SOURCE: The St. Petersburg Times DATE: Issue #734 (101), Thursday, December 27, 2001 ************************************************************************** TITLE: 2001: When the Economy Picked Up AUTHOR: By Victoria Lavrentieva PUBLISHER: Staff Writer TEXT: MOSCOW - For Russia, 2001 may be remembered, economically speaking, as the year of living realistically. Although growth outpaced most of the world for the second year running, at current levels, to use the Kremlin's favorite comparison, it will take Russia 20 years to equal the per-capita income of Portugal, the poorest country in the European Union. Spurred by that grim reminder, the government launched an unprecedented series of structural reforms - beginning the year with a 13-percent flat tax on incomes and ending the year by passing new Labor and Land codes and approving long-awaited plans to restructure the pension and banking systems. Along the way, it dampened inflation, raised the minimum wage, recorded a budget surplus, swelled its foreign-currency reserves, moved closer to joining the World Trade Organization, emerged as a viable alternative to the OPEC oil cartel and endeared itself politically to the West. But for all of its accomplishments in 2001, it remains to be seen whether the government, under President Vladimir Putin's unofficial motto of "patience, persistence and professionalism," will be able to convert the dizzying reform effort into tangible improvements for the average Russian in the years ahead. As the World Bank's top expert on Russia, Christof Ruehl, put it: "This year was the year of reforms. Next year will be the year of implementation." The government says economic growth this year will be 5.6 percent, which, although a third lower than last year's, remains robust. "This is the level we always dreamed of," Finance Minister Alexei Kudrin said this month. While last year's record 8.3-percent expansion was due mainly to unusually high oil prices, this year's performance, though more modest, was based on improved fundamentals, according to the International Monetary Fund. "Growth has been mainly driven by domestic demand - both consumption and investments - as the external sector has actually been a drag on growth," said Paul Thomsen, head of the IMF's Moscow office. The improvements were applauded by investors and reflected in the performance of the stock market, with the benchmark RTS Index growing 67 percent in dollar terms over the course of the year to nearly 250. In fact, with the exception of the sharp drop in the price of oil, which accounts for about 40 percent of the country's hard-currency reserves, nearly every major indicator of economic health shows that Russia is on the right track. This year's 18-percent inflation rate was higher than original government forecasts of 12 percent to 14 percent, but it was still lower than last year's 20.2 percent. The ruble was stable against the dollar throughout the year, although it fluctuated wildly in the last month of the year over oil worries and traditional end-of-the-year weakness. The Central Bank increased its reserves by some $10 billion, before spending $2.5 billion near the end of the year defending the ruble and paying foreign debts, which declined from 60.6 percent of GDP in 2000 to 47.1 percent this year. In all, Russia made debt payments worth $13.1 billion in 2001, two of which were of historic interest: a $1.1 billion payment that redeemed, in full and on time, Russia's first sovereign Eurobond; and a $1 billion payment to the International Monetary Fund, Russia's first made ahead of schedule. According to Putin's top economic adviser, Andrei Illarionov, industrial output grew 5.2 percent, overall investments 8 percent, exports hit a record $108 billion on 3 percent growth and imports jumped 21 percent. Contrary to Russia's economic performance, the EU is expected to post growth of just 1 percent for the year, while the world's largest economy, the United States', actually began to shrink in March. The World Bank's Ruehl said that while Russia is also outpacing nearly every country in central Europe, some fellow countries in the Commonwealth of Independent States, such as Kazakhstan and Ukraine, are doing even better, with 10-percent and 7-percent GDP growth expected, respectively. Illarionov named falling oil prices, higher natural-monopoly tariffs, inefficient investments and increased government spending as the "main factors that contributed to the slowing down of the Russian economy compared with 2000." Another major indicator of the overall health of the economy is per capita income, Ruehl said. "If we compare Russia to Portugal, with 5 percent and 3 percent annual growth, respectively, it will take Russia 18 years more to achieve the same income per person," Ruehl said. In 2001, GDP is expected to reach $316 billion, which is $2,195 per person, compared to more than $10,000 in Portugal and $30,000 in the United States. To have any hope of achieving that kind of