WEDNESDAY, OCTOBER 12, 2011

...Marching towards a common future

BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

Russian Prime Minis-ter Vladimir Putin an-nounced last month that he will con-test the presidential elections next year.

Defence ties get a boost.

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

Nerpa on the way, Gorshkov by Dec 2012

When he visited Russia re-cently, Indian Defence Min-ister A.K. Antony struck all the right notes: he honoured the World War II veterans by laying a wreath at the me-morial and travelled to Zhu-kovsky in the Moscow region where he saw a demonstra-tion of prototypes for the fifth-generation T-50-1 and T-50-2 fighter jets. The high-light of his visit was delega-tion-level talks with his Rus-sian counterpart Anatoly Serdyukov that ended with the two sides deciding to strengthen interactions be-

VIKTOR lITOVKINRIBR

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

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

mand of an Indian crew by December this year.The two sides also discussed the plan to transfer the Vikramaditya aircraft carri-er (known as Admiral Gor-shkov in Russia) to the Indi-an Navy which, according to sources, will happen in De-cember, 2012. The aircraft carrier is more than 85 per-cent complete. The Russian side has agreed to expedite refitting work on the aircraft carrier INS Vikramaditya and work on the MiG-29K aircraft to achieve complete synchronisation with the aircraft carrier.“Our bilateral military-technical cooperation is now on the even track,” said Ant-ony at the end of the talks. "There is a strong impulse, both at the level of the gov-ernment and among the peo-ple of India, to further

NEWS IN BRIEf

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

India aiming to double tourists from Russia

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

Construction giant to set up company in India

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

nami that struck Japan and the Fukushima nuclear power plant accident. Issues regarding the resumption of joint training exercises for Indian and Russian sailors, as well as joint exercises for soldiers and special com-mando units were raised.“The Navy's General Staff is preparing such exercises,” said Serdyukov. “Once ev-erything is ready, we will strike an agreement with our Indian counterparts and an-nounce the dates for these manoeuvres. They are ex-tremely useful for us."As for the modernisation of the SU-30MKI fighters for use with BrahMos missiles, the Sukhoi Company is ready to carry out such re-search and development ac-tivities, but it requires sever-al aircraft from the Indian Air Force.

Russian computer security solutions pro-vider Kaspersky Lab has named ace crick-eter Sachin Tendulkar its brand ambassa-dor. Beginning October, Tendulkar will represent the Kaspersky brand in India and other regional markets around the world. "The youth of this nation looks up to Sachin Tendulkar as a huge inspiration. We are ex-cited to be associated with the cricketing maestro," Kaspersky Lab Managing Direc-tor (Asia Pacific) Harry Cheung said. RIBR

Sachin, the face of Kaspersky IT brand

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

NMDC keen to buy stake in Yakutia coal company

50th Anniversaryof Manned

Space Flight

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

Unveiling his first major for-eign policy initiative as he prepares to return to the Kremlin as the president next year, Prime Minister Vladimir Putin has called for the creation of a "Eurasian Union" of ex-Soviet coun-tries that could serve as “a bridge” between Europe and Asia.The new union would fur-ther integrate the economies of existing customs union members Russia, Belarus and Kazakhstan and gradu-ally expand to include Kyr-gyzstan and Tajikistan, Putin said in an article published Tuesday in Izvestia."We won't stop with this and have set an ambitious goal to reach the next, higher level of integration — the Eur-asian Union," he wrote.The Eurasian Union, which is supposed to become "a powerful supranational body" and "an effective bridge between Europe and the dynamic Asia-Pacific re-gion," will welcome acces-sion of other countries, with the CIS nations having a pri-ority, said Putin. But Putin, who once famous-ly described the collapse of the Soviet Union as “the

