Microsoft is making great efforts to have Bing, its search engine, become a worthy competitor to Google. According to Microsoft’s CEO, Steve Ballmer, the software giant plans on investing significant sums of money into the development of Bing. In particular, Bing seeks to provide access to exclusive material not available on other portals. According to ComScore researchers, in October Bing’s share in total number of search queries in the U.S. amounted to 9.9% (during the time of its launch in June, its share was 8.4%), while Google’s share was over 65%.

News Corp. owns several major newspapers, including The Wall Street Journal and The Sun. The corporation has been considering offering its online content on a paid basis and its relations with Google have not been easy. Murdoch had even threatened to use legal measures to prevent Google from “stealing” material from his newspapers. “We believe search engines are of real benefit to newspapers, driving valuable traffic to their websites and connecting them with new readers around the world,” says Gabriel Stricker, Google spokesperson.

Google is stressing that news content is not especially important and is responsible for a “rather insignificant” share of its profits.

(Material from FT and WSJ have been used)

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The survey conducted in July - September by Pricewaterhouse Coopers (PwC) of more than 3,000 companies from 55 countries showed that, on average, 30% of these companies became victim of at least one economic crime since the beginning of the crisis. Russia holds the first place in this rating at 71% (see graph), followed by Kenya (67%) and South Africa (62%). Meanwhile, Netherlands (15%), Hong Kong (13%) and Japan (9.6%) hold the best positions.

When PwC conducted its 2007 survey, 59% of Russian companies came across economic crime, but even then Russia placed first in the world ranking (Russia also led the way in 2005). However in 2003, when the study was conducted in Russia for the first time, no one admitted to being a victim of fraud, notes the co-author of the survey, Irina Novikova: “Today, we live in different times – companies are no longer afraid of talking about their problems.

As of November 1, there have been 4.2 million corporate entities registered in Russia. Meanwhile, about 400,000 economic crimes are recorded annually, says Pavel Sychev, deputy head of the Criminal Investigation Department of the Ministry of Interior. It is hard to say just how many companies become victims of crime – he continues: many of the corporate entities are not active, meanwhile others may file several cases simultaneously. Moreover, not all companies prefer to air their dirty laundry in public (see graph).

Forty-eight percent of respondents faced bribery and corruption, learned PwC. Misappropriation of assets proved to be the most serious problem (64%). This concept not only includes corporate raiding, but also embezzlement by the staff, explains Novikova. No more than 1% of all criminal cases have been initiated against raiders. According to Sychev, about 100 new cases have been initiated this year, 300 more have been reopened, last year that number was 350.

According to PwC, most of the crimes are not committed by the staff, but rather by “outside parties” (in 62% of all cases), this includes agents and brokers. Fifty-six percent of respondents say that the measures taken by officials and law enforcement agencies are “inadequate”, while 48% say they noticed criminal activity becoming more frequent. Hence the fears of falling victim to these crimes: 45% of companies believe that they will fall victim to theft of assets in the next year.

SMARTS (which was attacked by raiders) Director General, Andrey Girev, says the survey results are not far from the truth: “More than 50 crimes have been committed against us annually”. It is not often that a major economic crime is committed without the help of regulatory, law enforcement or judicial agencies, he notes. According to Novikova, PwC did not ask the respondents in which cases the crimes had been committed with help from officials. The business sector is being pushed into the field of illegal corruption and bureaucracy, believes the Chairman of Business-Solidarity, Yana Yakovleva (a case had been initiated against her, but it fell apart in court). Due to these factors, it is becoming harder and harder to make honest money, meanwhile, it becomes much easier if one decides to share profit with officials, she explains.

Many businessmen do not view breaking the law as something beneath them, says Sychev: they cash out transactions, evade taxes, smuggle, and do not repay debt. Thus, it is not surprising that they expect their partners, competitors, and even staff members to engage in illegal activities, he notes.

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So far, a small positive trend has been noted in the mortality decline. In 2003, 35,600 people died in traffic accidents, in 2008 that number dropped to 29,900. In the same period, the number of accidents remained the same (204,000 and 218,000), and the number of victims increased from 243,900 to 270,900 (the highest number – 292,000 – was recorded in 2007). The rate of highway fatalities in Russia (22 deaths per 100,000 inhabitants) is significantly higher than that of Germany (5.9), France (7.3), and Latvia and Lithuania (15.9 and 16.8, respectively). Since 2003, highway fatalities in our country have decreased by only 10%, whereas in Germany they have decreased by 25%, France - 16%, and in our Baltic neighboring countries – by nearly 30%.

Part of the problem is in the rapidly growing number of motor vehicles. In 2003-2008, Russians purchased more than 5.9 million new and 2.2 million used foreign-made cars, as well as nearly 4.7 million domestic cars. But, according to statistics, only foreign vehicle purchases help lower fatality rates due to the fact that they meet the current safety requirements. In Moscow, there is one death for every 16 accidents (almost as in France), in Primorsk and Khabarovsk Krais – every one in eight accidents is fatal.

In places where drivers tend to use the products of the domestic automobile industry, the mortality risk is much higher: in Krasnodarsky Krai, every one in six accidents is fatal.

Officials blame undisciplined drivers and poor education in driving schools for the high rate of traffic accidents and fatalities. However, experts are naming other reasons: our roads are too narrow and are unsuitable for the increase in traffic. The state failed to provide the increasing number of vehicles in improved infrastructure, and it is not due to a lack of finances. In 2006-2008, about 1.1 trillion rubles ($40 billion) was allocated for the federal highway target program, “Development of the Transportation System". However, roads of federal importance were extended by only 3,000 km, of which highways were extended by 1,000 km.

The state displayed an inability to build high-quality modern roads; it is allowing officials to overlook traffic rules and create dangerous situations. "Passengers’ safety is above this [traffic jams and accidents],” said Gen. Viktor Kiryanov, STSI (State Traffic Safety Inspectorate) chief.

It is possible to reduce the number of casualties, for example, by enabling an easier access to quality vehicles, which are equipped in a way that can save the driver’s life in the event of a serious accident. Or, by installing built-in breathalyzers in cars, thus serving state and security services officials.

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It is simply amazing how Russia, with literally just two movements of the switch (in 2006 and 2009), exported its domestic communal tradition of winter preparations to Europe.

But, perhaps, these cut offs will, in the end, play in our favor. After all, Russia's official position is that the transit country is the one to blame for the cut offs - Ukraine. And, in order to minimize the “Ukrainian” risk, we will build two new gas pipelines – Nord Stream and South Stream. The finalization of the two projects has recently progressed. In October and November, Denmark and Sweden agreed to offer their territorial waters for the Nord Stream; it is expected Finland will give its consent before the end of the year. Last Saturday, Slovenia joined the South Stream project by allowing the pipeline to pass through its land territory (previously, Bulgaria, Serbia, Hungary and Greece gave their consent to build the pipeline through their territory). An approval from Turkey for the construction of the offshore section is still pending.

Thus Europe, after some hesitation, had seemingly agreed to the Russian version of the gas supply diversification (new pipes and an old supplier) by doubting the Nabucco pipeline project. A brilliant victory of the Russian (gas) weapon? That depends.

This year, other than feeling that the Russian gas supplies were unreliable, Europeans felt their high cost. Due to Gazprom's internal pricing scheme, in the beginning of the year the price of Russian gas in the long-term contracts was much higher than that of Norway, or of liquefied natural gas from Egypt and Qatar. Now, Gazprom’s price has fallen, but the price of liquefied natural gas and shale gas is also falling because their prime costs are constantly decreasing.

In the long term, Russia's gas prices will not decrease. The cost of building the South Stream and the Nord Stream is €25 billion and €7.4 billion, respectively. On the European territory, Gazprom will divide investments in half with its partners. But that’s not all, because Gazprom will have to build a gas pipeline and other infrastructure on the Russian territory.

The European consumers may acquire an additional burden of paying for deficient volumes of contracted gas (the "take or pay" principle). Lately, the media have been raising the fines issue to Europe and Ukraine, while Gazprom’s position was unclear. According to the contract, the fines should be collected, but this will worsen Gazprom’s position on the European market; meanwhile, in Ukraine, presidential elections are fast approaching and, in this case, Russia’s decisions regarding gas prices and fines are politically motivated. Another important nuance: an increase in transport capacity does not signify increased exports. The main objective is diversification of supply. Gazprom says that, in 2010, it will restore the pre-crisis export levels (about 160 billion cubic meters) – that has been outlined in the contracts. In reality, however, Europe will use less, and the issue of compensations will once again have to be addressed. Europe’s long-term consumption forecasts greatly differ: for 2020, 700 billion (according to Gazprom) and 542 billion cubic meters – according to the International Energy Agency.

The “early warning” agreement may be regarded as a new service to consumers. But, it will not save them from gas cut offs, the decision regarding which is made rather impulsively. Ultimately, by building two new gas pipelines, Gazprom risks selling less gas than it currently does.