wealth, however, Russia has to prepare the legal framework to create an entirely new system of commerce, which it has been doing at a frenetic pace. In fact, lawmakers passed so many laws this year that government officials sometimes found it hard to remember which laws had already been passed and which had not. "One year ago, we thought that what happened in 2000 was a mirage and Putin wouldn't be able to consolidate his position and continue reforms," said Roland Nash, head of research with the Renaissance Capital investment house. Nash said that perhaps the most unexpected victory was the passage of the Land Code, which allows for private land ownership in metropolitan areas for the first time in nearly a century. "There were a lot of vested interests against it, and most people thought that it wouldn't pass through," Nash said. "This was a huge success." "The Russian government was very successful in translating many reform ideas into a legal framework this year," Ruehl said. "Certainly the rate of approved reforms in Russia was higher than in any country in the Organization for Economic Cooperation and Development, but now everything depends on how they will be implemented." Among the most important reforms, economists named deregulation of the economy, including liberalization of registration and licencing for businesses; tax reform; land reform; and the first stages of judicial reform. Likewise, the main obstacles to implementing these reforms are complacency, the concentration of capital in several large industrial groups, resistance from vested interests and institutionalized corruption. Furthermore, difficult technical reforms, such as restructuring natural monopolies, the backbone of the economy, lie ahead. Even so, investors are bullish. "Investors' sentiment towards Russia is now much better than a year ago," said Andrew Somers, president of the American Chamber of Commerce in Russia. "The performance of the Russian government in 2001 far exceeded all expectations, even of those who hoped most," he said. The year would be have been even brighter if not for a sharp fall in oil price. The fact that Russia has been heavily involved in negotiating with the Organization of Petroleum Exporting Countries over oil cuts demonstrates the growing importance of the country as an energy exporter - and also shows the importance of oil to the Russian economy, which is 80-percent dependent on raw-materials exports. While the price of oil remains a key concern for 2002, the government has repeatedly stressed that it expects the macroeconomic situation to remain stable and has rejigged the federal budget to prepare for the worst. Economic growth in Russia will likely take a step back during 2002 but should still manage a reasonably brisk pace, the IMF said in its latest review of global economic prospects. The IMF forecasts that Russia's economy will expand by a "reasonably healthy" 3.6 percent next year. "As history shows, prolonged periods of high growth rates of above 5 percent are an exception rather than the rule," said Ruehl of the World Bank. Indeed, only in Germany, Japan and Italy after World War II and southeast Asia in the 1980s and 1990s have national economies grown more than 5 percent a year for close to a decade. "Both times, growth was supported by the availability of financing for huge investment needs," Ruehl said. The economy will be in great shape next year if oil averages $18.50 per barrel, which is "ideal" for Russia, according to Troika Dialog. "This would allow for planned industry development and the ruble to depreciate closer to the inflation rate and provide the stable budget revenue base required to achieve the objectives of [Economic Development and Trade Ministry German] Gref's economic-development plan without a risk of 'overheating' because of excessive liquidity," Troika said. Renaissance expects the central theme for 2002 to be restructuring, "particularly among Russia's natural-monopoly behemoths, such as Gazprom, United Energy Systems and Sberbank," following the impressive reform plan slated for next year. TITLE: Consuls Move To Rein In Police AUTHOR: By Vladimir Kovalyev and Galina Stolyarova PUBLISHER: Staff Writer TEXT: A group of foreign diplomats recently approached City Hall requesting the creation of a joint advisory council to address the large number of complaints by foreign visitors and residents concerning the St. Petersburg police. The diplomats said that they are concerned over the number of reports they receive of the city's police stealing money from tourists, detaining people without establishing any legal cause and even physically assaulting them. "In tourist cities in Europe, the police receive special training," said Ulrich Schoening, consul general for Germany and one of the diplomats involved in the discussions, in an interview last week. "They know that they can only stop people and perform identification checks when there are real grounds - the realistic suspicion of some