SOURCE: The St. Petersburg Times
DATE: Issue #1613 (74), Tuesday, September 28, 2010
**************************************************************************
TITLE: Danish Drugmaker Faces Fine
AUTHOR: By Irina Filatova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — The Federal Anti-Monopoly Service accused Danish pharmaceutical company Novo Nordisk of violating anti-monopoly legislation on Friday and said the firm might face a fine of up to 15 percent of its Russian revenue.
The watchdog said Novo Nordisk, the world’s largest producer of diabetes drugs, refused to sign supply contracts with some drug distributors, restricting competition on the pharmaceutical market.
“The violation was in the company’s unjustified avoidance and refusal to sign agreements with some buyers and discriminating against some potential partners in favor of existing ones, which has led to limited competition,” the Federal Anti-Monopoly Service said in a statement on its web site.
The statement also said the anti-monopoly service would send Novo Nordisk an order to stop violating the law. The service began a probe into the company’s activities in July.
Under Russian law, a company that “occupies a dominant position” on a market is not allowed to refuse, without cause, to sign a contract with a partner, said Yevgenia Borzilo, head of the anti-monopoly group at law firm Goltsblat BLP.
Novo Nordisk says on its web site that it is a leader in diabetes treatment in Russia.
The only basis for such a refusal may be specific reasons, including economic or technical ones, Borzilo said. “For example, if a partner has frequently violated its obligations,” the supplier may legally not work with it, she told The St. Petersburg Times.
The refusal by Novo Nordisk’s Russian subsidiary to sign direct supply contracts “with the majority of pharmaceutical distributors” affected the prices for drugs, particularly insulin, said Timofei Nizhegorodtsev, head of the Federal Anti-Monopoly Service’s social sphere and trade control department.
As a result the company may face an administrative fine of 1 percent to 15 percent of its sales in Russia, he said in the statement.
“If a commodity is available to a limited number of dealers, that means it’s less available on the market and there is less competition,” Borzilo said, adding that prices for such goods would, therefore, be high.
Novo Nordisk spokespeople were unavailable for comment on Sunday, but the company told Bloomberg on Friday that the drugmaker didn’t agree with the watchdog’s decision.
“We are considering whether to appeal,” said Katrine Sperling, a Novo Nordisk spokeswoman in Copenhagen.
Borzilo said the fine might be significant, taking into account that it would apply to the local revenue for the entire previous fiscal year.
Vladimir Shipkov, head of the Association of International Pharmaceutical Manufacturers, said he was not aware of the issue.
Novo Nordisk has been praised by officials for being aligned with the government’s Pharma 2020 program, which is aimed at raising the competitiveness of Russia’s pharmaceutical industry and stimulating production of innovative medicines.
In April, the company announced its intention to invest up to $100 million in the construction of an insulin-packaging plant in the Kaluga region. Initially the plant will pack insulin in cartridges and delivery devices, but it may expand later to full-scale insulin production, the company said.
TITLE: TV Awards Ceremony Hit by Scandal
AUTHOR: By Galina Stolyarova
PUBLISHER: The St. Petersburg Times
TEXT: Two scandals marred the “TV Personalities” nominations of the prestigious TEFI prizes ceremony held in St. Petersburg’s Mikhailovsky Theater at the weekend.
The first scandal broke when filmmaker Oleg Dorman, who was awarded a prize for his documentary “Podstrochnik” (Literal Translation), which was inspired by the life of the eminent translator Svetlana Lungina, mother of the filmmaker Pavel Lungin. Dorman, who boycotted the awards ceremony, sent an open letter via the film’s producer, Felix Dekter, who read the letter on stage after rejecting the prize on behalf of his colleague.
Dorman pointed out in his letter that some of the people on the jury of the TEFI awards were directly responsible for the fact that “Literal Translation” had been gathering dust on the shelves of film archives for more than 10 years before it was first shown to the public in July last year.
When Dorman made his documentary, which is essentially Lungina’s memoirs shown in 15 parts, blending personal drama with reflections on Russia’s stormy 20th-century history, his film was continually rejected by every television channel he approached, including the Culture Channel, seemingly due to its treatment of the historical period.
It was only after renowned Russian journalist Leonid Parfyonov personally recommended the project that the management of Rossia TV channel agreed to broadcast the series in 2009.
In his letter, Dorman refrained from naming names. “This is a television award, and not a version of the Nuremberg trials,” he wrote. “The point is that everyone connected with it knows what I mean. And a few more people sitting in the audience know as well.”
In Dorman’s opinion, the people who originally went to great lengths to stop his film from being screened have ano moral right to award a prize for it.
“These people have no respect for audiences; their damaging approach was crucial in turning television into a key factor of the moral catastrophe in Russian society,” Dorman writes. “Having received extraordinary access to such a powerful instrument as television, its leaders and managers should not dare to treat audiences as some sort of rabble. They have no right to mislead the public and lead them toward degradation by serving viewers large portions of vulgarity, which is exactly what they have been doing.”
Dorman did make one personal reference, however, to Mikhail Shvydkoi, the former Russian Culture Minister who is currently Special Presidential Representative for International Culture Cooperation as well as the head of the Russian Television Academy that awards the TEFI prizes.
Shvydkoi published an article praising “Literal Translation” in the state-owned daily newspaper Rossiiskaya Gazeta. In response to the praise, the director left a bitter comment on the newspaper’s web site, reminding the culture official of how he had rejected the film outright when Dorman had first contacted him.
Another controversy arose when, for the first time in the award’s 16-year-history, the name of a winner — media and television expert Marina Aslamazyan, who won the “Outstanding contribution to training television professionals in the regions” award — was not announced.
Marianna Maksimovskaya, an anchor with the respected Nedelya program on REN-TV and herself a multiple TEFI-winner, said the cowardice of the awards’ organizers was despicable and would result in devastating damage to the TEFI awards’ reputation.
Analysts say Aslamazyan was missed out, despite her victory, as a result of her journalistic background. As head of Internews agency, the journalist was forced to leave the country after she fell from grace with the authorities owing to her critical professional stance.
“Aslamazyan is often affectionately referred to as the mother of regional Russian journalism,” Maksimovskaya told reporters. “The decision not to congratulate her publicly will certainly damage the reputation of the awards.”
Aslamazyan is currently based in Yerevan, Armenia. In an interview with Interfax news agency from Yerevan, Aslamazyan admitted feeling uncomfortable about her name not being announced as a winner. The journalist said she was determined to come to Russia and receive the prize in the near future.
The awards, which have been held since 1994, are judged every year by a jury of professionals from the Russian television industry. All TEFI winners receive an Orpheus statuette created by Ernst Neizvestny. This year, the jury reviewed 653 submissions — 114 items more than in 2009.
The winners in the “TV Personalities” category included the News-24 program with Mikhail Osokin (REN-TV channel), which was named the best information program. The award for the best news analysis show went to Maksimovskaya and her show Nedelya (REN-TV). Anchor Tatyana Limanova took the prize for best information program anchor (News-24, REN-TV).
Yulia Muchnik of the Tomsk-based TV company TV-2 went away with the prize for best interviewer, while Ivan Urgant, Garik Martitosyan, Alexander Tsekalo and Sergei Svetlakov (by) triumphed as best entertainment show presenters for their work on Red Studio’s show “Prozhektorparishilton.”
TITLE: Moscow Mayor Says He Won’t Resign
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Moscow Mayor Yury Luzhkov returned from a weeklong vacation in Austria on Monday to announce that he would not resign, despite reports that the Kremlin had given him an ultimatum.
Analysts interpreted Luzhkov’s statement as a sign that he had not managed to bargain for a senior post outside the government for himself and guarantees of safety for his business interests.
Federal authorities will be forced to continue talks with the mayor until he agrees to resign because a conflict with Luzhkov could undermine the results of the 2011 State Duma elections and 2012 presidential vote, analysts said.
“I am not going to resign of my own accord,” Luzhkov, who celebrated his 74th birthday last week, said at a news conference.
A senior Kremlin official received the mayor on Sept. 17 and told him that he had one week to resign voluntarily, Vedomosti reported Sept. 21, citing an unidentified official in the presidential administration.
But Luzhkov’s spokesman Sergei Tsoi told Interfax late Sunday that the mayor planned to work as usual Monday, from 8 a.m. until late afternoon.
Meanwhile, prominent cultural figures have sent a letter to Medvedev in support of Luzhkov, RIA-Novosti reported Monday.
The mayor might make a statement Tuesday about when and how he will leave his post — either at a regular City Hall meeting or on the program “Litsom k Gorodu” (Facing the City), which starts at 7:55 p.m. on TV Center, the television channel controlled by City Hall, Vedomosti reported Monday, citing two City Hall sources.
The date for Luzhkov’s replacement will probably be decided Oct. 6 or 7, but not before President Dmitry Medvedev returns from China on Wednesday, the report said.
However, a City Hall source told RIA-Novosti on Monday that Luzhkov would go on three pre-planned business trips abroad as mayor in October. Luzhkov’s trips will include one to Munich, Germany, for a real estate exhibit Oct. 4 to 6; one to Hanoi, Vietnam, for a “Days of Moscow” cultural program Oct. 7 to 10; and one to Astana, Kazakhstan, for an international religious forum Oct. 17 to 18.
Vedomosti reported last week that the government would propose a new job for Luzhkov within two or three weeks if he resigned. As a compromise, the Kremlin could split the mayor’s responsibilities into leadership and functional roles and offer one of the positions to a Luzhkov loyalist, Vedomosti said Monday, citing a City Hall source.
Luzhkov looked calm Monday as he took part in the opening session of a three-day UNESCO conference dedicated to the education of small children. He also was to hold a number of other meetings, Tsoi said.
Asked by reporters what he thought of his first working day after his Austrian vacation, Luzhkov said, “It has started,” Interfax reported.
Alexei Titkov, an analyst with the Institute of Regional Politics, said Luzhkov was hoping that Medvedev would not have enough resolve to remove him, in which case Luzhkov would benefit by “exercising his powers and signing orders.”
Medvedev also needs to figure out how to handle the fallout of Luzhkov’s possible departure on United Russia, the ruling party that Luzhkov co-founded and has used Medvedev’s image in election campaigns with the president’s permission.
“Medvedev will be trying to come to terms with Luzhkov because a blow to Luzhkov is a blow to United Russia,” said Yevgeny Minchenko, director of the International Institute of Political Expertise, a think tank.
Luzhkov’s departure depends on the position that he is offered afterward, Minchenko said.
“Luzhkov needs security guarantees for himself and the businesses that were formed under him,” said Rostislav Turovsky, an independent regional analyst.
Turovsky predicted that the mayor and federal authorities could “get stuck in protracted talks that could last until the end of his term” in July 2011.
“Federal authorities had hoped that he would break down under the pressure of black PR, but Luzhkov turned out to be a tough nut to crack,” Turovsky said.
Earlier this month, Luzhkov became the target of an unprecedented smear campaign on state-controlled television that accused him and his billionaire wife, Yelena Baturina, of corruption and negligence.
Last Monday, a program produced in Luzhkov’s defense was unexpectedly axed at TV Center.
Meanwhile, Peterburgskaya Politika Foundation and Minchenko Consulting released a research report Monday that predicted four other regional leaders might be dismissed: Boris Gromov of the Moscow region, Dmitry Zelenin of the Tver region, Leonid Polezhayev of the Omsk region and Viktor Kress of the Tomsk region.
TITLE: Alfa to Invest $15 Million in Cuba
AUTHOR: By Olga Razumovskaya
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Alfa Group’s A1 unit said it would invest $15 million in a 49 percent stake in its venture with Cuba’s Commercial Caribbean Nickel.