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With others, the intonation and the range of problems resonated as “their own.” This means that the appeal, just as it was in the early Perestroika period, is once again directed toward them. But unlike in that period, today gestures are not enough. The public is irritated by this appeal, because it does not believe in the means which the president proposes to use, and thus does not believe that this is truly a “new course.”

What about the society as a whole? When Medvedev’s article was published, Levada Center asked Russians: “Does this article imply some significant changes in the country’s political course in the near future?” The respondents answered “no” (49%) and “I do not know” (27%) more often than they said “yes” (24%). The article was interpreted as a sign for possible changes among executives (54%).

A rare unanimity was displayed regarding the suggestion that “one of the most serious problems in Russia is chronic corruption.” Eighty-eight percent of the general population agreed; among businessmen, who are clearly strained by corruption, 98% agreed. Here the opinion of executives did not differ by much from the general population. But when 51% of Russians agreed to share the president’s hopes that “the people of Russia will be able to overcome the resistance of corrupt officials" and so forth, the most ardent supporters of this hope were officials (60%). Meanwhile, only 37% of entrepreneurs shared the same enthusiasm.

The interpretation of ideas, which were once considered rebellious, varied. Russians agreed with the president (63%) that "in Russia, people have gotten accustomed to relying on the government to solve their problems, rather than relying on the self.” But the public that had gotten accustomed to hearing about the greatness of the country was not ready to acknowledge that “today, Russia is a backward country with a primitive economy dependent on natural resources” (36% agree, 60% disagree).

What is the solution? Both the people and the authorities have dismissed the idea of returning to Soviet times (59%) and agreed to rapprochement with Western democracies and to the development of democracy and personal freedoms in general. But it was clearly stated (72%) that “Russia's democracy should not be a copy of Western models,” and that “we should not rush into reforms” (56%). After all, “we do not have the right to sacrifice a stable life, even for the highest goals "(70%). So, there is nothing to be nervous about – the era of stability continues.

Aleksey Levinson is the Head of the Socio-Cultural Research Department of the Levada-Center.

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The survey coincided with the 20th anniversary of the fall of the Berlin Wall, and the head of GlobeScan, Doug Miller, is somewhat discouraged: “It turns out that the fall of the Berlin Wall was not an unconditional victory of capitalism and free market economy”. It is normal for victories to be replaced with defeats; primacy must prove itself. Meanwhile, capitalism, due to the economic crisis, which prevailed in the past two years, has had problems proving itself.

Those surveyed were also asked to rate the disintegration of the USSR. Globally, 54% consider it to have been a blessing, 22% think it was bad, and 24% were undecided. Russians think differently: 61% said that the collapse of the Soviet Union was bad and 21% think it was a blessing.

In Russia, less people support the reformation of capitalism – 44% -- than in the rest of the world. There are slightly more people than in the rest of the world who are satisfied with capitalism - 12%, and the percentage of those who would like to see capitalism replaced is the same as the world average -- 23%. But majority of Russians - 77% - would like to see the government play a greater role in controlling major industries, and even industrial nationalization. Meanwhile, 76% would like to see the government play an active role in the redistribution of wealth.

As it turns out, the world is interested in the differences in terms of “capitalism” and “socialism”, and would like to see capitalism reformed. Russians are generally not concerned with capitalism or socialism; what is most important to Russians is - paternalism.

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Putin acknowledged these remarks as “absolutely valid”. The government plans to reduce administrative barriers in two ways: by introducing a declarative principle of business registration and transferring some functions to level of self-regulatory organizations (SROs), he explained.

The government plans to reduce the time foreign businessmen must wait for investment project permits, says a Ministry of Economic Development representative. It is possible that contracting organizations or state authorities will be the ones to undertake the issuing of permits, he admitted. Declarative procedures may be resolved in the construction, retail and service sectors, explained Minister of Economy, Elvira Nabiullina. There are not enough SROs; they have low-capabilities and are not ready to assume such responsibility, noted Putin.

The Advisory Council decided to expand consultations with the Russian government by establishing a joint executive committee. The committee will meet at least three times annually, as opposed to once a year, as it has been done before. This was an open and direct dialogue, says Ernst & Young partner, Alexandr Ivlev. In Russia, bureaucracy is so strong that the only way to resolve problems is by appealing to the highest level representatives, complains a member of the meeting.

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GM and GAZ Group representatives made no comments.

Magna continues to consider Russia to be a prospective market, and GM wants to prove that the company “wants to do something in Russia”, Stronach told the Canadian newspaper. Plans to create a new plant, are a sign that the relationship between Magna and GM was not hindered by the termination of agreement with Opel, he said.

GM and GAZ Group had the idea to build a new plant in Russia two years ago, recalls an official of the Ministry of Industry and Trade, the companies had even signed industrial assembly memorandums with the Ministry of Economic Development.

Indeed, in 2007-2008, GM held talks on cooperation with GAZ Group and signed a memorandum on industrial assembly of Opel cars in September of 2007, shortly before the Ministry of Economic Development announced that such agreements will no longer be signed.

Magna, in turn, signed a memorandum on assembly of Chrysler vehicles, but has not begun building a plant.

In July of last year, head of the Passenger Car Division of GAZ Group, Leonid Dolgov, told The Times that GM and GAZ Group plan to invest $1 billion in the construction of an assembly plant with annual capacity of 300,000 vehicles. With the outbreak of the crisis, all joint projects had been frozen, GAZ Group employees told Vedomosti. Dolgov did not say why the companies decided to resume negotiations on the construction of the new assembly plant.

Stronach’s statement seems strange, noted Evgeny Bogdanov, director of the Russian office of A. T. Kearney. In 2008, GAZ launched a Chrysler assembly line in one of the purchased factories. It has an annual production capacity of 170,000 vehicles; today, however, it is hardly used: it manufactures the Volga Siber, of which only 5,162 models had been sold in the first nine months of 2008.

General Motors launched its factory in St. Petersburg last year; its capacity is 60,000 cars annually. Only 4,422 cars had been produced from January to August.

General Motors’ unexpected decision to abandon the sale of the controlling stake of Opel consortium to Magna, Sberbank and GAZ Group disappointed Prime Minister Vladimir Putin. “In the future, we will have to take into consideration our partners’ style of doing business,” he said, and noted that the plans to develop Russia’s auto industry will in any case be implemented, including with other foreign automakers. It’s possible that Magna and GM are simply trying to signal to Russia's authorities that they are ready to continue to cooperate with the local auto industry, says Bogdanov.

Demarche of a dissident

General Motors reports its Vice President, Carl-Peter Forster, who also heads Opel, is resigning from the company: he disagrees with the decision to call off the sale of Opel. According to the Sunday Times, Forster plans to head the UK-based company, Jaguar Land Rover, which had been sold to India's Tata Motors.

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“Companies that sell antiviral drugs, have met their two-month sales goal in just one month,” says David Melik-Guseynov, Pharmexpert’s research director. According to a study by the DSM Group, in October, sales of Arbidol (Pharmexpert) Ingavirin (Valenta) and TamiFlu (Roche) increased by 100-200%. In the last month, Russians have spent 420 million rubles on Arbidol, 90 million rubles on Ingavirin and 40 million rubles on TamiFlu.

At 10pm, a Vedomosti correspondent found 10 people in a drug store, standing in line for cold and flu medication. There were no more large Arbidol packs, which were requested by every other customer - they agreed to purchase the smaller ones. The pharmacy was also out of the Swiss TamiFlu. According to a pharmacist, it’s rarely supplied, and has been selling out in a matter of hours.

Compared to previous years, this is a record level of demand, drug vendors tell Vedomosti. The average seasonal consumption increase of cold and flu drugs is about 30%. This year, however, we can safely say it’s a 60% jump, says Druzhinin. October antiviral drug sales in the Doctor Stoletov pharmacies have exceeded last year’s sales by 70%, says Svetlana Kosheleva, general director of the pharmaceutical chain. According to Kosheleva, 16 times more TamiFlu was sold this September than in the same month last year, and sales of Oscillococcinum have increased by 65%. In the “36.6” pharmacies, this year’s antiviral drug sales rate was 40% higher than during the same period last year, says Irina Lavrova, a chain representative.

Demand has especially risen since October 24, says Gusev. And, in one week – October 24-30 – 39% more antiviral drugs were sold than in the previous week. Certain drugs have experienced a 300% sales growth. The senior manager of a Russian drug manufacturing company talks about the rapid growth in demand that took place from October 26:

“First, the Swine Flu fatality reports have caused a public stir,” explains Oleg Kiselev, director of the Russian Academy of Sciences' Influenza Institute. Besides, this year the flu virus has been spreading faster than usual, continues Kiselev. “We are actively encouraging patients to take antiviral medications even before seeing a doctor. They are probably trying to stockpile in case of an illness,” he added.

