THURSDAY, 27 october 2011 A paid supplement from rossiyskaya Gazeta (Moscow, Russia), which takes sole responsibility for the contents

opinionHas the Ukrainian leadership blundered by trying to shift the economic blame on to Yulia Tymoshenko?

PAGE 6

If you ask an oil driller, Russia’s economy is in the pink. But manufacturing is limping along at pre-crisis levels

PAGE 5

economy

In an op-ed for the daily Iz-vestia Russian Prime Min-ister Vladimir Putin called for a Eurasian Union of post-Soviet states. Putin’s idea is geared towards building a viable common market of some 180 million people, starting with the three member states of the new customs union – Rus-sia, Belarus and Kazakhstan

vladimir frolovrussia profile

Soon after announcing his plan to return to the presidency, vladimir Putin dropped what many observers see as a large hint about a major focus of his term in office.

Politics from customs union to continental bloc: How serious is the putin plan for a united states of eurasia?

Distributed with european voice

See viewPointS, PaGe 7

continued on PaGe 4continued on PaGe 3

big idea launches Putin campaign

Kudrin: The last reformer

“A while ago someone put the question to me: ‘So what is your official title now?’ My answer was simple: head of the Faculty of Lib-eral Arts and Sciences at St. Petersburg State Universi-ty,” Alexei Kudrin says, smiling widely.

GriGoriy naberezhnovrusskiY reporter

the long-serving finance minister returns to private life with a sense of a job well done – and one very powerful enemy.

Profile putin’s original tandem partner

Many were surprised when Kudrin joined the univer-sity in June: why was the minister of finance taking on all this extra work for himself? In the wake of what hap-pened later, it looks as though Kudrin had planned his departure from the gov-ernment. And why become a university administrator? “The country is badly lack-ing in people who know how to think outside the box and how to come up with new ideas,” he says.

inSidearms salesall over for the kalashnikov?economy PaGe 5

viktor bogorad

– and gradually expanding into a common economic space including Tajikistan and Kyrgyzstan.Putin looked further ahead to eventual monetary and political union modelled on the EU. Many analysts pointed to the timing of Pu-tin’s article as a hint that gathering together the former Soviet lands under Russia’s leadership would feature in the presidential campaign next spring he is strongly favoured to win. And while the notion of a ‘Soviet Union lite’ remains popular among ordinary Russians, many have also questioned Putin’s priori-ties, arguing that Russia has

much more pressing prob-lems at home.In many post-Soviet states and the West, meanwhile, Putin’s ambitious plan has been taken as evidence of Russia’s neo-imperial am-bitions. In Russia, some an-alysts cited the move as a sign of Moscow’s increas-ing pragmatism in dealing with the former Soviet states.Putin argued that the Eur-asian Union would be a bridge between the EU and the dynamic economies of East Asia, but gave no de-tails of how this could be achieved.

It goes without saying that Kudrin is one of these peo-ple himself. Twenty years after the fall of the USSR, the last reformer has quit government. His resigna-tion a month ago repre-sents the end of an era for the liberal camp, and al-though his solutions were often inconvenient and a bitter pill for the people and the ruling elite to swallow, no one can deny his dedication.

the once and probable future president surveys his sphere of influence.

tai adelajarussia profile

russia is increasingly looking eastward for partners in economic and modernisation projects.

Putin & Co. all smilesafter talks in Beijing

foreign affairs economic diplomacy

Russian Prime Minister Vladimir Putin led a pow-erful delegation of corpo-rate executives to China on 11-12 October.Experts saw the trip as a sign that Russia is trying to reduce its dependency

on sluggish European en-ergy markets and is look-ing for opportunities in Asia to hedge its bets. Pu-tin’s visit came amid a flur-ry of pre-election prepa-rations at home, prompting experts to suggest that the Russian premier is set to place more emphasis on trading relations with the Asian giant in the near fu-ture.

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heritageMoscow’s seven sisters

featureS PaGe 8alaMY/legion Media

gettY iMages/fotobank

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27 october 2011politics

Voters content with one-party ruleelections A report on the mood in Russia as the parliamentary and presidential election season begins

heidi behaRussiA now

after four years of economic turbulence and international confrontation, russians are showing scant interest in voting for change.

After a flurry of activity over the summer, culminat-ing in the rapid rise and meteoric flameout of mag-nate Mikhail Prokhorov’s political prospects, public interest in the campaign for December’s elections to the State Duma has dimmed.The entrance into the po-litical arena of Prokhorov, one of the country’s rich-est men, cast an unusually glamorous tinge on the lacklustre campaign. Prokhorov took charge of the small, liberal-minded Right Cause party in June with big promises: He wanted not only to be elect-ed to the Duma, but to join the next government. He said Russia should join the European Union and prom-ised huge increases in the average wage.Less than two months later, he had lost the party lead-ership after a dispute with the presidential adminis-tration, which had previ-ously supported the party. Once tipped to gain 15% of the vote in December, Right Cause is now polling at 3%, far under the 7% threshold required to enter the Duma.The high threshold is one reason why the political party landscape in Russia changes at a glacial pace.Eight parties are expected to compete for seats in the Duma, but an August sur-vey by the respected poll-

ster Levada Centre indi-cates that only two have a strong chance of joining the ruling United Russia in the next parliament: the Com-munist Party (18% support) and the nationalist Liber-al Democrats (13%). The fourth party represented in the current parliament, Just Russia, was slightly under the threshold at 6% sup-port.

Another reason the Duma fails to capture the public’s imagination is that respon-sibility for forming the gov-ernment rests primarily with the president, not the parliament. Voters also know that United Russia is a near certainty to com-mand a majority in the next Duma similar to the 70% of seats it has in the out-going one. That is sufficient

for the party headed by Vladimir Putin to pass con-stitutional changes.

