WEDNESDAY, NOVEMBER 9, 2011

...Marching towards a common future

BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

WTO Direc-tor-General Pascal Lamy, who pulled off the deal with Geor-gia, shares a joke with Russian President Dmitry Med-vedev.

The leaders of the BRICS countries agreed to help the eu-rozone at the G20 Cannes summit.

Eurozone crisis Russian foreign minister wants deep IMF reforms in return for bailout aid

Will BRICS rescue eurozone from disaster?

The much-hyped G20 sum-mit in Cannes did not pro-duce any spectacular results. But it will stand out for high-lighting the larger shift of economic clout to BRICS na-tions whose leaders decided to work out a joint position on managing the eurozone sovereign debt crisis. Clearly, major emerging markets have a stake in preventing a financial disaster in Europe because it would inevitably spread to other regions. The EU is the key trading part-ner for BRICS. China’s trade with the EU stands at 35.6 billion euro, 800 million

ANDREI VEISMAN RIBR

The G20 summit in Cannes underlined the emergence of BRICS as a global player as these major emerging economies took a joint position towards the eurozone crisis.

euros more than the EU’s trade with the USA. For Rus-sia, the eurozone accounts for 50% of its foreign trade and 45% of its currency re-serves.If the Greek contagion spreads to other debt-ridden

EU countries, a new world financial crisis is guaran-teed. Experts reckon that 1 trillion euros will be needed before the end of this year and another 1.5 trillion next year to contain the crisis. The European Financial Stabil-

NEWS IN BRIEf

Russia is planning to put a “lighthouse” on the moon as a part of its joint Russia-India Moon Resource space mission. Russian en-gineers plan to attach a LED lamp to the moon probe, which will allow it to be visu-ally tracked on its flight to the moon and on its descent to its surface. “Subsequently, you will be able to use the LED beacon as a point of reference for a coordination net-work, for optical observations and mea-surements,” Interfax quoted a source in the aerospace industry as saying. The beacon would be able to work for a very long peri-od given its low energy requirements. RIBR

Russia, India dream big: Lighthouse on moon

Over five years ago, Russia and India agreed to establish a JV that would produce tita-nium dioxide in Orissa. Soon after, the Rus-sian and Indian shareholders found themsleves locked into a conflict. The land became a key stumbling block. There is now a strong chance for an out-of-the-court set-tlement. The conflict is close to its end, says a source close to one of the JV shareholders. The Indian side has indicated its intention to withdraw from the project, which could leave the Russian shareholder free to find another Indian partner. RIBR

Titanium JV with India may see a new partner

ity Fund (EFSF) can’t re-solve this problem alone. The hard truth is the eurozone badly needs the BRICS’ com-bined financial muscle.“The appearance of a com-mon BRICS position means that it’s becoming a real global player. It is worth the effort. These countries can meet the challenge”, says Ni-kita Maslennikov, adviser to the Russian Institute of Con-temporary Development. It’s “the start of the process of BRICS positioning itself as a subject of geopolitics. It is al-ready a player in the world economy but it has yet to emerge as a player in global politics,” he stressed.BRICS countries have been discussing options for help-ing the eurozone since Sep-tember. They have the back-ing of the IMF, as its head Christine Lagarde has often repeated. This is all the more important because the IMF

could provide the most con-venient channels for deliver-ing such aid. “The overall picture shows that BRICS countries tend to solve issues collectively. That means that BRICS will channel its aid to the Europeans through the International Monetary Fund”, says Maslennikov.On November 7, Russian For-eign Minister Sergei Lavrov confirmed that the world’s biggest emerging economies were ready to give financial assistance through the IMF, but only in return for “deep” IMF reforms. “Such a possi-bility does exists”, the minis-ter said. “Our countries are ready to take part in these combined efforts, including by issuing loans through the IMF channels.”Lavrov’s statement is further proof that Moscow is reluc-tant to lend money directly to the European anti-crisis fund (EFSF), experts point

India is an "incredible" gas market where the domestic supply shortfall offers a huge opportunity for a portfolio LNG player such as Gazprom, said Nigel Kuzemko, the global director of LNG development at the Russian state-owned company's trading arm. "Current demand for natural gas in India is around 120 Bcm/year, equivalent to around 88 million mt/year of LNG. We see India as one of our key markets for LNG supplies," said Kuzemko. RIBR

Gazprom finds India 'incredible' LNG market

Russia has honoured three Indians with state awards for their contribution to strengthening Russian-Indian cultural ties. By an executive order of Russian President Dmitry Medvedev, Dandapani Jayakan-than, Director of the Indo-Russian Friend-ship Society, was awarded with the Order of Friendship. Padmaju Mandayam Go-matam, classical Indian dance teacher of the Nrityam Cultural and Dancing Society and writer-philologist Achala Moulik were awarded with the Pushkin Medal for the outstanding merits. RIBR

Three Indians get Russian state awards

50th Anniversaryof Manned

Space Flight

Diplomacy Georgia deal clears the last hurdle; Ministerial conference on Dec 15-17 will take the decision on Russia's entry

In a key step, Russia on Nov 2 struck a bilateral deal with Georgia that paves the way for its much-anticipated entry into the WTO. The Working Party on Russia's Accession, chaired by Stefan Johannesson, intends to for-ward recommendations to a ministerial conference due on Dec 15-17 for making a final decision about approv-al of Russia's entry.Russia then will have to sign a protocol of accession stat-ing that it accepts the ap-proved "accessions package". The parliament will have to ratify the protocol, usually within three months from signing. Thirty days later, the applicant government noti-fies the WTO Secretariat that it has completed its ratifica-tion procedures, thereby be-coming a full member of the WTO.Russia, the largest economy outside the WTO, has an eco-nomic output of $1.9 trillion and accounts for about 2.8%

The long & winding road to WTO dreamAfter 18 years of tortuous negotiations, Russia looks set to join the WTO by year-end, marking a triumph for global trade liberalisation.