As stated on its website, the First Channel reported on the Swine Flu deaths for the first time in late October. On October 30, the Deputy Minister of Health and Social Development, Veronika Skvortsova, reported that almost 80% of influenza cases that have been registered in Russia were caused by the A/H1N1 virus (source: RIA Novosti). In the beginning of May, 3,122 Swine Flu cases had been officially registered in Russia, Minister Skvortsova said yesterday; currently there are 1,200 people infected, with 14 deaths.
The rapid growth in demand resulted in a drug deficit, especially in regional areas. “Distributors are already out of the TamiFlu and surgical masks,” complains Druzhinin. It’s often a struggle to obtain the medications from the suppliers. Elena Ulyanova, head of the Novosibirsk Municipal Pharmacy Number 4, is outraged: “Firstly, we are not getting sufficient supplies of Arbidol. The shipments that we receive are sold in a day, then we are left to wait for two more days for new shipments,” she says. Meanwhile, it has been very difficult to predict demand, adds a manager of the Samara Implosia chain. For example, in Orenburg, lines were forming prior to pharmacies’ opening, while in Samara, things were quiet. Federal pharmaceutical chains are experiencing fewer problems. “For the most part, suppliers have the necessary medicines to treat colds and flu,” says Lavrova. “Meanwhile, the situation with gauze masks is much worse; demand for them has increased 10 times.”

There truly is a problem with masks and Arbidol, says a representative of Protek, a distribution chain. Masks mainly come from China, while demand has increased throughout the entire world, an employee of the supplier explained to Vedomosti. Arbidol production has reached its maximum capacity, says a representative of Pharmstandard, which owns the rights to the drug. “We released Ingavirin on to the market in February. Since then, we have been continuously increasing production,” Laszlo Sugar, general director of Valenta told Vedomosti. “Even those packages that have not yet been produced have already been assigned to pharmacies and distributors.” It isn’t easy to instantly increase the production of drugs – says the senior manager of Russia's largest producer – at least a month or two are needed. As for Tamiflu, Roche has primarily been increasing supplies to countries where state orders have been made, a Roche representative told Vedomosti. Russia is receiving the drug in accordance with the usual terms, but compared to last year, imports have increased, he added.

Despite the increased demand, prices on antiviral drugs are not yet increasing, DSM Group notes in its report. “In September-October, a substantial retail price increase can be noted in Ingavirin – from 370 to 415 rubles. The cost of Arbidol is not increasing. The price of Tamiflu has increased by an average of 5%,” calculated analysts of the DSM Group. Representatives of Pharmstandard, Valenta and Roche said that the manufacturer’s price on the drugs has not been changed.

Mikhail Rudnev, Olga Morozova, Nadezhda Zaitseva, Elena Dombrova, Elena Mangileva, Ksenia Boletskaya participated in the preparation of this article.

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An investigation, which was organized by local authorities, led to the dissolution of the nursing home and dismissal of its director. Its residents were transferred to a place with better living arrangements. Volunteers, who did not expect such a reaction, are now taking dozens of calls daily from people offering their help.

In this story, skeptics will probably see the level at which problems may be resolved in Russia, today – a minor, small-town official may be dismissed due to extraordinary efforts of all of Russia's blogosphere. Some would say that civic engagement without support from the top would not lead to anything; meanwhile, those who are able to get support from the top are only the ones who do not threaten the regime. Even if both statements are partially true, one cannot dismiss an important distinction between assistance to the elderly and participation in elections. The main difference lies in the fact that the elderly – are real, and elections – are not; that the goal of the “Starost v Radost” is real and tangible: to save the elderly and dismiss the incompetent director. On the other hand, the goal of participating in elections, if ballot-riggers are to be caught, would be getting the representation from those parliamentarians who were graciously allowed to run for office. In gratitude for the undeserved support, the voters will either receive a farce in the form of a one-day demarche of State Duma parties, or a statement by Sergei Mitrokhin blaming the people – “passive-protesting majority that allowed the authorities to believe that they have decided everything for them” – in the fraudulent elections.

On election day, “Starost v Radost” volunteers were visiting veterans in Ramenskoye, and for this reason did not go to vote. The volunteers are insisting that they are not politically motivated. It is important to them that the public believes them. “We are absolutely apolitical,” says Marina Kochevalova, the group’s organizer. “The main thing is that our efforts are not hindered. We don’t need help – we can manage on our own.”

The movement had only recently received its name, and only due to the fact that a title was needed in order to participate in grant competitions. Then they won 250,000 rubles, with which they purchased mattresses and wheelchairs. In average societies, representative bodies help the society to control power. In our society, it seems that people have chosen other forms of control. The incident in the village of Yamm proves that other methods may also be effective.

“We were surprised by how many good people there are,” says Liza, author of the Internet post that caused an outcry. “People being indifferent is simply not true.”

Perhaps those who, on October 11, instead of going to the polling stations chose to visit the nursing home, chose a more efficient way to serve democracy and civil society.

The author is a freelance journalist and the director of programs to support independent media at the New Eurasia Foundation.

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In fact, the Interior Ministry began considering psychological examinations after police Major Yevsyukov’s April shooting rampage in a supermarket. However, the complicated draft manual is apparently a topic of many debates among psychologists.

Conducting shooting tests is the right thing to do. A recent examination of traffic control officers showed their poor knowledge of traffic rules. In Moscow Oblast, 40% of traffic policemen failed the test. Though they will not lose their driver licenses, they will be prohibited from using state-issued vehicles. It’s interesting to know whether or not weapons will be confiscated due to an officer’s inability to use them. Or, perhaps, bullets will simply be replaced with blanks or rubber bullets.

Nurgaliyev reminded the regional department heads of their personal responsibility for any accidents within the police units. Recently, this responsibility has been noted with the removal from office of the Moscow police chief, Vladimir Pronin, after Yevsyukov’s shooting. The Interior Minister of Tuva, Viktor Lesnyak, shared the same fate when a police officer opened fire on the street. The Head of the Interior Ministry of Buryatia, Viktor Syusyura, was arrested on smuggling charges.

Such cases are infrequent, however. The restructuring of personnel is much more complicated and lengthy. Russia’s police are also a part of a social project: pressure from the authorities, about 800,000 people, families, low wages – it’s impossible to dismiss all staff, there is no place new recruits can be found who are psychologically stable, able to fire a gun, and know traffic rules. Besides, there are already staff shortages.

Thus, for now, citizens should stay away from the police.

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Five per cent revolted against those creating the hype on the issue while 23.1% were boiled over by the actions of the mayor and his wife, 24.9% welcomed the corruption probe being taken up and for 28.4% the issue remained unnoticed.

This does not affect Yury Luzhkov’s rating directly, notes Levada-center’s deputy director Aleksey Grazhdankin, as most Moskovites are still satisfied with the mayor but, nevertheless, people are getting tired of Mr Luzhkov and his rating is spiraling down.

In 2001, Luzhkov enjoyed good relations with 65% of Muscovites, 24% were neutral towards him and 8% definitely disliked him. In 2005 the proportions swung to 54:27:9, today they are 36:42:18.

On Saturday, at the meeting with the President of Russia, the leader of LDPR, Russia’s Liberal Democratic Party, Vladimir Zhirinovsky, proposed firing the capital’s mayor. He said that after being in power for 20 years, Yury Luzhkov created the most corrupt government and has been falsifying elections ever since.

The President gave no reply, but of four parties present, three supported the idea.
A city official says that Luzhkov’s company is well aware of the good relations between their boss and Zhirinovsky, so if the latter made such a proposal – then he was asked to do so. The declaration had been sanctioned by the president’s administration, he insists. Sergey Tsoy, the mayor’s press-secretary, refused to comment on the issue.

A high-ranking member of the dominant United Russia party says the attack on the mayor is a serious one, but he will manage to remain through his term in 2011 because there is no alternative to him. Besides, the Kremlin and the government have not reached a verdict on his resignation.

Also, the purpose of the present campaign is to prepare public opinion about his leaving the scene and to show the mayor that his power is not forever.

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“It will be a sedan based on the design of the Polo. It will resemble the Jetta. The approximate price of the car will be 440,000 rubles,” said Schultz, and noted that the name for the car has not yet been finalized. The Jetta costs about 600,000 rubles. The nameless novelty has only been seen by Prime Minister Vladimir Putin, who visited the plant yesterday.

“I promised to keep quiet, but I can say that I liked what I saw. This is a promising model, both in its quality and price,” he said. Before the economic crisis, VW anticipated the manufacturing 80,000 of the budget cars in Russia annually. However, the auto manufacturer is not disclosing its revised plans. VW plans to reach 25% of the car being built using locally manufactured parts in 2010 and 30% in 2012.

Currently, Ford has the highest localization rate of 30%, says Ivan Bonchev, Ernst & Young analyst. Ford’s website lists 27 suppliers operating in Russia. Since the beginning of the year, the plant has been purchasing fabricated parts from the Stadco factory, which launched a production line in the Leningrad Oblast. The level of localization of Logan, which is being produced by Avtoframos, has reached 41%, says a Renault spokesperson. The plant buys large fabricated parts from Zile.

It is expected that VW will buy pre-fabricated parts from the Spanish Gestamp and Severstal: the production at the new plant in Kaluga will begin in May-June 2010; 140 parts of the body and interior will be produced locally.