a rubber-stamp house?Critics see an analogy be-tween United Russia and the Communist Party in the Soviet period, because the ruling party does not face any real opposition. The periodic alternations of power typical of many

the russian way of politics

The head of state holds most of the reins of power in Rus-sia’s presidential-parliamen-tary system, and the next president will enjoy a longer term in office, six years rath-er than four as previously. A person may only be elected president for two successive periods of office. Renewed candidacy is possible after

a break.To participate in the next State Duma, a party must win at least 7% of the vote, compared with 5% in the last general election in 2007. The second chamber of the Russian parliament, the Fed-eration Council, consists of two members from each federal subject. Half of the

members are representatives of regional governments ap-pointed by the president, and half are elected by re-gional legislatures.The formation of the gov-ernment is not dependent on the distribution of seats in the Duma. The president nominates the ministers, ex-cept for the prime minister,

act to freeze out political newcomers. “Anybody who is successful in Russia is as a rule also a party mem-ber,” political scientist Al-exandra Gluchova says.This year the dominance of United Russia could be even greater. Twenty-five percent of slots on the par-ty’s electoral list are re-served for members of the All-Russia People’s Front, an initiative of Putin’s to bring like-minded civic or-ganisations and individu-als into the party’s orbit.“The biggest problem of the political system is that there is no communication between members of the Duma and the electorate,” comments Natalia Zviagi-na from the election-mon-itoring organisation Golos. There is a lot of coverage of President Dmitry Medvedev and Putin, but people are not informed about the work of the leg-islature, Zviagina says.Turn-out is predicted to be 61%, which would be slightly lower than in 2007. “People are afraid to lose what they have. That is why they will vote for United Russia again,” Glu-chova says. Since the eco-nomic hardships of the 1990s, Russians have seen a period of stability and increasing welfare under Putin and Medvedev. Many are thus disinclined to take political risks. “The conse-quence is a petrification of political culture and de-bate,” Gluchova adds.The voters are less inter-ested in debates and party programmes than in image and quick decisions. “Peo-ple don’t put their faith in institutions, but in person-alities,” Gluchova says.

Main contenders in the december parliamentary elections

Critics say united Russia resembles the pliant Communist Partyof the soviet era.

who is chosen by the Duma.The president must work with the Duma in order to pass legislation. Bills ap-proved by the Duma must go through a second reading in the Federation Council. If the Federation Council rejects a bill the Duma can override the second chamber with a two-thirds majority.

Western democracies are almost out of the question. Some observers argue that the close links between business and the state also

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27 october 2011 politics

Kudrin came into politics riding the coattails of re-former Anatoly Chubais and of Vladimir Putin. Before Putin came to power, Kudrin followed Chubais first to the St. Petersburg city admin-istration, then on to the pres-idential administration and the Finance Ministry. The young economist rose quickly. “At this time no one had any practical experience. To rule a new country it was better to have no experience of the old regime,” says Kudrin’s former classmate and close friend, economist Dmitry Travin.It was at St. Petersburg city hall that Kudrin got to know Putin. And when Kudrin and Putin moved from St. Peters-burg to Moscow in 1996, their relationship was not one of master and slave. It was more a case of two peo-ple united in misfortune, and they were helped by Chu-bais. There is even a rumour that Putin briefly lived in Kudrin’s kitchen. And the future prime minister and president at times followed in his friend’s footsteps – as in March 1997, when he suc-ceeded Kudrin as head of the control directorate in Boris Yeltsin’s administration after Kudrin’s promotion to the Finance Ministry. When Yevgeny Primakov be-came prime minister in 1998,

Kudrin left his post as first deputy minister of finance to work under Chubais at United Energy Systems. In the meantime, Putin man-aged to overtake his friend on the career ladder and was in position to bring Kudrin back into government when Yeltsin nominated him to be prime minister in 1999. The next year, President Putin named Kudrin to be finance minister.Throughout, Kudrin has re-mained one of Putin’s genu-inely devoted allies. In a lec-ture in Washington two years ago, Kudrin again stressed that Russia’s economic suc-cess over the last few years can mainly be attributed to the “political consolidation that happened under Putin’s leadership”.

Mr. noIn government Kudrin was known as ‘Mr. No’ because of his firmness in refusing the demands for money from all the lobbyists who came knocking on the door of the ‘country’s chief accountant’. Kudrin earned this nick-name back in his St. Peters-burg days in the 1990s, when the entire Russian economy collapsed and people would do anything to survive.However, it seems that he was only Mr. No to claim-ants who came to him out of the blue. He has been more accommodating to friends,

with Medvedev last month came over the president’s an-nouncement of steep increas-es in military spending.Kudrin held the view that if defence expenses kept spending on economic de-velopment, education and health-care to just 3.6% of GDP, Russia might as well forget about modernisation. But the government did not agree. It is largely thanks to Kudrin that the Russian economy came back to life after the shocks of the 1990s, even if the only large-scale reform has been in the way Russians are taxed: the number of taxes has been cut from 53 to 15. The so-called cushion of stability that came with Putin’s regime was in fact largely owed to the finance minister. This is what kept the country and its finances relatively unharmed and in-tact during the global crisis. Putin and Kudrin were a genuine political tandem for the last 11 years. Now this partnership has fallen apart because Kudrin could not believe he would be asked to step down so soon, or so suddenly. Kudrin once said, “I get in-expressible satisfaction when I teach my little son how to ride a bike and am able to think that this proc-ess will have no impact whatsoever on the Russian financial system.” He’ll have time now to enjoy many more such joys.

Originally published inrusskiy reporter

and this is perhaps why he enjoyed limitless trust from a lot of people. Thus, in 2000 the Finance Ministry made moves towards withdrawing a grant of 342 million rubles (now €8 million) for recon-struction in war-torn Chech-nya, suggesting, not without reason, that the funds could be embezzled. But when of-ficials complained to Putin, the money was transferred immediately. The same year,

Kudrin tried to cut back the extremely generous prizes that the Russian Olympic Committee was handing out to Russian athletes for vic-tories at the Sydney Games. When the complaints of sports officials eventually reached Putin, once again the money was signed over straight away. However, it wouldn’t be fair to paint Kudrin as some sort of purse in the pocket of a strong leader. Financial jour-nalists named him finance minister of the year three times between 2003 and 2010; thanks to his efforts, the stabilisation fund came into being and helped ease the pain of the 2008 debt cri-

sis. Kudrin himself regards the creation of the fund as his crowning achievement. For a long time, Kudrin was convinced that policy was only of secondary impor-tance to the economy. This view holds that neither ide-ology nor the principles of a political regime are of any significance until the coun-try is able to manage its fi-nances competently. It was too late by the time he real-ised that a full ballot-box (functioning democracy) is a prerequisite to a full fridge (economic prosperity). We first got a sense of a change in Kudrin’s thinking from a speech he gave in

February. He was adamant that Russia cannot expect to have a fully-fledged market economy before there is real political competition in the country – a position that re-flected “certain stages in my own personal development”, he told the New York Times. His general principles, at least where the economy is concerned, have remained unchanged for the past 20 years or so. And apart from his professionalism and dil-igence, attributes even his fiercest critics cannot fail to recognise, the characteristic he will be remembered for is one that is unusual in Rus-sian politics: he was always

continued froM page 1

completely open and trans-parent.This summer Putin joked with staff at the Russian Academy of Sciences, “You shouldn’t listen to Kudrin so much, he’ll teach you some-thing bad.” The quip indi-cates another aspect of Kudrin’s career: no matter which government he was working for, he has always played the role of whistle-blower and scapegoat. Ex-amples of this are many, but the one that stands out hap-pened in May 2009, when Kudrin warned that the Rus-sian economy might not be so buoyant 50 years down the line. This was when he got his first sharp rebuke from President Dmitry Medvedev: “Someone who cannot refrain from relent-less pessimism should find another job.”