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

IRINA fIlATOVAThE moScow TImES

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

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

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

ar weapons, Stanovaya said. But Putin's spokesman Dmitry Peskov said the inte-gration of the post-Soviet re-gion does not negate the reset with the US, since these are two priorities of Russia's for-eign policy. "Both these vec-tors can be developed simul-t a n e o u s l y a n d independently," he said. Putin's article is "sort of a presidential manifesto” aimed at outlining his initia-tives after he returns to the Kremlin, said Alexei Portan-sky, a professor of the global economy and policy depart-ment at the Higher School of Economics.The idea of the Eurasian Union is not new, but it is likely to take a while before implementing this initiative, since the customs union has yet to prove its ability to work properly, he said. "The economic crisis in Belarus in June proved that the cus-toms union isn't working the right way yet," he said.The customs union has been operating as a free-trade zone since July 1 when inter-nal customs controls were removed at the borders of its member-countries. Putin, however, stressed that the Eurasian Union could be crucial for bolstering the global economy, as "the pro-cess of creating post-crisis models for global develop-ment is progressing with dif-ficulties".The Doha round of interna-

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

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BUSINESS REPORT in association with rossiyskaya gazeta, russia

companieswednesday, octoBer 12, 2011

Russia, the world’s second largest oil exporter and a nat-ural energy super

power, is now looking to the Asia-Pacific region and the fast-growing economy of India to diversify its hydro-carbon exports. Under Russia’s energy strategy covering the peri-od upto 2030, the share of European market in ener-gy export will steadily de-cline. The share of eastern energy market in Russian energy export of liquid hy-drocarbons would grow from 6 to 25% while the share of natural gas export would grow to 20%. The European Union makes no secret of the fact that its in-creasing import depen-dence on Russia has to be kept within limits. The en-ergy strategy stipulates that energy exports to Asia-Pacific could reach 105 million tonnes.The strategy envisages that towards the end of project-ed period, oil and gas ex-ports to Asia should amount to one third and one sixth of the total cross-border supplies of these hydrocarbons respectively. While only 3% Russian en-ergy exports goes to Asia at the moment, it would reach 30% by 2030. The plan includes building an oil pipeline linking Yu-rubchenko–Tokhomskoye oil and gas fields in Krasno-yarsky krai, and Talakan-skoye and Verkechenskoye oil fields in Yakutia with the existing oil pipeline that runs from West Siberia to Angarsk. The East Siberia-Pacific region pipeline link-ing Taishet to Nakhodka would be one of the major transport channels for ex-porting Siberian oil to the Asia-Pacific region. India and Russia are spe-cial and privileged strate-gic partners, and one of the strong pillars of their stra-tegic partnership is bilat-eral cooperation in the vital energy sector. Import, mostly from the volatile re-gion of Middle East, ac-count for 75% of India’s energy needs, and it is like-ly to grow to 85 to 90%. Ac-cording to the Internation-al Energy Agency, India would be the third largest energy consumer in the world by 2025 after the US and China. Russia, India’s trusted strategic partner

for many decades, is destined to play a vital role in ensur-ing New Delhi’s energy secu-rity in coming decades. The former Soviet Union played a major role in bol-stering India’s energy sector by building tens of hydro-power stations, developing coal industry, finding oil in Indian soil and helping in setting up India’s energy major ONGC. Indo-Russian energy coop-eration acquired new dimen-sions in the post-Soviet pe-riod. India has invested $2.8 billion in the Sakhalin ener-gy project, controlling 20% stakes in the venture and has purchased Imperial Energy, a London-listed oil major in Tomk region. These are In-dia’s largest investments abroad. Nord Imperial, a subsiadiry of Imperial Ener-gy, has been among the com-panies that submitted appli-cations to bid for developing Russia’s Trebs and Titov oil deposits in the Arctic. India has been eying energy proj-ects at Timon Pechora basin and Vancour in the East Si-beria. It is also considering an option to invest $1. 5 bil-lion to $1.7 billion used for an opportunity in Yamal pen-

insula that houses one-fifth of global natural gas re-serves, offered by Russian firm Navatek.ONGC, GAIL, and Petronet LNG Ltd. are among lead-ing India's state-owned companies keen to invest in Russia. GAIL plans to invest Rs 7000-8000 crore in Ya-mal-Nanets region and has the option to market the LNG or even bring back to India. Novatek has a 51% stake in OAO Yamal LNG, which has the licence for ex-ploration and development of the South Tambeyskoye field located in the northeast of the Yamal peninsula. The Russian energy strategy towards the Asia-Pacific re-gion clearly mentions India as one of the important tar-get countries along with Japan, China, and Korea. India has to carefully take note of Russia’s hydrocar-bon vision, particularly to-wards the Asia-Pacific re-gion, if it wants to have a strong presence in Russia’s massive energy sector.

arun Mohanty Specially foR

RiBR

energy

Russia’s energy strategy has india, apR on radar

Under new strategy, Russia's energy exports to asia will go up from 3% to 30% by 2030.

investment Steel giant to set up 3 mn tonnes per annum plant in Karnataka with NMDc

alexei Mordashov, the ceo of severstal, is upbeat about his $2 billion-a-year expansion plan and his project in india.

