Wednesday, January 25, 2012

Special ReportM.I.T. Professor Headed to skolkovoP.03

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The New York Times

Protests Russians march in anger over election fraud — but will they change the system?

The failure of Russia’s Phobos-Grunt probe, which crashed into the Pacific Ocean, was the disappointing completion of Russia’s first interplanetary mission in 15 years. When viewed in the context of six Russian launch failures in 2011, the doomed unmanned expedition is considered by experts a particu-lar blow to the reputation of the Russian space program, current-ly the only source of transporta-tion between earth and the International Space Station.

The crashes are not the only indication that Russia’s space program is in trouble. Late last year, a scandal erupted when LiveJournal blogger Lana Sator sneaked into one of the space program’s key factories and took pictures showing outdated equipment.

During a recent meeting with

What Brought Down Phobos-GruntSpace A fiery end to a much-heralded probe brings into question the quality of Russia’s space program

Dmitry Rogozin, a recently ap-pointed deputy prime minister in charge of the industry, Prime Min-ister Vladimir Putin said that the civilian space program must get army–style quality control. Among other things, military quality con-trol requires a permanent pres-ence of a controlling organiza-tion (similar to army purchase officers) at any given factory.

But there is some debate as to whether strict quality control alone will help the industry, which desperately needs a new influx of talented staff and updated manufacturing hardware.

“We are talking not about a cri-sis, but about the consequences of long-term underfinancing of the industry,” said Alexander Zheleznyakov, a member of the Russian Tsiolkovsky Space Acad-emy. The freeze on space program financing, ordered under Presi-dent Boris Yeltsin, has played a part in today’s failures but, ac-cording to Zhaleznyakov, closer attention must be paid to out-dated technologies. Zheleznyak-ov pointed out that Phobos-Grunt was made using 10-year-old tech-nology and spare parts.

On the evening of Dec. 5, several thousand people gathered in the freezing rain in central Moscow to protest alleged fraud in the Dec. 4 State Duma elections. “In the 1990s, we failed to make prop-er use of freedom,” TV host and writer Dmitry Bykov told a cheer-ing crowd. “It came down from above. But over the past few years, a real civil society has been formed in Russia, and it won’t

ARtem ZAgoRodnovSpeciAl To RbTh

RiA NoVoSTiThe MoScow NewS

Protests over election fraud add intrigue to a previously boring presidential race, while authorities announce a sweeping political reform in response.

the failure of Russia’s first major interplanetary mission in 15 years raises additional questions about the reliability of transportation to the International Space Station.

contInued on PAge 2

much of the last decade, author-ities had relied on seedy tactics such as blocking opposition candidates on technicalities, ballot stuffing and voter intimi-dation to secure artificially high results for the ruling party, Unit-ed Russia.

“Some in the government still see society as something to be ma-nipulated, but society has changed. You can’t cover up these protests with sleek P.R. You need real di-alogue,” said Ryabov. Ironically, it’s precisely the middle class that formed under Putin’s decade of record-breaking economic growth that is out on the streets.

Russians gath-er against al-leged vote rig-ging in the dec. 4 State duma elec-tions. While turnout was high for an op-position action in the Russian capital, many doubt that the marches will change the system. Protest organizers have scheduled their next ac-tion for Feb. 4.

disappear. Never before in Mos-cow was there such a feeling of unity and determination.”

That demonstration was fol-lowed by two larger ones, on Dec. 10 and Dec. 24, and recently or-ganizers have been agreeing on terms for the next demonstration, scheduled for Feb. 4. Under ban-ners of “Give us our elections back,” thousands of previously apathetic Russians demanded more freedom and accountabil-ity from authorities.

“Two months ago, I had no doubt as to the results of the up-coming presidential election. Now I do,” said Andrei Ryabov of the Carnegie Moscow Center.

When Prime Minister Vladimir

Putin announced in September that he would run for president in the March 4 election, almost no one doubted his return to the position he had held from 2000–2008. He has been the dominant figure in Russian politics for more than a decade, enjoying genuine-ly high approval ratings through-out both his terms, first as presi-dent and then as pr ime minister.

But then “something happened that the best sociologists can’t ex-plain,” said Ryabov. “It’s too early to say that the Russian consum-er has been replaced by a fully fledged member of civil society, but people are demanding more respect from the authorities.” For

can the Street determine the Road to the Kremlin?

the doomed Phobos-grunt probe being prepared for its nov. 11, 2011, launch.

neWS In BRIeF

Bribing foreign public officials may become a criminal offense in Russia if the State Duma pass-es a law committing the country to the Conven-tion on Combating Bribery of Foreign Public Of-ficials of the Organization for Economic Cooperation and Development (O.E.C.D.). Adopt-ing the convention is a condition for acceeding to the O.E.C.D., but some experts are concerned that signing it will limit Russian commercial in-terests in countries where bribery is part of doing business.

Michael McFaul, 48, U.S. President Barack Obama’s point man for Russia and one of the ar-chitects of the “reset” between Russia and the United States has taken up his new post as U.S. ambassador to the Russian Federation. McFaul arrives at a critical time in U.S.-Russian relations, as the two countries remain in disagreement over missile systems in Eastern Europe, and both coun-tries prepare to elect new presidents.Before his appointment to the U.S. National Se-curity Council, McFaul taught political science at Stanford University. He is only the second U.S. ambassador to Moscow in 30 years who was not a career diplomat.

Russia considers Antibribery convention

new u.S. Ambassador to Russia Arrives in moscow

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epiphany: ancient religious Tradition Lives On

11 Bands that surprisedthe Critics in 2011

On Jan. 16, Fitch Ratings, a global rating agency, cut Russia’s long-term default rating from posi-tive to stable. In announcing the decision, the agen-cy cited uncertainty surrounding the country’s political situation ahead of the March 4 presiden-tial election and its continued dependence on oil revenue to balance the federal budget.Nevertheless, Fitch affirmed Russia’s overall BBB Issuer Default Rating, noting the country’s low debt levels, substantial international currency re-serves and slowdown in inflation.

Russia gets mixed Report card From Fitch Ratings

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read more on Michael McFaul athttp://rbth.ru/14192

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When Monuments Fall: The Politics of Toppling Sculpturehttp://rbth.ru/14179politics & society

are traditionally unpopular. So far, Prokhorov has failed to dis-tinguish himself as a strong po-litical leader. His brief experience leading the Right Cause party in the summer of 2011 was marred by many errors typical of inex-perienced politicians.

Former finance minister Alex-ei Kudrin, with his increasing po-litical ambitions, is not really suit-able for the role, either. He worked with Prime Minister Vladimir Putin too long, and he does not hide his personal ties with Putin, who responds in kind. Some an-alysts pin their hopes on popular blogger Alexei Navalny. He gained popularity campaigning against corruption within state-run busi-nesses, but he is little known out-side of his Internet audience, and many opposition members are frightened by his nationalistic views.

Another factor working against the protests is the lack of a com-mon platform. The protesters are all unhappy with Prime Minister Vladimir Putin and Central Elec-tion Commission Chief Vladimir Churov, but they differ on what should be done next and how to do it. A new party might develop a strategy, but for this to happen, the protesters have to focus on the tedious work of organizing a political party. And in doing so, they must also be willing to com-promise — something Russia’s democratic opposition has never done before.

There are other factors, too. The representatives of Moscow’s rel-atively well-off cubicle dwellers known here as “office plankton” who took to the streets in Decem-ber have not been joined by the wider population. And that means that Vladimir Putin in his bid for the presidency can count on the support of those people. With an effective election campaign, Putin is sure to win on March 4 with-out any vote rigging.

In the short term, there do not seem to be any real threats to Vladimir Putin’s bid for power; it is after the presidential elec-tion that the authorities will face real problems, caused not so much by the protests of “angry towns-people” in Moscow and St. Pe-tersburg, but rather by the coun-try’s increasing economic problems and the need to take unpopular steps in order to modernize the economy and the aging infrastruc-ture inherited from the Soviet era.

Georgy Bovt is a Moscow-based political analyst.

Will Russia erupt in full-fledged revolu-tion during the com-ing year? Of course

no one knows for sure, but trends indicate that this is unlikely.

The protest movement trig-gered by popular discontent with the results of the parlia-mentary elections on Dec. 4 pro-duced the two largest demon-strations Moscow has seen in the past 15 years — followed by a lull during the long winter va-cation. Objectively speaking, the period of political silence might help defuse the atmosphere. On the other hand, real revolutions that are truly urgent and inev-itable do not go on vacation.

There are also some other fac-tors working against the pro-tests, starting with their disor-ganization and lack of unity. Up to this point, the protests have largely been fueled by what the Kremlin’s chief spin doctor, Vy-acheslav Surkov, called “angry townspeople.” These people, the product of the relatively stable era of Vladimir Putin, are not only dissatisfied with the results of the elections, but also the cur-rent political system, which they believe does not reflect their po-litical beliefs. Indeed, the key opposition leaders hardly reflect the spectrum of opposition views. Moreover, having gained seats in the Duma and more committee chairs than in the past, these leaders have quickly distanced themselves from the street protest movement.

The street opposition’s task now is to organize and coordi-nate its actions into a real po-litical movement and form a party that can act on its behalf. The authorities, agreeing to con-siderable concessions under the pressure of massive protests, are themselves creating all the nec-essary legal conditions for the protesters to do just that. Under earlier regulations, for a politi-cal party to be established, it needed 50,000 members from most of the country’s regions, but now it is enough to collect just 500 supporters, with 10 in each region. So, establishing a political party has become easy, but given the traditional inabil-ity of Russia’s democratic op-position to agree among them-selves, we can expect the emergence of dozens of tiny new parties that will compete with each other for opposition votes as happened in the 1990s.

But unlike the 1990s, today’s street protest movement suffers from a lack of obvious leaders. Billionaire Mikhail Prokhorov does not yet fit the role, and not just because rich people who racked up huge fortunes during the privatization of the 1990s

Viewpoint

No Revolution for Russia’s Cubicle Dwellers While Masses Still Back Putin

The opposition’s task now is to organize and coordinate its actions into a real political movement that can act.

georgy bovt

SPeCial To RBTH

The problem, of course, also comes down to a lack of strong candi-dates on Russia’s lopsided polit-ical playing field. The Communist Party of the Russian Federation (K.P.R.F.) is the most credible op-position, with 180,000 members spread across all of Russia’s 83 regions. Its candidate has consis-tently taken second place in every Russian presidential election since the fall of the Soviet Union. The K.P.R.F. has successfully attract-ed some high-profile candidates who are opposed to the ruling re-gime, but don’t care much about ideology. Businessman Viktor Kondrashov famously defeated United Russia’s candidate in a mayoral race in the Siberian city of Irkutsk on a K.P.R.F. ticket last year, repeating the success of the party’s young candidate in a sim-ilar election in Volgograd. But de-spite some new blood, the K.P.R.F. has failed to modernize. Zyu-ganov, 67, has headed the party since 1993 and the K.P.R.F. large-ly relies on the protest vote for its popularity.

Just Russia, a party many ex-perts feel was created by the Kremlin in 2006 precisely to take votes from the Communists, ap-peals to a left-leaning electorate with promises of a “New Social-ism of the 21st Century.” Leader Sergei Mironov, a staunch Putin supporter, also announced his in-tention to seek the presidency ear-lier this month.