A1 said in a statement Friday that it had created a joint venture with the Cuban state-run company to develop Cuba’s Nicaro mines, extracting nickel and possibly other metals.
The project is one of just a handful of Cuban-Russian industrial projects since the early 1990s, A1 said. Russian investment in the communist island nation dried up after the Soviet collapse.
“The Nicaro project is promising. There are approximately 100 million tons of flotation tailings in this region, and forecasts show that these tailings have a large content of not only nickel, but also cobalt, iron and chrome,” Alexei Mikhailovsky, A1’s managing director, said in the statement.
Commercial Caribbean Nickel has promised to provide licenses and permits and to assist A1 with building a work force and finding local expertise.
Russians will be involved in “technological operations,” including a pilot construction project that will help extract nickel from the flotation tailings, which are industrial waste left over from earlier mining.
The company will begin its pilot in the second half of 2011, Mikhailovsky said.
“The concentration of extracted nickel is lower than it used to be a few years ago. Extraction technology has improved, making projects like this one attractive,” said Nikolai Sosnovsky, a metals analyst at Uralsib Capital.
Norilsk Nickel, the world’s biggest producer of nickel, also has expressed interest in the Nicaro mines. In November 2008, it signed a memorandum of understanding with Cubaniquel to exchange specialists and expertise in mining and selling nickel products.
“A1 has a competitive advantage over Norilsk Nickel in Cuba because we have done business there before,” Mikhailovsky said. He said the company, formerly named Alfa Eco, took part in an oil-for-sugar program in the 1990s and delivered 1.5 million tons of oil to Cuba in exchange for 500,000 tons of raw sugar.
TITLE: In Brief
TEXT: Would-Be Deputy Slain
ST. PETERSBURG (SPT) — Oleg Denisenko, a 43-year-old resident of St. Petersburg who made an unsuccessful bid for municipal deputy in March, was found stabbed to death in his Nevsky district apartment on Sunday, Fontanka.ru reported.
In a preliminary analysis, Nevsky district police believe that Denisenko was murdered on Friday night, though the investigation only started on Sunday when Denisenko’s mother discovered the body with multiple stab wounds, the local news site reported.
Boy Raped and Killed
ST. PETERSBURG (SPT) — A ten-year-old boy was raped and murdered in the Malaya Okhta district on Sunday, Fontanka.ru reported.
A 24-year-old citizen of Uzbekistan living in St. Petersburg without registration lured the boy into an apartment rented by the man at 18/2 Respublikansaya Ulitsa at around 3 p.m., where he committed violent sexual crimes against the boy before inflicting five stab wounds upon his chest.
The attacker was detained by police at the crime scene, and is being held as an illegal under article 91 of the Criminal Code. He has been charged with murder and sexual assault, Fontanka reported.
The boy died of his wounds en route to the hospital in an ambulance.
TITLE: Mosque Plans Spark Protests in Moscow
AUTHOR: By Natalya Krainova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A dispute has escalated over plans to build a mosque in Moscow’s southeastern outskirts, with local residents vowing to send an appeal with about 2,000 signatures to President Dmitry Medvedev and nationalist groups promising to support them.
Muslim leaders defend the need for the worship site, saying the capital’s four mosques are overflowing with people.
Residents of the Tekstilshchiki district in southeastern Moscow will send Medvedev a complaint signed by more than 1,800 people opposing construction of the mosque, mainly on the grounds that it might cause massive traffic jams in the area on Islamic holidays, activist Mikhail Butrimov told The St. Petersburg Times on Friday. Butrimov leads the movement Moi Dvor, or My Yard, which supports residents in their fight against the mosque.
Butrimov said residents asked local authorities several years ago to build a Russian Orthodox chapel or create a park on the unused lot. But authorities banned construction on the plot, saying utilities ran underneath it, he said.
The proposed site on Volzhsky Bulvar covers half a hectare with some trees and grass. Locals push their children in strollers and walk their dogs there, and people would benefit more if a park were seeded there, Butrimov said.
Local residents staged a park-founding ceremony at the disputed site by planting 15 young maple trees there Sunday, Interfax reported.
Two ultranationalist groups, the Movement Against Illegal Immigration, or DPNI, and the Russian Public Society, pledged their support to the residents at a joint news conference Friday.
“DPNI will check whether the documents authorizing the mosque’s construction are legal and do everything to attract maximum public attention to the case,” DPNI spokeswoman Alla Gorbunova said by telephone.
Amid the outcry, Vladimir Zotov, prefect for the Southeastern Administrative District, has backtracked on his previous support for the project. Zotov wrote in a May 2009 letter to Moscow Mayor Yury Luzhkov that construction of the mosque on the land would contradict a 2004 order from City Hall but that he considered the construction “rational” after consulting with city officials.
Last Wednesday, however, Zotov told RIA-Novosti that “the mosque can’t be built until the consent of the residents is obtained.”
Traffic jams have been a main fear of residents. If a mosque goes up, “no one will be able to drive past it on holidays,” Butrimov said.
In fact, Moscow’s mosques are surrounded by Friday traffic jams as worshippers arrive for prayers, the imam for Memorial Mosque on Poklonnaya Gora told Vesti FM radio last week, Interfax reported.
There are up to 1.5 million Muslims in Moscow, which has a population of roughly 10 million, said Gulnur Gaziyeva, a spokeswoman for Russia’s council of muftis. On Islamic holidays, up to 100,000 people fill the capital’s mosques.
“It is goes without saying that a new mosque is needed,” Gaziyeva said.
Butrimov said the new mosque would accommodate 3,000 to 5,000 people.
Gaziyeva countered that it would be smaller, although she could not specify the number of worshippers that it would accommodate.
City authorities have been searching for a location for a new mosque for several years, Gaziyeva said. Luzhkov approved the unused lot in Tekstilshchiki for the construction in June, the web site for the southeastern district said.
“Of course, any construction will always be an inconvenience to local residents, and we understand that,” Gaziyeva said.
“But Moscow residents have to understand that it is better that Muslims go to a mosque than to an informal missionary who can preach something wrong,” she said, referring to radical Islamists.
Many young Muslims who are “separated from their parents” arrive in Moscow, and “the only teacher who can make sure that they don’t go the wrong way is an imam,” Gaziyeva said.
TITLE: Boy Abandoned In Caribbean To Return to Russia
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Children’s ombudsman Pavel Astakhov flew Monday to the Dominican Republic to bring home a 12-year-old Russian boy who was abandoned in 2005 in the country by his Russian foster parents.
Astakhov plans to bring the boy, Denis Khokhryakov, to Russia by Thursday, his press office said in a statement, RIA-Novosti reported.
Khokhryakov, the son of an alcoholic single mother from the Volgograd region, was adopted by Larisa Onopriyenko and Sergei Sologub in 2003, the online daily Gzt.ru said.
In 2004, his new family left for the Dominican Republic but returned to Russia the next year, leaving the boy with a local taxi driver and his wife who had carted the family around the island. The boy might have been traded for cocaine, Gzt.ru said, without citing anyone.
His Russian foster parents were arrested last year in Russia on cocaine trafficking charges.
The boy was placed in a temporary shelter for young victims of domestic violence in 2008 when allegations surfaced that the Dominican foster family was mistreating him.
Khokhryakov, who was given a new name, Diego Sologub, has completely forgotten the Russian language, news reports said.
In Russia, Khokhryakov will be placed in a new foster family and a customized rehabilitation program that will provide him with psychological, educational, judicial and other required support, Astakhov said.
TITLE: Man Dies in Police Custody
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — A 52-year-old man was found hanged in a police clink in western Moscow in an apparent suicide — just as the Interior Minister promised to step up care for detainees and the selection criteria for officers.
Nikolai Matryonin, who was detained for petty hooliganism, hanged himself using his own belt, Interfax reported Sunday. The man was drunk at the time of his arrest.
The Investigative Committee opened an inquiry into the actions of precinct officers who could have prevented Matryonin’s suicide, the report said.
Meanwhile, Interior Minister Rashid Nurgaliyev said that people brought to police precincts would undergo medical examinations on arrival and release to make sure that they would not be able to make claims of police mistreatment.
The checks are needed “so a person who comes to the Interior Ministry or is detained will not be able to say the law enforcement officers treated him inhumanely,” Nurgaliyev said, RIA-Novosti reported, citing an interview with Channel One television.
He did not elaborate on the practical implications of the decision, which would require examining hundreds of people nationwide every day. But a ministry spokesman told The St. Petersburg Times that police were working on related guidelines for officers.
Nurgaliyev also said the selection criteria for candidates to serve on the police force, which is currently undergoing a large-scale Kremlin-ordered overhaul, will be tougher than ever before.
“The person who comes to our environment, to our community, to our large family, must meet these criteria. It is very important to us to have the best of the best, and we will strive for this,” Nurgaliyev said.
TITLE: Energy Tops China Trip Agenda
PUBLISHER: Agence France Presse
TEXT: BEIJING — President Dmitry Medvedev was due to meet Chinese leaders Monday with energy cooperation high on the agenda as the Kremlin angles for even closer ties with the world’s second-largest economy.
Energy supplies still account for the bulk of Sino-Russian trade but Moscow also wants to secure Beijing’s help in modernizing the Russian economy and is seeking broader Chinese investments and know-how in various sectors.
Ahead of his three-day visit to China, Medvedev told the country’s official People’s Daily newspaper that Moscow and Beijing should work together more closely because they face a common challenge.
“Today, Russia and China are largely solving similar tasks as they move along the path of comprehensive modernization,” he said in comments released by the Kremlin.
“Never before have our ties been characterized by such a high level of mutual trust,” Medvedev said, adding that his government welcomed Chinese investments in high-tech industries including aircraft construction.
Trade between Russia and China totaled 25.5 billion dollars in the first six months of this year, according to official data.
Energy will be high on the agenda for Medvedev’s talks with Chinese President Hu Jintao, Premier Wen Jiabao and other senior leaders.
Gazprom has been in talks with China over gas deliveries for several years, but the two sides have yet to sort out a final pricing mechanism.
TITLE: Soviet Coup Conspirator Yanayev Dies Aged 73
AUTHOR: By Maria Antonova
PUBLISHER: Agence France Presse
TEXT: MOSCOW — Former Soviet statesman Gennady Yanayev, who led the abortive 1991 coup against then president Mikhail Gorbachev, died Friday following an illness. He was 73.
“Yanayev died after a long and painful illness. He was admitted the night before to a Moscow hospital,” a source at the hospital was quoted by the Interfax news agency as saying.
Yanayev died of lung cancer, television reports said.
The coup plotters, or “putchists,” shook the country when they declared a state of emergency on August 19 while Gorbachev was on vacation in the Crimea, Ukraine.
Tanks rolled through Moscow towards the White House, where Boris Yeltsin, leader of the Soviet-era Russian republic at the time, gathered his supporters after denouncing the coup from the roof of a tank.
In a sign that old wounds have yet to heal, a spokesman for Gorbachev had little to say on Yanayev’s death.
“He is a person who betrayed,” spokesman Vladimir Polyakov said.
Others were more gracious.
“I offer all my condolences to his loved ones,” Ruslan Khasbulatov, the onetime speaker of the Russian parliament and Yanayev’s political adversary, told Echo of Moscow radio.
Yanayev was a longtime Soviet state official who worked with youth and labor unions before he was appointed vice president of the Soviet Union in 1990. He was selected to head the coup in August 1991.
“He was not an active conspirator, but it does not diminish his fault,” said Khasbulatov.