In 2008, VW’s Russian plant assembled 63,000 vehicles, and “this year, we are hoping not to fall behind”, said Schultz (quoted by Reuters). Currently, the plant employs 1,800 people. Next year, it’s expected that this number will increase to 3,000 people.

The plant is capable of producing up to 150,000 cars annually, and with an increase in demand – 300,000, he added. These plans are rather ambitious, considering the 50% decline in demand, notes Bonchev. But the business strategy of VW differs from other foreign automakers that have a presence in Russia: Ford, Toyota, Nissan, General Motors, and Renault release from one to two models. Meanwhile, VW’s Russian plant assembles 18 different models, says the company representative. This allows saving on customs duties and having a more flexible pricing policy. Volkswagen Group – is one of the few corporations in Russia that was able to increase its share in the falling market. Meanwhile, the Volkswagen brand was the top performer in the market; according to the AEB, it grabbed an additional 1.3% of the market share in January - August of 2009.

The wide selection and a wide price range allows WV to quickly react to market fluctuations, said Bonchev: before the crisis, the production of “average priced” (as well as premium-class) cars from $20,000 to $25,000 was rapidly developing; now, the company is focusing on the mass production of budget-class cars ranging from $10,000 to $15,000. There should be no problems with demand: in Russia, vehicles are generally older and the ratio of car owners is low – for every 1,000 residents, there are 220 cars (in Europe – it’s 400-500, and in the U.S. - 600), said Bonchev. He adds that VW also takes into consideration the mindset of Russian citizens, who don’t like compact cars; and, while producing inexpensive cars, it will try to maintain their relatively large size.

The annual capacity of Russia’s existing factories as well as plants being built is 2.6 million cars. This year, around 1.3 million vehicles will be sold in the country. But VW has confidence in Russia: in 2018, compared with 2008, the market will increase by 30%, and the annual amount of sales will be 3.6 million vehicles – said Martin Winterkorn, CEO of the Volkswagen Group. He predicts that the Russian market will be considered one of the five largest markets in the world. Bonchev does not share the same optimism: Russia will only return to its pre-crisis level in no sooner than five years. Perhaps foreign business leaders are counting on state support, he notes, such as cancellation of price limits for concessional lending.

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The presidents of Russia, Belarus and Kazakhstan will sign the necessary documents on the establishment of a customs union on November 27 in Minsk. After the signing, they will share a customs code, tariff on imports, and have a shared list of restricted goods for import or export, said Igor Petrishenko, deputy foreign minister of Belarus, as quoted by Interfax.

According to officials from the three countries, the union will be effective as of January 1, after which there will no longer be customs control on the border between Russia and Belarus. From July 1, 2011 onward, there will be no more customs control on the border between Russia and Kazakhstan. Kazakhstan’s prime minister, Karim Massimov, assured Russian Prime Minister Vladimir Putin that the southern border of the country will be properly equipped by 2010. Earlier two Russian officials involved in the negotiations told Vedomosti that Russia is concerned with the lack of demarcation in many areas outside Kazakhstan’s borders.

A government official states that the main issues in the establishment of a customs union have been resolved, adding that things are moving swiftly -- a union commission is planning on meeting on October 21.

“A tremendous amount of bylaws need to be made,” the official said.

According to Deputy Economic Development Minister Andrey Slepnev, the introduction of a unified customs code in 2010 will reduce average tariffs on imports to Russia by about 1%. But he added that tariffs on key economic goods will remain the same. For example, he noted, tariffs on imported cars will equal Russia's ceiling rate.

Anatoly Vaskov, chairman of the EurAsEC Inter-parliamentary Assembly, confirmed that Russia is insisting on high tariffs on car imports.

“Tariffs are tariffs,” he said. “But we must support domestic manufacturers. It is very important for Russia.”

The current car import tariff rate in Russia is 30%, but no less than €1.2-2.8 per 1 cubic centimeter of engine volume. For three- to five-year-old cars, it’s 35%, but no less than €1.2-2.8 per 1 cubic centimeter. For cars older than five years, it’s €2.5-5.8 per 1 cubic centimeter. Belarus and Kazakhstan have lower tariffs, said a Ministry of Economic Development official, noting that a transitional period -- during which each country will keep their import tariffs on cars the same -- has not been excluded. Until mid-2010, temporary import tariff rates on cars will be applied in Russia. What will happen next is unknown, he said.

A customs union will not fundamentally change anything in the trade relations between Russia, Kazakhstan and Belarus, because these countries already have a free trade zone, notes Sergey Prikhodko, executive director of the Institute of the Economy in Transition.

Political analyst Mikhail Vinogradov says that Russia has never truly valued any real integration processes.

“Take our ‘friendly’ relations with Belarus as an example,” he said. “Each time Russian authorities say another ‘yes,’ what they really mean is a ‘no.’”

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The government expects the economic growth of the third and fourth quarters to be the beginning of recovery, said Finance Minister Aleksey Kudrin. And though he was one of the first to predict a second wave of the crisis in the fall, yesterday he confidently said that such a scenario is unlikely. The only thing that could potentially make things worse is the global economy. If new problems arise in the US and Europe, it will complicate the situation in Russia, reduce demand, and result in problems in the refinancing of debt of Russian enterprises, explained Kudrin.

The main reason for the Russian officials’ good mood has been Russia’s increasing economic growth rate for three consecutive months (with seasonal fluctuation and calendar factors taken into account). According to the Ministry of Economic Development, in June GDP increased by 0.4% from May, and by 0.5% in July from June. In August, the economic growth rate increased by 1.5%, Kudrin stated yesterday.

Even the industrial sector began to revive, said Shuvalov. Some sectors of the economy, such as the auto industry, are still experiencing negative numbers. But given the anti-crisis measures that are being taken, there is a chance to fix the situation by the end of the year, Shuvalov claimed.

The deputy director of the Center of Development at the State University–Higher School of Economics (SU-HSU), Valery Mironov, says that the revival of the industrial sector is related to the increased demand for Russia’s raw materials.

“In the fourth quarter, we could experience a sharp increase in the industrial sector that could be explained by factories selling their stock supplies and starting to produce,” said Mironov.

Prime Minister Vladimir Putin shared the optimism of his deputies: “Having [optimism] is vital, and we have something that we can base it on,” Putin was quoted as saying by www.government.ru. He agreed with Kudrin that the government must be ready for the various ways that the situation may develop on the world markets.

So far, there is no reason to worry. The world economy is stabilizing, and the US has already passed the critical point, believes Warren Buffett, the billionaire investor and CEO of Berkshire Hathaway.

“We have not yet begun to rise, but we stopped falling,” he said in an interview with CNBC. “[In the last three months] the situation hasn’t gotten worse. It hasn’t gotten better either… But we are moving through the recession. I see nothing that makes me worry about the fact that it's going to be worse than I would have thought three months ago.”

Indicators of those companies in which Berkshire Hathaway invests, and the stabilization of the real estate market, signify an improved economic situation, noted Buffett. Unless a terrible event such as the September 11 terrorist attacks occurs, he sees no chances of the situation worsening significantly.

“[Banks] have flushed through some of the toxic assets, and attracted capital,” he added. “We’re immeasurably better than we were a year ago.”

The recession is most likely over, said US Federal Reserve Chairman Ben Bernanke on Tuesday. But he did caution that for a certain period of time the economy will be weak and unemployment rate high. Bernanke expects a moderate economic stabilization in 2010.

The optimism of the economists is primarily based on the revival of the consumer sector (after the 0.2% July fall, in August retail sales rose by 2.7%, the US Department of Commerce said on Tuesday) and the industrial sector (in August, manufacturing increased by 0.8% comparing to July’s 1% growth rate, US Federal Reserve announced yesterday).

But Nobel Prize-winning economist Joseph Stiglitz cautions that the banking sector problems are more severe than they were when the crisis began in 2007, because they have become even larger and accumulated an even greater amount of bad credit. The economy will continue to be weak for a long time, its growth rate will not compensate for population growth, and “if employees are not going to get paid, it is difficult to comprehend how the US is planning to create the demand needed for the world economy”, he said in an interview with Bloomberg.

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The outcome of this global misbalance is well-known to all: financial systems of developed countries received such a large volume of capital that they simply could not digest, which led to financial bubbles, risky investments, and other troubles.

So, should we return to the previous trajectory of development? After all, by repeating the same scenario we will achieve the same result. The misbalance will be greater, and in about 10 years a new crisis will await – this time, more severe than the current one.

Perhaps we should take the opposite direction – change the direction of developed markets toward production, and of the developing – toward consumption and development of domestic financial systems? Economists warn that, in this case, simple solutions don’t work. One would like to hope that the leaders of the G-20, who will hold a meeting in Pittsburgh in two weeks, will have ideas other than the return to the previous “norm” or to its opposite.

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Income level decline not only affects people’s wallets, it is generally bad news for the economy as a whole because it suggests a slower rate of economic recovery. Income constitutes nearly a half of Russia’s GDP (exports about 30%, investment and imports about 22%). In other words, if there’s a 6% income decline, that means a 3% decline in the GDP.