Another longstanding political heavyweight is Vladimir Zhirin-ovsky, head of the Liberal-Dem-ocratic Party of Russia (L.D.P.R.) since its inception in 1991. While the party has positioned itself as

protestors take to the street in attempt to change system

Vladimir zhirinovsky (front), gennady zyuganov (second) and Vladimir putin (right) are the main contenders.

continued from page 1

thus far denied any intention to run for president.

the next six years“I’m not sure people in the West fully understand what the oppo-sition coming to power in Russia will mean,” said Dmitry Babich, a political analyst at RIA Novosti. “The protestors are united not by a single figure, but by several prin-ciples. Namely, they are against il-legal immigration, the lack of dem-ocratic institutions in Russia and corruption at its current levels.

“This means that, should they come to power, Russia will have some sort of nationalist govern-ment espousing democratic val-ues,” Babich said.

But while few doubt that Putin will win the top job in the end, his relationship with the newly elected parliament — and soci-ety — is anything from certain. It remains to be seen how far the

authorities will go in heeding the opposition’s demands. In his last state-of-the-nation address as president, Dmitry Medvedev an-nounced a sweeping political re-form that would include the re-turn of direct gubernatorial elections, a significant easing of requirements for registering po-litical parties and the creation of an editorially independent na-tional TV station.

But this hasn’t placated sev-eral opposition leaders. Boris Nemtsov, one of the main orga-nizers of the vote protest rallies, referred to Medvedev’s plans as an “acknowledgement of the com-plete failure of the policy of build-ing a corrupt power vertical” on his LiveJournal blog. “Most of the demands [from the protests] have [still] been ignored,” Nemtsov wrote. “We must fight for all our demands being met.”

Nemtsov’s comments echo those of other opposition leaders, many of who cautiously praise the re-forms, but are not eager to wait five and six years for the next round of parliamentary and pres-idential elections.

2012 russian presidential elections

The problem comes down to a lack of strong candidates on Russia’s lopsided political playing field.

Heading Up the “Blackberry” AgencyinterView aNDRei NikiTiN

Andrei Nikitin is general direc-tor of the Agency of Strategic Ini-tiatives (A.S.I.), a group created last summer by Prime Minister Vladimir Putin to address con-cerns of business owners and pro-fessionals — some of the same people who took to the streets in protest in December.

Nikitin shared his agenda with Anna Nemtsova, Moscow corre-spondent for Newsweek and The Daily Beast and a contributor to Russia Beyond the Headlines.

how do you respond to the latest wave of criticism and recurring pro-tests against prime minister Vladi-mir putin?

As far as I can see, Vladimir Putin is a person who has the support of a majority of Russians. That is what makes him feel con-fident about his strength. It gives him a feeling of legitimacy. At the same time, he is a clever man who realizes, as he said himself, that the people who came out to the square are also a product of the Putin regime. It is a generation of free professionals, brought up during Putin’s epoch.

The idea to create our agency was an attempt to establish com-munication between [Putin] and this part of the public. My agen-cy is a Blackberry that one can

call. Our job is to realize all the positive ideas coming to us, and try to apply them in projects on federal and regional levels.

how is your agency different from dozens of other, already existing state institutes?

We focus on different themes.

One of them is called “new busi-ness.” The idea is to support al-ready succeeding companies when they hit a ceiling, or some barri-er that keeps them from grow-ing. This month, our agency was assigned to develop our invest-ment projects across Russian re-gions. We are responsible for im-

proving local investment climates. We are interested in helping the best entrepreneurs with medium-size businesses, those worth three or four billion rubles, who have revitalized production in the re-gions. We create opportunities for them, and support them by mak-ing changes in the system in order

to limit decisions made by single bureaucrats.

what kind of interaction do you have with Vladimir putin?

The prime minister would like to meet with businessmen and hear about problems they come across. I meet with Mr. Putin every month and a half to report about on our progress. Being a business-man myself, I could see how to improve the issue concerning state guarantees; I came to this job to make the business climate better. I do not think of myself as of part of the government.

are you afraid to be direct when you tell the prime minister about the dif-ficult issues people deal with?

There is nothing to be afraid of. There is no use for me to talk about problems — I go with the options, solutions. We discuss op-timal solutions; besides new busi-ness, we have a department called “new professionals.”

Today, business companies suf-fer from professional staff hun-ger. Every year, the Ministry of Education spends about 100 bil-lion rubles on training profession-als, while business has to spend about the same amount for re-training the graduates they em-ploy.

what initiatives do you offer to the system of education?

Next year we are planning to launch the Global Education pro-gram, similar to what they have in China and Kazakhstan, where students can study at the world’s best universities under guaran-tees that they would come back. Before the program begins to work and thousands of students study abroad, we need to break the wall of resistance from the [university] rectors. They believe that everything is fine in our country.

One disagreement we have with the ministry is that they believe that university rectors should be selecting students who go abroad. We think that the system of ap-plications should be transparent and that any student has a right to study abroad.

what do you think makes business people like you so angry today that they come out to the streets?

The lower-level bureaucrats are violating their rights. We have made some real progress in the regions, where we demanded that governors guarantee their respon-sibilities to investors. Investors should have access, so bureau-crats react in no more than two days.

nationaLity: ruSSian

age: 31

studied: EconoMicS

Andrei Nikitin was born in 1979 in Moscow. He received undergradu-ate and Ph.D. degrees in econom-ics from the Russian State Universi-ty of Management. Nikitin wrote his Ph.D. dissertation on organizational change as an effective management tool. He also holds an M.B.A. from the Stockholm School of Econom-ics. Nikitin worked in several man-agement firms linked to the oil and gas industry before cofounding his own firm, Ruskomposit. In March 2011, Ruskomposit signed an agree-ment with the Federal Agency for Youth Affairs to support the work of young entrepreneurs. Nikitin was named head of A.S.I. in July 2011.

his story

anti-government with several no-torious nationalist slogans (Zhirinovsky famously called for reoccupying Russia’s near abroad and deporting ethnic minorities), it has consistently voted in favor of practically every major gov-ernment initiative.

“A drop in oil prices could be enough to turn these political leaders into genuine opposition,” Ryabov said. “However you feel about Zyuganov, Zhirinovsky and Mironov — they’re professional politicians, after all. They under-stand how society feels and know how to react.”

But not everyone is waiting for the parties to modernize. Billion-aire Mikhail Prokhorov made

headlines when he announced his plan to run for the country’s top office. For most of the last decade, big money had stayed out of pol-itics, and Prokhorov’s decision to enter the race could be seen as a test case for other wealthy Rus-sians.

“I don’t see a big threat [to the government] coming from Prok-horov just yet,” said Ryabov, “but he could take a risk at the right time and lead a major opposition bloc in parliament.”

Another widely circulated name is lawyer-turned-anticor-ruption-blogger Alexei Navalny, referred to as “the only electable Russian” by opposition journal-ist Yulia Latynina. Navalny has

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How Steve Jobs Would Have Built Skolkovo http://rbth.ru/13548 special report

steven geigerC.O.O. SkOlkOvO

fOundatiOn

i’m often asked to summarize the core mission of Skolkovo. This requires only two words: changing culture.

Skolkovo is changing the ac-ademic culture in Russia by building an entirely new grad-uate-level science institution. We believe it will be the first such institute in the world that comprehensively integrates ed-ucation, research, innovation and entrepreneurship. You may not choose to start your own company upon graduation, but you will know how to.

Skolkovo is changing Russian corporate culture. We’re educat-ing large Russian corporations on the value of conducting con-tract research at this new insti-tute, how to interface and part-ner with the venture capital community, and in general how to embrace innovation as cen-tral to their success.

Skolkovo is changing entre-preneurial culture. It’s easy to forget that not long ago, private enterprise in Russia was either illegal or strongly discouraged. It will take time to overcome this legacy and to let the Rus-

sian creative spirit flourish. Skolkovo is an accelerator in this transformation. By provid-ing support, financing and pref-erences to start-ups, we hope to level the playing field against stronger incumbents. Our role is also to provide moral support to young entrepreneurs want-ing to chase their dreams.

Finally, Skolkovo is aiming to change the cultural understand-ing of wealth creation. Russia is a country long dominated by physical production. An exclu-sive focus on material output dominated the Soviet era. Even today, virtually all top Russian businesspeople made their for-tunes through physical resourc-es. Unsurprisingly, most Rus-sians view wealth creation in physical terms.

But for Russia to compete in the global knowledge economy, it needs to shift gears — and Skolkovo is the new transmis-sion. We do this by educating about intellectual property; by assisting entrepreneurs and start-ups to create, defend and commercialize their intellectu-al property; and by creating en-tirely new intellectual property legal frameworks that can be applied across Russia.

In short, our task is to create efficient mechanisms to turn Russia’s scientific and intellec-t u a l h o r s e p o w e r i n t o competitive knowledge-based products and services.

Is changing any culture and mentality easy? They are prob-ably the hardest things to change. The upside, however, is that if you are successful, your

impact will be significant. In the global race towards a know-ledge economy, Russia is already well positioned. It can learn from the experience of others. Russia is starting later in this race, but that gives it an advan-tage. We at Skolkovo have stud-ied innovation successes and failures alike, and built the learning into our model. In a break with Russian tradition, Skolkovo is an entirely open platform for global cooperation in R&D. Closed science cities of the past served their purpose, but the sheer speed and scale of global interconnectivity dic-tate openness. The world may not be flat, but it’s definitely be-coming more elongated.

Steven Geiger is the C.O.O. of the Skolkovo Foundation, the Russian government’s program for innovation and technology.

Viewpoint

Skolkovo all about Changing Culture

in a break with Russian tradition, Skolkovo is an entirely open platform for global cooperation in R&d.

Our task is to turn Russia’s intellectual horsepower into knowledge-based products and services.

The founders of the Skolkovo city of innovation hope it will become not only the engine of the Rus-sian economy, but a major play-er in global research and devel-opment as well. They have their work cut out for them: At the mo-ment, Skolkovo exists more as a concept than as a reality. But nev-ertheless, the place is making its mark in Russia’s consciousness. Skolkovo as a brand is already widely known, and more words with the prefix “nano” are pop-ping up in everyday language, along with “innovation” and “modernization.” Skolkovo has also revived an older Russian ac-ronym: Niokr, basically the Rus-sian equivalent of R&D.

It refers to a full-cycle research center where scientists come up with new technology, build a pilot product, test it and, if the test is successful, launch it into mass production. In the United States, $382.6 billion or 2.7 percent of G.D.P. is spent each year on re-search and development. In con-trast, Russian firms spend just a little over $23 billion, or 1 per-cent of G.D.P.

Skolkovo wants to change that.

“Our main task now is to cre-ate the most comfortable condi-tions and environment,” said Roman Romanovsky, Skolkovo’s operating director for key part-ners. “Innovation centers are usu-ally thought to be exclusively aimed at start-ups, but that’s not the case. Nor are we committed only to corporate research. We seek to make the circulation of ideas at Skolkovo constant, so that everyone can find what they came here for. Major companies would get young talent, start-ups would meet investors and inves-tors would get promising new ideas, and so on.”

The approach has proven to be popular with foreign companies, many of which have already ex-pressed a desire to open research centers at Skolkovo. Most com-panies have just given verbal as-surances of participation, but some concrete agreements have already been signed.

German electronics giant Sie-mens has signed a document pro-viding for the phased develop-ment of its operations in Skolkovo. By 2015, it hopes to have a staff of 150 at the center. The total sum of joint investments will be about $80 million, with $50 million to be put up by Sie-

skolkovo the founders of Russia’s innovation city are already winning the hearts and minds of innovators

building the engine of progress From the idea upthe innovation city being built in skolkovo is still a work in progress, but the place is already making its mark on russia’s consciousness.

alexander VostroVSpeCial tO Rbth

mens and $30 million by Skolk-ovo Foundation grants.

