. And it sounds like a good idea! But there’s a catch. Paying out a real estate loan and providing for a childe takes a heavy financial toll on a family." The government’s initiatives such as the“Young family” programme, which enables young couples to take a real estate loan on favourable terms with a lower in-

In his poll campaign, Putin promised a strategy to increase the population to 154 million.

Young people in Russia are sceptical of the government's dismal family support policies.

groups for kids. “Today, either people have children when they are very young and reckless, and don’t realise what bringing up kids actually means. Or many others prefer to have kids at the more mature age, after 30, when both parents have successful careers and have saved enough money,” says the 28-year-old Ekat-

terest rate, are hardly an incentive to have a child, not to mention two or more children.“I received my maternity capital, about 37,000 rubles (a little more than $1000), which seemed like a considerable sum at first,”recalls the 27-year-old Maria who has a two-year-old daughter.“But all I could buy for this money was a pram

and crib for my baby. And raising a child means a lot of expenses. Now, I spend on an average of about 12,000 rubles a month (about $400) just on basic needs: food, clothes, shoes." And it’s not just financial issues. The dilemma of combining motherhood with a career or studying is very acute for women. In the Soviet times, there were more ways for women to have children without sacrificing their work, with a variety of services and facilities for women with kids such as day-care units or afterschool for children with working parents. Now, the number of such facilities has reduced, and the quality of care leaves much to be desired.“If you’re a full-time mum, you can handle it. But because of my PhD, I have to hire a nanny for my two-year-old daughter for several hours a day. And a good nanny is hard to find. They prefer to work on a full-time basis, which would cost around 40,000 rubles (more than $1,000). " There are some families who choose to have three or more children. But they are

photoxpress

Needed: Russians with an appetite for large families

More families with at least three kids is what Russia needs to avoid depopulation, demographers say.

exceptions. There are many middle-class 20-plus Russians, with higher education and successful careers, who don’t want to have even one or two kids.The study by the Institute of demographic research published in the "Demographic research" magazine in September, 2011 analyses the main reasons for the decrease in birth rate in Russia (see the chart). Experts are arguing that solely appealing to a return to traditional Russian family values is not enough. It’s time to take concrete measures to boost Russians’motivation to have kids, they say. Youri Kroupnov of Russian Insti-

Investing smart to avert pension blues

A healing journey: Ayurveda gets more Russian converts

With the ageing population rising, young Russians have to explore multiple strategies to secure decent pension when they retire. svetlana kononova Russia Profile

'Indian Medicines will be just as good for

Elena Krovvidi RIBR

Ayurveda, the centuries-old system of medicine in India, is rapidly becoming popular in Russia.“A lot of patients who prefer herbal medicines, oils and massages as ways of treatment and crave for attention that they don’t get in modern hospitals come to ayurvedic clinics,” says Dr. Mohammed Ali, head of the Ayurveda "Kerala" clinic in Moscow. But the road to success wasn't strewn with roses . Ali traces the popularity of ayurveda to the wave of globalisation in the 1990s. However, in contrast to India where generations of people had lived by the ayurvedic regimen, it took time for Russians to learn to trust the an-

A firm believer in a symbiosis between ayurveda and modern medicine, Ali says the most frequent ailments he has come across in Russia are respiratory diseases triggered by cold climate, gastro-enterology disorders and stress-related health problems. “I think a lot of ailments are caused by these reasons: stress, unhealthy diet and lack of movement. There are plenty of cases of arthritis and metabolism problems due to the lifestyle,”says Ali. Also ayurveda strives to cure people without side-effects. Ali is confident that“Indian medicines will be as efficient for Russians as they are for Indians as diseases are the same everywhere.” He says there are no problems in transporting Indian Ayurvedic medicines to Russia because they are herbal medicines and don't contain harmful chemical elements.