parallelsParallels are now being drawn between Kudrin and the first minister of finance in Russia, Count Alexei Va-siliev, who fiercely opposed the rise in military expend-iture on the eve of war against Britain in 1807. Had Vasiliev not died before war broke out, he could have taken grim satisfaction from observing its consequences, for the campaign made an irreparable dent in the state finances and the effects were still being felt decades later.For his part, Kudrin released a 15-year budget strategy in 2008 that proposed gradu-ally cutting back defence spending to 1.8% of GDP. Kudrin’s definitive break

tiMeline

an overview of kudrin-inspired policies widely credited with pulling russia out of the doldrums and staving off the global crisis

2000 • Named finance min-ister, launches tax reform. Over the next few years in-troduces a flat 13% income tax, abolishes sales tax and cuts VAT from 20% to 18%.

2003 • Emerging Markets magazine names Kudrin best finance minister in Central and Eastern Europe, lauding stability brought by his con-servative fiscal policy.

2004 • Launches a finan-cial stabilisation fund using oil export revenues. Resists many calls to draw on the fund for domestic spend-ing.

2006 • Presents the first ‘non-oil-and-gas budget’ in several years, limiting oil ex-port revenues to 2.8% of GDP. Russia settles all its debts to the Paris Club.

2008 • Government taps the €100 billion stabilisa-tion fund to stave off col-lapse of the ruble at the peak of the global reces-sion.

2010 • Euromoney magazine names Kudrin best finance minister of the year, high-lights stabilisation fund’s role in cushioning damage from the crisis.

Putin chose his friend to be finance minister, launching an 11-year partnership.

Kudrin could not believe he would be asked to step down so soon, or so suddenly.

kudrin: the last of the reformers steps down

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former finance Minister alexei kudrin (centre) and president dmitry Medvedev.

04 Russia now www.rbth.rusection sponsored by rossiyskaya gazeta, russia

27 october 2011economy

Putin hopes the visit, his first trip abroad since an-nouncing he was ready to reclaim the Russian presi-dency, will help broaden trade with China, which he expects to grow to €144 bil-lion in 2020, up from €42 bn last year. “To gain more room in the international market, we need to make joint efforts to push our co-operation to a new level,” Putin told Chi-nese journalists after talks with his Chinese counter-part Wen Jiabao in Bei-jing.Thanks in part to his po-litical clout as Russia’s pres-ident-in-waiting, seeming-ly irresolvable problems in bilateral ties are now prov-ing to be more managea-ble.“As far as the economy and trade are concerned, issues of a practical nature are being resolved, and this is good,” Putin told reporters at the start of the talks. One such issue is the dec-ade-long negotiation to supply China with up to 68 billion cubic metres of Rus-sian gas annually over a 30-year period, which has been held up over pricing disa-greements. “We are nearing the final stage of work on gas supplies,” Putin finally announced during his visit.A breakthrough on a gas accord with the world’s big-gest energy consumer would boost Moscow’s efforts to reduce its export depend-ency on the European mar-

ket. Russia, which supplies 25% of the European Un-ion’s gas, is under mount-ing pressure to cut its Eu-ropean pricing formulas. Analysts said clinching a deal with China could pro-vide Russia with a bargain-ing chip and a credible al-ternative to ease such pressure.

gas deal in the offingRussian officials had tried to lower expectations of a gas-supply deal ahead of Putin’s visit, suggesting that bilateral talks would focus on the expansion of mutu-al investment and co-oper-ation in high-tech industry, and the implementation of l o n g - t e r m e n e r g y projects.“The signing of official doc-uments on the deliveries of Russian natural gas to China is not on the agenda of this visit,” Putin’s depu-ty chief of staff Yuri Usha-kov said on 10 October.In addition to energy, which accounts for more than half of Russia’s exports to China, Russia also hopes that ex-panding economic ties with the Asian nation will help it to diversify its economy. Russia has lately tried to talk China into partaking in in-novative projects as diverse as energy efficiency, infor-mation technology and space exploration. “Our goal is to diversify our economic ties,” Putin told reporters in Bei-jing. “I think that everyone will agree that compared with the known difficulties in the global economy, this aspect of the Russian-Chi-

count on the support of Rus-sian voters because his gov-ernment has been able to steer the country out of the worst economic crisis in a decade. The Russian govern-ment, he said, managed to halve the number of people living below the poverty line even as the global recession sent the economies of rich countries into a tailspin.“We understand what needs to be done in order to achieve the maximum impact on so-cial development and eco-nomic growth,” Putin said.

Originally published onrussiaprofile.org

nese relationship has a sta-bilising impact.”

putin reassures chinaOne of the agreements signed between China and Russia on 12 October is for the construction of a 750,000-tonne aluminium smelter in Russia’s Irkutsk region. According to the terms of the agreement, the China Development Bank will open a $1.5-billion line of credit for the Russian state bank VEB to finance the first stage of the project, part of the aluminium giant Rusal. The state-backed Russian Direct Investment Fund, which was established in

china’s chief legislator wu bangguo and Vladimir putin hold talks at the great hall of the people in beijing.

June, also received a much-needed cash boost after ink-ing an agreement with the China Investment Corpora-tion. The deal will see the Chinese sovereign wealth fund injecting up to three-quarters of a billion euros into various projects in Rus-sia and the CIS. Kirill Dmitriyev, who heads the Russian Direct Investment Fund, described the Chinese commitment as “a resound-ing vote of confidence for Russia from one of the pre-mier investors globally”.Perhaps more resounding is Putin’s disclosure to Chinese media that he is reclaiming the presidency next year. Putin said his party could

billion cubic metres: Annual Russian gas deliveries to Chi-na over a 30-year period, ac-cording to Putin

billion: Line of credit from China Development Bank for the state-owned Russian bank VEB

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$1.5

the numbers

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tim goslingBusiness new europe

russian home mortgages are on track to nearly triple by 2020. in some parts of moscow office vacancy rates are close to zero. what’s happening?