“For us, [Skolkovo] is interest-ing as a pilot project that will transform Russia’s future,” said Alexander Averyanov, head of the

Siemens project at Skolkovo. “It’s no coincidence that Siemens C.E.O Peter Löscher is a mem-ber of the Skolkovo Foundation Board. We are also cooperating with the foundation to promote the Skolkovo brand around the world, and are dealing with the infrastructure issues.” Siemens has not disclosed details of its project, but some statements in-dicate that is likely to be related to radioisotope diagnosis. The first grant of more than $4 million has already been issued for the re-search project.

Nokia, Finland’s mobile phone powerhouse, has a somewhat dif-ferent vision of its partnership with the foundation, with a focus on inventing and introducing in-line production of everyday de-vices.

“[Skolkovo Foundation Presi-dent Viktor] Vekselberg and I signed an agreement confirming the specific stages of the center’s development,” said Nokia repre-sentative Tatiana Oberemova. “The center will develop power-ful mobile computing systems and offer solutions in the field of nan-otechnology. Nokia’s investments in the center amount to a dou-ble-digit number in the millions of euros, which is the standard budget for Nokia’s R&D cen-ters.”

The Nokia project developed

modity exports — and now we have a place, an ecosystem where this can be accomplished. Skolk-ovo provides an ecosystem, and that’s an important cornerstone,” said Podoprygalov. “Some things could have been done better and differently, but given the ambi-tious task Skolkovo is tackling and its vast range of goals, it is hard to say what’s justified and what isn’t.”

Timofei Shatskikh, a financial analyst with RosBusinessCon-sulting, said that showing that Skolkovo is not just talk, but ac-tion is crucial to its success: “This is really Skolkovo’s main prob-lem. Until the first project is im-plemented, in the minds of most Russians, not to mention domes-tic investors, it will remain just another ambitious government idea. People don’t see Skolkovo as a scientific institution, but rather as a political one aimed at projecting a positive image. Even the foundation’s estab-lished partnerships with West-ern companies cannot dissuade them of this. Until the first sci-entific idea that germinated within the walls of Skolkovo is presented, that opinion won’t change. But the creation of sev-eral R&D centers may rectify the situation. Then you can at least argue that the generation of new ideas will happen serially.”

at a dizzying pace: The construc-tion contract was signed in June and a handset research facility was opened in November. Even-tually, the company hopes to not only construct laboratories but also develop large-scale commer-cialization projects involving mass production of electronic de-vices using nanotechnology.

Nokia competitor Ericsson sees Skolkovo as an excellent platform for research in the sphere of tele-communications, cloud and tele-matics technologies. Its first re-search effort will be smart power-supply networks whose main goal is to save energy. These smart meters installed into phones will allow end users to provide up-to-the-minute information to distribution companies, allowing both the company and the con-sumer to monitor consumption patterns more closely. Ericsson Vice President for Work with Gov-ernment Agencies Mikhail Podo-prygalov said: “There used to be a lot of talk about the need to develop our economy, noncom-

academics for the first president of its new scientific institute, the Skolkovo foundation looked abroad

The Skolkovo Institute of Science and Technology (SkTech) recent-ly announced that its first presi-dent will be M.I.T. professor Ed-ward Crawley. In making the announcement, Viktor Vekselberg, president of the Skolkovo Foun-dation, said that the 56-year-old American scientist was the “No. 1 candidate.” Crawley was select-ed for his knowledge of Russian, connections to the Russian sci-entific world and his talent as a manager. According to colleagues, Crawley is one of the pioneers of commercializing science.

Crawley promised to turn Sk-Tech into a Western-style univer-sity, combining theoretical and applied research with the com-mercialization of scientific achievements.

the insiderCrawley earned his Bachelor of Science degree in Aeronautics and

the technical university at skolkovo will be led by an american with an interest in russia and a long history of commercializing science.

founded the company BioScale to work towards developing biomolecular detectors. He also took part in creating oil explo-ration system designs proposed by BP.

Crawley’s international aca-demic endeavors are no less im-pressive. His first notable project was co-directing the Internation-al Space University, based in Strasbourg, France. In addition, Crawley organized a series of lec-tures by M.A.I. professors at M.I.T.

“Despite an ability to win peo-ple over and his positive attitude, Crawley has always focused not on idle talk, but on solving spe-cific problems so that some kind of benefit results from commu-nication,” said M.A.I. Aerospace Department Dean Oleg Alifanov. “In particular, Crawley devised the practice of design work for first -year students, who are gen-erally lukewarm to strict disci-plines like mathematics, physics and chemistry.

“At the beginning they are in-volved in a game project [creat-ing designs or devices],” Alifanov said, “and there the student be-gins to understand why they need knowledge of sciences.”

Crawley’s managerial talent are what attracted Russia’s in-terest in his candidacy. For him personally, the decision to head the technical university at Skolk-ovo is apparently motivated by the opportunity to build a major project from scratch, which will require different skills than his work at venerable M.I.T.

m.i.t. professor edward crawley (left) and Viktor Vekselberg, president of the skolkovo Foundation.

elena pokatayeVa, konstantin polteV, nikolai ziminitOgi

his story

Edward Crawley began his career in science as a student at M.I.T. and has rarely left its confines. Although at one time he had hoped to be-come an astronaut, the rigors of sci-entific study held more appeal for

nationality: AmericAn

age: 56

studied: AeronAuticS

an architect’s rendering of the innovation city of skolkovo. in addition to research facilities, the campus will include housing for scientists.

in Figures

2.7% of G.D.P. is what Ameri-can com-

panies spend each year on research and development. Russian compa-nies spend 1 percent of G.D.P.

150 is the number of employees Sie-mens hopes to

have working in its research center at Skolkovo by 2015.

$30 million is the amount the Skolkovo

Foundation is contributing to Sie-mens’ Skolkovo project.

“until the first project is implemented, in the minds of most Russians, it will remain another government idea.”

the founders of Skolkovo hope it will become a major player in global research and development.

M.I.T. Professor Headed to Skolkovo

the aerospace expert. Although well respected as an academic, Crawley is also an effective manager and in-novator, creating a new program at M.I.T. to help engineering stu-dents learn about management and launching companies to monetize his inventions.Crawley is fluent in Russian and has been a guest lecturer at the Mos-cow Aviation Institute.

Astronautics from M.I.T. in 1976. According to the people who knew him then, he had no trou-ble deciding to specialize in man’s relationship to space. The young scientist dreamed not only of trav-eling to the stars himself, but also of engineering support for space travel. He received his master’s degree in the same field in 1978 and his Sc.D. in aerospace struc-tures in 1980.

Interaction with Russian sci-entists in the field of space ex-ploration has played a major role in Crawley’s career. In 1989, he was part of a delegation of aero-space technology specialists that visited the Moscow Aviation In-stitute (M.A.I.). In September of 2010, Crawley gave a report on innovations and reforms to engi-neering education at M.A.I., after which the university’s scientific council decided to award him an honorary Ph.D.

In the earliest stages of his ca-reer, he established a close rela-tionship with NASA, even reach-ing the final selection stage of the astronaut corps in 1989. But it was too difficult to combine his scientific work with the rigid sys-tem of astronaut training. His flights were limited to amateur piloting and gliding. As a mem-ber of the U.S. Human Space Flight Plans Committee, howev-er, Crawley enthusiastically con-sidered plans for an expedition to Mars several years ago.

an innovatorOver the years, Crawley has co-founded multiple businesses. He

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economy in brief

Morgan Stanley’s Real Estate Fund VII has agreed to buy St. Petersburg’s flagship mall, Gal-ereya, from Kazakh-run Merid-ian Capital for $1.1 billion in Russia’s largest-ever real estate deal. The Petersburg mall is Rus-sia’s second biggest, after the AFI Mall in Moscow. Galereya opened in November 2010 and features 290 stores, a 10-screen movie theater, and a 27-lane bowling alley. The deal is ex-pected to close by the end of January, according to sources quoted by business daily Vedo-mosti.

Carlos Ghosn, Chairman and C.E.O. of the Renault-Nissan Al-liance said that an agreement on the alliance taking a control-ling stake of Russian car giant AvtoVAZ is “very likely” to be signed in the first quarter of 2012, according to AFP. Renault-Nissan currently holds 25 per-cent of the company. In Decem-ber, AvtoVAZ president Igor Komarov said Renault-Nissan might take a controlling stake in March. AvtoVAZ share pric-es surged by more than 12 per-cent on the statement.

mall sold in giant real estate deal

renault-nissan to control avtoVaz

Deputy Prime Minister Igor Sechin has laid out in a letter how state company managers will disclose their assets, follow-ing up on Prime Minister Vladi-mir Putin’s demand that 21 state companies and banks disclose the income of their top employ-ees. According to the letter, the managers and their families will have to disclose not only income, but also their shareholdings and companies of which they are beneficiaries. Sechin’s letter said there would be no exceptions to the disclosure requirements.

President Dmitry’s Medve-dev’s economic adviser Arkady Dvorkovich said this was a log-ical continuation of the cam-paign against corruption.

bureaucrats forced to disclose income, assets

Investment Banking: Where the Big Bucks GoFebruary 8

gLobaL russia business caLendar 5th annuaL russia& eurasia trade& export financeconferenceFeb. 7, 2012Marriott Moscow royal auroraMoscow, russiaA variety of talks on essential topics will be held by leading pio-neers and practitioners of tradeand export finance. The talks will cover the opportunities, demands and complexities of financing theessential trade that is crucial for regional prosperity.› http://www.exportagroup.com/

9th annuaL krasnoyarskeconomic forum Feb. 16–18, 2012KrasnoyarsK, russiaThe theme of this year’s forum is “Time for Strategic Initiatives.” The experts will discuss the is-sues related to the development of Russia in the next electoral and investment cycle, focusing on the strategic initiatives that Russia needs. The forum will start with the opening of a thematic exhibi-tion, “Investment, Innovation, In-frastructure: the Future of Siberia.” Included in the three-day event is a youth forum for young manag-ers from all over the country.

http://en.krasnoforum.ru/ ›

find more in the Global calendar

at http://rbth.ru

gaming the world is using mobile apps created by russian designers, but the domestic market remains small

Watch out Angry Birds and Fruit Ninja: Russian companies in the booming mobile and games app markets are conquering the world with imaginative creations like Cut the Rope and MewSim.

The emerging players include traditional mobile content com-panies such as Dynamic Pixels, HeroCraft, Game Insight and i-Free, which originally focused on social games. With Game In-sight’s new Crime Story, each gamer can become a crime boss, building a criminal empire by eliminating rivals and expand-ing the business.

Founded in Moscow in 2005 as a mobile development studio, G5 Entertainment is now a global company developing mobile and PC games on a massive scale — one release a week, according to the company's Web site — with such international successes as Stand O’Food, Virtual City Play-ground and Supermarket Mania 2. The company is listed on the AktieTorget equity marketplace in Stockholm and has operations there as well as in Moscow and San Francisco.

But much smaller developers are also enjoying success. Tens of millions of mobile gamers across the globe are download-ing Cut the Rope. Developed by Moscow-based Zeptolab, the game features a little monster fed with candy. Maxim Petrov, another Moscow programmer, has built a flourishing business with Power AMP, praised as one of the best media players on the Android market.

“The Russian mobile content industry has been developing for almost a decade,” said Leonid Kovalev, marketing director of DaSuppa Studios, a Moscow-based mobile games company. “But in recent years, new-gener-ation apps have created a new situation. Through global stores such as the Apple App Store or the Android Market, Russian de-velopers can easily sell every-where in the world. Their vision has become global.”