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

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

month. It also plans to bring $756 million of new output online at its Dearborn, Mich-igan, plant by the end of 2011, and complete a $600 million mini-mill in Balako-vo, Russia, in 2013.Severstal has followed com-petitors in tapping emerging markets, where demand has outpaced expansion else-where. Besides the mam-moth India project, the com-pany also plans to spend $3.5 billion at the Putu Range in Liberia and $2 billion at the Amapa iron-ore project in Brazil.

As Severstal ramps up pro-duction, ArcelorMittal is cutting back to counter sur-plus capacity in Europe. The company idled plants in Luxembourg, France and Germany last month as or-ders from the European construction industry dropped amid economic stagnation.While ArcelorMittal and Severstal both sell steel in Europe and the United States, Severstal benefits from lower expenses at its Russian mills, where the av-erage cost of steel-slab out-

put is about $400 a tonne, compared with as much as $600 a tonne in Europe, said Dmitry Smolin, an analyst at UralSib Capital.Both steelmakers plan to boost investment in mining as they seek to avert rising raw-material costs. Sever-stal has snapped up iron-ore mines in Brazil and Liberia. “Because of very clear fun-damentals, we believe we should follow the trend of the market and be more fo-cused on Asia,” said Mor-dashov. Severstal may not be as resil-ient to market volatility as Mordashov's comments sug-gest, UralSib's Smolin said, citing decisions to backtrack on bullish investments in the past."I have a strong 'deja vu' with September 2008 when Sev-erstal last presented its strat-egy," Smolin said. "The com-pany was then convincing investors of great prospects in the developed markets in Europe and the United States. Afterward, Severstal had to reshuffle its asset portfolio and is now present-ing plans which may again be based on more bullish market fundamentals than the ones shared by its global rivals."By 2016, Severstal aims to be among the world's top five steelmakers by earnings be-fore interest, tax, deprecia-tion and amortization. "Of course, we can't predict the future," Mordashov said. "In-vestment activities could be significantly undermined in case of a negative develop-ment in the economic situa-tion. But we don't see it yet."

severstal high on india plan

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

kirill Mikhailovthe MoScow tiMeS

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

industry Demand for titanium from aviation giants like Boeing and airbus set to soar by 2014

in those years sometimes one couldn’t get milk in the shop. But I got a lot of support from students and staff at PFUR, and this friendly atti-tude helped me to overcome a lot of difficulties on my way,” he reminisces.After graduation, he got a PhD degree in agro-bio-chemistry and played around with the idea of stay-ing at the university and teaching his favourite sub-jects. But it turned out des-tiny had a different trajec-tory for him.“In the 1980s a lot of Indian

companies were interested in Indian graduates to help promote Indian businesses in the Soviet Union. I worked with them for a while which helped me to get contacts of different Soviet enterpris-es.”Finally, he got a job at Ural-redmet company. It wasn’t a good time for the titanium market. “The only hope for us at that time was to fix ex-ports. Western companies often mistrusted Soviet en-terprises for some reason, and in this way foreign busi-nessmen like me served good acting as bridges between

both sides, and so we began supplying titanium ligatures to the USA, using modern equipment and new technol-ogies,” recalls Raghav. One of the challenges of the industry is that the titanium market is very volatile and dependent on purchase or-ders, says Raghav, who has been now in the titanium business for over two de-cades. He believes in produc-tive cooperation between private companies and the state, in which private enter-prises conduct business ra-tionally and pay attention to reducing expenses. This ar-rangement will work only when there is no shortage of purchase orders from the state. The partnership with VSMP-AVISMA corpora-tion, the world's largest man-ufacturer of titanium ingots, therefore, proved to be ben-eficial to both parties.One of the key problems Russian titanium market faces is that there is no lon-ger diversification as it used to be in the Soviet times when a company could get, for example, titan ligatures from Tajikistan and titanic iron-ore from the Ukraine, says Raghav. After the col-lapse of the Soviet Union production is in different countries and Russian tita-nium companies often have to buy raw materials from Sri-Lanka, Vietnam, Mo-zambique and other coun-tries, resulting in delivery

