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BUSINESS REPORT

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

WEDNESDAY, APRIL 11, 2012

Diplomacy Leaders pitch for trade in local currencies, explore Development Bank and take a common stand on Iran, Syria

BRICS & mortar for a new world The BRICS summit in New Delhi maps out a new path for converting financial heft of emerging economies into global diplomatic clout. BEN ARIS

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RIBR

Half way through their transition from emerging markets to the world’s leading economies, the leaders of the five BRICS nations met for the fourth time in New Dehli on March 29, marking the transformation of a clever marketing term into the world’s most powerful economic club. Russia's President Dmitry Medvedev, who presided over the first BRIC summit on June 16, 2009 in Russia’s Yekaterinburg, called for changes in the world’s financial system to reflect the growing role of the BRICS – Brazil, Russia, India, China and South Africa – in the global economy.“We are all interested in reforming the world's ageing financial system. Such reform is proceeding, but today, we are expressing our displeasure at the speed at which it is going ahead, which is reflected in the draft of our statement. It is not taking into account the role in the global economy, which the BRICS and other states with developing markets already play.” What Medvedev said was shared by leaders of other BRICS countries and was encapsulated in the all-encompassing Delhi Declaration that voiced wariness with the slow pace of the IMF quota and governance reforms and its focus on recasting the global financial system in favour of emerging

The leaders of BRICS countries at the New Delhi summit made a renewed call for reforming the aging global political and financial system.

and developing countries. Medvedev suggested that the BRICS start to settle their trade contracts using local currencies, which will take another step towards breaking the US dollar’s hegemony over global trade. Russia and China have already introduced mutual settlements of trade contracts in their respective national currencies and a similar deal was signed with India. The summit saw the signing of two pacts on promoting trade transactions in local currencies of BRICS countries, which included the enabling master agreement for extending credit facilities in local currencies and BRICS multilateral let-

port,”which was prepared by experts from all BRICS countries under the leadership of Kaushik Basu, India's chief economics advisor, was also released at the summit.The report maps out synergies among economies of BRICS countries to accelerate mutual trade and investment. While most of the deals signed were economic, the BRICS are also pushing for more political clout on the international stage that better reflects the changing world order. They want a bigger say in the IMF, which is being restructured, as well as at other international bodies like the United Nations, where they feel they

ter of credit confirmation facility agreement. Finally, the leaders of five of the world's fast-growing nations agreed to explore setting up a joint BRICS Development bank, a proposal floated by India, similar to the World Bank or the European Bank for Reconstruction and Development that would invest in infrastructure and promote deeper economic integration between the members. Other important decisions that emanated from the summit included setting up of a BRICS exchange in futures and an ambitious target to scale intra-BRICS trade from 230 $billion to $500 billion by 2015.“The BRICS Re-

play a junior role that is not representative of their growing economic clout on the world stage. While the BRICS is still not an overt political body, Medvedev said that the club’s long-term goal should be to become,“a full-fledged mechanism of global economic and political cooperation”.In this context, the New Delhi summit marked an advance as the five countries, despite their differences, managed to harmonise a common minimum position to advocate dialogue and diplomacy to resolve the Iranian nuclear impasse and the Syria crisis. On Iran, the Emerging-5 warned theWest against any escalation of the

conflict that will flow from military adventurism. Above all, the New Delhi summit stood out for reinforcing the urgency of international decision-making institutions. China's President Hu Jintao echoed Russia’s central foreign policy goal of building a“multi-polar”approach to world politics, a challenge to the unipolar polar world where the US dominates international politics. Calling for addressing “deficiencies in global governance,”Indian Prime minister Manmohan Singh said: “While some progress has been made in international financial institutions, there is lack of movement on the political side. BRICS should speak with one voice on important issues such as the reform of the UN Security Council.” Ten years ago, then Goldman Sach’s chief economist Jim O’Neill coined the term BRIC (South Africa only joined in 2010) and predicted they would become the biggest economies in the world by 2027, but as they reach the half way mark, the BRICS already account for half of the globe’s economic growth. This fast pace of growth has thrown up huge opportunities for investors. A $100 invested in 2001 would be worth $674 now if invested in Brazil’s stock market, $451 from China, $459 from India and $414 from Russia, against the $112 that would have been earned from investing in America. However, as the BRICS come out of the frenetic ‘catch up’ phase of super charged growth, policies will have to change.

NEWS IN BRIEF India inducts nuclear submarine INS Chakra India inducted the Russian-origin nuclearpowered submarine 'Nerpa' into the Navy on April 4. "INS Chakra will ensure security and sovereignty of the country," Defence Minister A K Antony said after the formal commissioning of the Akula II class Nerpa, rechristened 'INS Chakra', into the Navy at the Ship Building Complex inVisakhapatnam. With INS Chakra and the indigenous INS Arihant expected to start operational patrols soon, India will have two nuclear submarines guarding its vast maritime boundaries. The Nerpa has been taken on lease for ten years. RIBR

Vikramaditya: Indian sailors train in Russia Russia’s Sevmash shipbuilding company, which is refitting the INS Vikramaditya aircraft carrier for the Indian Navy, has completed an important training phase for the Indian sailors who will steer the upgraded ship. On April 4, certificates were presented to the final team of specialists of the second group.The first group, including 152 Indian specialists, took the training course in Russia from March 14 to November 4, 2011.The second group (112 trainees) started on September 1, 2011. The final team of INSVikramaditya crew members is expected to arrive in St Petersburg in late April. RIBR

Tata Global gets nod to buy out Russian tea unit Tata Global Beverages (TGB), the maker of Tetley tea and a unit of India’s second-largest industrial group, has got regulatory approval to buy out its Russian tea unit from a partner in that country, a news agency reported. In September 2009, TGB acquired a 51% stake in Suntyco Holding in conjunction with the European Bank of Reconstruction and Development. Suntyco owned the Grand brand of tea and coffee products and the acquisition was aimed at entering Russia, a market where both coffee and tea are popular. Russia’s Anti-Monopoly Service allowed the Indian company’s Kahutara Holdings unit to raise its stake in Suntyco Holding to 100%. RIBR

Business Pharma, auto, tourism key areas for Indian firms

Reliance forges petrochem ties with Tatarstan

Russian tourists to India surge by over 20%

Tatarstan is one of the biggest petrochemical production and refining centres in Russia.