Despite the global success of Russian games, the domestic mar-ket is still quite small. Smart-phone sales in the country are taking off — more than doubling from 2010 to 2011 — but the num-ber of smartphone owners is still a fraction of what it is in West-ern Europe and the United States, according to a TNS survey. About 1.5 million Russians use the iP-hone, and about 5 million have Android-supported smartphones, according to recent estimates from i-Free.

from cut the rope to pocket blonde, apps built by russian developers are making serious money in the global mobile market.

adrien hennieast-west diGital news

millions of users are playing games developed by russian companies every day.

AlterGeo is a location-based social networking service for mobile de-vices. The app allows users to dis-cover new cafés, shops and other places of interest and share their opinions of them with friends. Us-ers can benefit from discounts and be rewarded with points when “checking in” to a venue. Launched in 2008 — before its U.S. competi-tor Foursquare reached the Russian market in September 2011 – Alter-Geo now claims 800,000 registered users. Only a fraction, however, are considered active.

Cut the Rope is arguably the most successful Russian mobile game. Players swipe a finger across the screen to cut ropes that hold candy to feed the monster, Om Nom. In the first 10 days after going on sale at the Apple App Store in October 2010, Cut the Rope was download-ed a million times. It topped the paid applications section of the An-droid Market a week after its launch on July 1, 2011, and won an Apple Design Award for the iPhone plat-form at the 2011 Apple Worldwide Developers Conference.

A high-definition role simulation game in which players turn sun, sea and beaches into a flourish-ing resort business. Gamers enter-tain rich tourists in casinos and en-tertainment centers; build hotels, restaurants and discos; and learn to manage the business. Launched in December 2010, the game has ranked highly on the Android Mar-ket’s Top-Grossing Apps list since May 2011, generating up to $1 mil-lion every month for its publisher Game Insight. In September, the game reached five million players.

This app introduces you to a girl who lives in your phone and talks to you. She wakes you in the morn-ing, chats about recent news, makes jokes, sends out birthday remind-ers, delivers a morning horoscope, keeps an eye on the weather and more. Blondie also has a memory: if you change your phone, she will remember you, so you won’t have to get acquainted again. Pocket Blonde was developed by the St. Petersburg-based i-Free, as part of Brainy, a series of smart mobile aide applications.

russia’s top 5 mobile and gaming apps are available on multiple platforms

titLe: AlTeRGeo

pLatforms: ios, AndRoid

deVeLoper: AlTeRGeo

titLe: CuT The Rope

pLatforms: ios, AndRoid

deVeLoper: zepTolAb

titLe: pARAdise islAnd

pLatforms: AndRoid, ios deVeLoper: GAMe insiGhT

titLe: poCkeT blonde

pLatforms: AndRoid

deVeLoper: i-FRee

free $0.99 free free

making mobile app success Look Like child’s play

start-ups russian tech entrepreneurs have a new place to look for advice and funding with a new local incubator

russia’s first local mentor-driven tech start-up incubator is now accepting bids for projects, but it faces competition from established foreign incubators.

The Russian start-up scene took another step towards becoming an international platform with the launch of TexDrive, Moscow’s first international mentor-led start-up accelerator program. The 12-week TexDrive accelerator program for entrepreneurs aims to “build busi-nesses that are efficient, attrac-tive and have global ambitions” with the help of Russian and for-eign experts and mentors.

Project teams selected by Tex-Drive are exposed to a range of assistance intended to match their focuses.

“For instance, projects will re-ceive a free session to review their

intellectual property strategy with specialists from Stratagem. Invest-ment bankers will advise on rais-ing capital internationally. Elto-ma Corporate Services will help companies with incorporating and international tax planning, while Fabernovel will advise on inter-national business development,” said one of the project’s co-found-ers, Alexander Zhurba.

TexDrive also provides projects with financial support — start-ing with a cash injection of $25,000 — in exchange for a “rea-sonable stake.” The most prom-ising start-ups will receive a sec-ond investment of $100,000 or more before being presented to angel investors, venture funds and industry players from Russia and abroad.

start-up shares for gurusThe list of mentors includes founders and general managers

Hatching the Best of Russian Tech

tech entrepreneurs who need advice can look to start-up accelerators.

adrien hennieast-west diGital news

of top Russian tech companies — from Abbyy and Qiwi to Soft-key and Adobe Russia — not to mention prominent local and for-eign fund managers and indus-try experts. Co-founder Andrei Kessel admitted these gurus could not devote a large amount of their

money problemsPart of the reason domestic smart-phone users have been slow to download apps is because pay-ing for such services is more dif-ficult in Russia than in other parts of the world.

“Most Russian users are ready to pay for good mobile products,” said i-Free co-founder Kirill Petrov. “But Apple’s app store and Google’s Android Market accept payments almost exclusively through bank cards, which Rus-sians are reluctant to use.”

Although traditional mobile content — from ringtones to Java games — still generates hundreds of millions of dollars in Russia, the market is expected to decline and a number of developers are switching to new-generation con-tent.

I-Free still generates $60 mil-lion in revenue from traditional content in Russia and abroad, but last year it created an entire di-vision dedicated to new apps and games. Petrov estimates that new-generation mobile applications

and games generate revenues in the tens of millions for Russian developers. I-Free’s most signifi-cant international success to date has been Pocket Blonde. The ap-plication features a “virtual per-sonal assistant,” and has been downloaded more than a million times from the Android Market since its release in March 2011.

Other companies, such as Da-Suppa, have stopped producing traditional games and are put-ting all of their resources into new-generation products.

Outsourcing is another prom-ising option companies are ex-ploring. Established offshore de-velopers such as Epam and DataArt have opened dedicated departments, while dozens of smaller businesses or teams are experimenting in this new mar-ket. “These companies and teams can barely meet the demand,” Petrov said. “Some Russian com-panies have already found addi-tional teams or subcontractors in Belarus, Ukraine or the Baltic states.”

time to TexDrive start-ups, but said, “Their involvement will be stronger and more efficient when they are granted shares.”

TexDrive received its first ap-plications from start-ups through its Web site in November. Some other projects have been brought

in by mentors or have come via the team’s network. The acceler-ator’s scope is large, and includes “all technology-based projects with strong teams at any stage of maturity from Russia or the C.I.S.,” said Zhurba, who added that he does not expect any dif-ficulties with sourcing.

Although TexDrive undoubt-edly has a unique form and focus, it is not the only smart collective attempting to herd Russian start-ups over the initial hurdles into international markets. Earlier this year, leading U.S. venture funds Tomorrow Ventures and Garage Technology announced partner-ships with Digital October, a Mos-cow incubator that will help them source projects from Russia. And in mid-October, Silicon Valley in-cubator Plug and Play Tech Cen-ter got operations underway in Russia with the selection of its first five start-ups.

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Economic Forecasts for 2012: Bad Start - Good End?http://rbth.ru/14174 money & markets

The traditional way of mea-suring pain in times of crisis is to look at the mis-ery index (inflation plus

unemployment). And misery has been rising fast in the West. But to really capture the pain people are feeling, look at the despair index (inflation plus unemploy-ment plus poverty): The shocker is that despair in the West is now higher than in Russia.

In October, the U.S. Census Bureau announced that one in seven Americans is now living in poverty — the highest num-

ber since record keeping began 53 years ago. Two weeks later, the U.K. announced that the number of people out of work has hit its highest level in 17 years, and youth unemployment has hit a historic high at well over 20 percent, according to the Office for National Statistics. Spain capped off the round of bad news with an announce-ment that unemployment is cur-rently 23 percent — its highest level ever and the highest in the E.U. Even with the West’s low inflation, the misery index is al-ready very high.

But the misery index doesn’t really capture the people’s pain, at least not any more. What does it matter if the cost of an iPod rises by 10 percent a year if you can’t even put food on the table or heat your home?

The despair index better cap-tures the pain, and allows a di-rect comparison between the West and emerging markets. The surprise is most of the states in Central and Eastern Europe doing much better than the de-veloped economies of the West.

And thanks to record low pov-erty and unemployment num-bers in November, Russia’s de-spair index number of 25.5 is now lower than that of the Unit-ed States, which has a despair level of 28.1.

Russia’s number highlights the total transformation the country has undergone since the collapse of the Soviet Union in 1991. Life for Russians at the start of the 1990s was truly hor-rible. Both Russia’s misery and despair indices were off the charts, into the thousands, thanks to hyperinflation. But as the decade wore on, despair fell steadily. The despair index has fallen from around 90 in 2000 to the current level of 25. It is easy to blame the rising despair on the current crisis, but the U.S. Census reports that poverty lev-els in the U.S. actually have been rising since well before the cur-rent crisis. Economists say that most American families were worse off in 2000 than they were in 1990.

There are some problems with comparing poverty across coun-tries. With a poverty line of $11,139, America’s poor are a lot better off than most Russians, who earn an average of $9,600, but the U.S. Census Bureau says half of those living in poverty live in “deep poverty” with in-comes half of the official pov-erty rate, which would make them poor even by Russian stan-dards. The existence of poverty in the “rich” world only under-scores the fact that Western de-mocracy is flawed, and empha-sizes the increasingly desperate need for deep structural reform. There has been a lot of talk of emerging markets overtaking the West, but for normal people, the BRICS have already caught up. If you are rich, then you are better off living in America, but if you are poor, then the chanc-es of your life improving are now brighter in Russia.

moscow bLog

ben arisThe moscow Times

As the west sinks into Despair, Russia Rises

if you are rich, you are better off in the U.s., but if you are poor, your chances look brighter in Russia.

what does it matter if the cost of an iPod rises by 10 percent a year if you can’t even put food on the table?

Patricia Cloherty, managing part-ner of Delta Equity Partners, bub-bles with enthusiasm discussing the relationship between success-ful entrepreneurs and people who have both excelled at sports and the hard sciences. Her love for sports was obvious from her shirt, a “Silver Sharks” ice hockey jer-sey — the sharks are the local youth hockey team she sponsors. Her interest in hard science stems from her early days in financial management, when she began in-vesting in health care.

It was in the health-care sector that she made her name in the United States, long before she be-came the doyenne of Russian cap-ital markets. Most famously, she backed the Scottish project to clone sheep that produced a particular special protein far more cheaply than synthesis – mainly because it made good business sense, but also because her sister was suffer-ing from a disease that the pro-tein cures. The project worked, al-though unfortunately not in time to save Cloherty’s sister.

international A legendary businesswoman discusses two decades of success

But her enthusiasm for medical research remained, and she went on to invest in the project that eventually produced the cocktail of drugs used today to fight H.I.V.-AIDS.

Speaking about medical re-search, Cloherty said, “It won’t work in Russia, as there are still no enforceable intellectual prop-erty laws that protect the heavy capital investment you need in this kind of work.”

Cloherty should know what works in Russia. She has been in-vesting in the country since 1994, when U.S. President Bill Clinton asked her to come along on a trip to visit Boris Yeltsin.

“I was sitting in my offices on 57th and Park Avenue in New York when I got a call from the White House,” said Cloherty. “‘We need a “deliverable” on the fund issue for Clinton’s trip to Russia,’ they told me, and asked if I would go over with Clinton and head up the fund.”

She was the president of the U.S. Venture Capital Association at the time, and her reputation clearly preceeded her. Cloherty set up her first private equity fund, Apex Partners, in 1969. It started life with $2 million under management and had more than $10 billion under management by the time she left.

patricia cloherty set up her first private equity fund in 1969. today, she is one of the most influential women in the venture capital world.

ben arisbUsiness new eURoPe

try in Russia is still in its infancy, but the number of new contracts being issued has been doubling every 18 months or so, and the gov-ernment says the total number will triple in five years as the business finally starts to take off.