wrongdoing. Russian police just stop people at random, which isn't in line with the Human Rights Convention of the Council of Europe, to which Russia is a signatory." Schoening said that six such incidents involving local police and German citizens have been reported to the consulate over the last year. But he says that these only represent the tip of the iceberg. "I have learned about more such incidents indirectly, cases where the people chose not to ask the consulate to intervene, and so we were not informed officially," Schoening said. "In one incident, a German citizen was dragged into a police car, driven around the city and then released - without his money," he added. The consulate only intervenes by contacting the police when victims file formal reports. In such cases, the consulate sends a note of protest to the Foreign Ministry and a copy to the police. Schoening says that, to his knowledge, no German citizen who has been robbed by the police has ever recovered their money. "Whether it is the police, or people dressing like police, the local authorities have to do something to stop this," Schoening said. Several months ago, a group of several St. Petersburg consulates, including those of Norway, Sweden and the United States, contacted the St. Petersburg city administration to ask for Smolny's cooperation in addressing the problem. Consular officials have since held four meetings to discuss the problem with the administration's External Affairs Committee. "We know that the problem exists, and we are ready to work on it together," said Karolis Kalkinas, head of the Department of Baltic States of the City Hall External Affairs Committee in a telephone interview last week. Kalkinas claimed that two police officers had recently been dismissed as a result of crimes against foreigners, but he could not say in what city district this had happened or what the specifics of the cases were. "I have heard about it, but don't know any of the details," he said. St. Petersburg police representatives, however, have not heard about these supposed instances at all. Andrei Stanchenko, deputy head of the Department of Special Police Services, the police unit responsible for investigating crimes involving foreigners, said that no police officers had been charged with or dismissed for any such offenses to date. "I'm familiar with cases where people wearing police uniforms have committed crimes of this sort, but these aren't the only cases. I also know of cases where foreigners organize the incidents themselves so that they can file an insurance claim for their cars, for instance," Stanchenko said, in a telephone interview. "There have been no cases initiated against police officers for such crimes," Stanchenko said. "There are black sheep in every family, but it is very difficult to prove that money has been stolen, isn't it?" "And how can we know that these were really police officers," he added. "It's easy to buy a police uniform and identification." Stanchenko said that there are no publicly available statistics from the special police unit on the number and types of such cases registered in the city. "They may be kept somewhere in the central police office, but they are only for internal use," he said. One such incident occurred in August, when the Swedish Consulate reported that two diplomats visiting St. Petersburg had been detained by police for not carrying their passports and were punched and bloodied. Stefan Eriksson, acting Swedish Consul General, said at the time that he was familiar with a number of similar incidents of crimes committed by the police, many of which go entirely unreported. Stanchenko said that his unit has undercover agents working at locations where incidents involving theft by police officers have most often been reported. He gave the Tribunal Bar on Ploshchad Dekabristov as one example. "I can't really answer questions about this though," he said. "Do you want me to reveal the identities of all of our undercover agents?" The combination of poor pay and a large degree of discretionary powers is often mentioned as the impetus behind police brutality and corruption in the city, but Yury Vdovin, a human-rights advocate with Citizen's Watch, says this explanation is not sufficient. "The level of morality among our police is far from ideal," he said. "It's not merely the result of low salaries. It's the result of an immorality that takes its roots in the police tradition from the Soviet era." "Because of this, I just don't know what the solution to the problem is." One of the biggest problems for foreigners, especially tourists, is the inability to communicate with the police here. One of the proposals made by the diplomats at the meetings with Smolny representatives is that the city provide foreign-language training for a number of officers who will be posted in the downtown area. According to Schoening, the city administration promised to give the proposal serious consideration ahead of the next meeting, tentatively