IRINA fILATOVAthe Moscow tIMes

of the world economy. How will the entry into the WTO affect key sectors of the Rus-sian economy? In agriculture, Russia re-served the right to mete out subsidies to farmers after entry, but the amount of money will gradually de-crease by 2017, President Dmitry Medvedev said in July. The government will re-tain the right to increase im-port duties on some agricul-tural products to help the domestic sector, he said. The WTO accession is likely to have only a limited impact on the oil and gas industry, which provides 40% of gov-ernment revenue. Oil and gas are exempt from import tar-iffs by other countries.With Russia's entry, import-ed consumer goods will be-come more accessible for shoppers, says Natalia Orlo-va, Alfa Bank’s chief econo-mist. Most foreign goods in Russia are currently sold at 30% to 40% mark-up from their original prices because of high import tariffs. Russia's accession could re-sult in domestic steelmakers increasing exports to the Eu-ropean Union as the current restrictions for exporting Russian rolled steel to Eu-

rope are likely to be can-celled, says Dmitry Smolin, an analyst at UralSib Capi-tal. Domestic steelmakers have been limited to export-ing a certain amount of rolled steel to Europe annu-ally since the EU introduced quotas regulating Russian supplies in 2002. The compa-nies are allowed to export 3.3 million tonnes of rolled steel this year, compared with 3.4 million tonnes in 2010, he said. However, it might take over three years after Russia joins the organisation for the restrictions to be cancelled, Smolin said.Aviation and railways repre-sent a mixed bag. In aviation, Aeroflot will lose at least a large portion of the fee it cur-rently charges European air-lines overflying Siberia. The company does not reveal how much it makes from the practice, but the European Commission has said the fee cost airlines flying to Asian destinations is $420 million in 2008. At least part of the losses will be made up for by cheaper access to new planes and pilot hire, which will also benefit other airlines. But the impact will not be immediate: Medvedkov, Rus-sia's chief negotiator on

WTO accession, said last month that reforming the fees would be unlikely be-fore 2013. For Boeing, which has been lobbying hard for accession in Moscow and Washington for more than 15 years, the news will come as something of a victory.Import tariffs on wide-body aircraft will be reduced from 20% to 7.5% in the four years following accession, accord-ing to data compiled by David Tarr, consultant and former lead economist at the World Bank. Russia has agreed to hefty tariff reduc-tions in construction, agri-cultural and scientific equip-ment, as well as medical devices, he said in "Russian WTO Accession: Achieve-ments, Impacts, Challenges." Tariffs in these sectors will average 5 per cent.Accession will have little if any impact on Russian Rail-ways, which is "physically and institutionally" isolated from Europe, but interna-tional documentation may ease transit of goods be-tween Asia and Europe, says Dorogov.Foreign and local drug mak-ers are excited about Rus-sia’s WTO entry, which is ex-pected to facilitate sales of

innovative drugs in the do-mestic market and increase its investment attractiveness. After Russia joins the WTO, the data exclusivity regime aimed at protecting the data of pre-clinical and clinical trials of innovative drugs will start working locally.This will result in foreign and domestic drug makers getting six years of patent protection for innovative

medications to be sold local-ly, says Vladimir Shipkov, ex-ecutive director of the Asso-ciation of International Pharmaceutical Manufac-turers.Russia will significantly in-crease its commitments to multinational insurance providers. It will allow 100% foreign ownership of non-life insurance companies upon accession to the WTO.

out. In mid-October, Russia had indicated that it was going to lend the eurozone $10 billion. At the Cannes summit, Russian President Dmitry Medvedev reaf-firmed that this was a possi-bility. Beijing has already bought 100 billion euros worth of Italian debts and EFSF head Klaus Regling has held talks in the Chinese capital on a further $100 bil-lion loan to the Fund.“BRICS aid to the EU is a dis-tinct possibility”, says Andrei Mordavchenkov, financial markets operations director with the Partner company. It can be channelled either through the IMF in the shape of credits, or through pur-chase of the much-touted EU bonds.” “Financial support for the eurozone by major emerg-ing markets is highly proba-ble,” says Bogdan Zvarich, chief analyst with Net Trader company.

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BUSINESS REPORT in association with rossiyskaya gazeta, russia

companieswednesday, noVeMBer 9, 2011

India has decided to pur-chase American AH-64D Apache Longbow attack helicopters,

which beat the Russian Mi-28N Night Hunter attack helicopter in a tender. The Apache was apparently chosen after comparative tests of the two vehicles, performed in late 2010. A representative for the West-ern Air Command in New Delhi noted that “both ma-chines worked perfectly, but the U.S. one was supe-rior in key features such as increased capabilities and all-weather use.”Such definitions (“in-creased capabilities” and “superior all-weather use”) are particularly slip-pery. Experts familiar with the Mi-28N insist that it has the very same capabil-ities as the Apache. The 28 N like any other vehicle, has its drawbacks – its rel-atively ineffective radar system and weak night sight capabilities, for ex-ample. The organisers of the tender reportedly listed 20 points of criticism that kept the Russian chopper from winning the tender.All of these criticisms are more or less valid. But many experts believe that they are unlikely to have played a decisive role. The on-board radar system and night vision capabilities could have been improved before delivering the Mi-28N to the Indian army. This could have included working with foreign com-panies and using equip-ment made outside Russia. That’s what happened with the Su-30MKI.Similar up-grades could be carried out on the Night Hunter. But New Delhi was not inter-ested. Why?There are many reasons for this. The main reason for preferring the AH-64D is that the Hunter has only just been put into opera-tion in its own country – the Russian Air Force current-ly owns just twenty Mi-28Ns. Boeing’s Apache Longbow, on the other hand, will soon be twenty years old – and its first model is almost thirty years old. Major upgrades began in 2006, with a plan to de-velop the new 284AH-64D