In a 2008 interview Yanayev said he had found out about the coup only one day before.
He said he could not stop his hands from shaking when he told the country during a televised news conference that Gorbachev was gravely ill and therefore he was taking over the country.
“I was sitting before millions of Soviet people, before the whole world, and could not answer the question of what the president’s illness is, could not say anything,” he said in the interview.
Yanayev and his collaborators held the Soviet leadership for three days before all the putchists were jailed. He was granted amnesty in 1994.
He was one of “Soviet officials, who have done a lot to make the Soviet Union the greatest country in the world,” said Vladimir Zhirinovsky, leader of the ultra-nationalist Liberal Democratic party.
“Yanayev lived an interesting, complicated and worthy life,” Communist party leader Gennady Zyuganov was reported as saying by Interfax.
He expressed regret that the plotters were not more “decisive” and could not “save our unified country and work out the difficult situation it was in.”
TITLE: Drugs Official Slams Lack of Rehab Centers
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Russia faces an acute shortage of rehabilitation centers for drug users, Federal Drug Control Service chief Viktor Ivanov said at a government meeting Friday.
He also said 30 metric tons of drugs have been seized by law enforcement and more than 6,000 drug dens have been closed since the start of the year, RIA-Novosti reported.
More than 90,000 people have been “brought to justice” for drug-related crimes this year, he said, without elaborating.
During the State Anti-Drug Committee meeting, Ivanov lamented that Russia lacks a unified, nationwide system of drug rehabs. Despite a population of 142 million people, the country has only three federal rehab centers, 27 in-patient hospital rehabs and 50 rehab centers funded by regional governments.
“That’s an extremely small number,” Ivanov said.
He added that the nation’s hundreds of nongovernmental rehabs centers were not looked after by the state.
The Health and Social Development Ministry’s top drug expert, Yevgeny Bryun, said in a March interview with RIA-Novosti that Russia has officially registered more than 500,000 drug users and that the overall figure was 2 1/2 times higher.
TITLE: In Brief
TEXT: No Light for Mikhalkov
MOSCOW (SPT) — The Defense Ministry violated state regulations when it equipped the car of the Oscar-winning film director Nikita Mikhalkov with a flashing blue light, the Prosecutor General’s Office said, Interfax reported Friday.
A flashing blue light allows a vehicle to ignore some traffic rules and usually is reserved for state officials. But Mikhalkov said in July that he was given one as the head of the ministry’s public council.
Prosecutors ruled that the ministry was not allowed to include the director on its list of people entitled to use flashing blue lights because he was not an official.
Mafia Boss Improves
MOSCOW (SPT) — Reputed crime boss Aslan Usoyan was discharged Friday from the Moscow hospital where he was admitted after an unsuccessful attempt on his life, Interfax reported, citing an unidentified hospital employee.
The 73-year-old Usoyan was shot in downtown Moscow by an unidentified attacker Sept. 16. His bodyguard was also injured.
TITLE: City Hosts CSR Event
AUTHOR: By Irina Titova
PUBLISHER: The St. Petersburg Times
TEXT: The ninth annual EABIS colloquium on corporate responsibility and emerging markets took place in the city last week.
Co-organized by the Graduate School of Management (GSOM) of St. Petersburg State University, it was the first event on such a large international scale to be held in Russia in the field of corporate social responsibility (CSR).
This year’s colloquium signified the progression of EABIS from the study of separate problems on collaboration between business and society to the complex analysis of the CSR phenomenon on emerging markets, primarily the BRIC countries.
The debate was related to the changing roles of “old” and “new” multinationals as the main global CSR actors.
“The range of problems of corporate social responsibility has altered its position today,” said Yury Blagov, head of the GSOM CSR center.
“Previously, CSR was considered to be an exotic form of management and it was associated with certain additional charity activities,” said Blagov. “Modern interpretation of CSR links it to such issues as strategic management, corporate governance and simply effective business practices.”
EABIS, the Academy of Business in Society, is an association of the biggest international companies, leading business schools and academic institutions aimed at facilitating collaboration between business and society.
TITLE: L’Oreal Opens $35 Mln Plant in Kaluga
AUTHOR: By Irina Filatova
PUBLISHER: The St. Petersburg Times
TEXT: VORSINO, Kaluga Region — Kaluga Governor Anatoly Artamonov touted the opening of French cosmetics maker L’Oreal’s first plant in Russia on Thursday as the latest step toward boosting his region’s fast-growing economy.
L’Oreal invested more than 26 million euros ($35 million) in the facility in Vorsino, 85 kilometers southwest of Moscow, and it will produce shampoos, hair conditioners and hair dyes under the brands Garnier and L’Oreal Paris for sale in Russia, Ukraine and Kazakhstan.
The Kaluga region, which offers tax breaks to investors, is a magnet for foreigners, with French carmaker PSA Peugeot Citroen and Japan’s Mitsubishi opening a joint enterprise in April and French cement producer Lafarge recently starting construction of a local plant.
Artamonov, speaking in an interview at the L’Oreal plant opening, said his administration planned to complete negotiations on various forms of cooperation with more than 10 foreign and Russian companies by the end of the year. He declined to identify the companies.
Healthy investment has boosted the region’s economy, which Artamonov said soared by 45 percent in the first eight months of the year compared with the same period in 2009.
He told The St. Petersburg Times that L’Oreal’s plant might provide annual tax revenues of 15 million rubles to 20 million rubles ($485,000 to $645,000) for the regional and municipal budgets in the coming years. The figure may reach 100 million rubles in eight years, when the period of tax breaks ends, he said.
The L’Oreal plant, which currently has one production line, has an annual capacity of 120 million units that might more than double “in accordance with the market requirements,” the company said in a statement. The facility will reach its current full capacity next year as additional equipment is set up.
“The opening of the plant in Russia reflects L’Oreal Group’s obligations to locate production closer to the key markets in order to react to the growing needs more effectively,” Jean-Philippe Blanpain, L’Oreal’s operating director, said in the statement.
L’Oreal, with a Russian market share of 17 percent, is the second-largest cosmetics firm in the country after Procter&Gamble, which has a market share of 24 percent, according to ExpoMediaGroup Staraya Krepost, a market researcher.
L’Oreal said it posted turnover of 563 million euros in Russia last year. Its local sales increased by 17.6 percent in the first half of 2010 compared with the same period last year.
Analysts said the local perfume and cosmetics market was attractive for foreign companies because of its stable growth and strong demand.
“The market is not saturated yet, and its potential will steadily attract foreign players’ attention,” said Ivan Kozlov, an analyst at ExpoMediaGroup Staraya Krepost.
TITLE: Forum Focuses on Innovation As Key to Economic Progress
AUTHOR: By Kristina Aleksandrova
PUBLISHER: The St. Petersburg Times
TEXT: More than 1,000 participants are expected to take part in the third St. Petersburg International Innovation Forum, which opens Wednesday at Lenexpo exhibition center and runs through Friday.
This year’s participants include the general director of Google Russia, Vladimir Dolgov; State Duma Chairman Boris Gryzlov, and the president of Russoft, Valentin Makarov. The program aims to formulate suggestions for creating an innovative plan for further economic development in Russia.
Before the official program starts Wednesday, a “Special Events Day” will be held Tuesday, at which the Committee for Science and Higher Education will judge the business ideas, technology developments and R&D projects contest held among students, postgraduates and young scientists under the motto “Young, daring and promising.” Previously selected finalists will present their projects in three nominations, from which the jury will select three winners. Grants ranging from 40,000 rubles ($1,300) for third place up to 100,000 rubles ($3,300) for first place have been provided by the St. Petersburg government.
The first day of the forum’s business program — Political and International Day — will kick of with a speech by Gryzlov. The highlight of the day looks set to be a presentation of Storozhevaya Gora, which is being touted as “Skolkovo’s younger sister.” The innovative cottage community is set to be built 12 kilometers from St. Petersburg near the Okhta River, with the main objectives of providing additional education and leisure activities for children and the development of youth innovations.
The main themes for discussion on Thursday, Business Day, are commercialization, resources and achievements. The grand opening of Pulkovo Technopark, the first center in Russia to be built by Finnish company Technopolis, will take place, and the problems of electronic education will be discussed during a master class organized by the Education Committee. Issues to be addressed are the possibility of electronic control at school, introduction of mobile training technologies and Web 2.0 as an educational area.
The final day of the forum is dedicated to infrastructure, technology and the role of young scientists in creating innovative projects and new ideas.
The “Nanotechnologies and materials as a means to enhance the competitive advantages of Russian industry products” conference will be held on the final day of the forum. Russian industry needs new nanotechnologies for its sustainable development, but the creation of such materials requires investments. One of the main problems to be discussed is therefore the role of the state and business in nanoindustry.
Forum participants will demonstrate new technologies, including a specialized exhibition titled “The Nuclear Industry 2010,” whose objective is to show all the latest developments and achievements in the atomic industry. Among its main sections are isotope products, remote control and robotic servicing systems, complex security systems for nuclear power plants, nuclear industry uniforms and a new section on nuclear machinery.
TITLE: AvtoVAZ Seeks Loan For Veggies
AUTHOR: By Alisa Fialko
PUBLISHER: Vedomosti
TEXT: MOSCOW — AvtoVAZ has decided to hang on to some of its noncore assets, including a subsidiary that is seeking a 1.2 billion ruble ($38.7 million) loan to build greenhouses for vegetable gardens, Vedomosti has learned.
In late August, Tolyatti City Hall included in its investment plan a project by AvtoVAZ subsidiary AvtoVAZagro. The company plans to spend 1.2 billion rubles in 2011-12 to rebuild a group of greenhouses to grow vegetables.
An AvtoVAZ spokesperson confirmed the project and added that it would be financed through loans.
AvtoVAZagro takes care of all garden areas located at the factory and in the city of Tolyatti, the AvtoVAZ spokesperson said. The company says on its web site that it has a 70-hectare nursery for tree and bush seedlings and a 3-hectare greenhouse for flower and plant seedlings.
In 2007, AvtoVAZagro was also given responsibility for building a new residential suburb in Tolyatti called Kalina, which would include 590,000 square meters of housing. Before the company could start construction, however, the crisis hit, leaving the carmaker on the edge of bankruptcy and the residential project frozen.
The anti-crisis plan introduced by the carmaker’s new senior management, headed by chief executive Igor Komarov, proposed a sell-off of the company’s noncore assets. The first stage alone should have brought in 670 million rubles, AvtoVAZ vice president Polina Grishina said.
But AvtoVAZagro did not appear on the list, and Grishina said in early 2010 that the carmaker would hold on to its gardening unit. “We’re planning to develop AvtoVAZagro via an entirely different project — growing greenhouse cucumbers and tomatoes,” she said. “We think it’s a pretty good idea.”
Investing in the agricultural sector while attempting to get cash by selling off other non-core assets seems strange, said Aton analyst Yuly Matevosov. Not everything is so sunny with their main business. The company plans to make only 573,000 cars this year, and nearly 700,000 next year. Matevosov said he thought that AvtoVAZagro would only be able to secure the 1.2 billion rubles with a guarantee from AvtoVAZ. The spokesperson for the carmaker categorically denied this.
AvtoVAZargo had revenue of 15.6 million rubles ($500,000) in the first half of 2010, according to its results to Russian accounting standards. It posted a loss of 2.4 million rubles over the period.
Given the market conditions now, it’s impossible to sell off lots of noncore assets at reasonable prices, said Igor Burenkov, AvtoVAZ’s public relations director. The assets need to be used with maximum efficiency now, so they don’t bring losses to the company, he said. In the future, they could be sold under more preferable conditions.