“The thing that really struck me about the mortgage business is that Russians are honorable bor-rowers” Cloherty said. “If they take a loan, they bend heaven and earth to repay it. Owning their own place is important to Russians, and they don’t want to lose it by defaulting on their loans.”

Another of her legacies was to train a whole generation of young Russian financial professionals.

“The first thing I did on taking over Delta was sack all the ex-pats,” said Cloherty. “They were ei-ther bent or incompetent. We hired [in their place] Russians, Ukraini-ans, Belarussians and Geor-gians.”

Kirill Dmitriev, who was ap-pointed this summer by Prime Minister Vladimir Putin to run the Kremlin’s $10 billion Russia Di-rect Investment Fund, is probably the most famous alumnus of the Cloherty school of asset manage-ment.

Cloherty has also been a pio-neer in several other sectors, in-vesting in Russia’s first successful supermarket chain, a bottled water company and a packaging com-pany, to name a few. But not all the deals went smoothly. One of Cloherty’s very first investments was in a diesel engine plant, but the fund’s money almost immedi-ately disappeared.

“I tracked the money to a suit-case that was delivered to Vienna, but lost the trail there,” Cloherty said. “We found the partner but not the money.”

And the Russians have lauded Cloherty. Until recently, she sat on the Russian foreign investment council and the board of Skolko-vo. And she is deeply enmeshed in the rhythms of Moscow life. Cur-rently she shares her apartment with a 17-year old dancer who is one of the few Americans study-ing at the Bolshoi.

“It’s a little bizarre, as I keep having all these young Russian and French ballerinas ringing up in the middle of the night,” Cloherty said, laughing, still a dynamo of energy at 70. She remains committed to Russia and believes that it is right at the start of the transformation process.

“You have to remember, every-one in Russia was someone else a decade earlier,” Cloherty said. “Peo-ple learned how to do business from watching movies like ‘Wall Street.’ That is why recreating things that already exist elsewhere can be so difficult. But then look at the growth rates, and that in it-self is a testament to the Russian ability to learn.”

her story

patricia m. clohertyCloherty began her career in ven-ture capital in 1969 at Apax Part-ners, Inc. She later became presi-dent, co-chair and general partner of the firm. In 1995, President Bill Clinton appointed her to the board of the U.S.-Russia Investment Fund. In 1998, she assumed the role of chairman, and in 2003 she became chairman and C.E.O. of the fund’s general partner, Delta Private Equi-ty. She was twice named one of the world’s most influential investors by Forbes magazine.Cloherty holds a Bachelor’s degree from the San Francisco College for Women and two Master’s degrees from Columbia University.

nationaLity: amErican

age: 71

studied: ForEiGn aFFairS

making money by keeping her options open

As soon as she landed in Mos-cow, in true fund manager style, Cloherty hired a helicopter and few off to visit a couple of facto-ries to see what life on the ground was really like. Her first stop was Sun Brewery, run by an Indian, Shiv Khemka, and one of Russia’s first really successful foreign in-vestments. Then she went on to a chipboard plant on the Finnish border.

“They made fiberboard the old

way, by hand,” said Cloherty, sit-ting in a swanky café in the foyer of her office, a stone’s throw from the newly renovated Bolshoi The-atre. “Babushki were testing the finished boards by hitting them with a hammer and listening to see if there were any holes in the boards. The whole place stank.” Rather than being put off, Cloherty said, “The whole experience only energized me.

“After the trip to Moscow, the State Department rang again and said things weren’t gelling, and

would I go back,” Cloherty said. “I left the next day. I didn’t want to give myself the time to change my mind.”

Clinton appointed her the head of the Russian Investment Fund, and by 2004 Cloherty had set up Delta Private Equity Partners, a U.S.-backed private equity firm dedicated to developing and funding fast-growing companies in Russia. Since it was founded, Delta has invested more than $550 million in 55 Russian companies through two funds: the U.S. Russia Investment Fund, estab-lished in 1994, and Delta Russia Fund, a successor private fund formed in 2004. Now, however, the fund is winding down and has sold all but four of its investments, earning an impressive 27 percent return on equity in the process and scoring some major firsts along the way.

Probably Cloherty’s most last-ing legacy was the creation of Delta Capital, Russia’s first dedicated mortgage bank, which she sold to GE Capital in 2004 at four times book value. The mortgage indus-

“You have to remember everyone in Russia was someone else a decade earlier,” said Patricia cloherty.

credit cards Russian state banks are increasing their consumer credit business, expanding into underserved regions

Ivan Svitek, chairman of the board of Home Credit Bank, re-cently complained that only 24 percent of Russians take out loans and only 18 percent have depos-its with banks, while most Euro-peans use two to four financial products, and some, five to six. Svitek believes Russia’s retail banks have a lot of potential, but need to expand into more regions and embrace new technologies.

There is reason for his opti-mism. According to the World Bank, Russia has only a quarter of the global average number of bank branches. Additionally, I.M.F. research shows that the debt of individuals to credit in-stitutions in Russia amounts to only 9 percent of G.D.P. In com-parison, in the United States, the ratio of personal debt to G.D.P. is 85 percent. Furthermore, 44 per-cent of Russians live in parts of the country where there are no retail banks.

According to the National Agency for Financial Studies, 74 percent of Russians use bank cards, but 92 percent of all cards issued are salary cards — issued by a bank at the insistence of a company for employees to access salary deposits. The agency re-ports that as of Sept. 1, individ-uals’ credit card debt to banks

bankers in the u.s. and europe face ongoing protests against growing credit card rates and bank fees while russian banks look to expand their offerings.

ployed by Russky Standart Bank, which sent credit cards through the mail without even receiving applications from consumers. A consumer could simply open his mailbox, tear open the envelope, activate the card and use it. The bank would charge up to 250 per-cent annually, including undis-closed commissions, and many borrowers learned this only when the time came to pay. This ag-gressive, if controversial, policy secured Russky Standart Bank the leading position in the Rus-

Taking Credit for Impressive Growth

VLadimir ruVinskyRUssiA beYonD The heADlines

russian credit card expansionnumber of credit cards per person

sian market for credit cards; the bank has issued more than 32 mil-lion of them, and according to the Frank Research Group, its current share of the market is 18.5 percent.

The 2008 crisis resulted in mass non-payment on credit cards, and the banks changed their tactics. They wrote off small debts rang-ing from 10,000-40,000 rubles ($325-$1,300) if there was little chance of collecting them; how-ever, amid the deficit of available funds and reduced number of new cards being issued, banks turned to harsh collection techniques. Unrecoverable debts were sold to debt collectors, who sometimes applied illegal methods to collect them.

After a series of banking regu-lations came into force in 2008, banks began using more discre-tion in choosing borrowers. They now ask recently formed credit-

history organizations to assess borrowers’ solvency. And market conditions have changed, with state banks increasing their cred-it card businesses. According to Frank Research Group, two of Russia’s major state banks, Sber-bank and VTB, have the second and third positions in the mar-ket, with a 13.3 percent and 10.1 percent share, respectively.

State banks have access to cheap money and can afford to offer loan rates below the mar-ket average. Sberbank offers a minimum annual rate of 17 per-cent for ruble-denominated loans and rates five to six points below that for cash loans. Although many experts regard the involve-ment of state banks as having a negative impact on market de-velopment, private banks have actually reported an increase in the number of credit cards they have issued. Credit cards now ac-count for more than 13 percent of Home Credit Bank’s portfolio, while Russky Standart Bank, with 52 percent of its loan portfolio made up of credit cards, expects its net profit to reach 5.3 billion rubles ($171 million) in 2011.

Currently, most banks provide credit cards free of charge, al-though some still charge between $60-$100 to issue a card. Inter-est rates are higher than those on regular loans, but cards can be obtained within 15 minutes. Card-holders have to pay not only in-terest but also card service fees, which, as a rule, amount to a min-imum of $20 per year. Some banks do not charge anything for the first year, but all banks charge a commission (from 2.5 percent of the loan, or a minimum of 200 rubles ($8)) for withdrawing cash from an A.T.M.

Although the anxiety caused by the debt crisis in the eurozone prevents bankers from being op-timistic about the future, the im-pressive growth of consumer lend-ing is hardly at risk.

had reached 350.2 billion rubles ($11.3 billion). At that time, there were 11 million credit cards in circulation in Russia, a country of 140 million people.

The market for retail loans and credit cards in Russia began to explode in the mid-2000s, when incomes began to grow. The busi-ness peaked in 2008, just before the crisis. The banks most active in this sector were private com-mercial banks and Russian sub-sidiaries of international banks. A popular tactic was the one em-

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saint spring (“svyatoy is-tochnik”) is a successful brand of bottled water.

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The prism of sTereoTypesboris

tumanov gazeTa.ru

as expected, last December’s protests caused yet anoth-er sporadic outburst of at-tempts by the foreign press

to comprehend what’s happening in Russia. For several days, I was interrogated by virtually all the Francophone media, which, to my growing surprise, paid attention mostly to secondary issues without even trying to get to the heart of the unprecedented manifestation of civil activity in Russian society.

This tendency became especial-ly conspicuous after the Dec. 24 rally, when all the media outlets contacting me asked only about Alexei Navalny as a political fig-ure and the consequences of Mikhail Gorbachev’s suggestion that Putin step down.

I tried to explain to them that Russia, most of whose popula-tion continues to worship Putin, does not need calls to storm the Kremlin, even though they are told it is occupied by “crooks and thieves.” Rather, the country needs to put in a lot of patient, thor-ough and conscientious work to create an opposition that doesn’t just shout slogans, but has a dis-tinct platform. I also told them that with all my infinite respect for Mikhail Gorbachev, I believe that his appeal to Putin is just hot air meant for discussion.

I also drew the attention of my foreign counterparts to the case of former Finance Minister Alex-ei Kudrin and his action plan, which proposes the evolutionary development of civil society in Russia. At the same time, I stressed that neither Navalny nor Kudrin was the leader of the opposition, but rather examples of the pro-cesses emerging in Russian soci-ety today. But my attempts in-variably encountered the cranky impatience of my interviewers, who insisted on sticking to the topic of their choice without em-barking on a more detailed anal-ysis of the situation. Moreover, when I tried to explain the es-

how N.G.o.s caN help

compariNG The wesT aNd The resT

anatoly golubev

special To rbTh

ian pryde

special To rbTh

last year’s turbulent events in the Middle East — and the recent protests in Mos-cow — show that fighting

corruption is crucial if we want to avoid a Libya-style revolution in Russia. And central to that struggle is the relationship be-tween business and nongovern-mental organizations (N.G.O.s).

One way to promote this rela-tionship is the “World Without Corruption” program, the full name of which is “Collaboration between Civil Society and the Pri-vate Sector to Advance the Unit-ed Nations Convention Against

with emerging markets expected to grow ap-preciably more than the stagnant West this

year, expect economic power to continue shifting to the East in 2012. But despite the growth, are the claims of emerging markets about their superiority and the bankruptcy of the West really true? The answer has profound impli-cations for the global economy and the battle of ideas in politics and international relations.

From the business point of view, dynamic growing markets offer excellent investment opportuni-ties and returns, guaranteeing a pipeline of I.P.O.s, M&A deals, bond issues and equity investments — but it’s hard to see how this trans-lates into overall superiority.