Tatarstan’s President Rustam Minnikhanov (first from the left) during his visit to RIL refinery in Jamnagar, Gujarat.

Laboratory Limited, INCA Laboratory Limited, Cadila Healthcare, Himalayan Drugs Limited,Ajanta Pharma Limited, are active in Tatarstan. India’s imports from Tatarstan include synthetic rubber, trucks and helicopters, instrument-making products. Tatarstan's imports consist mainly of medical products, food, raw materials and equipment for the food-processing industry. The two sides also decided that Indian automobile and auto ancillary manufacturers would be encouraged to visit Kazan. India is the largest buyer of helicopters from the Kazan Helicopter Plant. There are also plans to promote cooperation in culture, education, research, sports and tourism.

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The Tatar capital Kazan in India evokes images of the high-tech helicopters it is famous for. But Tatarstan, one of the most economically developed regions in Russia, is now making news in corporate circles. Reliance Industries Limited (RIL) and Tatarstan have agreed to set up a joint working group of specialists to develop strategic partnership in petrochemical and oil refining sectors, specially in crude oil refining. The agreement was reached during the visit of a high-profile delegation led by Tatarstan’s President Rustam Minnikhanov to Jamnagar in Gujarat on March 22. The visit was aimed at getting on-the-spot information about the manufacturing processes and studying the advanced oil refining technologies launched by the RIL. The refinery, located in one of the special economic zones (SEZ), processes 33 million tonnes of crude oil annually with five percent of world’s

visit to Jamnagar, Indian ambassador to Moscow Ajai Malhotra visited Kazan (March 12-15) to explore new avenues for enhancing bilateral cooperation and held talks with the Tatar leader. “Tatarstan citizens are extremely interested in India,” Minnikhanov said. “Kazan’s strategic location and the trade and investment incentives being offered by Tatarstan could be attractive for Indian businesses,” said an upbeat Malhotra. Both sides have agreed to expand cooperation in areas such as commerce, industry, pharmaceuticals, IT, auto and auto ancillary manufacturing, petrochemicals, sports, tourism, education and technical education, science, banking and culture. During the talks, the two sides agreed that an Indian trade exhibition would be held in Kazan later this month. It was also agreed that the Indian embassy would coordinate an interaction between Moscowbased Indian pharmaceutical companies and Tatarstan representatives in Moscow soon. Prominent Indian pharmaceutical companies, including Ranbaxy Laboratory Limited, Dr. Reddy’s Laboratory Limited, Lupin

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DADAN UPADHYAY

petroleum production.There are 50 technology departments at the processing plant, jointly refining main flow of crude oil for getting different types of end products. Last February, theTatar oil refining plant TAIF-NK and US Kellogg Brown and Root signed an agreement to establish a Veba Combi Cracker (VCC) technology processing unit and Tatarstan decided to simultaneously develop collaboration with Indian counterparts for using the technology successfully. The cooperation between India and Tatarastan has been expanding quietly since the agreement on trade, economic, scientific, technological and cultural cooperation between the Indian state of Andhra Pradesh and Tatarstan was signed in November 2003.The pact was in line with the efforts being made by India and Russia in promoting regional level cooperation between the two countries. In April 2010, Andhra Pradesh and Tatarstan signed an MoU for promotion of joint ventures pharmaceuticals, chemicals, gas-based industries, power plant equipment, bio-technology and IT. Ahead of Minnikhanov’s

Moscow and New Delhi will switch to trading in domestic currencies in three years, the chairman of Russia's largest state development bank said on March 29, Reuters reports. "With China, it took us three years to evolve from initial conversations to trading in local currencies," VEB Chairman Vladimir Dmitriev said on the sidelines of the BRICS summit. "I think we will meet similar terms with India," he said. He added that Russia was considering to switch to trading in local currencies with other BRICS partners, which could take some time. RIBR

© ALEXEY NASYRIV_RIA NOVOSTI

RIL's plan to forge strategic partnership in petrochem and oil sectors with the Russian region of Tatarstan is a win-win tie-up.

Russia, India to trade in local currencies soon

The Indian embassy in Moscow issued about 150,000 visas last year, most of them tourist visas, which represents a 24% increase over 2010. This trend is continuing in 2012, as India has recorded a 20% increase in the number of Russian tourists. Rosstat has reported the number of Russian tourists travelling to India at 95,500 in 2011, which is an impressive increase from 54,000 tourists five years ago. The Indian tourism office attributes the growing number of tourists to simpler visa procedures. The Indian embassy has been issuing sixmonth multi-entry visas to Russian applicants since the summer of 2011. Furthermore, the time required to issue an Indian visa has been cut substantially from two weeks to three days. India will soon open a tourist office in Moscow. RIBR


Politics

BUSINESS REPORT in association with rossiyskaya gazeta, russia Wednesday, APRIL 11, 2012

Politics President Putin, say analysts, will have to deliver on his poll pledges and his promise of dialogue if he does not want a return of popular protests

Activism wanes: Lull before storm? Civic activism that fuelled political protests against Putin has moved to social causes. But it’s time for Putin to deliver on change.