scheduled for January. The joint council of consular representatives and city officials meets irregularly, about once a month. Schoening said that the group would meet once every three months once the situation began to show improvement. TITLE: Argentina Hurries To Create New Currency AUTHOR: By Tony Smith PUBLISHER: The Associated Press TEXT: BUENOS AIRES, Argentina - Racing against time as Argentines run out of cash, the new government said Wednesday a new currency, the Argentino, would start circulating in January alongside the peso and the dollar. Officials said the move is a way to inject needed money into the country's bruised economy without dismantling a law that pegs the peso at one-to-one parity with the dollar. More immediately, it would put cash in the hands of Argentines hardest-hit by a nearly four-year recession and 18 percent joblessness. But the announcement raised fears of a currency devaluation that could return Argentina to the spiraling inflation that tore apart South America's second largest economy in the 1980s. The new government of President Adolfo Rodriguez Saa, formed by left-leaning members of the Peronist Party, is anxious to check discontent that last week erupted in looting and street riots, driving then-President Fernando de la Rua from office. The protests were triggered by restrictions, including a partial banking freeze, imposed by the old government. The new leaders have maintained the restrictions, and on Wednesday extended a "banking holiday," meaning Argentines again could not change pesos for dollars. With financial transactions limited, the stock market stayed closed. New interim President Adolfo Rodriguez Saa promised trade-union activists the Argentino would be "the currency that will allow us to reactivate the productive sectors." He rejected claims the government could print so much of the new money, it would spark inflation. "Some say we will do something irresponsible. They are wrong," he said. "We will back the Argentino." The backing would include "all assets of the ... state," including its embassies, the congress building and even the Casa Rosada government house, he said. The new currency is technically a bond that functions like cash. People can use it to "pay everything, from salaries to taxes, goods and services," interim Finance Minister Rodolfo Frigeri told local radio stations. He insisted there would be no devaluation of the peso, since the bonds would not be convertible into dollars or pesos. But in an interview with the daily Clarin, Frigeri acknowledged the new currency would allow "a controlled departure" from the dollar peg. "We don't rule out the possibility that, with time, it will depreciate," he said. Already, some Argentine businesses were believed to be marking up prices by up to 30 percent based on rumors of devaluation, moves sharply criticized by Chamber of Commerce President Osvaldo Cornide. Chip Brown, head of economic research at Santander Hispano Central in New York, said the move will lead to a devaluation "in everything but name." "I'm greatly concerned we'll be seeing Gresham's Law at work in Argentina," Brown said, referring to a tenet, named for a 16th century English economist, that states "bad money drives good money out of circulation." "The dollar will be considered better than the peso, the peso better than the Argentino," said Brown. "Dollars will be hoarded, then pesos will be hoarded." TITLE: the real sale of the century AUTHOR: by Oksana Smirnova PUBLISHER: Special to The St. Petersburg Times TEXT: Where can an art lover go to see van Eyck's masterpiece "The Annunciation," or Raphael's "The Small Cowper Ma don na"? How about Botticelli's "The Adoration of the Magi" or Titian's "Venus with a Mirror"? If you had been alive before the 1917 Revolution, the answer to all those questions would have been the same: the Hermitage Museum on the banks of the Neva River. But not anymore. These treasures were sold to Andrew Mellon, who later gave them to the National Gallery of Art in Washington, D.C. But they were just a drop in the bucket. By 1930, by some estimates, the Soviet government had sold off roughly half of the Hermitage's holdings to private collectors and Western museums, allegedly to raise money to get the young Soviet state on its feet. And the sales continued on through much of the 1930s. Natalya Serapina, head of the preservation department at St. Petersburg's Central State Archive for Literature and Art, or TsGALI, recently compiled declassified documents related to this scandalous sell-off in a new book, Ermitazh, kotory my poteryali, or "The Hermitage We Lost." The book appeared in bookstores around the country earlier this year. "Our country has been thoroughly taken to the cleaners," Serapina said. "Only pitiful crumbs remain of the cultural heritage we once had. Look at the lists of works sold in the 1920s, look at the artists on those lists. Almost any item from those lists, offered at auction today, would create a sensation. But