problems and other kinds of issues.But Raghav is optimistic about surmounting these problems. One of his compa-ny’s priorities is developing the chlorum method because it guarantees good quality ti-tanium and also is more eco-friendly than the sulfate method that is mostly used. But this depends to a large extent on the possibility of cooperating with big players in the titanium market such as DuPont and Crenex and their readiness to share the chlorum method technolo-gies. But the future looks promis-ing. “There is sufficient de-mand for titanium in the avi-ation industry from big corporations such as Boeing and Airbus,” he says. “At the moment there appears to be a slight delay in their pur-chase orders but we do ex-pect more orders from Air-b u s 3 8 0 a n d B o e i n g Dreamliner in particular,” he says. “But I hope they will

Making it: Indian spins Titan-ium success story in RussiaJugendra singh raghav, a russia-educated businessman, has turned the volatile titanium business into a success story.

elena krovvidiRiBR

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

the successful launch of the 24th satellite into the orbit marks a turning point in operationalising glonass, the alternative to gPs.

Glonass navigation up and ready to go

alina loBzinathe MoScow NewS

in the times of india every last Wednesday

RussiaIndia

RePoRt www.indrus.in

October 26

What should be Russia’s place in the future global economic order? This question was on the agenda of the 6th Russian-Singaporean Business Forum, which took place in late September. Anton Rakhmanov, manag-ing director of CJSC Troika Dialog, told ITAR-TASS that in the context of the current growth slowdown in mature economies, “the natural re-sponse is to increase as much as possible foreign trade and mutual integration between Russia and Asian countries.”

the russian-singaporean Business Forum has pitched for closer trade and integration between russia and asian countries.

“In this regard, a deeper co-operation between Russia and Asia is totally natural, because to maintain the growth rates that we see now, Asia badly needs raw mate-rials. Russia is ready to sup-ply those resources,” he pointed out.Russia can safely bet on the construction of new and modern oil refineries, the production of alternative en-ergy, and infrastructure up-grades, said participants. It should simultaneously cre-ate transparent conditions for doing business and invest in human capital.Turning Russia into a key re-gional financial center was among important ideas that emerged from the forum. Russia has become much more active in the Asian markets in recent years.

More power to trade with Asia

nikita dulnevRiBR

WEBSITE of the embassy of the Russian Federation in India

www.rusembassy.in

dr Jugendra singh raghav.

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

"one of the challenges of the industry is that the titanium market is very volatile."

sort it out by 2014 and the number of purchases will in-crease.”He is full of bright ideas for galvanizing the titanium business. First of all, he thinks the problem of depen-dency on raw materials should be addressed. And as he puts it his dream would be to have their own material basis for producing molyb-denum, vanadium and other raw materials. A diehard op-timist, Raghav is set for 2014 when the aviation industry’s demand for titanium is ex-pected to go up.But it’s not just business am-bitions that obsess him all the time. He loves his alma mater and is one of the or-ganisers of the EDU project which provided financial support to students from Southwest Asia and African countries wishing to study in Russia. This is his way of say-ing thank you to an institu-tion which he says proudly has made him what he is today.