helicopter. One is not sure that India will get the latest version of the Apache, but the previous model is also a good purchase. There is one more important reason. The approach of In-dia’s Armed Forces to pro-curing combat equipment is one of diversification. This approach does have its draw-backs, but then India won’t be held hostage to the inter-ests of one government. Cur-rently, 70–80% of India’s mil-itary equipment is Soviet or Russian-made. The compli-cated processes taking place in Russia’s military-indus-trial complex, the delays and the quality of the products delivered also influence the selection process. But this doesn’t mean that New Delhi should abandon Moscow, a tried-and-tested partner in military-techni-cal cooperation. Russia has many advantages. First of all, Russia has been doing this for over fifty years, with successes far outweighing the failures. Secondly, Russia has never used its arms sup-ply, the sale of licences and manufacturing to local en-terprises, or upgrades as le-verage against India in po-litical matters. This, however, is something that Washing-ton does on a regular basis.Looking ahead, India has signed a contract with Ros-boronexport for the supply of 80 Mi-17 military trans-port helicopters. Besides, India is holding two more tenders for the supply of 12 heavy transport helicopters and 197 general-purpose light helicopters. The total value of the tenders is $2.5 billion. The contract to deliv-er heavy transport helicop-ters will go to either the Rus-s i a n M i - 2 6 T 2 o r t h e American CH-47F Chinook, while the contract for the light helicopters will go to either the Ka-226T or the Eurocopter AS550. Russian vehicles stand a high chance of winning these tenders. The Mi-26T, for example, can carry upto 20 tonnes of cargo, while the Chinook can carry just 13.5 tonnes in the fuselage or 14.5 tonnes in ex-ternal store. The Russian Ka-226T light helicopter is also a superb vehicle, notable for its unique modular ability to change function at a mo-ment’s notice. In Moscow, there’s no doubt that New Delhi will make the right choice.

Viktor Litovkin SpecIally for

rIBr

defence

Night Hunter misses target, but hope floats

energy Driven by the dream of a single energy market, pipelines will cater to markets in east and West

russia is fast building a network of pipelines that will allow it to switch gas flows to wherever money and markets are.

The basic documents gov-erning the operation of the single Asian energy market are slated for signing in July 2012, says State Duma Dep-uty Speaker Valery Yazev. Gazprom is supplying lique-fied natural gas (LNG) to Japan and South Korea and is in talks to lay pipelines to those countries. Simultane-ously, new pipes are being built toward Western coun-tries. In the future, this infra-structure will allow for switching gas flows to wher-ever it is more profitable.A pine forest runs down the coast, near the leaden waters of the northern Baltic Sea. Emerging right from be-neath the shore’s wet sand are pipes that will carry gas from distant Western Siberia to Lubmin, Germany start-ing in November. The Nord Stream pipeline is laid deep undersea. The underwater part alone, stretching from Russia’s Vyborg to Lubmin, measures 1,224 kilometres. After that, gas produced in wells of the Ob River Basin is pumped through other pipe-lines for a few thousand more kilometres.“Along with my colleagues from the Asian Parliamenta-ry Assembly, we have come up with the concept of a sin-gle Asian energy market that will reflect the key principles of international energy co-operation. In preparing the declaration, special empha-sis will be placed on the prin-ciple of respecting state sov-ereignty with regard to natural resources and ensur-ing the safety of internation-al energy transport,” says

Yazev. “Reconciling the in-terests of the world’s largest energy consumers like China, India, Japan and South Korea with those of energy producers is not an easy task, since the latter wants to sell at a high price, while the for-mer to buy cheap.”Russia is, therefore, rapidly creating new routes to deliv-er its gas. The Nord Stream was the first major gas pipe-line built to Europe after the collapse of the Soviet Union. Next in line is the the South Stream, a pipeline leading to Europe that would take the south bypass.“Russia is currently extract-ing 650 billion cubic metres

of gas per year, with gas re-serves estimated to last for more than a century. This will permit us to not only provide supplies to Europe, China, South Korea and Japan, but also encourage socio-economic develop-ment in our country,” says Yazev.“By 2030, Europe will be consuming around 600 bil-lion cubic metres of gas per year. It is our main market. We have contracts running through the 2040s.” To hon-our all its contracts, Russia needs to supply gas in all di-rections and plans to boost gas output to 1 trillion cubic metres per year by 2030.

However, the Eastern mar-ket is still evolving. “Diversi-fying export energy markets and commodity structure is the major focus of Russia’s foreign economic activities. This will permit us to in-crease our share of hydrocar-bon exports to Eastern coun-tries to 10–13% by 2015,” Deputy Energy Minister Anatoly Yanovsky told a South Korean newspaper.Negotiations have been dif-ficult. Gazprom and CNPC inked their first agreement on gas supply to China in March 2006, for 68 billion cubic metres of gas after 2011 – a preliminary agree-ment stipulating delivery

Gazprom wants at least $350. The final decision has been postponed until the end of the year.On August 5, Gazprom and South Korea’s Kogas ap-proved the roadmap that could mean a pipeline laid across North Korea to South Korea. The first phase of the pipeline will have a capacity of 6 billion cubic metres. Later on, it's capacity will be expanded to 30 billion cubic metres – enough to sell gas to both Koreas.For now, however, while pipeline contracts with large consumers in the Far East have not yet been signed, Moscow has room to ma-noeuvre, say experts.“In terms of transport costs, it is very convenient to sup-ply gas to Europe from West-ern Siberia, and to Southeast Asia from Eastern Siberia,” says Dmitry Aleksandrov, head of the research depart-ment at the investment com-pany Univer Capital.While the network of main pipelines in Russia’s Far East is still under construction, there is no direct route for supplying gas from Eastern Siberia to the European part of Russia and Europe. The two gas transit systems will , however, be linked soon.The net result: Russian gas producers will be free to choose between export di-rections: the gas can either be sent to any European country or, with a liquefac-tion plant in the Far East, to any country in the world. Or it could even possibly be pumped through pipelines to either of the Koreas or China. In this case, whether or not any particular coun-try wants to buy Russian gas will cease to be of crucial importance. As Dmitry Aleksandrov says, every-thing will be determined by free market prices.