Support of consumer demand continues to be low on the list of priorities in the government’s anti-crisis program. The government is basically supporting demand through increasing pensions and salaries (subsidizing credit rates on Zhiguli purchases can hardly be called a serious stimulus measure). But budgetary infusions into the pockets of the population are not very effective: they contribute to the strengthening of the ruble and are probably more beneficial for importers than for domestic manufacturers.

However, there is also a positive side to the steady decline of consumer demand: perhaps it will teach Russia's manufacturers and retailers to reduce prices. Until now, domestic businesses have had a peculiar response to decreasing demand: to maintain their margin rates at any cost. Rather than reducing, they have been increasing. If people continue to only purchase basic necessities and nothing more, business owners will eventually have to change their price tags.

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Obliged by the memorandum

In Microsoft, the growth of this indicator occurred due to recent appointments. It was only in July 2009 when Irena Kozlova assumed the position of the head of department that works with major clients and partners, and Natalia Boldyreva became the director of strategic projects. Both positions were filled internally. For about a year Kozlova worked as head of a department that works with major financial institutions and international Microsoft companies, and Boldyreva was promoted from manager of marketing planning. The Russian Microsoft branch is not seeking to promote women to leadership positions by its own initiative. Recommendations on observance of gender balance, and in particular recruiting more women to the company, are outlined in an internal memorandum, which is annually updated by the corporate office, explained Khimanych. In the quest for gender balance lie not only gender equality ideas, but also the logic of business: “About 50% of our consumers for our products and ideas are women. Diversifying the team is a successful strategy.”

“In the Hewlett-Packard (HP) company, there is an active program called Diversity & Inclusion (diversity of staff and equal opportunities); its purpose is gradually to increase the proportion of women among the employees of the company,” said Owen Kemp, vice president of the company and general director of HP Russia. According to him, in 2009 the proportion of women in the EMEA region (Europe, Middle East and Africa) has exceeded 40%. There are 42,000 employees in those regions working for HP. Women hold only a third of managerial positions in HP Russia.

Risks of discrimination

It’s not likely that it will be possible to regulate the proportion of women who hold leadership positions in Russian companies. “According to Article 3 of the Labor Code of the Russian Federation, establishing such quota for employees will most likely be regarded as discrimination,” believes Roman Larionov, legal adviser of the Garant company.

Kemp from HP argues that there is no discrimination: no one is thinking on infringing on the rights of men. Khimanych from Microsoft explains: there are no strict instructions; it’s simply required to have a woman in a list of candidates for any given position. The final decision depends entirely on merit, he explained.

Russian companies dedicate much less attention to gender balance issues. “I’m indifferent to the gender of a staff member. What’s important is that they be effective in their position,” said Dmitry Syromyatnikov, deputy director general of personnel and administration of Siberian Coal Energy Company (SUEK). “Any division of gender or race causes discrimination.” At the SUEK corporate office, there is a relatively equal number of men and women, but one cannot say the same about the regional branches: by law, women are not allowed to work in coal mines, explained Syromyatnikov.

Statistics showed…

Some serious researchers are also interested in the influence of women in leadership roles on their work. In 2008, Daniel Ferreira and Renee Adams of the London School of Economics and Australian School of Business, Queensland University respectively, examined the influence of gender on the work results of board directors in 1,500 companies, information about whom can be found in the annual Standard & Poor’s report “Board Performance and Board Pay: The Structure and Compensation of Boards of Directors at S&P 1500 Companies”.

The database the researchers worked with included information on the age, seniority, professional status, affiliation, and discipline of 24,820 directors. 8.12% of them were women, 2,012 people to be exact.

According to the research, women are more disciplined and inspire discipline in male directors. But the frequency of turnover of top managers is higher where more women are on boards of directors. Women hold their subordinates on a shorter leash, say researchers.

The effects of female directors on work results were mixed: women's leadership can improve work results in companies experiencing problems with corporate governance. In other cases, their influence proved to be negative. If the gender of leadership composition is to be regulated, then it should be done for reasons other than financial, concluded the researchers.

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In total, this cost amounts to $9.6 billion. The price is 10% above the 2009 forecast ($250). And, the volume is almost a third less than what was outlined in the 10-year contract between Naftogaz and Gazprom (52 billion cubic meters per year).

The Naftogaz representative decided not to comment on these figures. And a staff member of the Russian company said that Naftogaz has already appealed to Gazprom with the new procurement plan.

The Gazprom representative did not comment on the negotiations, but noted: “The volume of purchases of 35 billion cubic meters of gas has not been agreed on with Gazprom.”

Director of East European Gas Analysis, Mikhail Korchemkin, is confident that a new reason for conflict during the New Year holidays exists: the main principle in the agreement between Gazprom and Naftogaz (signed after the two-week conflict in January this year) is “take or pay”. In other words, in 2010 Naftogaz could face overpayment for deficient fuel. The parties could have come to an agreement, but Gazprom and Naftogaz are behaving uncompromisingly, noted Korchemkin: “Moscow and Kiev are ready to quarrel without any cause, and if they happen to have one – even better.”

In January, Ukrainian Pravda published the agreement, and Gazprom sources confirmed its authenticity. The basic condition in the document is as follows: at least 80% of the annual volume of gas needs to be paid off. And, that is not considering monthly fines for deficiency: 300% of the cost for the summer season (April - September), and 150% for the winter season (October - March). The annual volume may be adjusted no later than six months before the start of deliveries; and by no more than 20%. That is, in 2010, according to the document, Naftogaz will be late with new volumes, and 20% won’t be enough.

True, there are gaps in the agreement that Gazprom employees recognized as early as winter: the documents were prepared in an emergency mode. For example, it’s not clear how the monthly fines correspond to the 80% limits: if not a single fine is missed, by the end of the year one ends up paying 100% of the contract volume. Plus there is no price for the payment of the difference between the actual supply and the minimum limit.

This year, Gazprom did not issue any fines to Ukraine for deficiency in gas: everyone is going through the crisis, Moscow won’t hassle a partner – Vladimir Putin explained Russia’s peacefulness.

But if the 80% limit alone were considered, then that threatens Naftogaz with overpayment of approximately $1.8 billion in 2010.

A representative of the European Commission decided not to comment on the negotiations between Gazprom and Naftogaz. He did not receive any warnings about EU complaints - the last notification was in May (Russia feared that Naftogaz won’t be able to cover the costs, remembers the European Commission representative).

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The concept of “social entrepreneurship” is non-existent in the Russian consciousness. Our fellow countrymen refer to this concept as anything they possibly can: charity, business, social services, state participation, nonprofit organizations. The diverse descriptions of this concept start from the neutral “corporation, practicing social responsibility principles” and “entrepreneurs who are engaged in charity work” and end with something as openly hostile as “scammers, who capitalize by conning people”.
In reality, a social entrepreneur is a person who realized that a certain social problem exists and is using business principles to resolve that problem. His sole motivation is the public benefit, but to achieve this goal, business technology is used. Social entrepreneurship started to develop in the 1970s in developed countries. But in Russia, such cases are almost non-existent.

One of the few examples is the Southern Regional Resource Center in Krasnodar (SRRC), which develops support services for migrant workers, including low-rate legalization of their status in an attempt to drive out the mediators (who are formally connected to the government). Other examples are funds that provide educational services, housing management funds, organizations that support women's entrepreneurship, and credit unions.

Most experts believe that social entrepreneurship, in our country, can develop from non-profit organizations. They, on the one hand, have a social orientation and experience in providing social services. And, on the other hand – they’re slowly beginning to master the business practice and implement business technology.

The reason for poor development of social entrepreneurship in Russia is simple: we have traditionally believed that social problems should be handled by the state. And, to imagine a situation where private organizations are dealing with the situation on the same level as the state, can be quite difficult for our fellow citizens. The fact that non-profit organizations are earning money to solve social problems is even more difficult to understand. More than half of those surveyed by ZIRCON do not believe that it’s possible to have a business in Russia that will create and maintain itself not for the sake of earning a profit but for the sake of providing assistance to poor and socially needy citizens.

This means that the society is not ready for the emergence of social entrepreneurs. And, even if they happen to appear somewhere, the society will be, if not hostile towards them, then certainly cold. So, before developing any socially-entrepreneurial projects, a favorable climate and Russians’ favorable perception of this new phenomenon must be created. Otherwise, this movement could be undermined by public mistrust from the get go. After all, the logic of social entrepreneurship is not yet understood, not only by Russian society, but also by the tax authorities, legislators, and various regulatory agencies. They are all looking for some sort of a dark side to this concept.

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Fox International, a subdivision of the 20th Century Fox, made an agreement with Russian company Art Pictures to work on creating a film version of Alexander Pushkin’s novel “Yevgeny Onegin.” The production budget, according to the general director of Art Pictures, Dmitri Rudovsky, is about $2.5 million. Fox International executive Anna Kokourina confirmed to Vedomosti that the studio agreed with Art Pictures to develop a screenplay for “Yevgeny Onegin.” According to Kokourina, the studio is reviewing only 20 Russian screenplays.