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BUSINESS REPORT in association with rossiyskaya gazeta, russia opinion

wednesday, octoBer 12 2011

At a recent interaction in Moscow with scholars and editors, there was an inter-

esting discussion on finding ways to significantly increase the economic interaction be-tween Russia and India and, more specifically, change the nature of the G2G-driven bi-lateral trade. We suggested that for a paradigm shift in our trade volumes (less than $ 10 bn currently), the two countries would need to work for an Asian Trading Region shaped and steered by Rus-sia, India and China. Until then, Russia and India would remain prisoners of percep-tions and perceived geograph-ical distance.We argue that the only sensi-ble architecture would need to be fundamentally driven by and emerge out of the RIC ar-rangement. Even though the RIC was conceptualised as a club of the Big 3 in Asia and had more political overtones than economic reality, the vo-cabulary of cooperation ema-nating from previous RIC forum allows enough leeway to work towards the forma-tion of an Asian Economic Zone beginning with an Asian Trading Region, largely driv-en by Russia, India and China.The then Russian Prime Min-ister Evgeny Primakov first voiced the idea of a Russia-India-China (RIC) Trilateral Forum publicly in December 1998. It was believed to be driven by a desire to create a countervailing influence to the US. In the 1990s, the mo-tivations driving the three countries in the RIC, however, changed. If Primakov’s fear in 1998 was a hegemonic US, by

Prime Minister Vladi-mir Putin's announce-ment on September 24 that he would run

for the presidency in 2012 has sparked new worries about the fate of Russia’s democra-cy and civil society, since Putin is all but certain to re-turn to the Kremlin for a six-year term, and possibly an-other six-year term after that. But a third presidential term for Putin is far from all doom and gloom. Here are five rea-sons for foreign investors to cheer Putin’s announcement at the United Russia conven-tion and his remarks a day earlier at the same event.1. The end of uncertainty. The lack of clarity from Putin and President Dmitry Medvedev on who might run has bewil-dered investors for months, if not years. Repeated promises of a continuation of current policy clashed with what seemed to be conflicting state-ments from Putin and Medve-dev about domestic political reforms, foreign policy and the tricky subject of who would run for president. With just five months left until the election, the 2012 riddle looked positively embarrass-ing, especially in contrast to a developed democracy like the US where opposition hope-fuls are already jostling to take on President Barack Obama more than a year be-fore the vote.2. The US-Russia “reset” will continue. While Medvedev and his more liberal policies have been credited widely with improving ties with Washington, it is now clear that it was Putin who was be-hind engineering the reset. The economic reset already appears to be bearing fruit, with an agreement for Rus-sia’s entry into the World Trade Organization just around the corner. A reset of sorts has also taken place with the European Union, and there is reason to expect eco-nomic relations to continue to flourish during a Putin presi-dency.3. Stability. If Putin has proved anything during his 11 years in power, it is that he is a strong leader interested in bringing stability to Rus-sia. However, his means of ushering in stability and maintaining it have bred corruption and raised wor-ries about the state of de-mocracy. But at the same time, the investment climate has markedly improved from the chaotic 1990s, with, among other things, the pas-sage of key legislation and regulations that allow inves-tors to work within an un-derstandable — if often vio-lated — legal framework, a demonstrably greater effort by the authorities to act on investors’ concerns, and a steady increase in the stan-dard of living that has led to growing consumer demand. Predictability is an important part of stability, and Putin is reliably conservative on polit-ical and security issues, and

Russia supported new UN sanctions on Iran. It abstained from a vote on a Libya no-

fly zone. And it firmly vetoed a Western-backed condemna-tion of the Syrian govern-ment's crackdown on protest-ers.Moscow's decision to exercise its veto in the UN Security Council has angered Wash-ington and its allies and raised questions about whether the Kremlin was adopting a tougher foreign policy in the months before a presidential election expected to be won by Prime Minister Vladimir Putin.But analysts say that Russia's seemingly hardening stance

Web 2.0 is the one millionth word in the English language. Ac-

cording to the Global Lan-guage Monitor in Texas, US, the word refers to the second generation of the World Wide Web. For a word to officially enter the lexicon, it has to be used in books or on the in-ternet 25,000 times. However, not many know the Hindi word ‘Jai Ho’ (Be Victorious) is the 999,999th word.