Let gas flow where profits are

the network of main gas pipelines in russia’s east siberia and far east is still under construction.

paVeL arakoVrIBr

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

along two routes. Gas for the Western pipeline, with a ca-pacity of 30 billion cubic me-tres, is to be provided by the Chayanda and Yamal fields in Western Siberia. The East-ern gas pipeline, with a ca-pacity of 38 billion cubic me-tres, will link China with fields in Eastern Siberia and Sakhalin. China is willing to pay a maximum of $250 per 1,000 cubic metres, while

Over the years, pharmaceu-ticals have emerged as an important pillar of the bur-geoning Indo-Russian part-nership. India is the third largest drugs exporter to Russia. “Gone are the times, when Indian medicines were mistrusted and considered inferior in quality compared to American or European ones,” says B P Singh, gener-al director of the CORAL-MED pharmaceutical com-pany. “Now, Indian drugs are firmly established in the Russian market. They are also quite popular in many other markets, thanks to their good quality and low prices – five or six times lower than the prices of the

Business a pact to speedily register domestically made drugs in the russian market on the way

indian pharma companies are set to grow bigger in the russian market, says B.p. singh, an indian businessman.

Western countries produced medications,” he says. The prices for Indian medicines are expected to plummet even more due to the grow-ing number of factories and intensifying competition. In Russia, according to Dr. Singh, a Peoples' Friendship University of Russia (PFUR) graduate majoring in lin-guistics, who has lived in the country since his student days, there are at least 10 to 15 good Indian pharma fac-tories. He recalls his happy student years at the PFUR and the first steps in the pharmaceutical business with warmth. Helping boost Russia’s pharma industry would be a good way of pay-ing back for free quality ed-ucation he got there, he says. Russia produces only 20% to 25% drugs while the export of medicines amounts to 70%, which explains high prices for a good many drugs in the Russian market. Build-

from that in Russia. The hardest time for a factory owner in Russia is getting the permission to open a factory. The registration can take up to two years and cost large sums of money while the company loses its potential profit. Indian factories, on the contrary, are encouraged to start their business and are spared ponderous proce-dures. For example, the phar-ma companies in India don’t pay taxes for the first ten years of their functioning, and they don’t have to go through complex certifica-tion procedures at the initial stage, but are routinely checked.However, the Russian gov-ernment has lately taken a slew of steps to cut down on red tape to encourage the Russian pharmaceutical in-dustry. According to a senior Indian government official’s statement, the good news is that India and Russia will sign a pact in December to speed up the registration of domestically made drugs in the Russian market. Indian pharmaceutical companies export drugs worth $600 million to Russia every year.Russian companies are in talks with Indian companies to set up testing facilities and

Indian boost for Russian pharma market

coraL-Med's general director B.p. singh (inset) plans to build a factory in russia with two large indian companies.

eLena kroVVidirIBr

ing factories and investing in indigenous drug production hold the key, says Singh. Having built his own busi-ness from the scratch in the 1990s, when the former USSR transformed into a completely different country, Singh is not afraid of diffi-culties. As he puts it, when

the times were tough, God helped him, and he believes if a person is honest and hard-working, he can pave his road to success. Currently, opening a drug factory in Russia is mired in red tape. The quality control and certification system in India is very much different

infrastructure on the Rus-sian soil to get a bigger mar-ket share in Russia, says media reports quoting De-vendra Chaudhry, joint sec-retary in India’s ministry of chemicals and fertilizers.Singh, who has won many awards in golf and badmin-ton competitions as a mem-ber of Russian amateur teams, is upbeat about his business plans. Singh’s com-pany CORAL-MED plans to build a factory in Russia in collaboration with two large Indian companies in the framework of Putin’s Phar-ma 2020 programme. The companies in question are Panacea Biotech and Lupin Ltd. According to Dr. Singh, the companies are covering all the costs and offering their technologies of produc-tion. The only thing that is needed from the Russian side is to support their initia-tive and land for the factory, which is not far from Mos-cow and not very expensive. Big Indian companies find it easier to forge tie-ups with Indian companies in Russia as they know the ropes and are familiar with the Rus-sian mindset, which proves very helpful while produc-ing and distributing medi-cines in the Russian market.

The fifth Russian-Indian Forum on Trade and Investment will open in Moscow on November 10. Despite the global fi-nancial crisis, the Indo-Russian trade touched $8.5 billion in 2010, thrice as much the figure for 2005. The two strate-gic partners are targeting bilateral trade volume of $20 bil-lion by 2015. This may seem quite challenging, but if both sides take positive steps to scale up their two-way trade and investment, they can even surpass the target. The fo-rum, which takes place alternately in India or Russia every year, provides a networking platform for businessmen of both countries to strike deals and explore new areas of in-vestment. This year, there will be special focus on coopera-tion in infrastructure, including production/power transmis-sion, roads, ports and airports construction, public transport development and pharmacy. A separate roundtable will be devoted to forging partnerships in innovations and the com-mercialisation of scientific research and technology. Find out more about the 5th Trade Forum on indrus.in

cooperationtrade and inVestMent foruM opens on noV 10

eVent

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BUSINESS REPORT in association with rossiyskaya gazeta, russia technology

wednesday, noVeMBer 9 2011

innovation The city, a magnet for start-ups and global giants, will be completed by 2014; to host 15,000 scientists and businessmen

skolkovo: Fast track to the futurerussia is rapidly building an innovation city near Moscow, a prized new home for investors, scientists and researchers.