New law to boost political parties

Viktor Dyatlikovich

Photoshot/Vostock-photo

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“Friends, urgently needed: dry food for an animal shelter.”This announcement was recently launched by the group “Against Putin and United Russia Party”,which includes more than 170,000 users of the VKontakte network. This was no lone example; it symbolised a tendency to intersperse calls to take to the streets with calls to donate blood for a sick child or raise money for expensive surgery. The civic activism that fuelled the protest movement in Russia is assuming other forms, while rallies are increasingly becoming the business of a few political activists from political parties.“After Bolotnaya Square, I attended other actions and, each time, my combative mood diminished,”says Sofia Shaidullina, a young protester. "I fell in love with a girl from an orphanage I visited with a group of volunteers.” The opposition protests on March 17 and 18 in Moscow gathered no more than a thousand people. Against this background, the“march of millions”planned for May 6 shows up the opposition leaders either as romantics who are out of sync with reality or pure utopians. At best, it will be a “march of tens of thousands”.“People

Protest waves that recently shook Moscow seem to have subsided. Or is this serenity a deceptive sign?

have realised that white balloons and ribbons are no weapons against OMON special security units. I think a period of social torpor lies ahead,” says author Boris Akunin, an organiser of the winter rallies. One of the reasons that the wave of protests has subsided is people’s sheer weariness. Unlike political activists, they are not used to going to rallies as if it were their work. Second, the authorities are behaving more wisely than in December. There were far fewer irregularities in the presidential

political parties that will spring up on the crest of the protests and the liberalisation of the law on political parties.“Many parties will be split by the opposition electorate, with the result that the opposition parties will find it hard to overcome the 5% cut-off barrier to get into parliament. That will play into United Russia’s hands," says Mikhail Tulsky, president of the Politicheskaya Analitika think tank. That will, of course, make things more difficult for Mikhail Prokhorov, who will be building a new liberal party,

elections (at least in Moscow) than in the Duma elections in December, which influenced the popular mood. Many of the protesters had, deep down, resigned themselves to Putin’s victory. Even an independent vote count gave him more than 50% of the votes. This did more to take people off the streets than anything else. The key issue today is how many of those people, who were“awakened”by the current protests, will not become disenchanted with politics and leave the stage. On this hinges the future of new

almost certainly in company with former finance minister Alexei Kudrin. Prokhorov’s showing in the presidential election provides a good springboard. Yet it is one thing to win 7% of the votes and another thing to win over hearts and minds when confronted with dense ranks of the right-wing, left-wing, social-democratic, monarchist and other parties that the Justice Ministry is beginning to register by the dozen. What happens in Russia now depends on how Putin behaves on his third presi-

The new bill "On political parties" signed into law by President Dmitry Medvedev entered into force on April 4. The legislation is expected to liberalise the Russian political system. At the moment, there are only seven officially registered parties in the country. The main obstacle to creating new parties was the complicated system of requirements for party registration. The new law decreases the minimum required party membership from 40,000 to 500 people and also drops the requirement of minimum

strength of regional branches. The law prohibits to disband the parties due to their "insufficient membership". But a party can be dissolved if it doesn't take part in the election for 7 years in a row (compared to 5 years before). The law also forbids using similar names to the currerntly existing parties' names to avoid confusion. Experts say that the new law is a big step towards the political reform, but the reform will remain incomplete without the permission to form election blocs, that is still not allowed.

dential watch. The situation on the eve of elections forced him to demonstrate a readiness for dialogue. Of course, the political reform was initiated by Dmitry Medvedev but Putin, too, made it clear in his series of articles published ahead of the elections that he is ready to change and is ready for a more meaningful dialogue with society. He promised to revive the system of referenda, to make it easier for citizens to initiate legislation and strengthen public watch over the executive branch. Putin’s convincing victory fuelled suspicions that all this will remain just promises.“There is no demand within the Russian electorate for a new Putin,”opinesViacheslav Nikonov. But others, such as Director of the Center for political information

Alexei Mukhin, think differently.“The people around the president understand that failure to keep even part of the electoral pledges will preserve the protest potential,”says Mukhin. Putin will have to work with both the protest electorate and with his supporters. The latter is far more important. As Mikhail Dmitriyev, president of the Strategic Studies Centre (which predicted the latest political crisis) points out, Putin’s problem is not legitimacy, which he now has, but how long that perception of legitimacy will last against the backdrop of growing discontent outside big cities.“At the end of the day, it was the Russian hinterland that elected the president,” argues Dmitriyev. “Now, the problem with the Russian hinterland is that it

Foreign Policy In his last visit to India as president, Medvedev praises Nehru, gives a push to trade, nuclear business

India a serious partner: Medvedev Russian President Dmitry Medvedev's talks with PM Manmohan Singh in New Delhi on March 29 focused on nuclear and trade issues. Shweta Chand

Specially for RIBR

It was a farewell of sorts. In what was perhaps his last visit to India as the president of Russia this March-end, Dmitry Medvedev charmed Indians, lavished praise on Jawaharlal Nehru as the architect of modern India and held wide-ranging talks with Prime Minister Manmohan Singh to reinforce robust strategic partnership between the two time-tested friends. He came to participate in the BRICS summit of the world’s top emerging economies, but made sure that the bricks and mortar holding together the sturdy

edifice of the India-Russia partnership was as strong as ever on the 65th anniversary of the establishment of diplomatic ties between the two countries. A day before attending the BRICS summit and meeting Manmohan Singh for talks, Medvedev set the right tone, describing India as a“serious partner” of Russia in international relations.Accepting the Doctor of Philosophy (Honoris Causa) conferred by the JNU for his outstanding contribution to deepening Indo-Russian friendship, Medvedev described India and Russia as examples of “good neighbourly”and“absolutely friendly” relationship. Both countries have developed a common approach on very complex situations, including critical ones, he said, adding:“Our countries

leaders was evident as they had interacted many a time both bilaterally and in several multilateral summits. The talks focused on scaling up bilateral civil nuclear cooperation, a sturdy pillar of the strategic partnership, and enhancing trade and investment. As the work had resumed at the Kudankulam nuclear plant after nearly six months of protests by activists who were raising safety concerns in the wake of the March 2011 Fukushima disaster, the discussions focused on the future. Manmohan Singh is understood to have assured Medvedev that the India-Russia civil nuclear cooperation will continue according to the roadmap outlined in 2010 which envisages Moscow setting up around 16 atomic reactors in India. The two leaders also

have been tested for duress.” He was unstinting in his praise of Nehru.“His personality was of world calibre, he was never searching for benefits but worked for longterm development, there is a