Corruption: Progress Through Synergy.” It is different from sim-ilar initiatives because it aims to prevent the possible involvement of businesses in corrupt schemes at the onset, rather than simply punishing violators of the law.

The negative and critical bias that has prevailed in the anticor-ruption activity of N.G.O.s makes it currently impossible for busi-nesses and others to openly par-ticipate. Private financial support for anticorruption activity on an international scale has been lim-ited to guilt gifts: Funding from private corporations is most often a public effort at redemption after they have been punished for cor-rupt schemes. But to effectively fight corruption, each business

High growth in poor, develop-ing countries is one thing, but quite another in rich, mature mar-kets. For all their dynamic growth, the BRICS and virtually all the other emerging markets remain very far behind the developed countries — even those with huge debt. Moreover, repeated opinion polls consistently show relative-

ly high levels on the OECD’s “life satisfaction index” of its 34 mem-bers, with Scandinavians and Ca-nadians among the happiest peo-ple despite their high taxes.

And yet, the West has lost its

entity should have the opportu-nity to participate in funding spe-cific anticorruption projects that meet the company’s interests and experience. The company should not only have the possibility to fully control the use of allocated

resources by the respective N.G.O., but to participate in the project independently or with the N.G.O. to realize selected stages.

direction and self-confidence, constantly castigating itself for past sins such as slavery and co-lonialism, and now more than ever plagued by doubt about its whole social, political and eco-nomic model and a lack of pride in what it has accomplished. It was, after all, the West that in-vented the modern world. Virtu-ally everything in science, tech-nology, economics, business, politics, ideology and art comes from Europe or its North Amer-ican and Australasian offshoots. The Rest is — up to now at least — largely following the well-trod-den Western path and has yet to come up with genuinely new busi-nesses.

But at a time when the West faces serious economic challeng-es, it is undermining its own fu-ture by compounding its chronic inability to provide outstanding mass education and training with

One such success story during our six years of work came from a particularly corrupt sector of the economy: construction. In the northern Russian city of Syk-tyvkar, we signed an agreement with a building company to es-tablish independent expert over-sight of each phase of the con-struction process. The price of a square meter of real estate with-in the building in question de-creased from around $2,500 to $1,000.

We also established the All-Russia Competition for Expos-ing Corruption in Media, which has brought 400 reporters from all across the country to receive awards in Moscow for investiga-tive journalism that uncovered

cuts in research and development. In a very real sense, this challenge is one of numbers rather than of superior economic models. Sin-gapore’s per capita G.D.P. is fore-cast at $52,220 in 2012, but with a tiny population of 5.4 million, it hardly causes sleepless nights in Western defense ministries. The real challenge to the West comes from the big populations and in-creasing assertiveness of many countries among the Rest as their total G.D.P. catches up and ex-ceeds that of the developed na-tions. For instance, on being asked recently whether Russia should join the E.U., Vladimir Putin an-swered that it should sort out its own problems first.

Much more articulate and in-fluential in recent years than Vladimir Putin, however, has been Kishore Mahbubani, dean and professor in the practice of pub-lic policy at the Lee Kuan Yew

cases of corruption. This compe-tition is critical to our efforts be-cause media, as the major plat-form for dialogue between the state and ordinary people, plays the most important role in fight-ing corruption.

Another problem is that com-pliance systems have become an integral part of the corporate pol-icy of large companies, which al-lows companies to act as if they are making progress, but codes of conduct, internal controls and staff training do not in and of themselves decrease corruption. Such systems are usually designed to ensure the integrity of middle and low management levels, while in highly corrupt markets, top management is often involved in corruption schemes as well. In-stead of further complicating an-ticorruption compliance systems, simpler and less expensive tech-nology could be utilized to coun-ter corruption. The basis for such

School of Public Policy at the Na-tional University of Singapore.

Mahbubani’s Web site states unambiguously: “The past two centuries of Western domination of world history have been a major historical aberration. All aberrations end eventually. Asia will return to center stage again. However, many leading global

minds cannot understand this be-cause their mental maps have been trapped by narrow Western worldviews.”

It is meaningless to speak of any region being center stage be-

technology should be a mutually beneficial system that has been carefully thought through with anticorruption N.G.O.s. Based on the practical experience of the Interregional N.G.O. Committee for Fighting Corruption, it’s pos-sible to say that no corporation can reliably withstand the pres-sure of corruption alone.

Only consolidation and coor-dination of joint efforts between anticorruption N.G.O.s and civil society institutions can provide the required synergies. The effect of the coordinated actions of a small number of organizations can exceed the efforts of the sep-arate activities of a large num-ber of anti-corruption projects.

Anatoly Golubev is chairman of the board of the N.G.O. Commit-tee for Fighting Corruption and steering committee member of the U.N. Global Compact Net-work Russia.

fore the Europeans began their global outreach in the 1490s and linked up the world.

More worrying, though, is that Mahbubani shows no sense here that domination per se might be a bad thing, no sense of the need to work together to solve global problems. Nor is there anything about squaring the circle of com-bining rising per capita income with sustainable development. It’s all about power and glory.

The danger inherent in the rise of any former underdog with this kind of attitude was best summed up by Albert Camus in his 1951 book-length essay “The Rebel”: “The slave begins by demanding justice and ends by wanting to wear a crown. He must dominate in his turn.”

Ian Pryde is founder and C.E.O. of Eurasia Strategy & Communi-cations in Moscow.

compliance systems do not work because they only target corruption among lower and middle management.

The west has lost its direction and self-confidence, plagued by doubt about its whole socioeconomic model.

The real challenge to the west comes from the big populations and increasing assertiveness of the rest.

The west’s inadequate perception of russia is caused by intellectual laziness rather than some malevolent bias.

sence of my position in more de-tail after the interviews, my for-eign colleagues disregarded my remarks, apparently thinking it superfluous discussion of phe-nomena that they believed had no external effect.

This belligerent lack of inquis-itiveness has recently brought many authoritative global media to the point where their anecdot-al conclusions are further aggra-vated by their inability to con-sider any other scenarios.

Take the example of Business

Week magazine: This highly re-spectable U.S. weekly decided that former chess champion Garry Kasparov could become the sole leader of the Russian opposition. “Kasparov is the only one in the movement who commands glob-al recognition,” the magazine wrote by way of explanation. The Chicago Tribune all of a sudden ascribed to Vladimir Putin a pro-found knowledge of Sun Tzu’s “Art of War,” which the newspa-per believes was evidenced by the fact that Russia’s “national lead-er” is “leveraging his opponents’ inherent disorganization against them,” just as the Chinese think-er taught — as if Putin, looking at the neverending and senseless quarrels among his critics, wouldn’t have thought of this without Sun Tzu.

This willful ignorance is char-

acteristic of not only the global media, but also all political of-fices, without exception. The un-willingness to delve into the nu-ances of various national realities inevitably discredits both the West in Libya and Russia in South Ossetia.

As for the West’s inadequate perception of Russia in particu-lar, at the risk of inviting the crit-icism of those who advocate the theory of the “eternal global con-spiracy” against our country, I be-lieve that this perception is caused by elementary intellectual lazi-ness rather than some malevo-lent bias. In fact, Russia is to a great extent responsible for this. During the 70-year-long Soviet-imposed isolation, the outside world had no chance to get to know Russian reality and was in-stead fed the specific social pro-

cesses devised in the ideology of-fice of the Communist Party’s Central Committee.

Despite the current openness of Russian society, the West still sees the country through a prism of clichés — positive, negative and neutral, but clichés nonetheless — without ever trying to move away from the familiar set of memorized ideas: sturgeon cav-iar, Dostoyevsky, the balalaika, the mysterious Russian soul, vodka, dissidents, the demonic K.G.B., oligarchs, matryoshka dolls and revolutionary sailors. This intellectual lethargy, colored by a carefully concealed superi-ority complex, already prevented the West from identifying the real reason behind the fall of the So-viet Union, resulting in its abso-lutely irrelevant disappointment with the events that followed.

These pragmatic observers are making the same mistake again, trying to convince themselves that globalization processes will soon-er or later bring humankind to some universal democratic com-mon denominator.

You must be living in Never-land if you truly believe that Garry Kasparov enjoys global rec-ognition as the leader of the Rus-sian opposition, therefore com-pletely ignoring the fact that most Russians do not care about the recognition of their politicians in international circles.

If the West really wants to see the emergence of a civilized Rus-sia in the foreseeable future, they should painstakingly and respon-sibly broaden their knowledge of Russian society, abandoning their clichéd pictures and the whim-pers of our liberals.

They simply have to stop being lazy and start scrutinizing Rus-sia’s social processes, which are growing increasingly complex.

The most important thing is for them to understand that for ob-vious reasons, what is currently going on in Russia cannot fit into their own historical patterns, to which they constantly refer in order to justify their reluctance to look into the sources of our mentality and social evolution.

This is more necessary for the West than for Russia, because one alternative to this natural matu-ration of civil society, which is unprecedented in Russian histo-ry, is the immediate recoil to its customary authoritarianism and self-imposed isolation.

Boris Tumanov is is a Moscow-based journalist focusing on in-ternational affairs. After report-ing from Western Africa, he was the Moscow correspondent for the Belgian Le Libre Belgique newspaper. He is a regular con-tributor to the Polish and French media.

originally published on

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PhoebeTaplin

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ing two State Prizes and thestatus award known as Honor-ary Actor of the Russian Federa-tion.

Equally as important, the actor brings his convictions to his art.

In Kama Ginkas’s production of “The Diary of a Madman” at the Theater Yunogo Zritelya in Moscow, Devotchenko incorpo-rates strokes of political commen-tary as he plays a man who is hounded by society and his own demons, and who grows more bel-ligerent as his grip on sanity in-creasingly eludes him. A scene of him slapping photos of Medve-dev, pop stars Fillip Kirkorov and Alla Pugachyova on a wall along-side his own portrait is loaded with poison irony.

Devotchenko also carries his message in a one-man show called “Farewell Waltz,” directed by Vladimir Mikhelson. The actor has perfomed this piece for the last six months on various stag-es around Russia. The show is a piece cobbled together out ofpoetry written by Nobel Prize–winning poet Joseph Brodsky. But it begins and ends with record-ings of historical broadcasts that frame everything in between in a political light.

But in reality, the performance of “Farewell Waltz” has a mini-mum of politics at its core. In-stead, Devotchenko uses Brod-sky’s works to paint the picture of a person alone in society, one who is constantly at the mercy of the social machine. We are in-troduced to simple people who have been lost to their friends and themselves, or ground under by the complexities of life. They live normal lives colored with life’s usual little tragedies.

Yet politics is never far from the surface, no matter what the topic of a given scene.

� rst novel, Omon Ra, published in 1992, portrays a protagonist who attempts to escape the So-viet nightmare by becoming a cos-monaut, only to � nd himself part of a farcical, mock-heroic moon landing during which he drives his lunar bike along a derelict un-derground tunnel.

While the political landscape has altered seismically around him, Pelevin has had no trouble shifting his satirical focus from the absurdities of the communist regime to the iniquitous consum-erism of post-Soviet Russia.

There are interesting parallels between the different worlds of Pelevin’s novels: both Omon and Lena are victims of the systems they live under, duped by the au-thorities and kept, literally and metaphorically, in the dark. The building of a secret entertainment complex for the top politicians and businessmen living in Rubly-ovka, Moscow’s most prestigious suburb, echoes the real life con-struction of Stalin’s wartime bun-ker, where a whole sports stadi-um was constructed on the surface above it to distract attention. Pelevin’s fantastical nightclub is built 1,000 feet underground to double as “a bomb shelter for the national elite in case of war or terrorist attacks.”