“We haven’t yet made any final decisions on whether or not we will be filming ‘Yevgeny Onegin’ with Art Pictures,” she said. “But in any case, we will definitely be working on a film together.”

Not only Pushkin

In addition, according to Kokourina, Fox decided to film a Russian version of two of their popular films: “Working Girl” and “Man on Fire.” The studio decided to open an office in Moscow and is directly working with Russian producers. Alexander Atanesyan will be producing “Working Girl” and “Man on Fire.” His last major project was a film about the Great Patriotic War, “Bastards.”

According to Atanesyan, he has been working with Fox for a long time, and when he was presented with a long list of films for localization in Russia, he chose those films that are relatable to the modern viewer. Then the list was narrowed down to two films from the most popular genres, lyrical comedy and psychological thriller.

“Working Girl” came out in 1988. Melanie Griffith plays a secretary who dreams of having a career and to achieve it she impersonates her boss. Harrison Ford is an executive with whom she falls in love.

The 2004 film “Man on Fire,” starring Denzel Washington, isn’t as well known in Russia. It is a story about a little girl’s bodyguard, a former CIA agent, who couldn’t prevent her abduction and is out to avenge the criminals.

According to the producer, the budget for the Russian remake of “Working Girl” will be no more than $3.5 million, and for “Man on Fire” not more than $6.5 million. Filming is set to begin in the spring or summer of 2010. These two films, according to Atanesyan, will be the first legal remakes of Western films in Russia.

Fox did not allocate a separate budget for film production in Russia in advance, Kokourina pointed out. Everything will depend on how many good screenplays the studio will find. The first Russian film, made together with Fox, will be released in the spring of next year.

An important market

Fox isn’t the first Hollywood studio that began filming in Russia. In 2006, Sony Pictures Entertainment, together with Patton Media, created a joint company in Russia called Monumental Pictures. Michael Schlicht was named its CEO.

Monumental released four films. The top grosser of the four was “The Very Best Movie 2,” with total sales in Russia and the CIS (with the exception of Ukraine) amounting to $12.8 million. At the end of October, a film based on Russian fairy tales is scheduled to be released. “The Book of Masters,” with a production budget of $7 million (data from Russian Film Business Today) will be shot by Walt Disney and Nikita Mikhalkov.

And during the December holidays, Russian viewers will have a chance to see “Black Lightening,” a Timur Bekmambetov’s Bazelevs and Universal Pictures joint production. The film’s budget is $8 million (data from the Russian Film Business Today). Central Partnership is also having talks about co-producing films with Paramount.

The Hollywood studios are basing their decision to shoot in Russia by the volume of Russia’s movie-rental market. According to Russian Film Business Today, in the 2008 movie-rental year (from November 29, 2007 to November 30, 2008) movie ticket sales for Russia and the CIS (excluding Ukraine) equaled to $830 million. That’s 46.9% more than in 2007.

The American film market in 2008, according to Box Office Mojo, amounted to $6.1 billion. But Hollywood studios are naming the Russian market as one of the most important ones outside of the US. For example, according to the deputy marketing director of 20th Century Fox CIS, Vadim Smirnov, Russia’s opening weekend sales for “Ice Age: Dawn of the Dinosaurs” was second only to the US.

They love their own

In addition, Fox’s Kokourina notes, Russian viewers are more likely to watch domestic films. Many Hollywood blockbusters were among the films that Fox rented out in Russia, but Russian films were the ones that sold the most. “Watch,” “Turkish Gambit” and “Admiral” were three named by Kokourina.

“This is a beginning of a trend that is typical for many countries: people want to watch movies in their own language,” she explained.

Fox will be filming in nine countries. The primary markets will be Russia, China, Japan and India, according to Kokourina. As in the case of Russia, the most lucrative films in these countries are those produced locally. For example, in China, according to data from the year 2008, out of the top 10 films, six were filmed in country.

“The viewers expect highly entertaining films, but all things being equal, they prefer Russian films,” said Mark Lolo, general director of the Central Partnership Sales House. “But it must be a really great movie with strong advertising support.”

“Those Russian films that sold out at the box office probably had such success not because they are relatable to the viewer, but because they were supported by major TV channels, and because of their budgets and advertising time,” said one of the producers.

“Movies of Russian production, no matter how much they would collect at the box office, very rarely earn more than the money that was initially invested,” said the head of the Statistics Department of the Russian Film Business Today, Sergey Lavrov. “And the fact that Hollywood studios are filming under a small budget is the right step.”

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The 11th test was conducted on July 15. Since 2006, when Bulava trials began, there had been only three fully successful tests.

This time, the Bulava exploded after less than 30 seconds in flight. One Ministry of Defense official has said that because the missile telemetry failed soon after takeoff, it will be difficult to determine the reason for this unfortunate event.

Member of the Presidium of the Public Council under the Ministry of Defense, Ruslan Pukhov, says that this is the first time in post-Soviet history when a director of the most important defense program resigned due to technical problems.

Roscosmos appointed Solomonov’s Deputy, Alexander Dorofeev, to the position of Acting Director and Deputy General Designer of MITT (Moscow Institute of Thermal Technology), said MITT representative Alexander Tumakov. Roscosmos has announced a vacancy for the post of MITT Director, which will be filled on September 14.

Under the guidance of the Academician of Russian Academy of Sciences at MITT, Solomonov, in addition to developing the Bulava, also developed the land-based intercontinental missile Topol-M in the 1990s, and its modern modification the RS-24 – the tests for which began in 2007. In 2006, Solomonov told journalists that the Topol-M, developed by his institute, and Bulava, ensured nuclear deterrence, and in turn a peaceful life for Russia until at least 2040, and perhaps even until 2060.

The original developer of marine missiles was the Makeev State Rocket Center (GRTs) in Russia’s Miass province. But in 1998, after only three failed new missile tests for the R-39UTTH “Bark” submarine missiles by GRTs, the Russian leadership agreed with the MITT proposal to make a smaller rocket – the Bulava. It was decided to equip the new strategic nuclear submarines of Project 955, first of which was “Yury Dolgoruky”, the construction of which was started in 1996, with Bulava missiles and not Barks. Dolgoruky trials began last June.

In addition to Dolgoruky, two more submersibles of this type are being built at the Sevmash shipyard in Severodvinsk. A fourth one is scheduled to be built by the end of the year. The Russian Navy leadership is planning on building six to eight vessels of this type.

Considering the expected reduction, by 2015, of ground-based intercontinental ballistic missiles to about 200 and the fact that the mono-bloc missiles Topol-M will constitute a greater part of these missiles – in ten years, nearly half of Russia’s strategic nuclear warheads can be used with the Bulava multi-stage missiles, said a Ministry of Defense official.

The decision to entrust the development of the new sea missiles to MITT, which wasn’t previously working on such projects, and not to the Makeev center, led to continuing criticism of Solomonov and the entire program, said the Ministry of Defense official. Many of the military men believe that the choice of developer was the main reason for the Bulava’s failure, confirmed a naval officer.

GRTs developers have for a long time been involved in the Bulava project. The delay of the program was caused by an overall technological and personnel decline in defense science and industry, said the Ministry of Defense official. According to editor-in-chief of Moscow Defense Brief Mikhail Barabanov, the Project 955 submarine and their missile production program, which started in the most difficult years for the Russian economy, the 1990s, itself became a strategic mistake. The total cost of the program, including the construction of submarines is, of course, secret, but it far exceeded the cost of the federal budget for the current construction of Olympic facilities in Sochi (195 billion roubles), said Barabanov.

He continued to say that due to this mistake, the budget for the surface fleet dried up and a shortage of funds for submarine repairs came about, which led to massive write-offs of ships that could have served for many more years. But now to abandon it, after the tens of billions of roubles that have already been invested in the program, would be no less of a mistake. Barabanov is sure that there is no alternative for Bulava than to readjust the Project 955 submarine to the Sineva missile, which is produced for submarines of the older 667-BDRM project, and won’t cost less than building a new vessel.

According to the opinion of Yevgeny Myasnikov from the Center for the Study of Problems of Disarmament, Russia’s marine component of the strategic nuclear forces, without Bulava, has no future after 2020. Meanwhile, having the offshore portion of the nuclear triad (which also includes surface missiles and bombers), is necessary, because this is the least vulnerable component on which the US, Britain and France are placing their bets.

As for Solomonov, the Ministry of Defense commission, while researching the causes of Bulava’s failed launches last year, proposed to divide the duties of the Director and General Designer MITT as head office for this program because of Solomonov’s heavy load of organizational questions, says the Ministry of Defense official. The military department hopes that Solomonov will continue to work on the program as a scholar and designer, and not as an administrator, said the official.