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

patriotic and fairly pro-busi-ness on economic issues.4. The Yukos takeover won’t be revisited. Many investors have long ago stopped fret-ting over the merits of the state’s legal assault on former Yukos CEO Mikhail Khodor-kovsky and its takeover of his Yukos oil company. But wor-ries have persisted that the scandal might be revisited and the assets might be redis-tributed again. A Putin presi-dency promises to lay linger-ing investor’s jitters to rest. The assets that were seized from Yukos and awarded to state-owned Rosneft will stay put. One wonders in retro-spect whether Putin gave U.S. energy giant ExxonMobil a heads-up on his plan to return to the Kremlin when he blessed its multibillion-dollar deal with Rosneft on Aug. 30. The agreement gives legiti-macy to Rosneft, and by ex-tension to Putin, in its owner-ship of former Yukos assets. 5. Better investment climate. Pundits are debating whether Medvedev would make a bet-ter prime minister or, perhaps, chief justice in the Constitu-tional Court or State Duma

speaker. But no matter where Medvedev lands, investors can hope that he will be in a posi-tion to push ahead with the modernisation, anti-corrup-tion agenda that was the hall-mark of his presidency. Putin is set to carry on with this mis-sion. “We must speak openly about the dependence of our economy on raw materials, about the dangerous level of social inequality, violence, cor-ruption, about the feeling of injustice and vulnerability that people feel when they are dealing with government bod-ies, courts and law enforce-ment,” Putin said. “All this, un-fortunately, continues,” he said. “We can and must over-come these problems.”We may never know whether the Medvedev presidency was little more than a charade. But it’s now obvious that Putin deserves to sit in the Kremlin. He has always called the shots and made the deci-sions, and the only place for the CEO of Russia is in the CEO’s office overlooking Red Square.

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

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

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

model for action by Western coalitions — NATO — is ab-solutely unacceptable," said ministry spokesman Alexan-der Lukashevich. He insisted that Russia had not become an "advocate" for the Assad regime, saying Russia's mis-givings about the European-drafted resolution on Syria had been "repeatedly ig-nored."Russia and China both used their Security Council vetoes to block adoption of the res-olution proposed by Britain, France, Germany and Portu-gal, saying it was “one sided” and smacked of an “ultima-tum.” The European coun-tries responded that they had done everything possi-ble to come up with a draft acceptable to Russia, includ-ing removing all references to sanctions, ruling out the

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

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

use of military force and call-ing instead on "all sides" to reject violence. Kremlin spokesman Alexei Pavlov reiterated concerns voiced by UN ambassador Vi-taly Churkin that the Syria resolution was “based on a philosophy of confrontation” and failed to urge the coun-try's opposition to disassoci-ate itself from “extremists” and start negotiations.Analysts said Russia was fol-lowing its normal foreign pol-icy line after the "strange and untypical" decision to abstain from the vote on Libya."What Russia did in Libya was an exception," said Fyo-dor Lukyanov, editor-in-chief of the Russia in Global Affairs magazine. "After they saw how quickly the no-fly zone turned into full-scale military action, they returned very

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

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

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

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

to Central Asia and Russia through China? Would these not create mutual dependen-cies between the two coun-tries that would offset some of the key imbalances that exist today? India helps de-risk China its current hydrocar-bon and trade flows through the Indian Ocean, while China offers alternatives to routes that would require India to traverse Afghanistan and Pakistan. At the opportune time, can Russia and China be a part of the IPI and TAPI? Can China extend pipelines from Central Asia and Russia to India? The participation of the three countries in these pan-continent pipelines also reduces the political risk. The biggest gainer would, however, be Russia. They would have a market for their resources outside of the EU and China. Without a cooper-ative arrangement or trans-port infrastructure, large vol-umes of Russian resources may have only one buyer - China.Russia and China have al-ready established significant cooperation in the area of en-ergy. It is time that India be-comes a part of this equation and the three countries start the process of developing an Asian Gas Grid. The first steps could be modest. Russia could ship some of its piped gas landing in China through the Chinese eastern board to India, a step both symbolic and political and a harbinger of Asian trilateral trade. Over the years, it could result in the grid that a former Indian pe-troleum minister strongly ad-vocated and a gas market in the region that could evolve its own price and commercial dynamics. The next stage could be jointly owned SEZs in Russia’s Far East with each of the countries within the SEZ enjoying privileges of the home country. This could also be the experiment to test the free movement of men, mate-rial and ideas across Asia.