India assures its commitment to the 2010 roadmap for nuclear cooperation lot to be learnt from the political legacy and heritage of Jawaharlal Nehru.” Against this backdrop of mutual goodwill, Manmohan Singh held 45-minute talks with Medvedev at his official residence on March 29 after the end of the BRICS summit. The warmth and bonhomie between the two

discussed the agreements for the units III and IV of the Kudankulam nuclear plant that will further enhance civil nuclear ties between the two countries. The pacts are “almost ready,”according to Russian Ambassador Alexander M. Kadakain. The two leaders explored the possibility of a Comprehensive Economic Cooperation Agreement (CECA) between India and the Customs Union of Russia, Kazakhstan and Belarus. Seeking to energise economic ties, which has remained much below the potential of two huge econom i e s , t h e t wo l e a d e r s reaffirmed their target of achieving $ 20 billion by 2015. The two sides have identified diverse sectors for future growth, including energy, pharmaceuticals, IT, steel, hydrocarbons, aero-

space, diamonds and agriculture sectors. Both leaders reviewed defence cooperation and held the BrahMos missile system as a shining example of this cooperation. There were some thorny issues also. Medvedev is understood to have informally raised the issue of Sistema Shyam Teleservices, whose licence has been cancelled due to a court order. Manmohan Singh assured Medvedev that India continued to welcome foreign investors and conveyed that the decision on the issue would be taken within the four corners of the Indian law. The issue also figured in discussion between India's Commerce and Industry Minister Anand Sharma and Russian minister of economic development and trade Elvira Nabiullina.

Economy World Bank says Russian GDP will grow by $49 billion per year and predicts spike in household incomes

The World Bank has painted a rosy picture of post-WTO Russian economy, but analysts suggest major reforms before it's possible. Tai Adelaja

russia profile

Russia looks primed to reap enormous economic gains when it becomes a fullfledged member of the World Trade Organization (WTO) this year, says a new World Bank report. Russian households incomes will spiral up in the near future, while average Russian workers will see their wages skyrocket, says the report. But some an-

alysts contend that the report, which could influence investors’sentiments, misses the mark and will only send the wrong signal to a Kremlin, already saddled with worries over a stretched budget.This is because investors are paying close attention to Russia's near-term economic outlook as an indication of whether a new six-year presidential term for Presidentelect Vladimir Putin would bring the much-needed improvement to the country's poor investment climate. According to the bank's baseline scenario based on oil price of $98 per barrel,

Russia's GDP will grow a mere 3.5 percent in 2012, and will slightly climb to 3.9 percent in 2013. With oil prices at $125 a barrel, Russia's GDP growth could reach four percent in 2012 and 4.2 percent in 2013. However, the bank believes that Russia's WTO accession will dramatically improve the country's economic fortune. Russia should see its GDP expanding by about 3.3 percent, or about $49 billion per year, as a member of the world trade block, World Bank economists said. In the long term, the economists say the gains

reuters/vostock-photo

Life after WTO: All milk and honey? Economic development minister Elvira Nabiullina is upbeat about Russian WTO prospects.

should increase to about 11 percent or about $162 billion per year. The WTO membership will have a substantial impact on Russian households too. The average Russian household would experience a gain of 7.2 percent of its in-

come each year, while more than 99 percent of Russian households will experience gains within the range of two to 25 percent of their incomes each year. TheWorld Bank sees about 72 percent of the estimated gains coming from improved

quality and lower prices of services that lead to productivity increases and the increased competitiveness of Russian firms. However, Russian analysts feel that the World Bank’s upbeat forecasts are overly optimistic, even when juxtaposed with estimates from the country’s Ministry of Economic Development.The growth in real disposable income should be four percent in 2012, and 4.4 percent in 2013 when the benefits of WTO accession are taken into account, according to the ministry. Ariel Cherny, a researcher of Allianz ROSNO Asset Management, however, suggests a reality check. "There's a need to restore investor confidence, particularly through fighting corruption, strengthening governance and protecting private property rights," says Cherny.

has frequent mood swings. It may happen that, in a year or eighteen months, support for Putin among these social strata will evaporate. It happened in the 1990s. In 1996, Yeltsin was elected and, by the end of the 1990s, his approval rating had dropped to less than 10%.These are very real risks for Putin.” Putin’s supporters in the provinces do not care very much about political reform. They are far more worried about the problems of housing and utilities, which have not been addressed for more than twenty years, and about corruption. Putin has always conducted a cautious personnel policy without sacrificing members of his team and anti-corruption trials have seldom involved top officials. But if he does not want to see the anger of provincials shift from local bureaucrats to himself, he will have to change his policy. In this situation, Dmitry Medvedev will, of course, become prime minister, but none of the political analysts give him any chance of holding on to the job throughout the six years of Putin’s presidency. He is sure to become a sacrificial lamb following the unpopular decisions the government will have to take. For example, the inevitable increase in the retirement age and other steps aimed at reforming the pension system. In this case, only a major sacrifice will rescue the popularity rating and political future of Putin himself, and few doubt that such a sacrifice will be made.

Behind the mask

Putin's third term: what's on the way? 1990s, he felt deeply“Russia’s disgrace”,when it was weak and“lost face”.On all these issues, many Russians think hat will Putin’s along the same lines. Putin considers himself to new presidential term – of- be “a man of his word.” He ficially the promised Medvedev to apthird, but actually the point him as prime minister fourth – be like? Will we and he will keep that promsee Putin 2.0 Reloaded or ise. Putin, who made a dizzywill the “regime collapse” ing career within a few and the world witness the months (1998-1999), cannot third Russian Revolution but believe in his“star”. Having enjoyed genuine popular in a hundred years? Watching television re- love, Putin is sensitive to any ports about rallies“for fair changes in society’s mood. elections”,the Western au- The protest demonstrations dience might get the im- apparently hurt him deeply. What policy can we expect pression that Russia is on the threshold of an Arab from this man in the foreseeSpring and that there able future? Putin will not might still be a “rerun” of make abrupt movements in the presidential elections under pressure from the street.Yet inside Russia, everyone – from Putin to his fiercest opponents – knows Putin will keep real this is not the case. Under power, but will be the new law, Putin has been sensitive to public elected for six years. His power is absolutely legiti- criticism and expand mate, impeachment by political freedoms. Russian parliament is impossible because Putin’s any direction. He will try to party holds more than 50% “divide and rule”: part of the of the seats. And no one has opposition has already been a taste for revolution. recognised as “systemic”; What is Putin, who will they have been allowed to remain in office until 2018, register their own political like? The myth about Putin party and they will take part the dictator concerned only in elections.Will Putin allow with personal enrichment greater freedom of expresdoes not bear scrutiny.Putin sion? Putin’s main concluis 60 years old and has been sion is that, if he controls the leading Russia for 12 of overall situation, criticism them. If he were concerned can do him good. only about“personal gain”, Putin will not“share real he had a wonderful chance power”but retain the right to to leave the post of president appoint top officials. But he after negotiating firm guar- will be sensitive to public antees of his safety. This is sentiments, especially w.r.t what Yeltsin did in 2000. the social/economic policy. Since he has stayed, he is He will do everything possinot guided by his selfish ble to avoid raising the re“personal interests” but by tirement age.Thus,Vladimir a sense of “mission”. As a Putin vintage 2012 will be a Russian, he has a profound president who keeps real faith in Russia’s great mis- power firmly in his own sion, just like the US, Brit- hands, expands public politain,China or any other great ical freedom, puts his stake country does. As a person on patriotic propaganda and who worked in the “wild” judicious social policy. Leonid Radzikhovsky