To date, AvtoVAZ has only managed to sell one building of all the property it has put on the market. The sell-off includes 38 pieces of property, including unfinished construction projects, and stakes in 29 companies.
State Duma Deputy Viktor Semyonov, who is also president of the Greenhouses of Russia association, said turnkey construction of a hectare of greenhouse space costs 1 million to 1.5 million euros ($1.34 million to $2.01 million). While by no means a very profitable business, it should be possible to find buyers for such assets, he said.
TITLE: New Defense Agency Planned
AUTHOR: By Olga Razumovskaya
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — President Dmitry Medvedev said Wednesday that he wants the Defense Ministry to create a unified research entity similar to one formed by the U.S. Department of Defense in response to the Soviet Union’s launch of Sputnik.
“The country lacks an efficient structure that would deal with demand for so-called breakthrough research and development in the interests of defense and security,” Medvedev said at a session of the Presidential Commission for Modernization and Technological Development of Russia’s Economy.
First Deputy Prime Minister Sergei Ivanov told reporters after the session that the first proposals on a new agency would be drawn up in the next few months.
“The president has given the task to find appropriate mechanisms so that this money goes not only to research by the Russian Academy of Sciences but to new players as well,” he said.
“There are new players on the market, including leading Russian institutes, research and development centers, the Kurchatov Institute, a minimum of three state corporations — Russian Technologies, Rosatom and Rusnano,” he said.
The U.S. Department of Defense created the Defense Advanced Research Projects Agency, known as DARPA, as a research and development office in 1958. It has pioneered many fundamental technologies, including co-founding the Internet.
Analysts said, however, that breakthrough defense research, which implies the use of new technologies, is a goal unattainable for Russian state corporations, defense holdings and individual researchers working separately and without organized state support. A Russian DARPA would unite all these participants under one roof and allow the government to focus on promising projects.
Neither the president nor Ivanov specified where the money for the new agency could come from. Ivanov, however, said in August that the state was planning to spend up to 22.5 trillion rubles ($725 billion) on its arms program by 2020.
Analysts said the money would have to come from the state budget and was unlikely to involve foreign investors.
“The key preconditions for the project’s success are financial support, the freedom to create, and infrastructure,” said Igor Korotchenko, director of the Moscow-based Center for Analysis of World Arms Trade.
While Skolkovo, Russia’s future innovation and modernization hub near Moscow, could serve as a potential base for the agency, this is unlikely to happen because its projects will be top-secret and the agency will most likely require construction of a production facility for prototypes, Korotchenko said.
Opening the agency will probably take from six months to a year, given Russian red tape, he said.
“America’s experience with DARPA is great, and using it is a good idea,” Korotchenko said.
Medvedev did not hide his disappointment with the current status of the country’s defense industry.
“The situation is quite bad, quite complicated,” Medvedev said. “In a whole range of areas, the Russian defense industry is not capable of reacting to additional orders or increased financing to make high-tech products in sufficient numbers.”
TITLE: Putin Stays Up Late To Congratulate Road Team
AUTHOR: By Derek Andersen
PUBLISHER: The St. Petersburg Times
TEXT: Prime Minister Vladimir Putin held a videoconference in the early hours of Friday morning to congratulate Transportation Minister Igor Levitin and a group of workers on the completion of the Amur highway.
The prime minister, calling from his home office at 1:00 a.m. to speak with his audience at 8 a.m. local time in Khabarovsk, discussed the further development of the highway with Levitin, then watched as Oleg Trushin, a heavy machinery operator who worked on the highway, was presented with the keys to the Lada Kalina car that served as backup when the prime minister made his much publicized four-day journey along the highway in late August.
“The highway will be the start of a new era of development of the regions of Siberia and the Far East,” Putin said in a telegram he sent to highway workers. “You have certainly done a good job. You have not only laid thousands of kilometers of roadway, but have successfully dealt with the most complex engineering and technology issues. You have certainly earned great respect and enormous praise.”
The highway runs between the southeastern cities of Chita and Khabarovsk, a distance of 2,097 kilometers. It is the last link in a road system that stretches from Murmansk, north of the Arctic Circle on the Barents Sea, and Kaliningrad, on the border with Poland, to Vladivostok, on the Pacific Ocean.
“It is a huge accomplishment,” Putin’s spokesman Dmitry Peskov said. “All points in the farthest extremes of the country are now connected.”
Construction of the highway cost 200 billion rubles (about $6.5 billion), and was resumed five years ago after being abandoned in its initial stages in the 1990s. Work went on year round, despite winter temperatures that dipped to minus 50 degrees Celsius. Roadbeds were graveled in the winters and asphalt, sometimes shipped from plants thousands of kilometers away, was applied in the summers. The route cut through 372 kilometers of previously untouched taiga forest.
The paving of a final 140-kilometer stretch of road marked the completion of the highway, but much remains to be done.
“In my view, it’s still not a modern road,” Putin told journalists accompanying him in August. “It is a dependable, modern farm road, but not the Autobahn.”
Services — filling stations, hotels and auto repair shops — are rare on the highway, and lengthy sections do not have access to electricity.
TITLE: Gas Giants to Appeal to Kiev
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — Gazprom and Naftogaz Ukrainy plan to ask the Ukrainian government to amend legislation so that foreign companies can manage Ukraine’s gas pipelines, a Gazprom executive said Friday.
Such amendments would give Gazprom the option of investing in Ukraine’s gas routes as part of its consortium with Naftogaz, said Anatoly Podmyshalsky, who heads Gazprom’s department for operations in former Soviet republics.
“It would be possible to sit down and determine, in a concerned manner, the amount of gas to transport over a significant time in the future,” he said at a conference in Kiev, Interfax reported.
If Russia’s gas monopoly and Ukraine’s national energy company can co-manage the pipelines, Gazprom would have a clearer idea of which routes it should leave as they are, upgrade or mothball, Podmyshalsky added.
He said the companies decided to request the amendment at a convention of consortium representatives earlier this month.
Ukraine’s new president, Viktor Yanukovych, has warmed to the idea of an international consortium to run and upgrade the country’s gas pipelines.
TITLE: Keeping an Eye on Ukraine
AUTHOR: By Grigory Nemyria
TEXT: The world’s center of gravity is heading eastward so fast that we Europeans can almost feel the ground moving beneath our feet. Because almost all major actors on the international stage are redefining their roles in response to this tectonic shift, Europe must do the same. So it is right that the European Union Council of Ministers is meeting to grapple with this challenge.
For decades, however, Europeans have been more concerned with unification and constitutional arrangements than with traditional diplomacy. Europe’s historical rivalries have, of course, been civilized into a political model that European diplomats often see as applicable across the international arena.
To be sure, consensus, compromise and a pooling of sovereignty are the only ways to resolve many of the great issues — climate change and nuclear proliferation, for example — that bedevil our world. But on the great issues of war, peace and the balance of power, Europe seems trapped between an insufficiently cohesive foreign policy and uncertainty among individual countries about how to define and secure their national interests.
By contrast, the world’s rising powers — Brazil, China, India and Russia — insist not only on the primacy of their national interests, but, as the failed climate negotiations in Copenhagen last December demonstrated, on sovereign freedom of action as well. To them, geopolitics is not anathema; it is the basis of all their external actions. Defending the national interest still rallies their people. The exercise of power remains at the heart of their diplomatic calculations.
In the face of this new and old reality, Europe must not merely make itself heard on the great global issues of trade and fiscal imbalances, important as they are. Instead, Europe must recognize which of its strategic assets matter to the world’s rising powers and leverage those assets to gain influence.
One of Europe’s key strategic assets are the countries that straddle the great energy corridors that will deliver more and more of the fossil-fuel resources of the Middle East and Central Asia to the world. Indeed, ever since the Russia-Georgia war of 2008, Europe has mostly averted its eyes from developments in the region.
Ukraine, in particular, is being neglected by the EU. This neglect is both unwarranted and dangerous. Ukraine and other countries that lie between the EU and Russia are not only a source of geopolitical competition between Europe and Russia, but now intersect with the national interests of the world’s rising powers, particularly China.
The Russia-Georgia war showed just how much this region matters to the entire world. In its wake, China began a systematic effort to buttress the former Soviet countries’ independence by offering them huge aid packages. Countries from Belarus to Kazakhstan have benefited from Chinese financial support.
China cares about this region not only because it is concerned with maintaining the post-Cold War settlement across Eurasia, but also because it recognizes that the region will provide the transit routes for much of the energy wealth of Iraq, Iran, and Central Asia. Indeed, China has been pouring billions of dollars into developing the oil and gas fields of Iraq and Iran. Given that security issues will likely prevent most of this energy from being transported eastward to meet China’s domestic needs, Chinese energy concerns will need to become players in international energy markets, which means shipping Chinese-developed oil and gas in Iraq and Iran westward for sale.
But two countries essential to this trade —Turkey and Ukraine — are increasingly estranged from the EU. For Turkey, tensions reflect the lack of progress on the country’s application for EU membership.
Ukraine is another matter. Until President Viktor Yanukovych bludgeoned his way into Ukraine’s presidency earlier this year, Ukraine was becoming emphatically European in its orientation. Now, Yanukovych seems determined — for the most shortsighted of motives — to weaken Ukraine fatally as an energy-transit country. Indeed, his latest gambit is an effort to sell Ukraine’s transit pipelines to Gazprom in exchange for cut-rate gas.
That idea is foolish economically and strategically. Ukraine’s industries need to modernize, not become more addicted to cheap gas, and transit will become almost as monopolistic as gas supply — a dismal prospect, given past cutoffs of gas supplies between Russia and Europe.
Moreover, Ukraine’s politics is fracturing. A witch hunt is under way against opposition politicians. Crusading journalists disappear without a trace. The country’s biggest media baron, Valery Khoroshkovsky, who happens to be head of state security, expands his media empire by abusing the courts. Yanukovych’s systematic dismantling of Ukraine’s democratic institutions is damaging the country’s potential as a European strategic asset.
Of course, it is up to Ukrainians to defend their democracy. But Europe is at fault as well because the EU lacks a grand strategy toward the East. The moral and strategic vision of the 1990s, which culminated in the EU’s “big bang” of eastward expansion, has exhausted itself. Nowadays, Europe is full of whispers that “neo-Finlandization” might be a reasonable compromise for countries like Ukraine and Georgia.
Rebuilding the EU’s relations with Ukraine and the other countries to the union’s east would, however, also help shape relations with Russia, which today is facing a series of strategic challenges: relations with the Soviet Union’s former republics, the proximity of a dynamic China, the exposed emptiness of Siberia and the future of Central Asia’s energy resources, around which the 19th-century “Great Game” between Russia, China, India and the United States is restarting. The EU can play a constructive role through permanent dialogue that is sensitive to the Kremlin’s concerns without acquiescing in all of Russia’s answers to them.
Today, the art of diplomacy is to translate power into consensus. This requires better relations with all of the world’s rising powers. But it also implies, above all, a unifying vision, not only concerning the challenges that affect all countries — weapons proliferation, terrorism, epidemics and climate change, for example — but also concerning one’s strategic assets. If the EU is to craft a successful policy toward the world’s rising powers, it must speak in a strategic language that they understand.
Grigory Nemyria is a former deputy prime minister of Ukraine. © Project Syndicate
TITLE: Aiding and Abetting: Microsoft’s Legal Nihilism
AUTHOR: By Sergey Matyunin
TEXT: Few things can ignite Russian society as much as a noisy case of criminal prosecution for computer piracy. When the case involves huge, powerful Microsoft versus human rights activists, the inevitable result is a barrage of news stories that produce more heat than light. It also creates a widespread sense that the software leviathan has once again done something reprehensible, albeit legal.