Waking from the long property nightmare

real estate Moscow prices are climbing and vacancy rates tumbling as empty buildings fill up fast

As in most of Europe, Rus-sia’s real-estate sector was booming before the start of the global debt crisis. Pric-es soared and Russian de-velopers and banks were investing bil l ions of euros.“The crisis arrived at abso-lutely the worst possible time for the Russian real-estate market,” said Darrell

Stanaford, managing direc-tor at the commercial prop-erty agents CBRE Russia. “In the spring of 2008 over a million square metres of new office space arrived on the [Moscow] market – the biggest ever addition to the city, so when prices began

vesting their spare cash in bricks and mortar.Sales rose in August, said Pavel Kocheryozhkin, dep-uty chief executive of YIT Moskovia, a subsidiary of Finnish developer YIT. “It’s both direct sales of new homes and mortgage deals,” he said.At the same time Russia’s Mortgage Agency (AIZhK) said in August that the number of mortgage and housing loans will nearly triple to 741,000 loans by 2015 from the current 300,000 and continue climbing to 868,000 by 2020. While many Ameri-can and European mortgage holders are still under water, prices for residential prop-erty in Moscow have held up well; as the market is so small the owners of the bet-ter apartments simply took them off the market during the crisis, prepared to wait until the worst was past.The average price of Mos-cow residential real estate has soared from around €650 per square metre in 2003 when mortgages first became available, to €3,600 by this June, according to the website Irn.ru.

The cranes atop the 47- storey Dom na Mosfil-movskoi office and residen-tial skyscraper have started to move again after a two-year hiatus. The towering silver and glass building overlooking Moscow near the iconic Moscow State University has already be-come a landmark, but the last five storeys had re-mained exposed to the ele-ments since its developer Donstroy ran out of money and suspended work in 2008. However, since the summer Russia’s economy has started to pick up mo-mentum again and work-ers are back on the site.

to fall they collapsed com-pletely.”Today, the new supply of of-fice space in Moscow is being steadily eaten up since despite the slower-than-expected growth, Rus-sia’s economy will still grow by at least 3.5% this year.Stanaford says there will probably be no new office space coming on to the mar-ket until at least 2013. That will also push prices up.Prices for prime locations have already passed their pre-bubble peaks. Office va-cancy rates in Moscow have fallen by half to 12.5% since the end of 2009, and are near zero in the prime retail and logistics sectors, according to Renaissance Capital.A similar story is playing out in the residential mar-ket, where the volume of new construction acceler-ated unexpectedly in July, rising by 17.6% year-on-year, according to analysts

with Alfa Bank. The uptick was primarily driven by new residential housing coming on the market and companies restarting work on half-finished buildings. Dozens of projects were fro-zen in 2008-2009 as heav-ily indebted developers

struggled to survive after their credits were cut off completely in the worst of the meltdown.The prospects for more growth are good. Banks have reported an increase in mortgages all year as Russians are once again in-

the dom na mosfilmovskoi skyscraper rises again.

The debt crisis arrived at the worst possible time for the russian real-estate market.

putin & co. in fruitful china junket

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05Russia now www.rbth.rusection sponsored by rossiyskaya gazeta, russia economy27 october 2011

Three years after the finan-cial crisis hit Russia, the gross domestic product is still short of pre-crisis lev-els. But results from the first half of 2011 show that there is not far to go. GDP grew by 4.1% in the first quarter and by 3.4% in the second. Other macroeconomic in-dicators also seem encour-aging, a trend which has prompted policy-makers to declare that the country’s recovery is complete – or will be by early 2012.

Manufacturing slumpOn paper, the situation in Russia looks better than in many other countries. And yet to declare the econom-ic crisis in Russia over is

economy Russian GDP remains lower than before the crisis although natural resources are helping it rebound

economy rebounds on oil and gas as manufacturers keep struggling russia’s economy is well on the road to recovery, if you ask an oil driller. but investment in many sectors has yet to return to pre-crisis levels.

nadezhda petrovaKommeRsant DenGi

the nuMbers

4.8 %: expected GDP growth for 2011, ac-

cording to International Mon-etyar Fund estimates

50 % of Russia’s budget rev-enues come

from sales of oil and gas

13 %: share of Rus-sian GDP contrib-uted by the high-

tech and intellectual services industries

economic growth by sector (%)

premature: The economy remains dependent on raw materials, and foreign in-vestment has been slow to return.Available statistics indicate that industrial production from January to July 2011 was only fractionally lower than before the crisis. Raw materials extraction grew by 4% and oil extraction by 4.2% compared to pre-crisis levels. The situation in the mining industry has led to positive general in-dustrial production indi-cators, the Centre for Mac-roeconomic Analysis and Short-Term Forecasting, a Moscow think-tank, re-ported. The Russian econ-omy owes its resurgence to the extractive industries, which have returned to pre-crisis levels, and in-vestment, which is only slightly less then before the crisis. The situation is far less rosy in manufacturing, which is down 10% compared with

2008 levels, although there are exceptions. Consumer production, hydrocarbon processing and the automo-tive industry are relatively healthy, for varying reasons – because producers are fo-cused on the local market, because of increased pro-duction, or thanks to gov-ernment support pro-grams.Manufacturing industries that are lagging include equipment, building mate-rials and metallurgy.

investing in the futureAlthough investment into the Russian economy has been growing, it has yet to return to pre-crisis levels, partially because there has been little positive move-ment in fixed capital invest-ment. This is particularly troubling, according to Vladimir Salnikov, deputy general director of the fore-casting centre, because fixed capital investment is “an important indicator that de-

termines the quality and dy-namics of future develop-ment.”According to the centre’s es-timates, fixed capital invest-ment in the manufacturing industries is 7.5% below 2008 levels, profitability is down by a quarter, and the number of companies that are solvent is down by a third. The flow of investment into the Russian economy overall has dropped signifi-cantly. Despite a nominal in-crease from €75 billion in the first half of 2008 to €82 bn in the first half of 2011, investment has fallen 14% in terms of GDP. “This re-versal has become rather fixed,” Salnikov said. “It is unclear how long it will be before we see investment growth again.”Russia, like many other countries, has now become “a hostage to the situation in Europe and the United States,” Salnikov said. With growing economic problems in these regions and China’s

economic slowdown – the growth forecast for the Chi-nese economy was recently lowered, although it still re-mains high, at 9.3% – a cor-rection in commodity pric-es is not out of the question. This will hurt the Russian economy, which emerged from the crisis with an even greater dependence on hy-drocarbon prices. “We have absolutely no control over such potential problems, as they can come from out-side,” Salnikov said.Nevertheless, the analyst re-mains optimistic: “Potential growth in developed West-ern countries is much less than in developing coun-tries. Investors will eventu-ally go where the potential is. In this sense, Russia ul-timately is in a good posi-tion. In a deep world crisis, all we want is some assur-ance of stability in these de-veloping countries so that investors can understand that their investment is pro-tected.”

victor litovkinRussia now

the ak is manufactured around the world, but discerning military buyers prefer the russian original.

ably the most famous as-sault rifle ever made, would soon end.In fact, the armed forces stopped buying Kalashnik-ovs in the 1990s because military arsenals were over-flowing with various ver-sions of the weapon that has been manufactured since 1947.“The country’s mobilisation stockpiles, including those of this assault rifle, are doz-ens of times bigger than we need,” Makarov said.But military experts say that despite the Kalashnik-ov’s age and problems with

mainly for special forces and intelligence units. However, experts say putting them into mass pro-duction would be very ex-pensive, and meanwhile, millions of the reliable AK-74s are available and more can be produced cheaply on demand.Mikhail Kalashnikov him-self has heard the rumours. The 91-year-old father of the AK, commenting on re-ports that superior weap-ons had emerged, “I know, but let them gain the au-thority of my rifle first, and we’ll talk then.”