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The attack on Mikhail Khodorkovsky and his company Yukos was organized because he was financing the CPRF without Kremlin’s consent – that is what the former Prime Minister of Russia Mikhail Kasyanov told the Financial Times. According to Kasyanov, he repeatedly asked former Russian President Vladimir Putin to explain Platonov and Lebedev’s arrest on July 2003, and the pressure that the law enforcement agencies began exerting on Khodorkovsky and Yukos. Putin refused to answer. But one day, during an informal meeting in Putin’s Kremlin office, the president began talking: Khodorkovsky was financing the communists without his permission, while the funding for Yabloko and the Union of Right Forces was made according to Kremlin orders.

According to Kasyanov, Khodorkovsky's lawyers handed over his written testimony to the European Court of Human Rights (ECHR), which is reviewing the complaint on the circumstances of the arrest of the co-owner of Yukos and the preliminary investigations. Khodorkovsky proved that his arrest was illegal, that he was set up to prevent the opposition from participating in parliamentary elections. The complaint was filed in 2004 in May. The court found it acceptable.

Khodorkovsky’s lawyer Karina Moskalenko confirms this: Kasyanov’s testimony went to the European court, but she refused to discuss its contents. “At this stage of the process, Mikhail Khodorkovsky considers that commenting on the progress of this case in any way is impossible,” says the lawyer. According to her, on July 10, the ECHR officially stopped receiving complaint documents and began reviewing the case. Moskalenko believes that a decision can be made in the fall.

Kasyanov’s testimony is about ten pages long, said Elena Dikun, the ex-prime minister’s advisor. Kasyanov showed that the alleged Yukos tax-minimization schemes were a legitimate practice, which was then used by all of the oil companies. Putin’s government fought against this practice, and relevant laws were adopted. The court then used them retrospectively and selectively. If the Ministry of Finance and tax authorities were asked for their opinion on Yukos’ tax optimization without being under political pressure, they would have confirmed its legitimacy. According to Kasyanov, the initial reason for Khodorkovsky’s prosecution, which was based on artificially created charges, was Putin’s fear on the eve of the 2003 State Duma elections. The opposition party, which could have posed him as a real threat, did not exist in Russia. But if a Yabloko-Union of Right Forces-Communist Party coalition was formed, then together they could have become a real opposition. Kasyanov believes that the idea to seize Yukos’ assets appeared at a later time.

The Russian representative in the Strasbourg Court Gregory Matyushkin said that he learned about Kasyanov’s testimony from journalists and cannot comment on it. Putin’s press-secretary, Dmitry Peskov expressed hope that for the ECHR, “Kasyanov’s pseudo-testimony won’t be the main criterion,” and instead will be the decisions of the Russian courts.

The CPRF argues that neither the party nor its members received money from Yukos. “This was repeatedly proven by the Ministry of Justice, the Central Election Commission and the Prosecutor General,” says Valery Rashkin, a communist.

In 2003, several Yukos managers entered the State Duma through the CPRF list. Among them was the former member of the company’s Board of Directors Sergey Muravlenko, and the former head of Yukos’ analytical department Aleksey Kondaurov. In spring 2003, Khodorkovsky himself explained that one of former Yukos managers and minority shareholders the company has close relations with the CPRF and will provide financial assistance to this party using his personal finances. He didn’t name any names, but in June of 2003, Deputy Chairman of the Central Committee of the CPRF, Ivan Melnikov confirmed to Vedomosti that Muravlenko “has been keeping in contact with the Communist Party for many years” and more than once helped the CPRF and the faction.

It was stated yesterday, in Muravlenko’s State Duma reception room, that he is not in Russia and is unavailable for comment. Aleksey Kondaurov did not respond to phone calls.

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Russia took first place out of 26 candidates, second place for the amount of income and savings. When it comes to spending money, foreigners working in Russia do not like to “throw their money around”: they come in the 15th place for the amount of luxury items they own.

Almost half of the foreigners working in Russia (43%) receive more than $200,000 a year. Russia has the highest proportion of those who make over $250,000 – 30%; while Hong Kong, Japan, Switzerland and India – 25-27% (an average of 16%). Foreigners in Australia and Belgium get paid the least – 63% and 61% respectively.

Among Western employees, Russia is considered one of the most uncomfortable countries to live in, and Moscow is one of the most expensive cities in the world for foreigners, says the Managing Partner of a head-hunting company, RosExpert, Igor Shekhterman. He explains that is why foreign businessmen have always been paid more in Russia. 97% of the respondents said that their dispensable income, savings and investments are higher than they are in their home-countries. For this reason, 83% are not planning on returning home, although 73% were forced to cut spending due to the crisis.

Some, however, need to return. In order to cut costs, AvtoVAZ had refused services from Renault’s managers; out of four vice-presidents, one will remain - while one of the three directors of management won’t be shifted, and the fate of four others isn’t clear. Experts have estimated their income to be from €240,000 to €400,000 per year, not including living costs.

High salaries in Russian banks made Moscow one of the most attractive places in the world for analysts, magazine Institutional Investor noted last year. Renaissance Capital, for example, spent nearly $35 million on their team of analysts in 2007. “There is a great demand for analysts dealing with complex analysis, and people are willing to pay for them,” the magazine cited Renaissance’s Chief Strategist, Roland Nash, “If you want to make a fortune – head East.” However, because of the crisis, Renaissance cut a great number of employees, from 1230 to 720. The dollar earnings of those who stayed with the company had been decreased, said a source from the company. A representative of Renaissance did not comment.

“We see a clear tendency to cut all unnecessary costs, including packages for foreign businessmen. Western companies are actively searching for replacements for their foreign management from a number of qualified Russian managers,” says Shekhterman. Many who stay with a company are able to cut expenses, for example, rent fell by at least 20% to 30%, he notes. Two thirds of those surveyed from HSBC said that their living expenses have been cut.

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Within the legal scope

At the beginning of 2007, E-generator had more than 30,000 authors. One of them, Igor Bargaftik, suggested creating an agency that would carry out requests – anything from the banal flower delivery to the most unusual requests - which other agencies would not take on. The growing web of authors was large enough to wrap around Russia and abroad. Because the authors included top managers as well as the unemployed, Belousov was often in doubt: “I imagined that a client would place an order like for some punk to appear at some ill and elderly woman’s door and scare her to death.”

Though in 2007, Porucheno.ru started getting orders, the start-up costs equaled around 100,000 rubles.

“We quickly decided to start accepting any orders that did not break the law and were ethical. Once, for example, a client asked us to buy vitamins in China, but as it turned out, it was a hallucinogenic, and the client was left empty handed.” Belousov relates.

Orders were coming from people and corporations. The former often asked to deliver something, meet someone at the train station, or to pick up prescriptions. Businesses requested to participate in bids or in auctions, to play the role of a sales representative, or to appear as a secret shopper. The prices of the services depended on the urgency, city or difficulty of the order. For example, verifying the actual location of a business (with a three day deadline) cost 2028 rubles in Sochi and 1200 in Yelets.

The agent’s passion

Of the 30,000 authors on E-generator, only 500 responded with an interest to work as agents. “We were surprised that many agents looked at the assignments as an adventure”, said Vargaftik. For example, in Surgut, the top manager of a bank passionately bought surplus stock from a branch of Gazprom. An agent in Mongolia was enthusiastically looking for samurai swords from the battle of Khalkhin Gol in the market stalls of Ulan Bator. He reported back by sending photos of the swords and their prices. And when the goal was to find discontinued hypoallergenic baby food, the agents, after being able to find two or three bottles in the pharmacies, felt as though they were saviors.

The agents were given points for completing their assignments: 5 points for an easy assignment, 20 for a difficult one, and 10 extra points for a client’s positive feedback. A highly-rated agent was allowed to take on more difficult assignments. Nikolai Lepikhin is rated fourth, and doesn’t work with the company for the money, “It is interesting in itself”, he says. For example, he was once sent to buy urgently-needed spare parts for a go-kart, but the store was already closed. He had to convince the store’s director to sell the goods. Vargaftik explained that the average agent’s pay is between 800–1,000 rubles.

A 200% result

A client, who had requested a photo-report in Tashkent, wrote on the agency’s website: “The assignment was executed 200%, and in a shorter time-frame than I expected. They photographed not only the house I requested, but also the surrounding territory.”

20% of all orders come from businesses, and they bring 80% of all proceeds. In the fall, there were fewer orders coming from the corporate sector, but by spring they were rising once again.

Kengurushka.ru ordered the agency to walk through the Russian markets and gather information about their potential clients. “I like the way they work”, said Sales Director, Elena Vovk. “They found someone with experience of being a sales representative. He walked the markets, showed the buyers our samples and collected their contact information – we are already working with some of these contacts.”

Experts estimate that the market capacity of these assignments is about 10-12 billion rubles a year, and 5% of Russians are interested in such services. General Director of PR-Technologies, Gleb Sakhary, says that there are no other companies that offer such a great variety of services as Porucheno.ru. Although the agency does, at times, compete with concierge and delivery services.