Russian rock singer-song-writer Boris Grebenshchik-ov famously sang ‘Halfway between Kalinin and Tver’. Speaking allegorically, it tells the story of Russia's path since the collapse of the Soviet Union and beginning of perestroika. It compares the country to a train travel-ling from the city of Kalinin (the city’s Soviet name) to Tver (the name it used to have before the Revolution and regained in the 1990s). The 1997 song resonates per-fectly with present day real-ity. Although it has been some time since Gorbachev’s reforms kicked in, some of Russia's industries are still where they were in the late 1980s.The Soviet Union had one of the greatest schools of scien-tific thought in the world during the days of the planned economy, but with the advent of capitalism, it became non-competitive. A consensus has emerged among Russia's ruling cir-cles that the economy needs to move beyond its depen-dence on oil and gas exports and science must be put on a capitalist development track. So the Skolkovo Foun-dation is seen as a locomo-tive designed to finally drag it from Kalinin to Tver.Lenin wanted to build Com-munism in a particular coun-try and we want to build the country’s high-tech future in a particular city, so goes the refrain at the Skolkovo Cen-tre. The city – dubbed inno-town or innovation city – is set to be completed by 2014. Located just outside the Moscow Ring Road (MKAD), the city will feature a state-of-the-art transport system and infrastructure. It will be home to 15,000 people: sci-entists, researchers, busi-nessmen and their families. The project has been devel-

how did you come up with the idea of the do-ra?I had the idea in March 2011, when I was asked to write an article about the Fukush-ima events. As I was taught at the Bauman Technical University, if you don’t un-derstand something, figure it out; if you doubt some-thing, verify it; and if you feel confident, do it yourself! That’s exactly what I did in this particular case. The DO-RA name is an acronym of the words dosimeter-ra-diometer.

did you face any difficul-ties? Assembling a team of devel-opers was a problem - it took around two months. I stum-bled upon a worthy team by pure luck. Another problem was financing. Very few Rus-sian banks lend money for

oped in collaboration with global landscape design masters such as French ar-chitect Michel Desvigne to lure promising young scien-tific startups.Living conditions are, how-ever, certainly not Skolkovo’s only way to attract invest-ment projects. Companies participating in the project will get considerable cus-toms and tax benefits. At this

point, it already has 200 members and the figure is likely to reach 250 compa-nies by the end of the year. Similarly, by year-end, the Foundation will have spent over 1 billion roubles to fund 30 startups. All in all, Skolk-ovo has already invested 4.7 billion roubles in 40 startups. Yet one should not get one’s hopes too high and expect to receive everything immedi-

ately. First, a company has to pass through a selection pro-cess and prove that it de-serves the funding.The future innovation city boasts five technology clus-ters: IT, nuclear, space, ener-gy and biomedicine. Within this framework, the Founda-tion’s authors are planning to build a huge international research network that should be of equal interest to inves-tors and scientists. Skolkovo has signed agreements with such giants as Boeing, Intel, Cisco, Nokia, IBM, GE, Sie-mens and many others.The centre’s weakest point so far is financing. Up till now, it has been funded almost en-

tirely by the government. Some experts are cynical. “How can they speculate on building a competitive envi-ronment in Skolkovo while living off the state?” wonders Mikhail Emelyanov, vice chairman of the Fair Russia faction in the State Duma. The powers-that-be driving the Foundation are, however, optimistic, as anyone at-tempting to create technocra-cy within the confines of a particular city should be. “It is customary to castigate all government initiatives in Russia and nothing could be more pleasant than to lash out against what appears to be a very controversial project,”

says Skolkovo Foundation Vice President Stanislav Nau-mov. He, is, however positive that the government will cut its share in the project down to 50% and subsequently withdraw from it altogether.There is hope. Portfolio in-vestments in the project have already reached $234 mil-lion, with global giants like Siemens, Boeing, EADS, Intel, Nokia, General Elec-tric and IBM already among its business partners. Fur-thermore, the Foundation is quite familiar with market laws: you have to get inves-tors interested or you will not sell your product. The opportunity to create start-

ups will also help entice in-vestors. In fact, Skolkovo and the Massachusetts Insti-tute of Technology have signed an agreement to set up a joint Skolkovo Science and Technology Institute. The institute’s founders pre-dict it will be the first educa-tional institution in the world that can handle busi-ness and innovative activi-ties alongside training pro-grammes and scientific research. Students will re-ceive guidance here from 200 lecturers and 300 research fellows, including foreigners. Scientists from MIT, Har-vard and Stanford Universi-ties and other globally re-

a picture of radiation dosimeter, a unique invention.

alexander VostroVriBr

nowned institutions will be invited to deliver lectures. Will Skolkovo, a brainchild of President Dmitry Medve-dev, survive the change in the regime? Political scientist Nikolai Zlobin dubs the in-novation city as Medvedev’s personal ambition and doubts that the project will be of any consequence to Vladimir Putin, who will al-most definitely be the next president. Naumov disagrees and feels the project is above personal idiosyncrasies of politicians. “The project’s future does not hinge on any possible re-shuffles within the govern-ment,” he says.

Skolkovo has invested 4.7 billion roubles in 40 start-ups. 250 companies to set up shop.