In 2006, Alexander Ponosov, principal of a high school in a remote village in the Perm region, was prosecuted on criminal charges for using illegal copies of Microsoft Windows and Microsoft Office on 12 of the school’s computers. He faced five years in prison.
Several public figures, however, spoke in his defense. For example, then-President Vladimir Putin said, “To take a man who simply bought some computers and then threaten him with prison is utter nonsense.” Former Soviet leader Mikhail Gorbachev wrote to Microsoft founder Bill Gates asking him to intervene. Gates refused to step in, saying it was a public prosecution and not a private dispute. In the end, Ponosov not only was found not guilty, but a Perm court ordered the government to pay him 250,000 rubles in damages for being falsely accused.
Three years later, Anastasia Denisova, head of the nongovernment organization ETHnICS, was charged with copyright infringement. Investigators said pirated software had been installed on three computers that belonged to ETHnICS. Denisova denied the allegations. There were reports of activist groups being searched and their computers seized under the pretense of fighting copyright fraud, despite the evidence that the software was legal. What’s more, the activists claimed that Microsoft was slow, if not reluctant, to help them prove that their software was legal.
Human rights heavyweights like the Moscow Helsinki Group and Memorial sent a letter to Microsoft demanding to know whether the company is “supportive of all actions of its representatives” and whether it endorses the criminal prosecution of activists if they use nonlicensed software. In short, they accused Microsoft of being used to suppress the dissident movement in Russia.
There is a comic element in this statement. Why should activists be immune to copyright laws? And why should a private company “endorse” a prosecution, which by definition is founded on criminal law and is instigated by the state? But at the same time, there is an element of truth. In the real world, prosecution is unlikely to succeed unless assisted by the copyright holder.
Copyright is essentially a private matter. The bulk of the cases is supposed to be civil rather than criminal. In a civil case, mere possession of an illegal copy of intellectual property is usually enough for monetary compensation. Sending a copyright infringer to prison is another thing. Criminal proceeding requires a high standard of proof. Neither the Ponosov or the Denisova cases were well founded in criminal law, and they shouldn’t have even been instigated.
The real scandal is that Russia has a system, backed by a technology giant, of intimidating, menacing and extorting alleged copyright infringers.
Two out of every three computer programs in Russia are stolen. Statistically, nearly every Russian computer has some illegal content. This opens unlimited opportunities for abuse by law enforcement officials.
Microsoft does not usually act directly. It operates through a myriad of independent lawyers and distributors, all of whom represent Microsoft, as well as an army of government prosecutors and police officers. They are often motivated by greed, the desire to further their careers or just outright stupidity.
This combination sometimes means a bizarre result, like when a school principal, human rights activist, businessperson or a housewife is charged with a criminal offense that carries a prison term because he or she bought a computer with pirated software already installed.
Unless Microsoft learns to control everyone who represents the company and unless it is more scrupulous about cooperating with Russia’s law enforcement agencies, we will see more of these bizarre stories unfold.
Sergey Matyunin is editor of RussianLawOnline.com
TITLE: Big Money Merges With Big Brother
AUTHOR: By Guy Sorman
TEXT: All over the world, Internet users entertain romantic delusions about cyberspace. To most of us web surfers, the Internet provides a false sense of complete freedom, power and anonymity.
Every once in a while, of course, unsolicited messages and ads that happen to be mysteriously related to our most intimate habits intrude. They remind us that we Internet users are, indeed, under constant virtual surveillance. When the watchers have only commercial motives, such spam feels like a minor violation. But in China or Russia, the Internet is patrolled not by unsolicited peddlers, but by the police.
So Russian human rights activists and the environmental organization Baikal Wave should not have been surprised when, in January, flesh-and-blood policemen confiscated their computers and the files stored within them. In the time of the Soviet Union, the KGB would have indicted these anti-Kremlin dissidents for mental disorders. This supposedly being the “new Russia,” cyber-dissidents are accused of violating intellectual property rights.
The employees at Baikal Wave were using Microsoft-equipped computers. By confiscating the computers, the police could supposedly verify whether or not the Microsoft software that the activists were using had been installed legally.
On the surface, Microsoft and Prime Minister Vladimir Putin’s police look like strange bedfellows. But are they? Microsoft’s representatives declared that they could not oppose the police actions because the Seattle-based company had to abide by Russian law. Such an ambiguous declaration can be interpreted either as active support for the Kremlin or, at the very least, passive collaboration. Moreover, in previous cases, Microsoft assisted the police in their investigations of nongovernmental organizations.
Clearly, human rights activists in Russia cannot and should not count on Microsoft as an ally in their efforts to build a more open society. But Microsoft’s ambiguous — at best — behavior is part of a pattern. Indeed, the record of Internet companies in authoritarian countries is both consistent and grim.
Yahoo’s record is also far from clean. In fact, it pioneered the active collaboration of Internet and high-tech firms with political repression. In 2005, Yahoo gave the Chinese police the computer identification code for a dissident journalist, Shi Tao. Shi Tao had sent a message in praise of democracy, which the censors had detected. Following Yahoo’s lead, the police arrested him. Shi remains in jail to this day.
At that time, Yahoo’s U.S. managers — just like Microsoft in Russia — declared that they had to follow Chinese law. Shi Tao, sitting in his jail cell, was undoubtedly pleased to learn that China is ruled by law, not by the Communist Party. After all, the rule of law is what Shi Tao is fighting for.
Google, at least for a short while, seemed to follow different guidelines in its Chinese business, appearing to adhere to its widely proclaimed ethical principle, “Don’t be evil.” To protest against censorship, the Silicon Valley-based company relocated from mainland China in 2009 to the still relatively free Hong Kong. On the Hong Kong-based search engine, Chinese internauts could read about Taiwan, the Tiananmen Square massacre of 1989 or the Dalai Lama. On mainland China’s Google.cn, these sources — along with the results of searches using many other forbidden terms — were blocked.
Google’s move seemed to reconcile its proclaimed libertarian philosophy with its business ethics. But that reconciliation did not last long. Google, after all, had accepted China’s widespread censorship practices from the beginning of the company’s operations in the country in 2006. After six months of life in Hong Kong, money talked: Google reinstated its mainland China service — and with the same level of censorship as before. In the end, Google, not the Chinese Communist Party, lost face.
Yahoo, Google and Microsoft have thus followed a strikingly similar road: Access to lucrative markets trumped ethical anxiety. The tools that they provide are politically neutral. Dissidents try to use them to pursue a democratic agenda. Police use them to detect and repress dissidents. Either way, Microsoft, Yahoo, and Google make money. This is similar to how IBM operated in the 1930s when it sold computing machines to the Nazi regime. The Nazis used these machines to make the destruction of their victims routine, countable and bureaucratic.
Should we be shocked that Internet companies put profits ahead of morals? After all, they are ordinary, profit-seeking corporations, just like the IBM of Hitler’s era. Internet companies may be able to hide their true motives better than other companies behind ersatz, democratic-sounding slogans, but in the end they are advertising products like any other. In advertising or self-promotion, the choice of words is determined by customer expectations, not by managers’ philosophy, as they mostly have none.
Capitalism is always a trade-off. We must live with unethical behavior by moneymaking corporations that provide us with useful new tools. These tools can be used by Iranian dissidents fighting dictatorship or by Tibetan dissidents trying to save their culture. They also can be used to compute the number of exterminated Jews, to arrest a Chinese dissident or to shut down a human rights group in Russia.
Microsoft in Russia or Google in China teach us that capitalism, although efficient, is not ethical. Entrepreneurs are greedy by definition. If they were not, they would go bankrupt. An open society will never be created or sustained by righteous entrepreneurs or be the mere byproduct of political engineering. Liberty, as always, remains the endeavor of vigilant, free men and women.
Guy Sorman, a French philosopher and economist, is the author of “Economics Does Not Lie.” © Project Syndicate
TITLE: The $2 Million Spy
AUTHOR: By Richard Lourie
TEXT: Russia was the big loser in the summer spy scandal when it lost its 10 “illegals.” In the subsequent spy swap, Moscow also lost four Russians convicted of spying for the United States and Britain. To top it off, Russia also lost face, the use of illegals seeming laughably old-fashioned and unproductive.
Fortunately, the whole business did not upset the reset in U.S.-Russian relations. The United States treated it all as titillating entertainment, while Russia welcomed the illegals home, with Prime Minister Vladimir Putin even singing patriotic songs from an old Soviet spy film with them.
But there was one off-key note. On June 13, Sergei Tretyakov died at age 53 in the small Florida town of Osprey. A former colonel in the Foreign Intelligence Service, Tretyakov was the most important spy to defect since the collapse of the Soviet Union. He was also the most highly paid, having received more than $2 million from the U.S. government. His position as deputy station chief in New York responsible for all covert operations in New York and at the United Nations made it possible that he had fingered the 10 illegals. (Tretyakov spied for the United States for three years before defecting in 2000.)
Even though Tretyakov died two weeks before the arrests of the illegals on June 27, this does not rule out that he was killed as an act of vengeance. CBS reported that the White House had been informed about the Russian agents under surveillance as early as February. A leak, or worse, could have occurred in this time.
Tretyakov’s widow waited until the day of the actual swap, July 9, to announce her husband’s death to deny his “former colleagues the luxury of flattering themselves that they punished Sergei.” An odd statement. Though perhaps willing to make use of his death to intimidate other potential defectors, Tretyakov’s “former colleagues” are the sort of people who prefer genuine revenge over poetic justice.
There were other reasons that made Tretyakov a likely target. As Pete Early, author of Tretyakov’s biography “Comrade J,” wrote: “The murders of [former FSB officer Alexander] Litvinenko and [Novaya Gazeta journalist Anna] Politkovskaya are reminders of how dangerous it can be for a defector from the Russian intelligence or a vocal critic of Russian leaders to speak out publicly. Sergei is both.”
The strong circumstantial evidence linking Tretyakov’s death to the arrest of the 10 illegals or to his “treasonous defection” lost all importance on Sept. 2, when Florida’s District 12 chief medical examiner issued his autopsy report. It found that Tretyakov had choked to death on a piece of meat. One may well ask, “Why did it take almost three months to determine that a person choked on a piece of meat?” Complex toxicological tests had to be run to eliminate the possibility of some subtle poison. None was detected.
Unless you want to concoct fantastical paranoid plots with the medical examiner pressured into lying about a murder, the official version must be accepted. But it too has its own dark twists. Russia was routed in the last round 14-0 — a humiliating defeat. Tretyakov’s “former colleagues” will at some point want to even the score.
“Traitors always end badly,” Putin told reporters in July after meeting with the illegals. Russian intelligence agents who defected to the West should be careful where they park their cars and not accept drinks from strangers.
Richard Lourie is the author of “The Autobiography of Joseph Stalin” and “Sakharov: A Biography.”
TITLE: Army Considers Inflatable Tanks and Airplanes
AUTHOR: By Irina Filatova
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW — As world military powers look to develop the biggest, baddest weapons, Russia’s armed forces are toying with an alternative: inflatable missiles, tanks and planes.
Rusbal, a private Moscow-based company, makes inflatable S-300 missiles, T-80 and T-72 tanks, and Su-27 and MiG-31 fighter jets — all life-sized and, it says, extremely difficult to distinguish from the real thing when viewed by radar or satellite.