Reports of the Kalashnik-ov’s death may prove to be exaggerated.When the chief of the Rus-sian general staff, Gener-al Nikolai Makarov, admit-ted recently, “We are no longer happy with the as-sault rifles we have now,” it seemed to confirm ru-mours that production of the ubiquitous AK, prob-

its accuracy, more modern weapons are not that much better.The Kalashnikov, in all its variants, has long since be-come a Russian brand along the lines of vodka, Yuri Gagarin and the Kremlin. The current version, the AK-74, replaced the vener-able AK-47, which is still manufactured in Russia at the Izhmash factory and in knock-off versions in many other countries. The ‘Kalash’ is the most popular assault rifle in the world thanks to its reliability, durability and simplicity. It’s very easy to

grab, attach a loaded mag-azine and start firing.The AK is not without its flaws, chiefly its low accu-racy compared to rival mod-els. It is considered very ef-fective for a short urban skirmish or a massive in-fantry assault supported by armour and artillery. For one-on-one combat and other situations where ac-curacy is paramount, ex-perts say other Russian ri-fles such as the AN-94 or AEK-971 make better choices. The Russian mili-tary procures small quan-tities of these weapons

Venerable Kalashnikov holds its own against rival riflesdefence as the Russian armed forces seek a new-era assault rifle, aKs in the millions gather dust in arsenals

his grandfather may also have carried a kalashnikov.

life/vostocK-Photo

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06 Russia now www.rbth.rusection sponsored by rossiyskaya gazeta, russia

27 october 2011

The death of Steve Jobs was met with sadness by Apple fans around

the world, while industry experts rushed to praise Jobs as not just the driving force behind a company which this summer briefly became the most valuable in the world, but also as a visionary in the sector and even the greatest industri-alist of the last 20 years – or ever.Are the paeans justified, or is it all just hype? Apple cer-tainly stands out compared to companies such as Mi-crosoft and Google, which are also highly successful, but which have never won people’s hearts and minds. They might be respected, even feared, but never loved.That is the big lesson to be learned from Steve Jobs and Apple, both for other com-panies, and for countries

such as Russia, which is now trying to jump onto the innovation and high-tech bandwagon.Yet, for all their technical expertise, many electronics wizards are woefully igno-rant of history and are far too young to have experi-enced anything else at first hand. In truth, many mod-ern products are by no means as revolutionary – or as good – as they seem to be. Take the Apple iPod. The big breakthrough in per-sonal music on the move was the Sony Walkman. Be-fore it was introduced in 1979, the choice was be-tween boom boxes, bulky cassette decks and tinny portable radios. The Walkman made a huge leap forward with its aston-ishing sound quality, and I still prefer the heft and feel of my old clunky Walkman to the sleek and austere de-sign of my two iPods. Of course, the iPod is self-con-tained – you no longer need to carry around spare bat-

teries and cassettes, and the latest, 160-gigabyte itera-tion of the iPod Classic can store 40,000 songs.Apple’s real revolutionary product was not the iPod, but iTunes, an innovation

that saved the recording in-dustry from extinction.Still, it is very hard to argue with Apple’s phenomenal success. It makes sexy, high-margin products bought by millions the world over, and ultimately, that is what business is all about.Copying this trick is hard-ly easy, even for world-class firms, and leadership can pass very quickly from one company – or country – to another.

Russia is now trying to modernise, and is hyping its Skolkovo project just out-side Moscow at home and abroad as the country’s an-swer to Silicon Valley, but there is massive scepticism domestically and interna-tionally. Russia has precious few firms outside oil, gas, metals, mining and bank-ing, and high-tech compa-nies are conspicuous by their absence.Instead of fixing this by proper reforms at national level, as usual, the approach to Skolkovo is Soviet – a government-led approach which pumps in large finan-cial and other resources.The Russian oligarch and TNK-BP shareholder Viktor Vekselberg said Skolkovo had received a promise of €2 billion in government funding over the next three years, ac-cording to the Financial Times. The aim is to raise the same amount from pri-vate sources, including major multinationals. Sie-

TRUE INNOVATION CANNOT BE PLANNEDmens, GE and Nokia-Sie-mens have said they would build R&D centres at Skolkovo and invest up to €35 million each.But Russia’s brightest and best are leaving the coun-try in droves. Some 40,000 Russians work in Silicon Valley alone, and estimates are that something like 300,000 emigrate every year. And outside the tech sec-tor, it’s also worth remem-bering that developing just one new drug costs half-a-billion, so €2 billion or even €4 billion won’t go far.Nor do Russia’s leaders un-derstand science and tech-nology. Dmitry Medvedev and Vladimir Putin have each said, for instance, that money invested in R&D should produce results and not be wasted. But risk is the name of the game. There can never be any guarantee of success, and scientific and technological progress often results from sheer serendip-ity – it cannot be planned.Russia has wasted years

since the Soviet Union ended in its still unsuccess-ful search for a national vi-sion. It is just learning to talk the talk, but walking the walk across the board will be much harder. Ger-man Gref, a former econo-my minister and now head of Sberbank, Russia’s big-gest financial institution, said on Vladimir Pozner’s late-night talk show that a domestic car industry would take at least 15 years to cre-ate.At the end of August, Av-toVAZ, one of Russia’s big-gest car makers, made a small step forward by hir-ing Steve Mattin as chief designer. Mattin has previ-ously worked at Mercedes-Benz and Volvo. It will be fascinating to see if he can do a Steve Jobs and trans-form the maker of the Lada into a sexy, high-tech car company.

Ian Pryde is CEO of Eura-sia Strategy & Communi-cations in Moscow.