Pacts signed with Boeing, intel, Cisco, Nokia, iBM, GE and Siemens for setting up research network.

interView vladiMir yEliN

aha!Geiger counter, mobile, doc...

alexandra BazdenkoVariBr

Vladimir yelin has invented a radiation dosimeter that can be integrated with mobile devices. he speaks about key features of this unrivalled invention.

scientific and technical proj-ects. Most Russian inventors are far from rich, while peo-ple with money don’t like to risk their capital. Hence the main problem of Russia’s in-ventors: a lack of funds to promote their inventions. My advice for Russian inventors is to fight for grants to devel-op their inventions from places like Skolkovo.

what has been skolkovo’s role in your project?I used the Skolkovo website to create a resume and a roadmap for the project, in-cluding a detailed descrip-tion of its research and de-velopment components and a commercialisation plan. After passing a preliminary assessment by a panel of ten industry experts, five Rus-sians and five foreigners, I obtained the board’s con-clusion on my project’s com-pliance with Skolkovo re-quirements. As a Skolkovo resident, OAO Intersoft Eur-asia, the operator of the DO-RA project, will only have to pay a 14% payroll tax. We will be exempt from all other taxes. One can only

qualify for such exemptions under the Russian tax sys-tem by conducting R&D work as a part of proprie-tary innovation projects with the subsequent com-mercialisation of the inven-tion.

how does the device respond when it detects excessive ra-dioactivity?The DO-RA device current-ly operates in four different modes. 1. A radiometer: Displays a radiation map of a given ter-ritory on a cell phone screen. There are three levels of alert: Normal (green zone), high-risk (amber zone,) and no-go/urgent evacuation from the contaminated ter-ritory (red zone.) 2. A dosimeter: The device displays the radiation dose absorbed by the holder. In

the event of exposure to a critical dose, the DO-RA will also alert its holder with voice, sound, text, and light signals. 3. A map: A real-time radia-tion map of a given territory, site, or reservoir is superim-posed on a downloadable world map on a smart phone screen. The device owners can supplement this map with their own GPS/GLO-NASS measurements using their smart phones. 4. A Personal Office. In this mode, a cell/smart phone can receive relevant and up-to-date information on poten-tial risks for the body and different organs associated with the absorbed radiation levels as recorded in the per-sonal dosimeter. Users or their doctors can access the Personal Office data from anywhere in the world.

There is a lot of talk floating about Skolkovo projects. But it’s just that, talk. To get an idea of how the foundation actually works, consider the following story. A group of scientists working at a Mos-cow company has developed a unique tri-leaflet artificial heart valve; to this day, heart surgeons use bi-leaflet valves designed by the Americans more than 20 years ago. The multi-million dollar heart valve production and mar-keting industry has been di-vided among three U.S. com-panies. The Russians have invented a more sophisticat-ed valve where a small black cupola opens up in three leaflets. While the design seems extremely simple on the outside, it took the high-est technology available to develop it, as the leaflets must open and close 40 mil-lion times a year.“Our valve model is based on three nano components,” ex-plained Alexander Samkov, one of the developers of the device. “Everything was made using special equip-ment with upto 150-nano-meter tolerance. We acceler-ate high-energy carbon ions in a particle accelerator and

smash them into a titanium surface to get a material compatible with human flesh.”Technical tests and clinical trials have been completed and patents have been ob-tained in Russia, Europe, the US, China, and Brazil. The Russian Ministry of Health and Social Services has given a green signal to start manufacturing and marketing the device. Fourty people are already carrying them around in their hearts, including a young boy who received an implant when he was six! But the small company of just 35 people found it im-possible to compete with the American giants domi-nating the market. They needed investors to estab-lish mass production. Offers were coming in from the Chinese, Japanese, and even

the Americans. But the Rus-sian scientists wanted their invention to remain in Rus-sia’s hands. The company applied to and became a member of the Skolkovo Foundation. This doesn’t mean that the devices will be produced in the City of Innovations since there will be no manufacturing base there at all. But the compa-ny may obtain a grant and legal assistance with the necessary documentation, while venture funds will find an investor in the pro-duction of “leaflets of life”.Another project being devel-oped by a Skolkovo partici-pant may revolutionise can-cer treatment. A drug has been developed that carry anti-cancer drugs directly to the nuclei of target cells that need to be destroyed. In order to get the drug to the market, expensive clinical trials are needed in addition to regula-tory approvals. The develop-ers of the drug applied for a $500,000 Skolkovo Founda-tion grant and have raised as much from investors.Other areas in which re-searchers in Innovation City are working include the de-velopment of speech recog-nition software, an artificial 3D vision technology, and a nuclear reaction-based bat-tery with a 10-year service life. Thanks to Skolkovo, per-haps the entire world will be using these technologies and devices in the future.

Heart talk: Where leeaflets of life blooma tri-leaflet heart valve. a revolutionary drug for cancer treatment. skolkovo promises to transform our lives in myriad ways.

tatyana toropoVariBr

Vladimir Elin: born in 1957, graduated from the Moscow High Technical College after N.E.Bauman (1984). PhD in Technical Science. In 1995-2007: Founder and President of the corporation «United International Network of Custom Warehouses» LLC. Since 2007, Chairman of the Board of Directors of "Smart Logistic Group" CJSC. Since 2011, DO-RA Project Manager and Investor.

Biography

a 600-hectare business park under construction has five clusters: biotechnology, energy, it, space and nuclear technology.

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BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA Feature

WEDNESDAY, NOVEMBER 9, 2011

Travel Food is cheap and so is the metro ride. Only hotels are expensive. And yes, it is safe unless you stray onto shady dark streets

Forget stereotypes, discover the real MoscowMoscow is changing by the minute. It's time to let go of stereotypes, and discover a vibrant, pulsating city that never ceases to amaze with its myriad charms.