Samir Saran and Nandan Unnikrishnan are vice presi-dents at the Observer Re-search Foundation, New Delhi.

afi was," he said. Among other things, Syria hosts Russia's only naval base in the Medi-terranean — and it’s the only one outside the former Soviet Union — at the port of Tar-tus.And there are also strong fi-nancial links. The Russian embassy in Damascus report-ed exports to Syria worth $1.1 billion in 2010 and invest-ment in the country valued at $19.4 billion in 2009. According to data from Mos-cow Defense Brief, Russia has more than $4 billion in active arms contracts with Syria, in-cluding for MiG-29 fighters, Pantsir surface-to-air mis-siles, artillery systems and an-ti-tank weaponry.

Roland Oliphant is Russia Profile magazine political analyst.

Chakraborty’s popularity among Russian baby boom-ers remains unchallenged) and Indian movies are in-creasingly catering to an in-ternational market. India is a linguistic bridge be-tween the major first-lan-

RIC: How to evolve Into An AsIAn tRAdIng RegIon

syRIA veto: AvoIdIng lIbyA 'CRusAde'?

JAI Ho! FoRget new yoRk twAng, get new delHI 'desI' dRAwl

wHy InvestoRs sHould CHeeR PutIn PResIdenCy

samir sarannandan unnikrishnan

SPeciAlly foR RiBR

roland oliphantthe timeS

of moScoW

rakesh krishnan simha

SPeciAlly foR RiBR

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.

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

in power for 11 years, Putin has proved that he is a strong leader who brought stability to Russia.

Originally published in the Moscow times.

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

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

Rakesh Krishnan Simha is a New Zealand-based writer.

BUSINESS REPORT in association with rossiyskaya gazeta, russia heritage

wednesday, octoBer 12, 2011

architecture Brainchild of Stalin, Gothic buildings looms high

supposedly said: “Better build chemical combines instead.” In place of the Pal-ace, an enormous outdoor heated swimming pool was built. In the 1990s, the pool was replaced by the Cathe-dral of Christ the Savior. (The original cathedral had been pulled down by Stalin in 1931.) Today, the “seven sisters” have somewhat lost their old lustre. In the two resi-dential buildings the eleva-tor breaks from time to time while the residents, mem-bers of the intelligentsia in the first case, pilots and cos-monauts in the second, must

From time to time, the Sovi-et man, raised in the spirit of atheism, needed messag-es from on high. Fortunate-ly, he had the inspirational Pioneer camp Artek in the Crimea, the Exhibition of Economic Achievements in Moscow, and the famous Moscow Metro — heralds of the communist paradise on earth, which would arrive one fine day, despite all the burdens of grey socialist work days. Soon after the end of World War II, in defi-ance of all doubters, a gran-diose new architectural project was launched. Jo-seph Stalin, “the father and friend of all Soviet archi-tects” as he was called at their All-Union Congress in 1946, embarked on a colos-sal construction project de-signed to convince the So-viet people and the whole world of the victorious So-viet power’s increased self-awareness. In early 1947, the Council of Ministers adopted a resolu-tion for the construction of seven “skyscrapers”. On Sep-tember 7, that same year, during the celebration of Moscow’s 800th anniversa-ry, at exactly 1:00 pm, the first stone was laid in a spe-cial ceremony. The first Moscow skyscraper was completed in 1949, fol-lowed every three-five years by another (all but one of the remaining six). Later known as the “seven sisters”, these buildings became famous as monuments of “Stalinist-Gothic” and the defining symbols of Moscow: Moscow State University (240 m.) on Sparrow Hills remained the tallest building in Europe until completion of the Exhi-bition Center at Frankfurt-on-Main in 1990; the Foreign Ministry; the Ministry of Transportation; two residen-tial buildings; the Hotel Ukraine; and the youngest of the sisters, the Hotel Lenin-grad (135 m.). In the post-war period, these symbols of a new era, glowing with mag-nificence, seemed like fantas-tic emblems of triumph and beacons of a resurgent coun-try proclaiming its greatness to the world. “We can!” That was their architectural slo-gan, trumpeted from a coun-