Russia’s leaders do not understand the role of science and technology in the economy.

opinion

YANUkOVYCh Is BURNINg hIs BRIDgEs

Yulia Tymoshenko is no stranger to controver-sy, court cases and de-

tention, but even by her own standards the guilty verdict handed down on 11 Octo-ber and seven-year prison sentence for abuse of office were shocking. In addition, she will face a five-year ban from standing in elections and a €135 million fine for her poor judgement in con-cluding a 10-year natural gas supply deal with Gazprom in 2009 – an agreement that was heav-ily in Russia’s favour at the expense of Ukrainian con-sumers.Given the high stakes in-volved in this verdict and the well-documented polit-ical dependency of Ukraine’s judiciary, it is hard to im-agine that the inexperi-enced judge, Rodion Kireyev, took the decision to back the prosecution independ-ently, as Ukrainian Presi-dent Viktor Yanukovych claimed. After all, it was the deputies from Yanukovych’s Party of Regions who pressed for a criminal case against Tymoshenko and formulated the charges.A closer look at the con-verging factors behind the ruling suggests that Ty-

meantime, Yanukovych and his cabinet are likely to seek a face-saving meas-ure that could result in Ty-moshenko being released early, but still having to pay the gigantic fine.Yanukovych’s statement that the court verdict is not final suggests that he is aware of the high political costs attached to the ruling for Ukraine’s relations with the West. The Ukrainian po-litical and business elite still view a foreign policy that balances relations with Russia and the European Union as being in their long-term interest. As Yanu-kovych put it after his vic-tory in the presidential elec-tion in 2010, he will seek to turn Ukraine into a bridge between Russia and the EU. So far, however, he has only managed to alien-ate both.

Originally published inthe Moscow times

result, she lost the presiden-tial election to Yanukovych in 2010. But her jail sen-tence may give her an op-portunity to redeem herself as a politician. Often oppo-sition leaders are more ef-fective at leading their fol-lowers from behind bars than from parliament.Third, the verdict is an at-tempt to undermine the le-gality of the 2009 gas deal with Russia. Ukraine is des-perately trying to gain a price concession from Gazprom. But these at-tempts have only led to the deterioration of otherwise close ties between Moscow and Kiev – so much so that the Ukrainian government has threatened to seek in-ternational arbitration to have the agreement re-viewed.In his witness statement against Tymoshenko, former President Viktor Yushchenko said he was not aware of the details of the agreement that Tymoshenko, who served as his prime minis-

sian Prime Minister Vladimir Putin. The agreement sets an exorbitantly high price for Russian gas imports and disadvantageous terms for import and transit volumes. The current Ukrainian lead-ers believe that it is only fair that Tymoshenko shares part of the blame for her poor decisions, which have cost the state and its citi-zens dearly.Second, the verdict goes a step further to ensure that Tymoshenko is isolated from the political scene for the next five years. This con-veniently takes Tymosh-enko, a controversial yet in-fluential opposition leader, out of parliamentary elec-tions in 2012 and presiden-tial elections in 2015. It is hard to say whether the au-thorities will be able to suc-ceed with their plan. Per-haps this will work for the parliamentary elections, but banning her from the pres-idential race in 2015 might be difficult because the West will clearly oppose this and might threaten Ukraine with sanctions if Tymosh-enko were excluded from the race.In addition, the effective-ness of this strategy is du-bious. Tymoshenko had al-ready lost popularity in recent years because of the failings of the Orange Rev-olution government. As a

ter during his presidency, was concluding with Gazprom at the time. And the verdict clearly states that Tymoshenko criminal-ly exceeded her powers. This ruling effectively creates grounds for the Ukrainian delegation currently in talks with Gazprom to question the legality of the agree-ment and even try to annul it. So it comes as no sur-prise that Putin criticised the verdict.Tymoshenko’s guilty ver-dict appears to be a tacti-cal move by the Ukrainian authorities to shift the blame for the country’s eco-nomic hardships away from themselves and to exercise pressure on Russia. In the

moshenko has become a scapegoat for Ukrainian au-thorities who wanted to achieve a number of goals with one guilty verdict.First, by blaming Tymosh-enko for agreeing to high gas prices, the authorities hope to shift the blame for the current state of the economy onto her. Current-ly, the Ukrainian govern-ment is under pressure from the International Monetary Fund to liberalise its domes-tic gas prices. In August 2010, Yanukovych ordered a 50% increase in otherwise heavily subsidised domes-tic gas prices.This has proven to be a very unpopular measure with voters. But the IMF has strongly recommended an-other 50% hike this year. In fact, it was due in August but Ukraine has been drag-ging its feet, fearing a po-litical backlash from ordi-nary Ukrainians ahead of the 2012 parliamentary elections. The IMF has fro-zen its co-operation with Ukraine over the noncom-pliance with its recommen-dations, which is not a good sign for a teetering econo-my in dire need of attract-ing foreign investors.One of the key contributors of these economic woes is the 2009 gas contract that then-Prime Minister Ty-moshenko signed with Rus-

ian prydebusiness

Consultant

Lilitgevorgyan

analyst

tymoshenko may now face new charges of corruption while in office.

07Russia now www.rbth.rusection sponsored by rossiyskaya gazeta, russia comment27 october 2011

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Putin’s united states of eurasiaViewpoints continentaL diVide

How effective could Putin’s plan for the Eurasian Union be? What obstacles will Moscow have to over-come to achieve this ob-jective, and in what time frame? What about Russian efforts to entice or cajole Ukraine into joining? How could domestic upheaval

and political succession is-sues in future member-states, such as Belarus or Kazakhstan, impact plans for the new union? How would Western and, per-haps more importantly, Chinese influence in the region affect Putin’s am-bitious plan?

Putin’s article is prob-ably only the first in a series of moves that

will determine his upcom-ing presidency. This first step needs to be recognised as positive, and it will find support among people in many corners of the former Soviet Union. It will also likely be supported by a majority of the Russian business community and people in general. The ne-cessity of some form of new integration in the region is quite evident and long ex-pected, and has required only the political will of contemporary leaders of the involved countries.If the project succeeds, Putin will be not only a Russian, but a Eurasian hero. Yet, although this plan is a great one and will enjoy the support of a majority of people in most of the post-Soviet countries, it will nevertheless face many ob-stacles. Among them are the current leaderships in Tajikistan and Kyrgyzstan, and even more so in Uz-bekistan and Turkmenistan (which were not even men-tioned in the article). A similar situation persists in the western borderlands. Yet, at the same time, the Eurasian Union could pave the way for a final solution

to the conflict over Nagorno-Karabakh, and Moldova could also solve its problem regarding Transdniester. However, for the time being, all these conflicts and ten-sions will present some dif-ficulties on the way to de-v e l o p i n g s u c h a community of nations in the former Soviet Union.The Chinese factor is also important because China plays an increasingly im-portant role in central Asia, and it even has plans for closer ties with distant Be-larus. However, I hope that central Asian leaderships realise that China will never be able to provide them the opportunities that may come from Russia. China is a different civilisation, and any deep integration be-tween Islamic people and the Chinese is very unlike-ly.The European Union, for its part, should realize the ben-efits of the Eurasian Union, and what is equally impor-tant is for the EU to accept its own limits on expansion. It is quite obvious that, for example, Ukraine will never be a part of it. Brussels must accept this simple fact and give up unjustified hopes.

alexandre strokanov

historian

ira strausrussia-nato

analyst

anthony t. salvia

political scientist

Vlad ivanenkoeconomist

Vladimir belaeff analyst

a long-overdue and grand idea

contradictory and confused

set hard conditions for eurasian union entry

the beacon in the east beckons to ukraine

has the feudal lord sired a rebellious heir?