The Mister Times company completes around 40 assignments a month in St. Petersburg. General Director of the company, Dmitri Podkoritov, explained that, so far, it’s mostly delivery orders, booking tickets and standing in lines; which is why the average invoice is so small – around 300 rubles per order. According to him, in order to raise the sum of the account, they would need to offer more difficult services and broaden the territory in which they work – as do Porucheno.ru, which completes 50 monthly orders on average, and is planning to double that number next year. The agency recently attained five new representative offices that operate in St.Petersburg, Prague, Tashkent, Perm and Novosibirsk.

Negotiations with China are underway.

Finam.ru’s Director, Sergey Mikheev, says that the special-errands agency is still a small business which, nonetheless, is growing at a high speed. “We are pleased to include this brand in our portfolio, as well as other internet services created by E-generator”, said Mikheev.

Example Orders:

Purchase 5 liters of beer and snacks and to be delivered to the recipient in Kursk

Find out where archival documents of the Obstetrics Birth Center are located

Receive some information from a supplier of spices in London

Calculate the cost of a railroad tariff for transporting plywood

Buy jam from a feijoa [guava] merchant and deliver it to Lipetsk

Copy all for-rent ads in the real estate sections of newspapers of 15 cities for three years

Buy Cossack clothes and to send them Poland.

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The Ministry of Justice is only the first step. Today, all agencies that are involved in developing legislation are obligated to conduct anti-corruption experiments on their bills. Each bill is supposed to be displayed on the official website of the department that is developing the bill, and after that during the next seven days, conclusions are to be made regarding the corruptibility of the future law. Thos writing the new laws are obliged to take into account experts’ opinions.

It very much resembles the OpenCode practice, developed by programmers. The program’s code is open, in other words, accessible for all to view and make changes. The same principle is applied in many informational systems, the content of which is formulated by various users (various Wiki products, for example). It seems that Russia is becoming a true information-society, even as the Public Administration is shifting the way it works to making laws with the help of electronic forums.

Of course, practically all Russians are experts in corruption. But, perhaps, not only in corruption? Should we also involve our citizens in the construction of the Central Bank’s credit policies, establishment of customs duties and taxes, formulation of energy strategies, and discussions on processes of law enforcement that runs over women on cross walks and shoots people in stores?

To look at this seriously, the voice of the people is beneficial and can help to improve laws. The problem lies in that corruption in our country is flourishing, not because there are bad laws, but because there is a great demand and supply for corrupt services. To destroy that market is the main problem for anti-corruption politics to deal with.

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Officials from the Ministry for Economic Development, who have spent the last 16 years of their lives on exhausting negotiations, are now licking their wounds. The WTO, foreign decision makers and the Western press is simply refusing to believe their eyes and ears until they receive an official document from the organization (still to be drafted) regarding the Customs Union of Russia, Belarus and Kazakhstan. Something very important has happened in the relationship between Russia and the rest of the world. Russia hasn’t been fully integrated into global institutions, but was on its way to such integration. Joining the WTO and then the Organization for Economic Co-operation and Development (OECD) was simply a matter of time – this was the general outlook on Russia. Now Russia is on its way somewhere else. But where?

Three directions are appearing. The first: Russia has chosen a special way and is now building a favorable road, that inspired by our (Russian) successes, and the world will follow. If one were to believe this, then the world economy would more and more begin to resemble isolated regional economies. Has anyone joined the WTO as a group? Has anyone announced its plans to join the organization before any formal plans were drafted? We will be the first. Besides, why rush towards global integration? After all, we can form our own common market in the region, our own WTO, IMF and World Bank – mainly by using Russian strength, naturally. Financial, natural and other resources are abundant in Russia – enough to cover for all its neighbors. A Customs Union, then a monetary union will follow (it isn’t the first time Russia has tried to persuade the Eurasian Economic Community (EurAsEC) to deal in rubles), and then free labor exchange within the common market – closed from all sides by protectionist barriers – how is that not a way out of these difficult critical times? There is also a benevolent part of the equation: after integration with Belarus, it will be possible to do the same with Tajikistan and Kyrgyzstan. Russia will be able to help these countries even more.

The second scenario becomes a reality if one assumes that walking out on the talks was a way to bargain. If so, the WTO will be frightened by our determination and will quickly take its meaning and will do so on a more favorable platform than planned. After all, our partners in the WTO are losing more than we are from our absence. There aren’t any bargaining barriers in the way of oil and gas. If we decide to discard international agreements, then at the same time international producers will need to break a sweat to get into our market. After all, we won’t depend on imports and, if we so desire, can accommodate the manufacturing of any consumer goods in Russia. Any buyer knows the first rule of bargaining: pretend you’re not interested in the goods and are prepared to walk away. So, the Russian demarche can be a win-win situation in fighting the stubborn foreign bureaucrats. They will come to their senses and embrace Russia as it is.

The third scenario is a complete refusal to integrate with anyone. The North Koreans support themselves by self-reliance, are not encountering any crisis. How is Russia worse off than them? We could pour all of our remaining money into the domestic auto-industry. We could install monetary control without being afraid of the worsening investment climate and the outflow of capital; stimulate the civil banking, insurance and telecommunications industries, while closing access for foreigners. We could do it all. No one will come and shake their finger at us; no one will write an angry piece in a newspaper and show a slanderous report on television. No one will come because no one will need to come. Neither will anyone be interested in this place.

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Last year, the Libyan Investment Authority, whose savings amount to $65 billion, acquired almost 5% of the second largest bank in Italy – UniCredit.

It is expected that Colonel Qaddafi, who on his trip is being accompanied by several dozen businessmen, will be discussing the details of these deals in Rome.

Libya and Italy are held together by historic ties. Last year, after Silvio Berlusconi came to Libya and Italy agreed to pay Tripoli $5 billion for its colonization during the years of 1911 to 1947, they moved on to more friendly ground. Muammar Qaddafi had even promised favorable conditions for Italian companies.

At the end of 2007, Gazprom had won a bid for one of Libya’s oil and gas deposits. In the same year, the company had signed three more contracts with Libya. Currently, Gazprom is holding negotiations regarding ENI’s article concerning its share in the Libyan project “Elephant”. ENI and Enel jointly own ArcticGaz and Urengoil, while Enel owns 49.5% of shares of RusEnergoSbyt and 55.78% of shares of OGK-5.

The General Director of the National Energy Security Fund Konstantin Simonov says that in regards to North Africa, where by 2015 it is estimated that natural gas extraction may increase by at least $35 billion, Gazprom is interested in everything. He adds that the increased share of Libyan capital in Italian energy markets may play a positive role for Russia: it is easier to enter North Africa with Italy serving as an intermediate than it is to do so directly.

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Now, guess who has repeated Goebbels’ justification of Nazi aggression against Poland in September 1939?

It’s not a pro-Nazi resource, but the official website of the Russian Defense Ministry, an article by Colonel Sergey Kovalev from the Institute for Military History, RF Defense Ministry. It’s been published in the Military-historical magazine – the official medium of the institution. What’s more remarkable is that it was published in the column ‘History: Against Fraud and Forgery’.

This antiscientific version of the outbreak of the war reassures the readers that it was possible to avoid concessions to the dictator and repeats the logic of the initiators that the ‘appeasement’ policy which, as we know, only brought water to the mouths of Hitler and his team. It’s well-known that the annexation of former German territories after the WWI was part of the Nazi program.

Besides, they knew in Warsaw what such concessions may lead to: during the territory settlement negotiations in March 1939, the Nazis occupied Czechoslovakia even though they promised to stop expansion after the annexation of the German-populated Sudetenland in October 1938. The plan of the Polish assault, codenamed as ‘Fall Weiss’, had been worked out by April 11 – three weeks before the official diplomatic break.

Such an article is blasphemy in regard to the people who lost 6 million lives during the years of war: 15% of the pre-war population. Apart from that, this was disrespectful of our anti-Hitler coalition ally, who constantly fought against the Nazis for all 6 years of the war, and in 1941sent the 4th biggest army to the front line.

Disrespect of the Victory against our common enemy. Now the article may become the cause of a diplomatic scandal – Warsaw may lodge an official protest to Moscow.

But there is another problem. Publication of such articles in magazines with scientific status rings an alarm bell. The publication shows once again how dangerous attempts to polarize acute problems of the recent past, and create a new civil religion based on the cult of history, can be. The strengthening of nationalistic prejudices against foreigners caused by a desire to pick on disputable neighbors will inevitably lead to an increase in xenophobic moods towards representatives of non-title nations of the country, which is very dangerous for modern Russia.

Apart from that, excessive interference, by the state with the past, may lead to the replacement of academic discussions by political demagogy. According to the native historic science experience, it could lead to its degradation, when the objective of studying historical events is substituted by quasi-studies aimed at guessing the authorities’ mood and proving that they are right.

Finally, this encourages the tendency with some historians to obtain certain amenities by opportunistic distortion of the past. This, in turn, leads to a lack of trust in history as a science, sparks interest in dishonest theories and results in shifts public consciousness, which becomes unable to recognize even evident failures and crimes.

In such a situation, History as a science cannot fulfill its main task – to teach those living in the present moment, and the ensuing generations, to move forward in such a way that they will not repeat the tragic mistakes and crimes of the past.

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