try that lay in ruins, a country faint from hunger, a country most of whose residents still had to live in cramped com-munal apartments. The supervision of the sky-scrapers’ construction was initially entrusted to the no-torious KGB chief Lavrenty Beria (who would be execut-ed in 1953). Beria was also in-charge of creating a Sovi-et atomic bomb. Thousands of prisoners from the Gulag and German prisoners of war helped in constructing these towering high-rises. A different technique was used for every building to stabi-lise the ground under the foundation. The costs didn’t matter. Around 2.6 billion Soviet rubles were spent on Moscow State University alone. At current exchange rates, it would amount to around $650 million, more than two billion rubles set aside to rebuild the war-rav-aged Stalingrad from 1946 to 1950. Roughly the same amount was spent on the construction of the other six “sisters”.These monumental sky-scrapers built in the style of neoclassicism surround the center of the city like a for-tress wall. All were built ac-cording to one stylistic con-ception: a dominating central tower which, like an Aztec pyramid, narrows in stair-like stages to the top, and is flanked, in a more or less strict order, by wings. The plan of the buildings may vary, as may the lavish decorations of the towers, the statues and bas-reliefs. Each skyscraper represents a set of architectural quota-tions and borrowings from various styles and tenden-cies, from the Renaissance and baroque to Russian church architecture. Clear-ly, Stalin’s tastes, known for his preference for Gothic, loomed large in the minds of architects. They didn’t al-ways manage to please him: the Foreign Ministry was not originally designed with a spire, but the dictator in-sisted. So as not to violate the building’s statics, a spe-cial light-weight construc-tion had to be perched on top with supports descend-ing five floors made the same color as the skyscraper. After Stalin’s death in 1953, the architects asked the new General Secretary, Nikita Khrushchev, for permission to undo this Stalinist act of despotism. But Khrushchev refused. He wanted the spire

on the Foreign Ministry to remain as a “monument to Stalin’s stupidity”. Contemporaries were im-mediately struck by the re-semblance of these Stalin-ist-Gothic monuments to certain American precur-sors, such as the Manhattan Municipal Building com-pleted in 1914. Given this resemblance, it was hard to make the necessary ideo-logical case. A dialectical explanation was required here: capitalist temples of trade were studied in detail and used as a foundation, the object being to give them a completely new

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

on Stalinist extremes in city planning. Now everything would be sacrificed to func-tional understatement. Rapid construction of mass housing had begun, leading to many city dwellers get-ting separate apartments for the first time in their lives. In the Russian mind, however, Stalinist skyscrap-ers still equal quality, while Khrushchev’s matchbox-size apartments equal quan-tity. The construction of the Stalinist-Gothic skyscrap-ers was completed under Khrushchev. But the most impressive skyscraper of all

(number eight), which was supposed to be located next to Red Square and soar up to 275 meters, was buried. Instead, on the foundation of this would-be adminis-trative building, the Rossiya was built, the largest hotel in Europe. Fate was not kind either to the classical model of “Stalinist Empire” archi-tecture: the Palace of the Soviets. The construction of this 420-m tower to be crowned with a 100-m stat-ue of Lenin was suspended during the war. When Khrushchev learned how much it would cost to com-plete the construction, he

seven sisters, emblems of soviet grandeur, light up Moscow skylineBuilt by stalin as emblems of victory and symbols of a new era, the seven colossal skyscrapers still stand out amid new high-rises.

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

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

Moscow state university on sparrow hills (left picture); the ukraina hotel interior (right).

hotel ukraina, once the largest hotel in europe, has re-opened after renovations.the iconic hotel is set for its 55th birthday bash in 2012.

alyona tveritinariBr

An oasis of opulence,Hotel Ukraina is reborn

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

boats. This landscape, em-bracing the very center of the city was immortalised in 1977 when it was recreated as a diorama. The three-year renovation followed a change in man-agement: the Ukraina now belongs to the Rezidor group and operates under the Radisson Royal brand. The hotel’s layout and interiors have changed, although the old trimmings made of nat-

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

Moscow's tallest hotel has been refurbished. it is now owned by the rezidor group.

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

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

meters is the diameter of a unique decorated ceiling with the name 'Celebration of La-bor and the Harvest in Hospi-table Ukraine'.

206 1200 10the nuMBers

the skyscrapers: height and number of floors.

three of the seven skyscrapers: hotel ukrai-na (right), the Ministry of Foreign affairs (to the left of the hotel), the building on kudrin-skaya square (extreme left).

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