In an armed conflict, enemy pilots cannot discern immediately that the military equipment they are about to attack is fake, “and time is money,” said Rusbal’s marketing director, Viktor Talanov, whose father founded the company in 1993.
Further confusing the foe, the tanks, planes and missiles are built to appear authentic on thermal imagers, Talanov said in an interview.
The realism of the inflatables has attracted considerable interest not only from the military, which reportedly deployed test versions of the blow-up tanks during the 2008 conflict with Georgia, but also from Iran and other Middle Eastern countries, Talanov said.
The only differences between a real and inflatable tank are price and weight.
An inflatable T-80 tank runs for 187,000 rubles ($6,000), according to Rusbal’s web site, while a real T-80, which is no longer produced, can cost $100,000 to $1 million depending on its condition.
Likewise, an air-filled tank weighs just 90 kilograms, making it a lot easier to deploy than a real T-80, which starts at 42 tons. (An inflatable S-300 missile battery weighs 120 kilograms, while the jets are the heaviest at 250 kilograms each.)
Rusbal, or Russkiye Ballony, was established two years after the Soviet collapse when Talanov’s father, a former engineer in the defense industry, decided to manufacture hot air balloons together with two other retired defense engineers. Just two years later, in 1995, Rusbal started negotiations with the Defense Ministry to create inflatable military equipment, Talanov said. At the same time, the company conducted extensive research on whether it was possible to make a realistic-looking tank out of fabric.
Rusbal decided that it was and settled on Oxford cloth, a durable basket-weave pattern perhaps best known for its use in cotton dress shirts.
Rusbal has delivered trial samples of the inflatable military equipment to the military together with a full-color catalog of khaki-colored tanks and jets, Talanov said, adding that the company was waiting for a Defense Ministry order to start serial production.
The Defense Ministry press service did not reply immediately to faxed questions.
The military used test models of Rusbal’s tanks during the brief war with Georgia over its breakaway region of South Ossetia in 2008, the official government newspaper Rossiiskaya Gazeta reported in March.
Talanov said he was trying to confirm whether the tanks had been used. “We were trying to find out through our channels whether this is true. It seems that it is,” he said.
He said the Defense Ministry has not given any clue as to how it has used or might use the inflatable equipment.
“The strategy of how to use these models is a secret, and the army doesn’t disclose it,” he said. “We can only fantasize together with you.”
Inflatable military equipment could serve as effective decoys during armed conflict, said Ruslan Pukhov, a defense analyst with the Center for Analysis of Strategies and Technologies. He said the Yugoslav army successfully used wooden models of real military equipment while being bombed by NATO forces during the Kosovo War in 1999.
“Creating such systems, especially with an internal device that simulates a working engine, would increase the chances that the inflatable equipment is attacked instead of the real equipment,” Pukhov said. “In a war, it might decrease losses significantly.”
The enemy’s financial losses also would be higher because the cost of a fake tank is incomparable to the $1 million or more spent on the missile used to attack it, he said.
Talanov said the prices for tanks and other equipment provided to the Defense Ministry would be higher than Rusbal’s list prices because additional materials would be needed to make the deception more convincing.
“Special metallic fabric would be used in them to make them visible on thermal imagers,” Talanov said, declining to provide exact prices.
As Rusbal waits for a military order, it has been flooded with interest from other countries, primarily Iran and its neighbors in the Middle East, Talanov said.
“They are very interested in the military equipment, but we can’t supply it,” he said, declining to provide additional information and referring questions to Rosoboronexport, the state arms exporter.
A Rosoboronexport spokesman declined to comment, citing the sensitivity of the issue.
The inflatable models, however, are not in demand with private individuals or companies because of the high price. “It’s quite an expensive toy,” Talanov said.
Defense toys are a sideline for Rusbal, which has a staff of 50 at its facilities in Khotkovo, a Moscow region town located about 60 kilometers northeast of the capital. Its main business includes inflatable trampolines shaped like castles for children, hot air balloons, pneumatic costumes and special orders for advertising campaigns.
Talanov said selling to companies based overseas made no sense for the company because of high customs duties and long delivery terms. “Foreigners come to us regularly, but we can’t work with them because of the customs barriers,” he said.
So Rusbal focuses on the domestic market — and every once in a while gets a fun customized order. Girl pop duo t.A.T.u ordered a pink tank with flowers and a blue fighter jet with clouds and red flowers on its wings for the group’s performance at the Eurovision Song Contest in Moscow last year. Flanked by the tank and plane, the girls sang their “Not Gonna Get Us” hit together with a military choir serving as backup on the stage at the Olimpiisky stadium.
“We thought about including the pink tank and the blue jet in the catalog for the military,” Talanov joked on his blog in February. “But we got frightened that the defense minister wouldn’t appreciate the joke.”
TITLE: Tensions Rise in Japan’s Spat With China
AUTHOR: By Kyoko Hasegawa
PUBLISHER: Agence France Presse
TEXT: TOKYO — Japan demanded Monday that China pull back two fisheries patrol boats from near a disputed island chain that is at the center of the worst diplomatic row in years between the Asian giants.
Tokyo also summoned Beijing’s ambassador to demand regular consular access to four Japanese nationals whom China detained amid the ugly spat a week ago for allegedly filming a military facility.
The latest developments came days after Japan freed a Chinese fishing boat captain, a move which failed to ease the escalating conflict and drew only a demand for an apology from its traditional Asian rival.
The dispute started when Japan’s coastguard on September 8 arrested the skipper on suspicion that he had intentionally rammed and damaged two of its patrol vessels in a chase near the disputed islands.
Amid the rising bad blood, Japan’s top government spokesman, Chief Cabinet Secretary Yoshito Sengoku, earlier on Monday said Tokyo would ask Beijing to pay for the damage to the coastguard boats.
The communist government of China, where the incident has sparked a strong nationalistic response, has called the skipper’s arrest invalid and illegal, arguing that the islands have been part of China since ancient times.
The islets, known as Senkaku in Japan and Diaoyu in China, lie in an area between Japan’s far-southern Okinawa island and Taiwan that has rich fishing grounds and is believed to contain oil and gas reserves.
On Monday afternoon, Sengoku said fresh trouble was brewing in the area.
Two Chinese vessels, he said, “are nearing the waters around the Senkaku islands but have not entered Japanese territorial waters, as coastguard vessels are on guard against their entry”.
Japan had already asked China four times to withdraw the ships from near the islands, he told a regular news conference.
An official with the China Fisheries Law Enforcement Command said that two ships had set sail last Thursday for the area. China’s foreign ministry had no immediate comment on Japan’s demand for them to leave.
With relations between the Asian giants at their worst level in years, Japan on Monday again urged its neighbor to do its part to repair ties.
“Right now, the ball is in China’s court,” Sengoku, the right-hand man to Prime Minister Naoto Kan, said Monday morning, stressing the need for healthy ties between the world’s second and third biggest economies.
Beijing has launched a tirade of diplomatic protests, snubs and threats and, industry sources say, halted crucial rare earth mineral exports to Japan.
China was Monday still holding the four Japanese nationals — employees of a company working on a bid to clean up wartime-era Japanese chemical weapons — after detaining them last week for allegedly filming a military installation.
Japan’s Foreign Minister Seiji Maehara on Monday summoned the Chinese ambassador, Cheng Yonghua, to demand regular access to the four.
“Minister Maehara asked for continuous meetings with the four Japanese as well as a swift handling of the case,” the ministry said in a statement, adding that the ambassador had said he would relay the message to Beijing.
As the dispute has escalated, Washington — which openly worries about China’s growing military muscle — has been quick to reaffirm its commitment to a half-century-old security alliance with fellow democracy Japan.
The United States, long the dominant military power in the Pacific, has also voiced support for Southeast Asian nations that have had their own territorial rows with the regional giant China.
Sengoku, asked how Japan would deal with China’s new assertiveness in the East China Sea, told reporters: “It is all about how China realizes its peaceful rise in international politics.”
He stressed that both sides need to strengthen what they call their mutually beneficial relationship based on common strategic interests.
Japan’s center-left government has come under pressure at home for caving in to Chinese demands when it freed the trawler captain, a decision the government insists was made independently by prosecutors.
A dozen parliamentarians of the ruling Democratic Party of Japan, led by lawmaker Jin Matsubara, on Monday criticized the captain’s release and proposed that Japan consider stationing troops on the disputed islands.
TITLE: Building Resumes In West Bank
AUTHOR: By Hazel Ward
PUBLISHER: Agence France Presse
TEXT: JERUSALEM — Settlement building resumed across the West Bank on Monday just hours after a 10-month freeze expired, but the Palestinian leadership held back on a threat to quit peace talks with Israel over the move.
Palestinian president Mahmud Abbas had repeatedly warned he will turn his back on direct negotiations with Israel should the Jewish state continue building on occupied Palestinian land.
But, despite weeks of international pressure, Israel’s hardline premier Benjamin Netanyahu made no move to extend the moratorium on new building in the West Bank, which formally ended at midnight.
As bulldozers across the West Bank lumbered into action early on Monday, Abbas told reporters in Paris he would defer a decision on whether to continue talks with Israel until he meets top Arab diplomats on October 4, his spokesman said.
“Before October 4 there will not be an official Palestinian answer,” said Nabil Abu Rudeina shortly before Abbas met with French President Nicolas Sarkozy.
“We are in continuous contact with the U.S. administration and U.S. efforts are continuing, but we are waiting for a final Israeli position so that we can form a clear and final response,” he said.
“Our position is clear and obvious. We are ready for serious negotiations, but the settlement activity should stop immediately. This is the only way to continue fruitful talks.”
Just minutes after midnight, Netanyahu had appealed to Abbas to stick with the talks, which were launched earlier this month.
“I call on president Abbas to continue with the good and honest talks we have just embarked upon, in an attempt to reach a historic peace agreement between our two peoples,” he said.
Abbas responded immediately, saying: “Netanyahu must take a decision to freeze the settlements in order to create an appropriate atmosphere to proceed with the peace talks,” Abu Rudeina quoted him as saying.
Shortly after sunrise, building work began in around a dozen small settlements, albeit on a modest scale.
News correspondents saw an earthmover breaking new ground on the outskirts of Adam settlement, north of Jerusalem, and another digger preparing the foundations for several dozen housing units in Kohav HaShahar northeast of the city of Ramallah. A bulldozer was also seen moving earth in Shaar Binyamin near Ramallah.
Construction was due to start in at least seven other settlements, including in the flashpoint enclave of Kiryat Arba, where 600 extreme rightwing settlers live in the heart of the southern city of Hebron, Channel 2 television and Haaretz newspaper said.
The expiry of the moratorium means that anyone who obtained a permit to build prior to the freeze can now go ahead and start working.
However, for practical reasons, no major construction was taking place -- largely due to the ongoing Jewish festival of Succot, the Feast of Tabernacles, during which Jews are not supposed to work.
TITLE: Chavez Party Wins Election
AUTHOR: By Sophie Nicholson
PUBLISHER: Agence France Presse
TEXT: CARACAS — Venezuelan President Hugo Chavez’s party won most seats in key legislative elections, but strong opposition gains robbed him of enough votes to easily pass reforms, electoral officials said Monday.
The leftist president’s party won at least 94 of the 165 seats in the National Assembly, and the opposition had at least 62, officials said in reporting initial results from a gripping overnight count.
“We have to keep strengthening the (socialist) Revolution!! A new victory for the people. I congratulate everyone,” Chavez wrote in his Twitter account.
But the results were set to shake up an assembly Chavez has dominated for the past five years, as the main opposition will return en masse after boycotting the last vote in 2005.