A hired “ideologist” tells the as-sembled sex workers that “ene-mies” are trying to brainwash them with a sense of economic injustice by printing photographs of oligarchs like Roman Abram-ovich and Mikhail Prokhorov and describing their freakish whims. A brilliant, miniature gem, this novella introduces the absurdist Pelevin perfectly.

Prime Minister Vladimir Putin’s televised talk in December — billed as “A Continuation of the Con-

versation” — had hardly begun when actor Alexei Devotchenko sent out a salvo on Facebook, in-dicating he was following the event on Ekho Moskvy radio.

“On Ekho they’re saying that the vast majority among the po-lice are on the side of the peo-ple,” Devotchenko wrote. “How about arresting Putin right in the middle of today’s ‘live broad-cast,’ right in the middle of his, so to speak, ‘continuation of the conversation?’”

Not everything Devotchenko writes on Facebook, or says in public, can be printed in a news-paper. He has emerged as, ar-guably, the most outspoken po-litical commentator in the world of theater and film. His is an angry, strident voice that often resorts to the riches of Russian obscenities to bring his exhor-tations home.

That is not to say that his ar-guments lack coherence or in-telligence. Devotchenko fre-quently expresses himself with force and clear thinking in in-terviews, open letters and in popular blog posts on LiveJour-nal, the Ekho Moskvy Web site and elsewhere.

Hailing from St. Petersburg, Devotchenko was at the fore-front of a loose public move-ment attacking Valentina Mat-viyenko for corruption and a lax attitude to residents’ needs dur-ing her term as St. Petersburg governor.

There were no signs that this “victory” gave Devotchenko rea-son to ease up his public ap-peals, however. On the contrary, having relocated to Moscow himself, he redoubled his efforts to speak out against Putin and President Dmitry Medvedev.

Most recently, at the end of November, he relinquished all the state awards he has accu-mulated over his career, includ-

In this surreal story by Rus-sian master of postmodern science � ction Victor Pelevin, young Lena is employed to

stand naked for hours at a time and sing — when she is not in-dulging the excessive fantasies of oligarchs. She and her fellow “caryatids” are decorative pillars in an elite underground night-club. The girls are injected with a classi� ed serum, “Mantis-B,” which enables them to stand to-tally still for up to two days. Le-na’s encounters with a giant, tele-pathic praying mantis while under the in� uence of the serum radically alter her perspective on the outside world, revealing an alternative universe of wordless clarity.

In true postmodern style,Pelevin intersperses these drug-induced episodes with other voices. There are the pseudopre-tentious extracts from the mag-azine that Lena reads during her commute back to Moscow. She also meets conceptualartists, girls dressed as mer-maids, important clients in bath-robes, guards in suits, and the sinister, ironic-slogan-toting Uncle Pete.

Pelevin has been perplexing and delighting readers with his unique brand of polyphonic sci-� comedy for two decades. His

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An Actor Takes on the Theater of the Political Stage

A Post-Modern Sci-Fi Reality Not So Far from the Truth

In “Farewell Waltz,” Alexei Devotchenko uses Joseph Brodsky’s words to paint a picture of a person alone in society.

TITLE: THE HALL OF THE SINGING CARYATIDS

AUTHOR: VIKTOR PELEVIN

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RBTH CONTINUES ITS COLUMN ON BOOKS THAT WILL BE PRESENTED AT BOOKEXPO AMERICA. THE EVENT, SCHEDULED FOR JUNE 4–7 IN NEW YORK CITY, WILL FEATURE RUSSIA AS THE GUEST OF HONOR.

Imagine your teenage daughter suddenly starts speaking a lan-guage you don’t understand — then again, maybe this isn’t so hard; this happens to ev-eryone who has children. In “Close Up Space,” a world premiere which opened at Manhattan Theatre Club’s City Center stage last month, Harper (played by Colby Mini� e) gets kicked out of boarding school. The 18-year-old returns to New York and refuses to speak anything but Russian to he r bewilderedfather.

The acerbic play spins com-edy out of tragedy, showcasing the joyful talent of Molly Smith Metzler, a 33-year-old play-wright. The title of the play, “Close Up Space,” refers to the editing symbol used to tighten up the space between letters. It could also more loosely refer to closing up the space between peo-ple stricken by grief and fear. The play is directed by Leigh Silver-man, who recently earned kudos for her direction of the play “Ch-inglish.”

“Close Up Space” stars four-time Emmy award winner David Hyde Pierce as a major editor in one of New York’s big publishing houses. About Hyde Pierce, the playwright said, “I don’t emote [during readings]. But I cried in his reading, he was so vulner-able.” Hyde Pierce’s performance has been lauded by critics, even by those who wrote disappoint-ing reviews after opening night.

Hyde Pierce’s character has a � erce passion for editing that is little help when he raises his eyes from the page. He can’t talk to his daughter, who burns with anger, and the Russian language becomes a metaphor for the abyss between father and daughter.

“We think of language as some-thing to communicate,” Metzler said over a cup of coffee in the classic Times Square offices of her press agent. “My play is wrought with a lack of communication. No one speaks the same lan-guage.”

Paul Barrow (Hyde Pierce) is a man who speaks editor; Vanes-

Theater New York playwright looks to Russian to express a gulf between her charactersmother, Gloria, a lyrical poet, committed suicide a few years before the play opens. Harper’s father, Paul, was his wife’s edi-tor. After her death, he sends his daughter away and boards up their house, a hideously impre-cise way of dealing with the emo-tions he cannot even name.

“I always imagine Paul want-ed to be a writer and was drawn to Gloria — a wild, expressive person,” said Metzler. “He would improve her writing by reining in her spirit. But he did not im-prove her spirit.”

The playwright grew up in Kingston, N.Y., in what she called, “A Royal Tannenbaum” kind of family of brilliant eccentrics and overachievers, some of them es-tranged.

“There is a lot of Harper in me,” Smith Metzler said. “For almost a decade, my father and I were very estranged. When we � nally

reunited, it was bittersweet. But it was also wonder-

ful to get to know each other again. That’s why I think of the play as a com-

edy, not a tragedy. I think it’s so hopeful.”

There’s Nothing More to Be Said, So Say It in Russian

David Hyde Pierce and Colby Minifie star as father and daughter in “Close Up Space.”

Playwright Molly Smith Metzler uses the Russian language to express a gulf of grief between father and daughter in her play “Close Up Space.”

NORA FITZGERALDRUSSIA BEYOND THE HEADLINES

HER STORY

Molly Smith Metzler

Molly Smith Metzler is the author of “Close Up Space” (Manhattan The-atre Club), “Elemeno Pea” (Huma-na Festival of New American Plays, South Coast Repertory (upcoming), “Training Wisteria” (Summer Play Festival, Cherry Lane Mentor Proj-ect) and “Carve.” Her work has been developed by the Eugene O’Neill Theater Center, Manhattan Theatre Club, Chautauqua Theater Compa-ny, the hotINK International Festi-val of Play Readings, and the Ken-nedy Center. Metzler is a graduate of SUNY Geneseo, Boston University, N.Y.U.’s Tisch School of the Arts and The Juilliard School, where she was a two-time recipient of the Lecomte du Noüy Prize from Lincoln Center. She lives in Brooklyn.

NATIONALITY: AMERICAN

AGE: 33

STUDIED: CREATIVE WRITING

Daniil Trifonov, the 20-year-old pianist from Nizhny Novgorod, has only begun the hectic and ex-hausting life of international touring. The day before his Car-negie Hall debut in October 2011, Trifonov was backstage, nibbling on a small bag of nuts. “I don’t always have time to eat, but I make time to practice,” he said, referring to his impromptu lunch.

Pale and slight, Trifonov may look like a teenager, but he is be-coming known as a comet of � erce musical talent, an unassuming young man who approaches his music with a focus nearing fa-naticism. Despite his growing fame, it seems that he has hard-ly been touched by his sudden stardom and that all he cares about, still, is the music.

Trifonov has been at the cen-ter of a whirlwind since he won third prize at the XVI Interna-tional Chopin Piano Competi-tion in Warsaw in late 2010. Prizewinners’ concerts took him around the globe, then in May 2011, he won the Arthur Rubin-stein International Piano Mas-ter Competition in Tel Aviv, which sparked a dizzying two weeks of concerts. In mid-June 2011, the day after those concerts

Music Newest piano prodigy finds passion more in his music than in his growing fan base

Trifonov looks like a teenager, but plays with passion beyond his years.

AYANO HODOUCHI SPECIAL TO RBTH

At 20, Daniil Trifonov is winning global recognition for the fanatic fervor he expresses toward his music. He has only begun his touring career, which took him around the world in 2011.

See a video of Trifonov at work atrbth.ru/13711

sa, his high-maintenance diva writer (played by Rosie Perez), speaks woman. The intern, Bai-ley, speaks both Vassar and Urban Out� tters, according to Metzler. Barrow’s assistant (Michael Cher-nus) is a caretaker type who can’t fax or make calls, happens to be homeless and camps out in tents in the office (the play was writ-ten before Occupy Wall Street).

Most of the audience of non-Russian speakers feel some of Paul’s frustration as Harper speaks. What is she saying? Colby Mini� e, playing an American stu-dent obsessed with Russia, also learned Russian for the part, working with a language coach. More than once, the words of one

of Russia’s most revered poets, Anna Akhmatova, escape her mouth like blood on stone. At a certain point in the playwriting process, Metzler, who studied Akhmatova at Oxford Universi-ty, said she realized that Harper had to speak Russian. “Close Up Space” went through many stag-es, she said.

Metzler hopes one day to bring the play to Russia.

Why the Russian?In the play “Close Up Space,” Harper doesn’t speak English for good reason, it turns out. Russia is Harper’s intimate language of protest, of expression, of bearing witness to injustice and grief. Her

Trifonov Playing for Keeps

" If I say that Daniil has a sophisticated emotional palette, an open, pure, pas-

sionate heart, sharp musical intel-lect and absolutely effortless pia-nistic facility, that will not define what really makes him so special. The most important thing is his overwhelming love for music. It is disarming.”

IN THEIR OWN WORDS

Sergei Babayan

Barry Douglas

" Trifonov plays with a pas-sion and sincerity that touches the audience.”

ended, he arrived in Moscow for the International Tchaikovsky Competition.

At the � nals, Trifonov set him-self apart from the others by per-forming Chopin’s Piano Concer-to No.1 instead of typical heavy competition fare such as Rach-maninoff’s Piano Concerto No.3 (which three of the � ve � nalists played). Initially, Trifonov also wanted to learn the darkly re-splendent Rachmaninoff 3. He wanted the challenge, he told his teacher at the Cleveland Institute of Music, Sergei Babayan. He ar-gued that no one had ever won this competition by playing Chopin, to which his mentor re-plied, “Prove that you can win by

playing Chopin. Be the � rst to do it.” And he did.

After his win, Trifonov was swamped with concert offers. He received 150 for the following 12 months, and whittled the list down to about 85. “At my age, 150 would be suicidal,” he said. Al-though time is scarce, he usually sets aside � ve to seven hours a day for practicing.

Trifonov moved to Moscow when he was nine to study with Tatiana Zelikman at the Gnessin School of Music. He stayed with her until he was 18, when he came to the United States on a schol-arship. Zelikman recommended him to Babayan, with whom he still studies in between concerts.

That he continues to study is apparent from the way he plays, as if nothing else exists in the world. His concentration and focus are remarkable. Irish pia-nist Barry Douglas described Tri-fonov as “playing with a passion and sincerity that touches the au-dience. He is completely absorbed by the music he plays.”