they were sold off for nothing. Not to mention that masterpieces in gold and silver were melted down first, then sold. Weight was all that mattered. Everything was molded into ingots." As if that weren't enough, Serapina said that, at one point, there were plans to sell off the Hermitage lock, stock and barrel. "The Bolsheviks wanted to sell the Hermitage and throw the Winter Palace into the bargain," she said. Fortunately, that secret deal fell through. Serapina calls her book an akt nashikh poter, or account of our losses, a term originally used after World War II for the reports of wartime damage to factories and other institutions. She got the idea for the book after going through TsGALI's "archive No. 5," labeled "State Hermitage of the RSFSR State Education Commissariat (1921-1937)." The archive contains only 58 files, but that was more than enough for Serapina to comprehend the enormous scale of the sales of Hermitage masterpieces. Documents labeled "secret" and "top secret" contain lists of the art works sold, prices and the orders from top government officials approving the deals. Most of the documents display the ignorance and limited literacy of their Bolshevik authors. In the following "secret" document from 1932, mistakes in the original have been retained, with correct spellings or titles in brackets: "The Science Sector hereby requests that the following paintings by artists of the new Western painting be earmarked for the needs of the Antikvariat: art. Cezan [Cezanne], "The Smoker"; Vangok [Van Gogh], "Lilac" [A Bush] or any of his other paintings; and one painting by the artist Pisero [Pissarro]." The Antikvariat, the normal word for an antique shop, was the state agency charged with selling Russia's cultural treasures abroad. This was a typical work order issued by the Narodny komissariat vnutrennikh del, or NKVD, a precursor of the KGB. The more the director of the Hermitage or his employees attempted to save a work, the more likely that work would disappear from the museum forever. To this day, it is unclear what exactly the Bolsheviks did with the profits they reaped by selling off Russia's art in wholesale fashion. "We have no idea how many tractors or lathes they got for Raphael's Madonna, and we probably never will. In the book, we just record what happened," Serapina said. The book's fourth chapter is devoted to the employees of the Hermitage, whose fate was entwined with the museum's art works. Many were fired, sent into internal exile or to prison camps. "We included just the tiniest fraction of what we found in the archives," Serapina said. "We simply couldn't keep quiet about it." In his foreword to "Ermitazh, kotory my poteryali," Andrei Leshchinsky, head of the Culture Ministry's department for preservation of St. Petersburg's cultural heritage, makes clear the importance of the documents presented and analyzed in the book. "The pages of this book are filled with a terrible truth," Leshchinsky writes. "We would like to forget, to think about more pleasant things, and calmly enjoy the [Hermitage] collections. But so little time has passed, and the pain is so acute, the losses so fresh, that it is still far too early to forget." TITLE: classical, folk, jazz and bird calls AUTHOR: by Gulyara Sadykh-zade PUBLISHER: Special to The St. Petersburg Times TEXT: The first appearance by Robi Lakatos - the semi-official "King of the Gypsy Violin" - in St. Petersburg was an event that thrilled the entire musical community. And for good reason, since the Lakatos family - featuring seven generations of violinists - has long established its honored place in the pantheon of musical performers. The family's history begins with Janos Bihari, the favorite violinist of the Habsburgs. His mastery two centuries ago so amazed Franz Liszt that the composer was moved to create his immortal Hungarian Rhapsodies. Afterward, the Lakatos violin genes, in the form of children, grandchildren and great-grandchildren, were lauded across Europe. Robi's father settled in Paris, making a living on the excellent violin that he inherited from his uncle. Robi's daughter, who is now 15, has already mastered the most intricate "family secrets" of playing gypsy music, according to her father. Thirty-four-year-old Robi Lakatos graduated from the Budapest Conservatory, becoming the first member of the family to receive a formal musical education. He started his career in Brussels, playing in a restaurant called "The Gypsy Orchestra" that was frequented by the cream of the violin world - Yehudi Menuhin, Maxim Vengerov, Vadim Repin. These masters were drawn to the restaurant by a professional interest in the magical interplay of classical, folk and jazz elements that they had heard nowhere else in the world. It was also in Brussels that Lakatos collected the ensemble with which he now tours. Of course, if a child is given a violin while still in the cradle, it is likely that a first-class violinist will result. But Lakatos is not merely