W


BUSINESS REPORT

Opinion

in association with rossiyskaya gazeta, russia Wednesday, APRIL 11 2012

Debidatta A. Mahapatra

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T

he relations between India and Russia, despite occasional tumultuous phases in past, can be aptly characterised as“continuity in the midst of change.” Broadly, the relations of India and Russia can be divided into three phases: Soviet phase; disintegration phase and initial years; and post-Soviet phase after BorisYeltsin. Specifically, the post-Soviet phase can be classified into three sub-categories: initial phases of turmoil; the compulsions of the Yeltsin period; and the resurgence of relations after 2000 when Putin took charge. Even prior to the emergence of the Soviet Union, the legendary letter exchanges between Gandhi and Tolstoy, the great forays of Nicholas Roerich and later his son Svetoslav Roerich, who married an Indian actress Devika Rani and settled in India, the close links of some of Indian freedom fighters with Soviet leaders, the great Indian revolutionary M. N. Roy’s links with the Soviet leadership, particularly Lenin, are some of the cherished moments in the annals of the India-Russia relations. In the first two decades after independence, India’s growth story depended a great deal on Soviet aid and assistance particularly in

heavy industries and defence sector. At the height of the cold war, when South Asia was propelled to be a crucible in geopolitical rivalry, the Soviet Union played the Good Samaritan to keep India on the winning side. Whether it was wars with Pakistan, or the liberation of Bangladesh, or sending its naval fleet to counter the seventh fleet of the US in the Bay of Bengal, or vetoing the United Nations Security Council resolutions on Kashmir in favour of India, India-Russia ties have withstood the test of time. Starting with the historic visit of Khrushchev and Bulganin to India in 1955 with the signing of the Treaty of Friendship, Cooperation and Peace in 1971 and the bilateral ventures later, the relations remained sturdy in the Soviet period. Culturally, the people of India and Russia bonded easily. Thousands of Indian students flocked to the Soviet Union. Indian cinema legends like Raj Kapoor were household names in the Soviet Union and the all-time hit song "Mein Awara Hoon" still evokes nostalgia. The collapse of the Soviet Union plunged the relations into uncertainty, and led to what is called a lost decade. Whether it was the Cryogenic deal controversy, or differences over rupeerouble exchange rate, or shifting priorities of both the countries, the relations

andrey popov

Time-tested ties to scale new peaks

At 65, the IndiaRussia partnership is young enough to steer ahead of past compulsions.

were at the lowest ebb in this period.The visit of Russian President BorisYeltsin to India in 1993 could be termed a turning point in the India-Russia relations. Yeltsin was in the process of giving up ‘pro-Atlantic’ policy in favour of ‘Eurasianist policy’, with focus on ‘near abroad’ and traditional partners like India. Such a policy was well articulated by prominent Eurasianist

Yevgeny Primakov, later vigorously pursued by Vladimir Putin, who after taking charge in 2000 robustly articulated his vision of India-Russia relations: first, the common stakes in the rise of a multipolar world structure; second, the fight against religious extremism and terrorism; third, economic cooperation in defence and energy sector; and fourth,

common stakes in shaping regional and international affairs. This was reflected in many joint agreements and declarations, including inter-governmental cooperation on science and technology; annual summit of heads of states; joint working groups on terrorism, and on Afghanistan; Moscow Declaration on terrorism; and joint deals on arms

sector to develop missiles such as BrahMos. Medvedev followed the line developed by Putin. From the late 1990s onwards, Russia began re-emerging as a global power with its economy bolstered by energy dollars and its assertiveness in foreign policy. The platforms such as Russia-IndiaChina(RIC), Brazil-RussiaIndia-China-South Africa (BRICS), and Shanghai Cooperation Organisation (SCO) promote the vision of a new world order in which both the countries can play effective roles. Perhaps the 65th anniversary of the establishment of diplomatic relations provides an opportunity to flesh out some occasional differences. Some areas of contention include: the procrastination at operationalisation of nuclear reactors in Indian state of Tamil Nadu, the cancellation of license of Sistema Shyam TeleServices Ltd. (SSTL), along with other 122 companies, by Indian Supreme Court and easing of the visa regime. While in the case of nuclear plants, it is a mixture of domestic politics and international politics that delayed the operation of phase-1 and phase-II, in case of SSTL, it is the Indian law that is involved. However, the work on both nuclear sites has already resumed, after the Tamil Nadu government allowed resumption of work on March 19, 2012. Regarding SSTL,

Russia’s Syria stand: Myths and Reality Alexander Yakovenko Diplomat

I

consider it important to share with readers the basic elements of Russia’s real position on the situation in Syria. Unfortunately, there is a distorted view of Russia’s approach to the political crisis in a country with which we have longstanding bonds of friendship and whose fate is not a matter of indifference to us on a state or human level. First, I would like to make clear Russia categorically condemns any violence.The actions of President Bashar al-Assad’s government in the crisis can hardly be called exemplary and the perception Russia is‘blindly supporting’ the Syrian authorities is mistaken. However, it is worth remembering that 25-30% of

those who have been killed in Syria were members of the security forces. It is wrong to say government tanks and artillery are confronting poorly armed civilians. Several dozen law enforcement personnel die in