“It’s been demonstrated that the country has an alternative, formed thanks to the convergence of very different people,” said Ramon Guillermo Aveledo, spokesman for an opposition coalition.
“No one had a full majority, which will force us to negotiate,” said Pablo Perez, an opposition governor.
The electoral council did not release full vote numbers but the opposition claimed its candidates had won 52 percent, although it failed to get a majority of seats due to controversial recent changes in voting districts.
Such a result would be a blow for Chavez, two years before presidential elections in the oil-rich nation as he seeks a third six-year term.
More than 66 percent of some 17 million voters turned out in the key vote, as tensions played out on online social networks during the lengthy vote count.
The ruling United Socialist Party of Venezuela (PSUV) had sought to win 110 seats, or two thirds of the congress, to keep pushing through reforms under Chavez’s “socialist revolution.”
Chavez, who was welcomed at a hillside slum polling station by cheering, red-clad crowds, dominated the end of campaigning.
In more than a decade of rule, the firebrand leftist leader has nationalized public utilities, key industries and media, as well as launched health clinics and subsidized food programs for the poor. He has also increased pressure on opposition groups and dissidents.
TITLE: First Athletes Arrive in New Delhi As Accusations Fly Over Poor Preparation
AUTHOR: By Ben Sheppard
PUBLISHER: Agence France Presse
TEXT: NEW DELHI — Hundreds of athletes moved into the Commonwealth Games village in New Delhi on Monday, as a row broke out over statements made regarding preparation for the Games.
Despite warnings that work would not be finished at the much-criticized village until Wednesday, athletes and support staff from nations including England, South Africa, Australia and Canada arrived during the day.
Problems plaguing the crisis-hit Games range from shabby accommodation to security fears, an outbreak of dengue fever, and doubts about public safety after the collapse of a new footbridge next to the main stadium.
In a desperate bid to finish work on time, hundreds of extra workers at the village tackled uncompleted apartments, dirty toilets and heaps of builders’ rubbish.
A blame game has now erupted between local organizers and the event’s federation.
Commonwealth Games Federation president Mike Fennell was forced to defend the organization’s chief executive Mike Hooper, who said the Games’ chaotic run-up was due to Indian officials.
“We’re at the hands and the mercy of, effectively, the government of India, the Delhi government, the agencies responsible for delivery of the venues,” Hooper told Television New Zealand on Sunday.
“Renewed deadlines came and went. New reasons for delays kept coming up. Absolutely exasperation from our perspective,” he said.
Fennell said Hooper had “merely stated the fact that the responsibility for delivering and operating the Games lies with authorities in India” and that Hooper was a victim of a “vicious and totally unwarranted attack” in the media.
South African High Commissioner Harris Mbulelo Majeke complained a snake was found in one room at the athletes’ village, while Indian boxer Akhil Kumar said his bed collapsed as soon as he sat on it.
Delhi chief minister Sheila Dikshit said the residential zone would finally be finished mid-week.
TITLE: The Emergence of the ‘Renaissance MBA’
AUTHOR: By Matt Symonds
PUBLISHER: Special to The St. Petersburg Times
TEXT: A new MBA model is emerging in the wake of the crisis, though it seems it has yet to catch on in Russia.
Just how much blame the business community should shoulder for the financial crisis is open to debate. Rather than dwell on what has happened in the past (and the rather embarrassing number of percentage of major players in the crisis who boasted an MBA from a top school) many voices in the community are instead pointing out the need to create a new generation of more responsible business leaders — leaders who will hopefully avoid the herd mentality which led their predecessors into such trouble. Their argument is that the traditional emphasis on teaching subjects such as finance, strategy, operations and the like is outmoded.
“In many respects the recent economic crisis stemmed from a failure in leadership and corporate responsibility,” says Valerie Gauthier, associate dean at one of Europe’s top business schools, HEC Paris. “And if we are to avoid repeating history MBA students must learn to ask the right questions, challenge the status quo and trace the intricate web of connections between events, cultures, nations and disciplines.”
The renaissance period in Europe once produced leaders who were as grounded in science and the arts as they were with diplomacy and war. Now Gauthier suggests that business education needs to create “renaissance MBAs,” managers and professionals who are as familiar with history, philosophy and design as they are with a business plan or a balance sheet.
Gauthier believes that one of the ways to achieve this would be to open up MBA programs to individuals with a much wider range of backgrounds so that bankers and management consultants would find themselves rubbing shoulders with artists or political scientists. In her view the resulting mix would produce business leaders able to see their decisions and actions in a wider context and therefore, hopefully, with a more responsible and far-sighted approach.
Though leadership is core to the curriculum of many, if not all Russian business schools, the idea of the renaissance MBA is yet to catch on nationally. Greater emphasis is placed on a global approach to teaching business, and exposing students to international business and cultural differences through international faculty and exchange programs. This is the case for the Graduate School of Management at St. Petersburg State University, whose Dual Degree Executive MBA with HEC Paris provides study trips to Asia and North America to better grasp business realities in those markets, and develop the sense of leadership in context.
Elsewhere the idea of broadening the remit of business education is, of course, not new. Back in 2006, well before most people even knew what a sub-prime mortgage meant, Nancy Adler of the Desautels Faculty of Management at McGill in Canada wrote an essay stating that business leadership in the 21st century would call for “levels of inspiration and creativity that have been more the domain of artists and atavistic approaches than of most managers.” In her view this meant the time was right for the cross-fertilization of the arts and leadership because “designing innovative options requires more than the traditional analytical and decision-making skills taught during the past half century in most MBA programs.”
Adler, who combines her academic work with a second career as a highly respected water colorist, uses an innovative approach to learning, with paintings that are used to get business students to look at the world in a different way, while enhancing self-awareness and helping to develop their own leadership styles.
“Art doesn’t serve up answers to specific business problems on a plate,” she says. “But what it can do is get you to step back, reflect and come up with your own solutions, solutions that are often beyond the constraints of accepted practice.”
At the Haas School of Business in Berkeley, California, dean Rich Lyons has reacted to the challenge of developing this kind of post-downturn leader with a major revamp of the MBA curriculum.
“We want to prepare leaders who define what’s next for our markets and our societies,” he says. The new curriculum will emphasize analytical thinking, flexibility, and creativity and is designed to inspire what Lyons describes as “confidence without arrogance.”
In the Netherlands, the Nyenrode business school has taken an even more dramatic approach, suspending its MBA program for a year. “While a lot of schools have tinkered with their course material, adding bits and pieces here and there, we decided to take the program off the road and do a total rebuild,” says the international MBA program’s director, Desiree Van Gorp.
“We’ve changed the program radically and the new MBA starting focuses a lot more on personal development, experiential learning on a global scale and future leadership,” she says. “We allocate one day a week specifically to this — every Friday we discuss topics on leadership, have meetings with CEOs, or have boot camps taking the students out of their comfort zone.”
At Harvard Business School, the drive for a more responsible attitude to business has come less from the school itself than from the student body. In 2009, MBA student Max Anderson came up with the idea of an “MBA Oath” under which signatories would promise to “act with the utmost integrity” in their future business careers. Within a few weeks, more than half of the class had taken the pledge and the oath has now gone viral and attracted interest from students at over 250 other schools around the world.
At one of the leading schools in the field of entrepreneurship, EM Lyon, dean Patrice Houdayer is an enthusiastic supporter of the teaching of ethics, but is also keen that students do not construe legitimate risk taking as irresponsible behavior.
“Many large organizations struggle once they reach a certain size and the creative spark that first brought them success can be stifled by bureaucracy, conformity and an unwillingness to take risks,” he says. “What better way to tackle this than to introduce some fresh entrepreneurial thinking to the existing corporate mix?”
Some commentators have however pointed out that it was individuals with unrestrained entrepreneurial tendencies who almost brought down the international banking system. “I think this is a misreading of what really happened in the crisis,” says Houdayer. “There’s a big difference between the ‘mad trader’ and an entrepreneur with the right training. We need to get over that entrepreneurship is about risk assessment rather than ill considered risk taking.”
Elsewhere in the business education sector, some schools are trying to create more robust corporate leaders by jolting students out of conventional thinking and accepted practice. At Warwick Business School in the U.K., for example, MBA students are put through the CAPITAL Centre, a joint venture by the English department of the school’s parent university and the Royal Shakespeare Company. The centre uses theater workshop techniques to help students develop their soft skills such as teamwork, sociability, self-esteem and self-management.
Other schools have taken this use of theater to more extreme lengths. Modules and courses where students either analyze or even act out the works of William Shakespeare, for example, have become increasingly popular in recent years. MIT-Sloan, NYU-Stern, and Oxord-Sa?d are just a small selection of those that believe that being King Lear or Julius Caesar for a few hours can teach valuable lessons to modern managers nearly four hundred years after the playwright’s death.
The way we conduct business may never be the same again. And the world’s top business schools are already working hard to produce corporate leaders ready for the rigors of an unpredictable future.
Matt Symonds is founder of
SymondsGSB.
TITLE: Comment
AUTHOR: By Ismail Erturk
TEXT: The implications of the current economic problems in the West — which started with the 2008 financial crisis — on business education will be several, ranging from a change in emphasis in the curriculums to being reflected in the knowledge being taught on MBA programs. More focus will be placed on management skills that provide a deeper understanding of both national and international macro-economic risks for businesses.
The implications of unprecedented deficit financing by governments on corporate finance, and the increasing uncertainties in international trade flows and foreign exchange markets (with their respective impact on operations and marketing, for example) will require greater emphasis.
In addition, assumptions about the efficiency of financial markets will need to be revisited in business school curriculums, and the business leaders of the future will be taught to be more critical and more innovative in action.
However, we also need to understand that this crisis mainly affects the core capitalist countries in the West. The BRIC countries — Brazil, Russia, India and China — are in a better position, enjoying higher economic growth, healthy foreign exchange reserves and high commodity prices. Therefore the business education in BRIC countries has to address these specific business environments.
As these countries get richer, the role of private business will be unavoidably greater in determining the future economic trajectories. All BRIC countries have relative disadvantages in service industries. In Russia, this is particularly acute. As the Russian economy becomes more diversified and relies less on traditional energy industries, business skills will be needed to set up large-scale and efficient service companies in sectors including food retailing, logistics, consumer goods, health, education, social media and information technologies. Manufacturing industries, too, need to re-configure themselves to become more demand oriented, agile and innovative.
Business leaders in energy and manufacturing will need strategic skills to position their companies in higher value-added parts of the global supply chains. This current crisis has opened up very good opportunities for countries like Russia to increase their market share in the global trade of manufacturing goods and to develop national champions in the service sector. But these opportunities can only be turned into reality if the firms are managed by leaders and their management teams have the necessary business skills such as marketing, pricing, innovation, human resources, supply chains, international business and corporate finance.
For Russia, there are also regional opportunities. The trade between emerging economies has increased significantly because there is both a significant amount of wealth owned by the middle classes in countries like India, China, Russia, Indonesia, and Brazil and the governments in these countries invest heavily in infrastructure. But there is bound to be tough competition in such high growth areas. The success will depend on spotting trends in the consumer sector, negotiating well with both state and private sector partners, managing risks in international trade and having the right skills to manage an international workforce. All these skills require a good education in management and business, and having access to accumulated knowledge in world-class business schools.
Ismail Erturk is a senior fellow in Banking at Manchester Business School.
TITLE: MBA Courses: A Student Perspective
PUBLISHER: The St. Petersburg Times
TEXT: St. Petersburg-based Vadim Pak, who won a scholarship with Manchester Business School two years ago and is in the process of completing his MBA, talked to The St. Petersburg Times about the experience.