a first-class violinist. He is a genius, an extraordinarily gifted musician with almost supernatural abilities. It is difficult to describe the sounds that this massive figure manages to extract from a tiny violin: the unimaginable agility of his fingers; the Grand Canyon-like chasms between piano and forte; the driving passages that seem to rise like mist or like a partridge startled from the grass, with an obligatory, firmly-fixed note capping off each rhythmic flight; the confident, unforced pizzicato. Violin connoisseurs observed this eruption with gaping mouths, and the less sophisticated public broke out in childlike applause. Lakatos' uninhibitedly playful manner and his infectious friendliness and his good-hearted smile seemed to invite the public to participate actively, to join in the shared process of creating joyful, holiday music. The audience raved at Lakatos' fantastic bird-like trilling and appreciated the forays into jazz that typify his own compositions. Moreover, it was obvious watching the performance that Lakatos was thoroughly enjoying himself and deeply touched by the warm reception he was given. The members of Lakatos' ensemble also fully merit mention. Guitarist and cymbalon player Ernest Bango offered his own arrangement of Liszt's Rhapsody. Second violinist Laslo Boni, pianist Calman Cheki and bassist Oscar Nemet - all of them quintessential gypsy musicians - are all obviously virtuosos of their instruments. As an ensemble, they came together almost ideally: the synchronization between first and second violin was striking and all of the musicians demonstrated facility reacting finely to the slightest impulses of the various soloists. Such qualities are possible only among musicians bound by a single aesthetic and perfecting a common style. Lakatos' single St. Petersburg concert - at 3:30 on a Sunday afternoon - filled the Shostakovich Philharmonic Hall to capacity, while the day before he drew about 1,500 people to Moscow's Kremlin Palace of Congresses, a venue that holds considerably more spectators. The concert was part of the season-long Sophisticated Kitsch festival, which was inspired by pianist Irina Nikitina, the founder of the Musical Olympus festival. It was carried out under a program called Express Line: Moscow-St. Petersburg that is designed to bring touring musicians to both capitals. That effort is off to a solid beginning, promising to open up to us the almost entirely unknown world of contemporary European music. TITLE: chernov's choice TEXT: As the year ends, this newspaper feels obligated to hand out its immaterial 2001 music awards. Leningrad- or any other Sergei Shnurov project - is, as always, Best Group. During 1999, Leningrad mainstay Shnurov turned the St. Petersburg music scene upside down, but now he is mostly busy with composing and recording scores for television series and working on Leningrad's new album, which fans have been waiting for since 2000's "Dachniki." Best Video. MTV Russia has finally surrendered to Russian pop (Alla Pugachyova, Angelica Varum and especially, a woman singer called Sladkaya N. prove it). Tatu is still the best among MTV's regulars such as Zemfira and Chicherina. As to Best Music Press, FUZZ magazine - the magazine that was Russia's only consistent rock edition for 10 years - has fallen from grace and now pushes some pretty poor pop/rock acts such as BI-2 and Chicherina supported by Moscow-based major record labels. While FUZZ was celebrating itself, it didn't seem to notice the arrival of NME Russia, the Russian glossy version of the U.K. newspaper-format original. It is both better structured and better written. And who else will tell you the latest news about Pulp, one of the cleverest U.K. bands, which was reborn earlier this year. Best Album could have been Leningrad's double CD "Pulya Plus," if it weren't half based on the band's 1999 debut "Pulya." The best tracks are those sung by Leningrad's former vocalist (now electronic solo experimenter) Igor Vdovin. However, our prize goes to La Minor, a band that performs Odessa bandit folk, which is sort of a Russian blues. In their album "Blatnyak" (or as they sophisticatedly translate it into French on the cover, "La chanson russe populaire"), the old bandits' songs (pre-revolutionary or NEP-period) are performed with dignity and coolness that this kind of material had never been granted before. Anyway, the extremely gloomy/ tragic, albeit danceable, title track from Leningrad's stolen and illegally issued 27-minute-plus album "Ya Prosto Bukhayu, No Mogu Uskoritsya"(I Do Booze, But I Can Speed It Up) is the year's Best Song, and it gives an idea of just how great Leningrad's new album, due out next year, may be. Boris Grebenshchikov's Akvarium - despite the leader's best efforts - failed to release an album of new material before the end of the year. Grebenshchikov even canceled his traditional Christmas concert that he usually plays in December. Two band members quit during the recording