Alexandre Strokanov is a professor of history and director of the Institute of Russian Language, History and Culture at Lyndon State College in Vermont.

Putin gives two mutu-ally contradictory geo-political definitions of

his Eurasian Union: a pole within a multipolar world,

M e a n w h i l e D m i t r y Medvedev has kept the op-tion open of resolving the contradictions by a more substantive and meaning-ful integration of Russia with the Euro-Atlantic space, making initiatives for this that have been flawed but far from senseless. Putin promises, far more illogi-cally, that his union will somehow help achieve this rather than its obvious role in adding a further obsta-cle to it.What is new in Putin’s use of these opposite definitions is that he raises the Lavrov contradiction to a higher level. He makes it a contra-diction at the core of what is supposed to become the main project of the Russian state, not just a contradic-tion in its foreign policy rhetoric as it keeps its op-tions open.

Ira Straus is US coordina-tor with the Committee on Russia in NATO.

the idea of a free-trade zone in the post-Sovi-et space is not new.

When one considers other associations, like NAFTA or Mercosur (and even the EU), which include countries with dissimilar historical trajectories, a Eurasian free-trade zone for coun-tries that share histories and were recently in the sin-gle (albeit very flawed) economy of the defunct USSR is logical.Would a Eurasian free-trade union be the “revival of the Soviet empire” or even of the older Russian empire? This argument makes sense only if one also proposes that NAFTA is an American empire, Mercosur the Brazilian empire writ large and the EU a revived late-Roman empire. Would Russia be willing to surren-der her own sovereignty to a revived USSR in manda-tory parity with some small, barely functional central Asian republics? Doubt-ful.Can the Eurasian free-trade zone be built in the 12 years of Putin’s presumable two presidential terms? A foun-dation can be laid in that

period. However, Putin should carefully study the experiences of Mercosur, NAFTA and the EU, so as not to repeat the same mis-takes.There is a huge disparity in economies, cultures, devel-opment and human poten-tial between some of the po-tential Eurasian members. Countries where voices al-ready express great inter-est in joining a free-trade zone (Kyrgyzstan, for exam-ple) are among the poorest and least developed in post-Soviet central Asia. They seek to exchange their third-world output for first-world market access, rep-licating their position in the defunct USSR.To counteract this compli-cation the Eurasian Union must establish degrees of membership and rigid “Maastricht criteria” for promotion from one grade to another, with mandatory roll-back provisions. There must be no bending of the rules to allow premature ac-cessio. The example of Greece and others in the EU must be a lesson thorough-ly learned and always re-membered.

vladimir Putin’s pro-posal of a Eurasian Union may not be

wholly original, but it does have lots of merit. If it is to have any hope of succeed-ing, however, it must not be patterned on the European Union, a body with a pen-chant for central economic planning and suppressing national autonomy. Moscow, in setting up the envisioned Eurasian Union, cannot go down this route. Instead of central plan-ning, it must aim for growth and economic free-dom within the space de-fined by its tariff walls. The freeing up of the economy is vital to getting rid of cor-ruption, promoting a de-mographic resurgence, and fostering social peace and stability. What about Ukraine? Will it tap into these benefits that have the potential to transform its economy? Kiev believes its interests are better served by nego-tiating a free-trade agree-

ment with Brussels. Frank-ly, I think Ukraine is running a great risk at a time when Europe is mired in a debt crisis so severe that some question whether the EU can even survive in its present form. Moreover, the EU, which views Ukraine as too big, too poor and too corrupt to be easily absorbed, refuses to assure Kiev that the con-clusion of a free-trade ar-rangement would lead to a road-map to eventual mem-bership.In my view, that’s a bless-ing in disguise. The biggest shortcoming of the free-trade agreement for Kiev is that it precludes joining the Russian-led customs union with its very tangible ben-efits for the national econ-omy, including paying do-mestic Russian rates for gas. My fear is that Kiev will realise too late that its most likely alternative to the ruble zone is not the euro-zone, but the twilight zone.

Anthony T. Salvia is direc-tor of the American Insti-tute in Ukraine, Kiev.

vladimir Lenin wrote, “In Russia, as is com-mon knowledge, cap-

italist imperialism is weak-er than military-feudal imperialism.” It seems that while the military compo-nent has dwindled in Rus-sia over the last 20 years, its feudal part remains firm-ly intact. Lenin’s namesake Putin has demonstrated mastery in navigating treacherous po-litical waters. The problem lies with the same antiquat-ed system of feudal, verti-cal governance, which he has nurtured during the last decade and whose hostage he has become. By agreeing to form a union, Astana and Minsk will trade their current status of politically independent countries for economic ben-efits they obtain from ac-cess to Russian markets.

This arrangement would mostly benefit a handful of large companies owned by local oligarchs.Yet, I see a silver lining in this mostly cloudy picture for Russia. The union will invariably dilute the polit-ical clout wielded by the Putin regime. Soon, because big money wants to control the power and not to be subjected to the feudal lord’s will, would come an uprising under the slogan, ‘Oligarchs of all nations, unite!’ the success of which could lead to democratisa-tion of Russian politics. And Putin might find in the end that he is in desperate need of the same level of public support that he enjoyed at the beginning of his politi-cal career.

Vlad Ivanenko is an econo-mist based in Ottawa.

Vladimir Belaeff works at the Global Society Institute in San Francisco.

and a part of a united Eu-ropean space. In his words, the Eurasian Union will be “a powerful supranational structure capable of becom-ing one of the poles of the world as it is and serving as a bridge between Europe and the dynamic Asian-Pa-

cific region.” At the same time, it is somehow to be an integral part of “the greater Europe with com-mon values of freedom, de-mocracy and market laws”.This is the standard con-tradiction of Russian for-eign policy in the Sergei La-vrov era. The united European space – spoken of sometimes in grandiose lan-guage as a unity of Chris-tendom in its three big chunks, America, Europe and Russia – is conceived by Lavrov and Putin in terms of a classical balance of power “unity” with all its intrinsic internal contradic-tions; that is, conceived apart from and, to a large extent, in opposition to the actual unity built in the At-lantic space since the bal-ance of power destroyed it-self in World War I. The real Western unity is integrative and has overcome the cen-turies-old contradictions of European power politics.

full version originallypublished on

russiaprofile.org

08 Russia now www.rbth.rusection sponsored by rossiyskaya gazeta, russiaFeatures 27 october 2011

tino kuenzelRussia now

built as symbols of victory and a new post-war era, the seven sisters skyscrapers still stand out amid new high-rises.