The perception that Russia is ‘blindly supporting’ the Syrian authorities is mistaken. Syria every week in terrorist attacks. Seeking to stoke tensions, opposition fighters disrupt power and water supplies and the work of shops. In the recent showdown in Homs, civilians were in effect hostages to the irreconcilable positions of the two sides. So we believe it is crucial

that the international community condemns not only the violence on the part of government forces, but also the armed actions of the opposition; that it demands the political opposition dissociate itself from extremists and that armed opposition groups leave population centres in conjunction with the withdrawal of government forces. This was the aim of the Russian amendments to the draft resolutions of the UN Security Council and the General Assembly. Sadly, these ideas were not backed by many of our UN partners. We are convinced that a one-sided condemnation of the Syrian government and its diplomatic isolation, coupled with unconditional support for the opposition, are not conducive to a peaceful settlement but instead encourage the opposition to continue armed struggle in-

stead of turning to politics. Our western and some Arab partners are in effect taking one side in the confrontation, when the goal should be to help Syrians decide their future independently through the political process. It is well-known how long it took for the political situation in France to return to normal after the 1789 revolution. Perhaps in England, it took less time – 50 years – to achieve a settlement in the form of the Glorious Revolution. Neither the Enlightenment nor the European revolutions could protect Europe and the world from the catastrophe of the First World War. Why not help others avoid such a bloody path and carry out transformational processes by evolutionary methods? It is important to understand that President Assad still has the support of a sig-

nificant proportion of the Syrian population.The high turnout and the results of the vote on the referendum for the new constitution, for all the flaws of holding a referendum during such an unstable period, have demonstrated Syrians’ desire for a political solution.To continue to inspire the opposition to overthrow the government militarily is irresponsible with regard to all the citizens of Syria, irrespective of their political views. Judging from media reports, the opposition claims that western countries first provoked it to launch an armed struggle and have now ‘abandoned’ it. Russia is working with Damascus on the diplomatic front in order to induce the Syrian authorities to hold a dialogue. It is not easy to achieve results because any government would find it hard to agree to negotiate

with people who openly call for its overthrow. Nevertheless, we have secured the Syrian government’s agreement to have such a dialogue. By contrast, the opposition, including the Syrian National Council, has rejected it. The whole international community is interested in averting civil war in Syria. Russia knows only too well what civil war is from its own tragic experience. To that end, it is necessary to make every effort to launch an inclusive political process in Syria, involving both the authorities and opposition groups. One of the key conditions for that is restoring confidence, including between Russia and western partners. One has to admit that this was seriously undermined by Nato’s military operation in Libya. Some episodes in the Syrian crisis

have also tended to erode confidence.They include the hasty vote on the draft UN Security Council resolution, ignoring our mediation efforts while western journalists were evacuated from Homs, and so on.

Annan’s mission is Syria's last chance to avoid a long and bloody civil war. It must not be missed. However, we see that responsible politicians and diplomats are leaning more and more towards the need for a political settlement. The appointment of the former UN secretary general Kofi Annan as the representative of the UN and the Arab League, mandated to bring the parties to the ne-

Prime Minister Singh has assured Russian President Medvedev on the sidelines of the BRICS summit in New Delhi on March 29 that the issue will be sorted out soon. Currently both the countries are exploring plans to develop hypersonic cruise missile. Another strong area of cooperation is the area of energy. In June 2012, Russia’s Gazprom Global LNG signed a pact to supply upto 10 billion cubic metres of LNG to Gas Authority of India Ltd., Gujarat State Petroleum Company and Petronet over 25 years. Similarly, both countries have made visa rules flexible. In fact, India and Russia have myriad areas to explore by coming out of the ‘rupee-reactor syndrome’, which puts more emphasis on defence relations. It is time to diversify the relations. At 65, the India-Russia partnership is young enough to steer ahead of past compulsions and constraints, and acquire an all-encompassing character. Going beyond the usual glamour and celebrations, the new presidency of Putin and the UPA-II government under Manmohan Singh is set to witness some historic milestones. Dr Debidatta Aurobinda Mahapatra is part of the research faculty at the Centre for Central Eurasian Studies, University of Mumbai, India.

gotiating table, is a welcome development. All the more so as his mission has received unanimous support in the Security Council. President Dmitry Medvedev, at his meeting with Kofi Annan in Moscow on March 25, called Annan’s mission Syria’s last chance to avoid a long and bloody civil war. That chance must not be missed. We are convinced that civil war can be avoided and that the Syrians can overcome the current crisis, if all the outside players act together.The main aim must be to help create conditions in which the Syrians themselves can sort things out. One may argue that we are advocating a ‘soft landing’ for the regime, but in fact, it is about a soft landing for Syria and all Syrians, and for the whole of this. Alexander Yakovenko is Ambassador of the Russian Federation to the United Kingdom. He was previously Deputy Minister of Foreign Affairs of the Russian Federation.

Jagannath P. Panda

Specially for RIbr

T

he continuity in BRICS summits and the current economic primacy of the BRICS grouping suggest that global politics is entering a new phase of power politics, with the developing world taking the lead in the global decisionmaking process. The March 29 New Delhi summit gives a clear indication of this. Critics and the Western media are sceptical of BRICS, saying that powers like China and India will never think alike; the dialogue in the developing world has also not been very forthcoming, given the BRICS members’ differentiation in their political and social systems, and particularly in foreign policy objec-

tives.Yet, the very existence of BRICS and its progressive character in discussing political concerns over global issues are vital to developing world politics,suggesting that BRICS will be playing a bigger role in world politics. Though the first two BRICS joint statements released in 2009 and 2010 were akin to toddling efforts, the Sanya and Delhi declarations marked a way forward in institutionalising the grouping further in an evolving multipolar world order. The Delhi Declaration also raises the scope for bigger powers like China, India and Russia to rationalise a credible political understanding,and to ponder whether the time has come to overcome the existing political misunderstandings among them and forge a credible union,which can be useful for

global governance, where they will have a better influence in both the North-South and South-South spectrum. The New Delhi summit reinforced the“primary role of the G20 as a premier forum” for global economic cooperation. The major powers in BRICS like China, India and Russia must prepare a constructive demand draft to increase the pressure to reform the global financial architecture, and increase the voting rights of China and India, realigning the architecture, which is more favourable to the US and the EU. Russia, which takes over the G20 presidency in 2013,could take a lead in this regard. On political issues,the New Delhi summit indicated that a difference of opinion is not always a result of differences in perception.For example,on