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Russians for gastro problems, Stress' cient Indian medical science. That's one of the reasons Ali got Doctor's degree and postgraduation at the Russian People Friendship University to combine ancient ayurvedic knowledge and modern medical science. "For the first 2 years that I worked in Russia we cooperated with Russian doctors. We treated by ayurveda medicines and massages, and they investigated the patients before, during and after our treatment. It also helped that many Russians now travel to India and learn about ayurveda,”feels Ali. Back then Russians perceived ayurveda more as a system of purely cosmetic procedures helping to keep skin glowing or hair in a good condition. But they were surprised to learn that ayurveda could treat even serious diseases and medical conditions like cerebral palsy.

Research: The reasons for decrease in birth rate in Russia.

Retirement 76% Russians plan to continue working

Interview Dr Mohammed Ali

Not many knew about ayurveda two decades ago. Now, more Russians are seeking Indian herbal cure.

tute of Demography, Migration and Regional Development, is convinced that a quarter of profits from selling raw materials must go directly to the special Foundation of Future – to the individual account of every Russian child aged 0 to 25 years, and up to 30,000 rubles can be spent annually for supporting families with kids. Roman Mogilevsky, scientific leader of the“Agency of Social Information”, points out that if the mother’s capital is not enough, then the government must work hard and search for new ways of increasing the birth rate in the country.

With ayurveda becoming popular, discussion forums have sprouted on the internet where ayurveda followers ask questions about this system of medicine and share their experience. But ayurveda rules have to be adapted to Russian realities.“As people eat too much meat nowadays, better to reduce the intake and I would rather say vegetarianism is healthier than excessive animal diet even though ayurveda doesn’t advocate strict vegetarian diet,”Dr. Mohammed Ali explains. "Traditional Indian diet of rice porridge, peas and spices isn't very suitable for Russia. Besides, Indians have "genetic memory" of vegetarianism and specially adapted intestinal

Pioneer

Herbal connect Dr. Mohammed Ali, head of the Ayurveda "Kerala" clinic in Moscow, has worked in Russia for more than 15 years. Ali was invited to Russia in 1996. He treated the 1988 Chernobyl nuclear tragedy victims suffering from radiation, with positive results.

flora." Ayurveda is also about attitude and mental habits. One should get rid even of bad habits by 1/4, teaches ayurveda.And this ayurvedic principle should be good for Russians who sometimes behave impulsively.

The ageing of the population is gradually changing the proportion of working to retired people in Russia. The Standard & Poor's rating agency has predicted the proportion of the population over 65 to increase to a quarter by 2050. Russia will, therefore, have to increase state spending on healthcare and pensions at a time when analysts are predicting a slowdown in the GDP growth rate. “According to forecasts by the Finance Ministry, the budget deficit of the Pension Fund may amount to 2% of the GDP by 2015, and exceed 3% by 2020, with the current pension system in place,” says Alexander Osin, the chief economist at Finam Management. There are many suggestions on covering this deficit.“For example, Just Russia proposed to abandon the contributory pension scheme. Even if the effective yield of the contributory pension system matches the effective yield of the GDP, it would be chronically scarce because of operating expenditures,” he says.

Colonialism 2.0. Is the West reviving what was once a spectacularly successful Western strategy – colonisation?

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“Right-wing parties are suggesting increasing the retirement age, but this could lead to an oversupply in the workforce and a decrease in the population’s real income as a result,”Osin warns. Meanwhile, only 5% of Russians are confident that their future pensions will cover their expenses for life, says a survey conducted by the Moscow-based National Agency for Financial Studies (NAFS). The survey also found that 76% of respondents plan to continue working when they retire; 1 in 5 hopes that their children will help out.The third most popular strategy for surviving in retirement chosen by 14 percent of respondents is grow-

Russians' retirement prospects.

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ing vegetables at dachas, Russian summer homes. Only 4% are banking on nonstate pension funds; 3% will rent out property and 1% is relying on charities. Currently only 13% of Russians of working-age are making voluntary contributions to non-state pension funds as they don’t trust them. So what’s the best way to safeguard their financial future? “It is necessary to invest. In such circumstances, the most secure options are diversified investment portfolios, or investments, which have a long-history of growth, such as buying inexpensive real estate or shares. Setting up a business might also be a good strategy,”says Osin.

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March 2012, Russia & India Business Report  
March 2012, 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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