Moscow’s stalinist-gothic templesarchitecture skyscrapers were signs of renewal in a country struggling with the aftermath of war

From time to time, in the grey days of the Soviet era, working people raised in the spirit of atheism need-ed inspiration. They had the luxurious Artek pioneer camp in the Crimea, the grand Exhibition of Eco-nomic Achievements in Moscow, and the lavishly-decorated Moscow metro to lift their spirits. But the communist paradise on earth was yet to arrive. Soon after the end of World War II, in defiance of all doubt-ers, a grandiose new archi-tectural project was launched. Joseph Stalin, “the father and friend of all Soviet architects” as he was called at the All-Union Congress in 1946, undertook a colossal construction project designed to convince the Soviet people and the whole world of the victori-ous Soviet power’s new self-confidence. Early in 1947 Stalin’s cab-inet adopted a resolution for the construction of eight soaring structures. On 7 September of the same year, during the celebration of Moscow’s 800th anniversa-ry, the foundation stone of each skyscraper was laid in a special ceremony.

a vista of triumphThe first Moscow skyscrap-er was completed in 1949, and six more were complet-ed within ten years. Later known as the Seven Sis-ters, these buildings be-

came famous as monu-m e n t s o f t h e Stalinist-Gothic style and symbols of Moscow: Mos-cow State University on Sparrow Hills; the Foreign Ministry; the Ministry of Transportation; two resi-dential buildings; the Hotel Ukraina; and the youngest of the Sisters, the Hotel Leningradskaya. In the post-war period, these sym-bols of a new, glorious era seemed like something fan-tastic. ‘We can!’ – that was their architectural slogan, trumpeted from a country that lay in ruins, most of whose residents still had to

live in cramped communal apartments.Supervision of the sky-scrapers’ construction was initially entrusted to the no-torious KGB chief Lavren-ty Beria (who was also in charge of creating a Soviet atomic bomb and was ex-ecuted in 1953). He was ru-moured to have installed spying devices in some of the rooms.The actual construction of the Sisters was carried out by thousands of prisoners from the gulag, as well as by German prisoners of war.

With every building, a dif-ferent technique was used to stabilise the ground under the foundation. The costs incurred were of sec-ondary importance. Some 2.6 billion rubles were spent on Moscow State Univer-sity alone – the tallest build-ing in Europe until the Frankfurt Messeturm was completed in 1990. In to-day’s money that would convert to around €500 mil-lion, more than the 2 bil-lion rubles set aside to re-b u i l d w a r- r a v a g e d Stalingrad over a period of five years. Roughly the same amount was spent in total on the construction of the other six buildings.These monumental sky-scrapers surround the cen-tre of the city like a fortress wall, and themselves resem-ble fortresses. All followed a similar concept: a domi-nating central tower which, like an Aztec pyramid, nar-rows step-wise to the top, flanked in a more or less strict order by wings. How-ever, each building has its own stylistic palette and the lavish decorations of tow-ers, statues and bas-reliefs vary from one Sister to an-other. Stylistic influences range from Renaissance and baroque to Russian church architecture and Gothic. Stalin was said to be fond of the Gothic style and the architects tried to guess what would appeal to his taste. They didn’t always manage to please him though: the Foreign Minis-try was not originally de-signed with a spire, but the dictator insisted on having one. So as not to overload the structure, a special lightweight spire had to be

palaces for students, tourists and bureaucrats

a hotel reborn as an oasis of post-soviet luxury

perched on top with sup-ports descending five floors made in the same colour as the skyscraper. After Sta-lin’s death in 1953, the ar-chitects asked the new gen-eral secretary, Nikita Khrushchev, for permission to undo this Stalinist act of despotism. But Khrushchev refused, wanting the spire 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 Manhat-tan Municipal Building built 40 years earlier. This led to confusion over the ideological statement in-tended to be conveyed. The dialectical explanation was that capitalist temples of trade were studied in detail and used as a foundation, the object being to give them a completely new meaning.

the end of opulence Stalin’s death put an end to the principle that ‘the eye should delight’ no less quickly than 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 began, as a result of which many city dwell-ers received separate apart-ments for the first time in their lives. In the Russian mind, however, Stalinist skyscrapers still equal qual-ity, while Khrushchev’s matchbox-size apartments equal quantity.Construction of the seven skyscrapers was completed under Khrushchev. But the eighth, intended to be the most impressive of all, which was supposed to have been located next to Red Square and soar up to 275 metres, never materialised. Instead, Soviet planners erected what was then the largest hotel in Europe, the Rossiya, on the foundations. The hotel was demolished in 2006.Today the Seven Sisters have lost some of their old lustre. The elevators in the two residential towers break down from time to time and

the residents – members of the intelligentsia, pilots and cosmonauts – must accept that their new neighbours are hardly high society an-ymore. The central build-ing at Moscow State Uni-versity with its marble staircases and rich interior furnishings and special aura remains very grand, but many of the rooms in the dormitory are in need of re-pair.Fate has been unkind to the grandest of all Stalin’s ar-chitectural visions for Mos-cow. The Palace of the So-viets, designed in classical ‘Stalinist Empire’ style, was to be crowned with a 100-metre statue of Lenin, bringing the total height to nearly 500 metres, but con-struction was suspended during the war. An enor-mous outdoor heated swim-ming pool took the place of the palace. In the 1990s the pool was replaced by a rep-lica of the building that had stood on the site originally – the Cathedral of Christ the Saviour, which had been pulled down on Stalin’s command in 1931 to make room for his temple of progress.

Money was no obstacle as the skyscrapers rose, transforming the Moscow skyline.

under Khrushchev, functionality replaced imperial splendor.

The Hotel Ukraina – now the Radisson Royal – has always been special among the Sev-en Sisters. Unlike the closed ministries and the residen-tial buildings with their con-cierges, anyone can wander in and admire its panoramic views. The Ukraina opened in 1957 as Europe’s largest hotel. The observation deck that used to occupy the 29th sto-rey is gone, but the views

can still be enjoyed from the fashionable restaurants at the top.A three-year renovation transformed the hotel into an oasis of elegant luxury. But the old trimmings made of natural and traditional mate-rials – marble, Karelian birch and onyx – remain, as does the bird’s-eye view over Moscow from the main lob-by, itself a treasury of 1950s Soviet design.

geophoto

pRess seR

vic

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