Iran, India’s stance could be different from that of China and Russia,but their common stand on Iran at the BRICS summit will have a lasting effect on global politics, at least over the US which seems to have taken India for granted on many pressing global issues because of the recent vitality of Indo-US relations. About the Syrian crisis, BRICS also collectively expressed the view that a solution to the crisis lies in“dialogue”. The opportunities for BRICS are many; equally, the challenges are big.The immediate thrust should be on the promotion of intra-BRICS trade and setting up a formal BRICS platform through a secretariat, where economic and political sensitivities could be discussed. As the BRICS summit has indicated,

the developmental banks of BRICS countries could take concrete steps to formalise and establish understanding (a) in extending credit facility in local currency, and (b) in the multilateral letter of credit confirmation facility agreement. The proposal to extend credit facility in local currency is a momentous step, as it intends to reduce the demand for fully convertible currencies for transactions among BRICS nations. This will directly help in reducing transaction costs; as will the credit confirmation facility. The Delhi Declaration and the 2012 New Delhi BRICS summit will be remembered more as a progressive political statement for a new world order and politics. Politically, the BRICS members’elite understanding and perspective

andrey popov

BRICS: Mapping New pathways in shifting global Power politics

on the issues of Iran and Syria are a positive indicator of how the emerging economies are forging a united political stand on key global issues. The BRICS call on the IMF, World Bank, and on the global markets also puts BRICS in a different league. The demand for reforming the IMF quota as being necessary for the“legitimacy and effectiveness of the Fund”is a notable stance.The call to have a pres-

ident in the World Bank from the developing world is equally distinctive.There was also a united call to pressure the advanced economies to “adopt responsible macroeconomic and financial policies”to avoid creating excessive global liquidity.These are huge political statements,and the target is to limit and restrict the American and European supremacy in the global financial architecture.

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.

Though it is not going to be easy to curb theWestern dominance in the global financial institutions, the New Delhi summit does indicate that the process and the attempt from developing countries has already started in this direction. Dr. Jagannath P. Panda is Research Fellow at the Institute for Defence Studies and Analyses, New Delhi.


BUSINESS REPORT

Lifestyle

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA WEDNESDAY, APRIL 11, 2012

People Feeling homesick? Take a walk on Jawaharlal Nehru Square, try desi kababs at Maharaja or shop at Sevastopol Hotel

Curry or cricket, India forever in Moscow From shops and restaurants to streets and monuments, Indians make sure that the sounds and songs of India are never far behind. ELENA KROVVIDI RIBR

THE QUOTE RUSLAN SUKHUSHIN (2)

The Indian embassy located in beautiful 19th century mansion in Moscow's historical area.

Making a home away from home More than 10,000 Indians live in Moscow, mostly students, businessmen, representatives of trade missions and staff of the Indian embassy. Wellknown Indian organisations include Indian Business Alliance (IBA), an umbrella organisation for business enter-

to be the Museum of History of Gubkin State University of Oil and Gas. The other is the Interclub conference hall at the Russian Peoples' Friendship University (PFUR). The PFUR warmly welcomes different ethnic and cultural groups living in Moscow, but for Indians, this place symbolises “a real home away from home”. On Diwali and Holi, large groups of people of Indian origin,

teric centre and shop on Pokrovka Street and the famous Indian market in the Sevastopol Hotel are redolent of Indian aromas and are buzzing with customers looking for a bargain. Moscow State University stadium, where cricket matches between eight teams are held, is a favorite with Indians who love to indulge their passion for the game here. And even those who are not very familiar with the Indian cultural life in Moscow can still get a feel of India by just walking along the streets of the city. Many people on their way to work by car or public transportation daily come across landmarks and streets named after iconic Indian politicians or cultural personalities. Jawaharlal Nehru Square, Indira Gandhi Square with the Indira Gandhi monument close to Moscow State University,

ELENA LININSKAYA RIBR

For Russian musicologist and Indologist Tatiana Morozova, listening to Rabindranath Tagore’s songs was a life-transforming experience. The tryst with Tagore started a few years ago when she was living in Bangladesh. “When I lived in Bangladesh where my husband worked as a diplomat, I heard a wonderful melody from the ground floor of our block of flats. I ran down the stairs and entered the room where local residents were listening to the radio. When I asked: “Who composed this beautiful music?”they proudly replied: “Rabindranath Tagore.” The chance discovery inspired her into delving deeper in the transcendental

world of Tagore’s poetry and music.This love affair culminated into a book entitled “Rabindranath Tagore – Geetanjali – Musical Poems”, edited by Morozova and translated by Dr.Irina Prokofieva. The book, published with the support of the Bengali Society, Russia, was launched at an elegant function at the Indian embassy in Moscow. Speaking at the function, Morozova couldn’t help being emotional while speaking of Tagore’s unique musical rhythms and the imprint his music leaves in her soul. She even sang some poems of Tagore, sending the audience into raptures. This is a unique book, which for the first time ever, puts Tagore’s poems to western classical music notation and provides the accompanying text in Russian for 60 poems from Geetanjali as well as 16 other songs written by Gurudev. Tagore is hailed as a literary and poet-

PRESS PHOTO

Evoking Tagore magic in Western classical strains

Ambassador Ajai Malhotra, Dr. Irina Prokofieva and Dr. Tatiana Morozova.

ic genius, but Morozova rues that people often forget about Tagore’s amazing musical gift. She also feels that the Nobel laureate’s music works are the best way to get to know Indian classical music because they repre-

sent best traditions of the Indian national melodies and elements of the European classical music. “Musical Poems” once again proves that Tagore’s heritage cuts across national and cultural boundaries and

transcribing his Geetanjali into an entirely different music notation doesn’t take anything away from the greatness of his works. Prokofieva says that her translations of Tagore’s poems for Morozova’s book are just literal translations, as she was careful not to miss any nuance of the profound meaning of Tagore’s poems. Morozova, however, lauded Prokofieva for preserving the meaning while managed to keep the musicality and rhythm of the original verse. Indeed, it's hard to reflect Tagore’s vivid imagery, great sensitivity and sincerity, whether one translates Gurudev's poems from Bengali into Russian or his music from the Indian notation system into the European one. Prokofieva has transmitted some of her passion for Tagore and the Bengali language to her students. She recalls fondly her experiences with her first-year Bengali students at the Moscow’s MGIMO Institute. “Firstyear students are often confused when they are told they are going to learn Bengali; it is such a rare language, but afterwards, they change their attitude and fall in love with it.”