Q: Two years on after winning the MBS scholarship, how have things been?
A: Pretty good! Since winning the MBS scholarship from being head of imports at SOTRANS, I was promoted to the position of commercial director first in a private investment company, then at Baltisky Style. My salary and responsibility have increased significantly.
Q: How have you found combining the MBA and your work and personal life?
A: It was quite challenging, especially during my first semester, but after the “settling in period” was over, I could manage my time and efforts more easily.
Q: Have you been affected by the financial crisis?
A: Unfortunately, the current recession has interfered with our plans to achieve our strategic goals, but the MBA knowledge — marketing and strategic management — helps us to look for other business opportunities and capitalize on them, so we don’t give up.
Q: Do you think that the MBA is equipping you with the right skills and tools to help you progress in your career?
A: I think so, yes. Especially when you can apply your new skills and tools to real life business situations directly.
Q: What has been your experience of doing the MBA? What were your best and worst moments?
A: I think that both my worst and best moment was when I had to travel from St. Petersburg to China on a business trip (on my first semester), and I had not solved the five problems for my financial accounting assignment. I had tried to solve them previously — unsuccessfully. And my deadline was the day following my arrival in China. So I decided to reserve a quiet train compartment from St. Petersburg to Moscow, where I managed to solve two of the problems. Once in Moscow airport, I solved another two problems. Finally I solved the last problem during my flight to Beijing. I was really pleased with myself for managing to meet the deadline. Nothing works so well to stimulate brain cells as a little bit of pressure!
Q: What are your ambitions for the future once you have completed your MBA?
A: I intend to build a big international company connecting business in Russia, China and the U.K. and to realize my leadership ambition.
TITLE: Running the Gauntlet of Applying to U.S. Schools
AUTHOR: By Patrick Brown
PUBLISHER: Special to The St. Petersburg Times
TEXT: Applying to universities in the United States can be a grueling and labyrinthine process, especially for international high school students. Few high school students in the U.S. navigate this process effectively, so it is no wonder that Russian students have had a difficult time discerning exactly how to present themselves to admissions committees. Fortunately, Russian students, armed with a few simple tips, should be capable of competing with the most qualified applicants from around the world.
START EARLY
Due to the viciously competitive nature of admissions, students need to begin thinking about their applications as early as possible. It is advisable to start, at the latest, in 11th grade or two years before a student hopes to matriculate. The goal is to try and find a university that is a good fit for you, and then become identified as a viable candidate. Early on, results from Preliminary Standard Aptitude Test/National Merit Qualifying Test (PSAT/NMQT) help universities pinpoint talented students, both domestically and internationally. Taken in the fall of their junior year, this exam is not mandatory, but, especially for those unable to attend summer programs at U.S. universities, it is certainly an excellent way of distinguishing students from the rest of the international applicant pool. With a solid score, students will find themselves being courted by the U.S.’s top universities.
As universities begin contacting stellar candidates, it is important for students to find a university at which they can be successful. When building their college list, obviously, students should use university rankings in popular publications but also ask themselves what they want from their university experience. For example, would students prefer to be in a small college town or a major metropolitan center? The most successful students are so because they have found an environment that will foster and nurture them during their academic career. To increase their admissions chances to their school of choice, Russian students should apply Early Decision and/or Early Action, which usually entails completing standardized testing requirements by November of a student’s senior year.
After assembling a shortlist of schools, students will need to discover how to become eligible for admission. College counselors should be privy to this information, but requirements will be listed on almost any university web site. At any top university, it will be requisite to take either the Scholastic Aptitude Test (SAT) or the ACT. If students have both options of testing (either in-country or by traveling), they should take full-length diagnostic tests of each to ascertain which test better highlights their strengths. Due to the stark differences between the two tests, students will be better suited for one versus the other, and because both are accepted and equally respected at every university, it behooves students to focus on exam that will better demonstrate their unique talent.
LANGUAGE SKILLS
To ensure their students score well, Russian high schools should provide students with both SAT and ACT preparation. This should begin in ninth grade by incorporating vocabulary study for the SAT and/or ACT into their English curricula. Because Russian students compete against other international students for admission to top American universities, test preparation courses give students an inherent advantage versus countries where test preparation is not offered privately. Schools can outsource test-prep classes to specialists and organizations dedicated to the tests themselves. In addition to being experts in the subject matter, specialists are distinguished from high school subject teachers by the knowledge they have of the test itself — what is and what is not on the exams. For best results, students should be advised to seek individual tutoring.
In addition to the SAT and ACT, students may be required to take two or three SAT Subject Tests. Students can and should prep for these tests as well. It should be noted that, at some schools, taking the ACT alone will satisfy requirements that must be otherwise met by taking both the SAT and a number of SAT Subject Tests. To be considered competitive, students should, at a minimum and on all tests, attempt to score somewhere in the middle 50 percent of accepted students from the year before. If they score poorly on the Critical Reading section of the SAT or the English or Reading section of the ACT, students should take the Test of English as a Foreign Language (TOEFL), which is recommended by several top schools, so international students may demonstrate more accurately their English proficiency.
Even with impressive scores, students will still need to construct an appealing application in order to gain admission. Many universities use the Common Application (www.commonapp.org) coupled with various university supplements. To effectively communicate their individuality and strengths, school counselors should begin working with students in the spring of their junior year to complete the Common Application by the end of the school year. For the common app, students will be required to write one long essay and one short response. University supplements will vary, but usually, will ask students to compose at least one additional essay.
Students do not want to split time between cramming for their standardized tests and hastily writing personal essays. Otherwise, both will be completed satisfactorily, but students’ unique spirit will not shine through their application. Essays should demonstrate your reasons for applying to the colleges chosen, exhibit emotion, and be compelling and personal.
WORK HARD, PLAY HARD
Finally, universities will ask students to share their extracurricular activities and provide recommendations from teachers and guidance counselors. While they desire students who are able to handle the academic workload, universities want to know that students are involved and passionate about something outside of school. On their applications, everything should be included, from hobbies like playing ping-pong to prestigious academic awards. Each student will contribute to the overall makeup of an incoming class. Universities hope to create a well-rounded student body that reflects the diverse interests of its students.
As for recommendations, admissions committees want insight into what its students are like as people. This is the only opportunity that universities have to hear the voice of someone other than the applicant’s. While it is nice to be reassured about a student’s academic capacity, the best recommendations reveal how students impact those around them.
Without a sound approach and a professionally trained counselor, even the most brilliant and determined students will struggle to be accepted at the U.S.’s best universities. In such a competitive environment, it is requisite that all aspects of a student’s application are outstanding. Unfortunately, admission into the U.S.’s top universities necessitates that an applicant appear remarkable in every facet, and even then, there are no guarantees.
Patrick Brown is the founder of Occam Education, which specializes in U.S. college admissions for international students.
TITLE: Japanese, Norwegian Courses See Popularity Boost
AUTHOR: By Olga Kalashnikova
PUBLISHER: The St. Petersburg Times
TEXT: Demand for foreign language courses in the city has picked up again since the peak of the crisis as companies resume their corporate programs and interest in non-European languages grows, representatives of local schools say.
“There was a small stagnation due to the crisis, but the situation has now stabilized,” said Yelena Yarovaya, director of EgoRound educational center.
“We have had a very encouraging start at our center this September, which allows us to predict a busier season this year,” said Yelena Dovzhikova, key account manager at Liden & Denz Language Centre.
The most popular language remains English, followed by German and French.
“There is a demand for more higher level English courses,” said Stanislav Chernyshov, director of Extra Class Language Center. “We had more beginners courses before, while now the average knowledge of the language among our new students is higher and starts from intermediate.”
More exotic languages are also seeing a growth in demand, in particular Japanese. Usually, interest in such courses comes from people who are preparing to move abroad with their job.
“Student mostly choose oriental languages because of the influx and development of major international companies in the city,” said Yarovaya.
Japanese culture is undeniably fashionable, as evidenced by the plethora of sushi restaurants around the city and popular interest in anime films and Japanese fashion.
“Japan is like a fashionable hobby,” said Chernyshov. “But if a person is serious about their interest in the culture of a country, it supposes the studying of the language.”
Norwegian is another less usual language currently seeing increased demand. The Scandinavian language saw a previous rise in popularity four or five years ago, but then fell into decline. Last year, however, the popularity of Norwegian began to revive. Previously, according to Chernyshov, the Norwegian group at Extra Class consisted mostly of unmarried women and qualified computer specialists who probably intended to move abroad. This year, the situation has changed very little.
The most popular program at language schools invariably remains the general course, though according to Liden & Denz, business English and preparation for the TOEFL exam, for instance, are seeing more bookings than last year.
Unsurprisingly, courses promising a good result while requiring less money and time are always popular.
“These are intensive courses, training sessions, conversation clubs,” said Yarovaya. “Students are also interested in classes with French and German native speakers,” she added.
The economic crisis has not failed to leave its mark on the program preferences recorded among language students.
“English for specific purposes is seeing more active demand among our individual clients than before,” said Dovzhikova. “These changes are probably due to growing confidence in the economy after the crisis.”
One of the first areas to see budget cuts in companies were expenses on social benefits and personnel training, though according to Antal Russia recruitment company, training and educational programs have always been a major incentive for candidates when accepting job offers. A year ago, some multinationals even pulled out their expatriate staff, causing some Russian-language students to stop their language courses immediately and return home.
“During the crisis, the number of corporate clients decreased to zero,” said Chernyshov. “We currently have fewer corporate clients than before the crisis, but they are starting to return. Developers have revived this bonus for employees more quickly than others,” he said.
“Quite a few companies are now reporting improvement in their business activities,” said Dovzhikova. “This tendency has inevitably influenced their HR policy. At our center, the number of corporate clients has not noticeably increased so far, but we have far more requests for in-company training than a year ago. Hopefully this will translate into real contracts during the last quarter of 2010,” she said.
As a large proportion of corporate clients are foreigners studying Russian, it can be said that in general the demand for Russian is increasing.
“Companies with a long-term view tend to send their expatriates for an immersion course prior to beginning an assignment,” said Walter Denz, the owner of Liden & Denz Language Centre. “That gives them a head start when they actually start to work.” He said that the corporate sector accounts for about 40 percent of the school’s clients.
“Business Russian plays an important role in their language training,” said Denz. “We have curriculums and vocabulary ready for quite a few sectors of the economy. For these students, we ideally suggest either one-to-one teaching or a combination of a group course with additional individual lessons,” he said.
The range of foreign students’ nationalities is broad. At Liden & Denz, most of them come from European countries, above all Germany and Switzerland.
“We also have quite a lot of students from the U.K., France and Italy, followed by Austria and Spain,” said Denz. “Our Russian-language programs are also popular among U.S., Korean, Australian and Japanese students,” he said.
Most Russian-language students are from Eastern Europe, in particular Poland, followed by Croatia and Lithuania — countries in which Russian is spoken as a native language by some of the population.
For Eastern Europeans, knowing Russian can help them to gain a well-paid job at an international company.
“For example, they can become managers who work with Russian clients,” said Chernyshov. “They become intermediaries between the Russian market and major Western companies,” he said.
“Young students want to add Russian to their portfolio of languages, because they believe — quite rightly — that it opens interesting careers for them,” said Denz.
Another category of students come from the tourism industry, in particular, staff from European ski resorts where the majority of visitors are Russian.
“These students include hotel staff, store assistants and ski instructors, because Russians are a significant group of clients for whom it is worth studying the language,” said Chernyshov.