Imagine Moscow and stereo-types start � owing thick and fast. Horribly expensive, an-archic, lawless, it gets dark by noon, melancholic and depressive. And yes, every Russian woman is a poten-tial Miss World.Well, stereotypes sometimes help to conjure up a foreign place, but they are invari-ably distorting. These ste-reotypes hark back to the Cold War and the Iron Cur-tain, when only a few people could afford to see for them-selves what things were re-ally like “over there.” Twenty years have passed since the collapse of the Soviet Union, and to quote singer Michael Stipe, it was “the end of the world as we know it.”After talking to many ex-pats, RIBR found that Mos-cow has a visceral impact. Rarely did we meet someone who is blasé about the place. It punches them in the gut and teases the imagination with its ageless beauty, epic-like grandeur and a larger-than- life feel to its bustling life. To know what foreign-ers think about Moscow, RIBR interviewed dozens of expats and tourists aged be-tween 22 and 50. Here is what they think.

Is Moscow more expensive? Many foreigners feel that Moscow is an expensive city. But some have a more round-ed, nuanced view. “Housing is expensive. Transport and culture are rather cheap in comparison to western Eu-rope,” says Lucie Pokorna of the Czech Republic, who has frequently visited Russia as a tourist. “I think Moscow

can be expensive, but there are also a lot of ways to save money as well, especially on food. Eating street food and eating in places that serve cafeteria-style food, helps to save on food costs. Also, using the metro is a lot cheaper than taking taxis,” says 22-year-old Brandon, an American. Considering that an average business lunch in a Moscow restaurant costs 300 rubles ($10) and a metro ride costs 28 rubles (about 90 cents), hotels are by far the most expensive part of a trip to Moscow. A recent survey by the hotel.info portal re-vealed that the average cost of a hotel room in the Rus-sian capital this autumn is 140 euros (more than $200) a day, which makes Moscow

the second most expensive capital in terms of hotel ac-commodations, after Oslo. However, if one looks at the difference in average prices between Moscow and for example, London, which is the fourth most expensive city, it is less than 4 euros (137 euros). Part of the rea-son for the high prices is the shortage of hotels in Mos-cow. There are 215, accord-ing to official statistics. Things are looking up though: in 2011, three new hotels were opened in Mos-cow, four more will open be-fore the year is out and 14 hotels in the center are due to open in 2012. According to City Hall, by 2020, the capital will have 535 hotels capable of accommodating 150,000 tourists.

An affordable visitTry to save by choosing the right season for your visit: January is considered to be the off season, which in-cludes the three Christmas weeks. Few conferences are held during that period and only 10 to 15% of hotel ca-pacity is used, according to Moscow’s Tourism Commit-tee. Another way to save is to find an affordable hostel. There are officially 55 hos-tels in Moscow, almost all of them in the center. Twenty were opened in 2011. The av-erage price per night is $14-28.

Picking a good bargain “Souvenir shops are to be avoided at all costs, especial-ly in central Moscow, as their prices could bankrupt small

countries. Markets are the best place to look for that cheap, authentic piece of Russian culture that you just can't live without,” advises Laura Gardner from Man-chester, UK. One of the most famous souvenir markets is located at the picturesque Izmailovsky Kremlin. The average prices there are lower than in the shops and, most important, you can bargain. Expats and tourists agree it is a great place to practice your � edgling Rus-sian. Learn to ask “How much?” Then learn to walk away when you hear the an-swer. The price goes down when they see your back. It works every time.

Dangers at every step?According to The Village portal, 15% of expats inter-viewed are afraid of nation-alists — and not without reason. “If you are a minority going to Moscow, don't let the comment I wrote above discourage you. Most Rus-sians I met were very loyal, friendly, and generous. How-ever, there are a few bad ap-ples mixed in as well, and you probably will come across them at some point during your stay,” says Cole Margen of California. Here are some don’ts: do not stray onto unknown streets after dark and keep away from groups of strangers. Official statistics state there were 24 crimes against for-eign tourists in Moscow last year. "Someone told me Moscow is a dangerous city. But when I came to live here I realised that it's not as dangerous if you are careful and observe common safety rules.Such as: try to avoid metro in the night, don’t go the darkest area at night and don’t put all your money in the bag," says Neeraj Khemani from India, who has 2,5 years' experi-ence of living in Moscow.

To Russia with love: Indian tourists amid the throng of visitors at the Kremlin in Moscow.

INNA LEONOVARIBR

Ask directions from a beauty“As for finding your way around, the metro is really pretty clear and simple. The crowds can be a bit intimi-dating if you get lost, but if you're underground, you can � nd your way. Above ground, the streets can be confusing, and they're not always clear-ly marked,” says Elliott Es-tebo. Street signage is increasing, and you can always ask di-rections from a passer-by: the younger the person, the more chance he or she speaks English. And one stereotype is true: there are beautiful women walking around in stylish clothes, just as you might imagine. You can even ask them directions. But an elder Babushka (grand-mother) is more likely to take you by the hand and show you your train. And if you try just a few words in Russian, you will be heartily applauded.

Twinning with New Delhi The Moscow City Government and the Legislative Assembly of the National Capital Terri-tory of Delhi have approved a cooperation programme for 2012-2014, and are planning to sign it during the Days of Moscow in Delhi in April-May 2012. “Delhi is extremely im-portant as a strategic partner to the government of Mos-cow. We believe that these kinds of regional connections between the world’s ma-jor cities help generate new ideas,” said Sergei Cheremin, head of the Moscow City Gov-ernment's Foreign Economic and International Relations Department during his recent

India visit. “Top-priority coop-eration projects and joint ef-forts in the programme will involve spheres like economic and trade policy, housing and utilities infrastructure, archi-tecture and real estate de-velopment, traffic manage-ment, the Safe City program, healthcare, education, culture and tourism,” he said. Among other things, the two coun-tries will continue the prac-tice of holding the Days of Moscow in Delhi and Days of Delhi in Moscow in 2012-2014. “The events will include exhi-bitions, concerts, and feature documentary films from both countries,” he said.