INDIAN BUSINESSMAN

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I love to loiter around Red Square and the Kremlin at least twice a month. There is no place, which is more beautiful.

Moscow State University stadium, a popular cricket ground.

daily basis. Even though Indian names stand out among the names of other Russian streets such as Lomonosov Prospect or Leninsky prospect, they merge effortlessly and strike their own chords in the symphony of the Moscow streets.

the statue of Mahatma Gandhi in Moscow's “Museon” park with the monument of Peter the Great in the background, and the Jawaharlal Nehru monument on Vernadsky Prospect street are just a few Indian names that Muscovites encounter on a

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The first BRICS youth film festival showcased universal themes of love, passion and conflict from five culturally diverse countries. PRIYANKA GERA RIBR

Moving beyond politics and economics, a festival of short films entitled“Film Dialogue” by young directors from BRICS countries was held in New Delhi ahead of the summit. Organised by the Russian Centre for Science and Culture, the festival included a competition of short films while full-length feature films were also screened. Cutting across boundaries, young directors explored universal themes of love and passion, concerns of an individual or a society in these films. “The festival gives us a rare opportunity to know and understand each other better as these films reflect the feelings, interests and public mood, common to our young people,” says

Best Feature FIlm award at BRICS Youth Short Films Festival.

Sergey V. Karmalito, senior counselor at the Russian embassy in Moscow. Sathish Chandrasekaran won the“Best Director”and “Viewer’s Choice”award for his personal narrative, Sathish Chandrasekaran B.E, MBA (Bar).The protagonist, an engineer, recounts how he switched to film-

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Mikluho Maklaya street, my Alma Mater place, is very special for me. It makes me feel nostalgic about my student days.

making when his son questions him about his education.The short film“Enmesh” written and directed by Ainur Askarov of Russia, bagged the awards for“Best Feature Film”and“Best Male Actor”.It is an autobiographical story of a boy who aspires to see a show of Bollywood movie“Disco Dancer” in the local House of Culture in the remote Bashkir village. “When my parents went on vacation”directed by Cao Hamburger of Brazil, evokes 1970 when Brazil was going through political unrest and at the same time, was on the verge of its third FIFA victory. "Hutong Days-An Zhanjun", the Chinese entry for the festival, is the story of a middle-aged man who lives with his family in a small street in Beijing and manages to sustain courage and compassion through difficult times. White Gold-King Deon was South Africa’s offering at the festival.

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My favourite haunting ground in Moscow is the newly constructed "Moscow City", which is an array of skyscrapers with several ultra modern facilities.

Doondi Talasila

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restaurants where Moscowbased Indians enjoy the food and atmosphere they’re accustomed to. According to the Indian embassy, there are prises functioning in Moscow, around 14,000 Indians in Hindustan Samaj, one of the Russia, with over half of of oldest organisations open to all Indians, and students asso- them living in Moscow. Around 4000 Indian stuciation. Cricket matches held dents are enrolled in various at the MSU stadium and Indian song and dance concerts medical and technical institutions in the country. are popular events that atFor any Indian feeling tract large crowds. homesick and missing their favourite flavours and arodressed in festive clothes, mas or for that matter, for a come to these places with Russian who’s got hooked on their families to celebrate delicious Indian food and the Festival of Lights and the beautiful jewellery and scarves, there are a host of Festival of Colours. But Indians are not the Indian shops in Moscow, kind to bond only on festi- starting with low-cost marvals. There are a number of kets where one can grab inIndian eateries where Indi- expensive bracelets or sweets ans often meet over a cup of to the Indian shops selling masala tea or a lunch of exquisite luxury goods for curry. “Talk of the Town”, the exacting buyers.“Indian “Maharaja”, “Khajurao”, Spices” shop on Sretenka "Darbar”are just some of the street,“White Clouds” eso-

SENIOR EXECUTIVE, PHARMACEUTICAL FIRM

Monument to Mahatma Gandhi was created in 1988.

Culture 'Geetanjali' comprises text of 60 poems and 16 songs written by Gurudev into Russian

In a pioneering feat, Dr Tatiana Morozova has put Tagore’s poems to western classical music notations in her new book.

Dr Deshini Lakshman

NATALIA KHRAMTSOVA

There is a corner of foreign land, which is forever India. In Moscow also, one can find many places, which have become preferred haunts of Indians and persons of Indian origin. From shops and restaurants to streets and monuments, there are special places, which bring together Indians of varied cultural backgrounds and have an emotional pull for them. The hub of Indian activities in Moscow, the embassy of India, is a historical building built by renowned Russian architect Ivan Baryutin in 1911. It is located in Vorontsovo Pole street, initially the residence of the Russian noble family of Vorontsov Princes in the 14th century and then the territory of the Andronikov monastery in the 15th century.This area miraculously survived the great fire of 1812 that burnt almost the whole city but continues to retain its patriarchal old-Moscow look. The neighbouring streets such as Chistoprudny Boulevard or Myasnitskaya Street also have unique historical ambience. Here you can find the majestic Archangel Gabriel Church, as well as buildings that transport visitors to different periods of the Russian history. The embassy hosts national holiday celebrations and myriad cultural events. But there are other Moscow locations that are traditionally known as “Indian” among both Indians and Russians. One of them is the Cultural Centre of Gubkin Institute, situated on the Leninsky Prospect street, which used

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April 2012, Russia & India Business Report  
April 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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