sessions. Nontheless, Grebecnshchikov and the band played some of the best local concerts of the last year. The year's Best Shows were by U.K. band Tindersticks and Pakistan's Sabri Brothers - both promoted by a local structure called SoundLab. "Big names" Sting, Eric Clapton and Mark Knopfler pleased only their hardcore fans and the easily impressed "general public." Probably, few fans noticed the year's Best Club Show, but it looks like one of the best was by the Bombers at the new underground rock club Front. For its gigs and, especially, atmosphere, Front was definitely the Best New Club this year - founded by some people with history and located - not inappropriately for the year 2001 - in a bomb shelter. - By Sergey Chernov TITLE: russian cuisine and proud of it AUTHOR: by Robert Coalson PUBLISHER: Staff Writer TEXT: Although I had heard a lot about the modestly named Restoran since it opened two years ago, I'd never ventured in, mostly because I was under the seriously mistaken impression that it was both overpriced and hopelessly stuffy. When I finally did stop by recently, my first course was a healthy dose of humble pie, as I found a comfortably elegant, mid-range restaurant where the maitre 'd greets you with a smile and every detail is carefully thought out to make the entire experience as relaxing and enjoyable as possible. Restoran's guiding principle is simplicity, and this is obvious from the first moment, as it dominates the restaurant's refreshingly uncluttered and surprisingly soothing design. The work of famed local decorator Andrei Dmitriev, the interior is done in a lovely, washed-out, off-white color that is offset by gentle browns, more or less the shades of recycled paper. As we were unfolding our napkins, the friendly maitre 'd was urging us to take the chill off the winter afternoon by sampling one of the eight types of homemade vodka the place offers. We passed up on such temptations as the horseradish-, pepper- and garlic-flavored variations and settled for a more modest 50 grams of cranberry vodka (64 rubles, or $2.13) which both warmed us up and put us in the proper frame of mind. Restoran understands that Russian cuisine is simple and hearty, and makes no effort to hide this fact or apologize for it. When prepared with fresh ingredients and proper time and care, Russian cuisine can be perfectly delicious, as Restoran makes abundantly clear. This place salts its own mushrooms, pickles its own cabbage, brews its own kvas and more. Before I turn to the menu, I should mention that Restoran offers an all-you-can-eat Russian cold-appetizer bar for 150 rubles ($5), which gives you a great chance to sample all their pickled and preserved delights. For food, atmosphere and price, this salad bar has every business lunch in the city beat hands down. Restoran also has a tea bar, with three types of tea and a lovely selection of baked goods for 126 rubles ($4.20), for the late-afternoon crowd. We skipped the cold starters and set off with a plate of the freshest beef pelmeni (116 rubles, or $3.87) that I've ever had. The hot-starters menu also features turkey pelmeni (120 rubles) and a selection of other traditional favorites priced from 88 to 170 rubles ($2.93 to $5.67). After the pelmeni, we couldn't possibly resist the dervuni (88 rubles), which are hash-brown potatoes fried up with onions and mushrooms - a dish as simple as they come, but delicious all the same. We followed the starters with soup. I chose the traditional meat, or Davydovskaya, solyanka for 108 rubles ($3.60), and my companion went for the equally stalwart mushroom soup for 98 rubles. The solyanka was excellent, thick and flavorful, making the most of obviously fresh ingredients. The mushroom soup, on the other hand, was bland, despite the fresh, homemade noodles. Only a generous pinch of pepper saved the dish in the end. Also more than a touch disappointing for a place that hit virtually every note spot on was the bread, which had obviously been trucked in from some bakery and most likely not from the closest one. Restoran gave us every right to expect better. For mains, I went for the salmon in crab sauce with rice croquets (316 rubles, or $10.53), which was tender and flavorful, as well as generously portioned. My dining companion went for the beef stroganov a la Pushkine (255 rubles or $8.50), which was considerably tangier than your run-of-the-mill beef stroganov. Luckily, she was so full from the salad bar that I got a healthy share of her entree. We left Restoran satisfied on virtually all counts. As we left, the maitre 'd asked not only what we liked, but what we didn't, which I took as a sign of tremendous confidence. We couldn't help commenting on the bread, but probably shouldn't have. In the face of such beauty and elegance, it was pretty petty of us. Restoran, 2 Tamozhenny Pereulok, 327-8979. Open daily 12 p.m. to 12 a.m. A large lunch for two with beer, 2,047 rubles ($68.23). Menu in English and Russian. Credit cards accepted.