Said Sergei Babayan, “If I say that Daniil has a sophisticated emotional palette; an open, pure, passionate heart; sharp musical intellect; and absolutely effort-less pianistic facility, that will not de� ne what really makes him so special. The most important thing is his overwhelming love for music. It is disarming.”

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Skolkovo Innovation Center Goes on the Road http://rbth.ru/13721Feature

As recently as � ve years ago, the suburban Moscow home of the Skolkovo School of Management was just an ordinary � eld over-grown with dandelions and dai-sies. Today, the only thing remi-niscent of a daisy is this super-modern business center as viewed from above. Designed by British architect David Adjaye, the glass-and-concrete campus of the school is divided into oddly shaped petals called clusters.

And yet, despite the contribu-tion of the celebrity architect, on the ground, the campus looks more like an ordinary shopping

Entrepreneurs The Skolkovo School of Management and the Skolkovo Institute are hoping to create a new generation of capitalist innovators

The Skolkovo School of Management, which counts among its peers the London School of Economics, celebrates its fifth anniversary this year.

mall. The courtyard is full of gad-get-toting students strolling about lazily. They look like the affluent young people Russian comics and satirists have start-ed to mock as “start-uppers” — educated men and women who hope to create the latest must-have product.

But some students are already outdoing the stereotype. Irina Linnik is one. Sitting in popular expat restauranteur Isaac Cor-rea’s fashionable on-campus res-taurant, her face is buried in her aluminum MacBook. Unlike many others, though, Linnik is not “liking” something on Face-book or retweeting funny cat posts; she is communicating with her business partners. Linnik in-vented the Life Button, a simple device designed to help people with elderly parents. “It’s no se-cret that the healthcare system

in our country is far from per-fect,” Linnik said. “Even if you get through to emergency ser-vices, there’s no guarantee an ambulance will arrive on time. I have an elderly grandmother myself, so it’s an important issue for me, too. I devised a special button that mounts on a cell phone or wrist strap.”

Thanks to a special motion de-tector, the sensor will work even if the person wearing it has fall-en or is unconscious. Once acti-vated, the signal is transmitted to a call center where employ-ees decipher it and look the cli-ent up in a database that includes his or her medical records, in-surance information, allergies and more. A call center employ-ee then contacts the relatives, who decide whether to call a reg-ular ambulance, a private one or deal with the situation them-

selves. “Has the Skolkovo school helped me?” Linnik asked, rhe-torically. “Yes, of course. When I studied at the Higher School of Economics, my professors ham-

mered into me the idea that en-trepreneurship is bad. It was only here that I realized that making money is not only cool but also interesting.”

Irina Prokhorova, Skolkovo’s Business Development Director, expressed a similar opinion. “For a long time, our country’s tradi-tional idea was that working hard, let alone making money,

ALEXANDER VOSTROVSPECIAL TO RBTH

was somehow shameful,” she said. “So, our mission is to restore peo-ple’s respect for honest labor; to give them a shot in the arm of Protestant work ethic, if you will.”

That shot doesn’t come cheap: The 18-month-long M.B.A. course at Skolkovo costs around $80,000 — on par with estab-lished giants such as France’s In-sead, or the London Business School. But many believe it is worth it. The curriculum is very hands-on. Students travel to im-plement projects in Russian re-gions or carry out ideas in the BRICS countries, and upon grad-uation, there is the possibility of an angel investor. Students can select a mentor from among lead-ing Russian businesspeople, in-cluding Ruben Vardanian, C.E.O. of investment bank Troika Dia-log, and Leonid Melamed, gen-

eral director of the Alemar In-vestment Group. If the mentor likes a student’s idea, it will be implemented quickly and its cre-ator will be poised for a bright future. This is the fundamental difference between start-ups “made in Skolkovo” and those made elsewhere: Researchers here don’t get cash without a solid business plan, the invest-ment procedure is strictly regu-lated and major Russian corpo-rat ions implement most inventions.

It’s no secret that many estab-lished Russian companies are stagnating. Their old-guard ex-ecutives have exhausted their potential, while the new ones ex-pect starting salaries dispropor-tionate to their proven contribu-tion. Some members of Russia’s business establishment see the Skolkovo system, in which those with real ideas pay for the op-portunity to share them, as a way to maintain their � rms’ prestige while getting what they want. And, as is the case in many big-name Western institutions, the tu-ition at Skolkovo is not so much compensation for the school’s ex-penses as it is a pass into a cer-tain circle, which until recently was accessible only to those born into the right family or who had substantially more than $80,000 in the bank.

“The country always needs thinking people who can gener-ate pro� ts,” said Irina Prokhoro-va. “It wouldn’t be an exaggera-tion to say that we, to the extent of our modest abilities, are cre-ating exactly that kind of gener-ation. Judging by the interest ex-pressed in our graduates not only by business but also by govern-ment agencies, the project will succeed.”

It’s hard to argue with that: Vladimir Putin has repeatedly spoken out recently about the im-portant role foreign investment plays in Russia’s future. And an incubator for startups may help the country to attract it.

The Business of Teaching Business

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C O N TA C T U S : F o r e d i t o r i a l i n q u i r i e s , p l e a s e , c o n t a c t u s @ r b t h . r u F o r p a r t n e r s h i p o r a d v e r t i s i n g c o n t a c t s a l e s @ r b t h . r u p h . + 7 ( 4 9 5 ) 7 7 5 3 1 1 4

After the radiation leak at Ja-pan’s Fukushima Nuclear Plant following a devastating tsunami last spring, Russian research en-gineer Vladimir Yelin, 54, was asked to write an opinion piece about the incident. After reading into the fears of people living in the area around the plant, Yelin came up with an idea for a de-vice that would give individuals more information about their per-sonal threat from radiation ex-posure. Yelin, who is also head of the company Smart Logistic Group designed a radiation do-simeter that can be integrated with mobile phones or added as an application. He called it the Do-Ra, a derivative of dosimeter-radiometer.

The Do-Ra mobile application operates in many different ways. It can work as a radiometer that displays a radiation map of a given area, such as a reservoir or plot of land, on the screen of a mobile phone. In this mode, the device has three levels of alert and displays them on the screen. They are normal (green), high risk (yellow) and evacuate as soon as

Innovation Scientists with good ideas but no money are looking to Skolkovo for support

possible (red). The device can su-perimpose the radiation map onto a downloadable world map on the screen and users can add their GPS or Glonass measurements to it, providing them with more personal information. The appli-cation also has a dosimeter func-tion, which displays the level of radiation being absorbed by the user. In the event of exposure to a critical dose, the Do-Ra alerts its user through audio and visu-al signals.

Finally, in another mode, the phone can provide relevant in-formation on potential risks for

specialize in � nancing new busi-nesses are only testing the waters in the huge Russian market. Most don’t like to risk their capital on inventions.”

Yelin decided to try his luck with the Skolkovo Innovation Center, the much-discussed Rus-sian Silicon Valley-in-the-mak-ing. He used Skolkovo’s Web site to create a roadmap for the proj-ect, including a detailed descrip-tion of its research and develop-ment components and a business plan. After an assessment by a panel of 10 industry experts, the board informed Yelin that his project ful� lled the requirements for Skolkovo funding.

“I have become a fully � edged participant in Russia’s innovation process,” Yelin said. “As a Skolk-ovo resident, Intersoft Eurasia, the operator of the Do-Ra proj-ect, will pay only a 14 percent payroll tax. We will be exempt from all other taxes. One can only qualify for such exemptions under the Russian tax system by con-ducting R&D work as part of pro-prietary innovation projects with the subsequent commercializa-tion of the invention.”

At the moment, the company representing the invention is in negotiations with mobile phone producers Sony Ericsson and Fu-jitsu. According to Yelin, the price of the device purchased as a sep-arate application will be some-where between $30 and $50, but if the device is to be integrated into the phone in the production process at the factory, the cost could be cut to $10. The trial ver-sion of the Do-Ra mobile appli-cation is already available on the Android market and Yelin hopes to expand it to other mobile de-vices soon.

Venturing into the Nuclear Zone

The Do-Ra can transmit radiation readings to anywhere in the world.

In the wake of the Fukushima disaster, a new radiation monitoring device that works with mobile phone and sat-nav systems is being marketed.

ALEXANDRA BAZDENKOVASPECIAL TO RBTH

While Western scientists are used to the idea of developing ideas with an eye towards marketabil-ity, this mindset is largely miss-ing among Russians brought up in the Soviet Union, and even younger scientists have inherited this bias. Today, tech transfer proj-ects are looking to change the mindset — and money helps.

In Russia, tech transfer — the process of linking innovators and creators with businesses that need their ideas and products — hap-pens in two ways.

First, foreign tech transfer agencies place a request on be-half of a foreign client for a spe-cialist with a certain set of skills, or even a specific person. “The most frequent customers are American technology institutes ful� lling complex orders for in-dustrial corporations. The lead-ing tech transfer customer is the Massachusetts Institute of Tech-nology (M.I.T.). We ful� ll six to 10 orders of this kind annually. Russians are traditionally strong in physical chemistry, astronomy, quantum physics and microbiol-ogy,” said John Neiper, Eastern

Tech Transfer Making money from ideas

The know-how of Russian scientists is in demand in the West, but connecting specialists with companies who need them can be easier said than done.

European Manager for the tech transfer agency Griffin

Assuming the negotiations be-tween the parties go well and a contract is signed, the agency earns a fee equal to a portion of the scientist’s salary.

Another way to connect scien-tists with those who need their skills is through Russian univer-sities or corporations working in partnership with a similar insti-tution abroad. They allow a young specialist to work for the over-seas partner for a set term. The employee shares his or her knowl-edge with the foreign partner and has the chance to make a higher salary than he or she could com-mand at home.

At the moment, the construc-tion sector dominates in this kind of transfer. “Companies like ours have unique technologies for building the most complex spa-tial structures,” said Ilya Ruzhan-sky, deputy director of Mostovik, a major design and construction � rm operating in Siberia and Rus-sia’s Far East. “Back in the Sovi-et era, we mostly had contracts in Africa and Asia, and partner-ship with the West was minimal; now, graduates of the Moscow Ar-chitectural and Construction In-stitute capable of designing miles-long bridges are worth their weight in gold. They can compete for annual contracts of up to $200,000.”

The Rules of Supply and Demand, Applied to Scientific Expertise

MIKHAIL BORISHPOLSKYSPECIAL TO RBTH

different organs of the body as-sociated with absorbed radiation levels. Users or their doctors can then access the data from any-where in the world.

Although the idea came to Yelin quite easily, bringing it to frui-tion was another story. “At the initial stage, assembling a team of developers was tricky,” said Yelin. “I stumbled upon a worthy team by pure luck.”

A slightly bigger problem was obtaining financing. “Very few Russian banks are prepared to lend money for such projects,” he continued. “Venture funds that

Students at Skolkovo prepare for a lecture — part of their journey toward becoming innovative entrepreneurs.

“Our mission is to restore people’s respect for honest labor; to give a shot in the arm of Protestant work ethic.”

students were part of Skolkovo’s M.B.A. class in 2009, its first year of operation. The school hopes toenroll 240 M.B.A. students in 2014.

years of experience in a manageri-al position or in creating a business is required for students applying to the M.B.A. program at Skolkovo.

individuals and businesses from both Russia and abroad contributed to the Skolkovo School of Manage-ment as founding partners.

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The 47th Petroushka BallFriday, February 10, 2012Waldorf-Astoria Grand Ballroom

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