Image trap

"Before coming, I thought Moscow winter would be ter-ribly cold. But when I saw the first snowflake of my life and made my first snowball, I felt very happy. Actually, I like the weather here more than India."

Paribhi Sharma, 28, India.

"The stereotype is that Mos-cow is big, crowded, and that people are always in a hurry. These are all true! However, it is possible to find quiet places, and Moscow's parks are won-derful."

Andrew Close, 40, UK

"Before I visited Moscow, I thought it would be unpleasant and the people would be un-friendly. But I realised that gen-erally, if you need help, peo-ple will help you. I can go out alone and don't feel unsafe."

Sarah Kay, 22, England.

There is now a round-the-clock call center for English-speaking tourists in Moscow. Operators are ready to an-swer all your questions about the capital’s places of inter-est, transport, or help in an emergency. Telephones: 8-800-220-00-01 and 8-800-220-00-02. The call is free.

DIAL FOR FREE

24x7 helpline in English

Heritage Officially, the restoration work costs $635 million; Soviet hammer-and-sickle has given way to tsarist symbols

In the summer of 2005, the legendary Bolshoi Theatre downed its shutters, plung-ing music-lovers and bal-letomanes into wistful sad-ness. And a bit of shock. Some foreign diplomats and expatriates were dev-astated when they realised they would complete their postings without ever see-ing the celebrated Main Stage. The theatre’s dramatic ren-ovation did not come a mo-ment too soon. The building was literally on the verge of collapse. Overtime, the Bolshoi Theatre audience became painfully aware that the original completion date for repairs was an ar-bitrary date that would never be met. “New issues emerged after the closure. When we scraped off the plaster covering the walls, we discovered seven mas-sive cracks running from the foundations to the roof. Actually, the walls were only standing, thanks to their own weight,” Anatoly Iksanov, the Bolshoi’s direc-tor and a longtime adminis-

Russia's historic Bolshoi Theatre reopened on October 28 after six years of elaborate, painstaking reconstruction.

trator, said in a recent inter-view with RIBR. However, no one would have imag-ined that they would have to wait until October 28, 2011 to enter the legendary interior again. The impact was electrifying as the elaborately illumi-nated theatre reopened amid a constellation of global celebrities. As Rus-sian President Dmitry Med-vedev opened the gala, there was national jubilation. Officially, the restoration

work costs $635 million. Some reports suggested that in the end, the budget bloat-ed to twice that. A federal investigation committee was formed two years ago to ensure that public money had not been siphoned off, but its report has yet to be published. The Bolshoi Theatre has maintained a policy of no comment on allegations of corruption. “Our experts agree that the final cost is actually two times more than the official one,” said Kirill Kabanov, president of

the National Anti-Corrup-tion Committee.

A new shine Yet meticulous care and lov-ing attention defined the restoration. The most im-portant result of the over-haul is a vast improvement in the acoustics, says Ik-sanov. There have also been aesthetic improvements. The old balcony wood has been replaced by pine from Karelia. Even the seat and curtain fabric were chosen to � t acoustic experts’ rec-ommendations. Four tonnes of gold have been used in the theater, while Soviet symbols displayed until 2006 (such as the hammer and sickle) have given way to original imperial tsarist symbols from 1856. Nevertheless, Soviet dicta-tor Josef Stalin’s imprint will stay. Stalin had a cus-tom workroom designed for himself in a box near the stage. The room was scru-pulously restored, “but it will remain inaccessible to the public,” says Iksanov. Thanks to a more modern design, there is even more space at the Bolshoi. This extra space will be used as rehearsal rooms, while the main stage will gain more depth. It should also be noted that the metro line passing ever so close to the

Bolshoi was closed for a few days to lay new tracks de-signed to reduce vibrations that could be felt even in-side the concert hall.

Playing it safe The theatre’s artistic policy is perfectly in sync with its time. Conservatism is a reigning trend and the Bolshoi will still rank itself among the most traditional in the world. “We are going to direct great operas and ballets from the past; it is our top priority,” says Ik-sanov. During the last decade, the Bolshoi Theatre rarely sur-prised or shocked its audi-ence. One of the few excep-tions was the creation of the “Children of Rosenthal” opera by Leonid Desyatnik-ov and Vladimir Sorokin — the � rst world premiere of an opera at the Bolshoi in a quarter century. Alexei Rat-mansky, a former artistic di-rector of the Bolshoi Ballet, also focused on forgotten avantgarde works of the 1920s. Of course, these works are only shown on the intimate New Stage, an adjacent theater of a more modest size opened in late 2002. The 236th season opened with “Ruslan and Ludmila”, a symbolic opera often re-garded by musicologists as

A legend is reborn: 6 years on, curtains go up at Bolshoi!

The iconic Bolshoi Theatre re-opened its doors on Oc-tober 28 with a gala con-cert.

PAUL DUVERNETRIBR

the birth of the Russian lyr-ical genre. The production will be directed by Vladimir Yurovsky and staged by Dmitry Chernyakov. The first ballet of the sea-son, “Sleeping Beauty”, with original choreography by Marius Petipa, revisited by the Bolshoi’s art director, Yuri Grigorovich, will open in November. Later in the season, “The Knight of the Rose” by Richard Strauss and “Charodeika” by Tchai-kovsky, will represent the only other new productions of a modest first season. Lovers of contemporary dance can also look forward to the fresh, breathtaking work of choreographer Wil-liam Forsythe.

Tradition will reign. The 236th season will open with Ruslan and Ludmila, a symbolic opera.

The revival of a national brand A

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