Notebook

“The ruble is on the move. The next stop is Berlin.”

Vladimir Zhirinovsky (Reuters)

 

For over a decade, the U.S. dollar has been Russia’s unofficial currency. Keeping savings in relatively stable dollars has helped Russians weather currency devaluations, avoid rampant inflation and limit uncertainty. Even today, despite laws that disallow the practice, large ticket items (e.g. real estate) are often expressed in dollars.

But now, after years of lying low, the Russian ruble is on a roll. In the first half of 2006, powered by energy exports, the value of the ruble has risen 6.7 percent versus the dollar. Analysts agree that this trend is expected to continue. Meanwhile, the country’s leadership is steering the ruble toward further convertibility.

In his May 10 State of the Nation address, President Vladimir Putin said work on making the ruble fully convertible should be completed by July 1, instead of January 1, 2007, as had been planned. 

Shortly afterward, Finance Minister Alexei Kudrin announced that, on July 1, Russia will lift all remaining currency restrictions, including reserve requirements for foreign currency deals and the obligation to use special accounts for some foreign exchange operations. These restrictions were enacted after Russia’s 1998 default, and sought to slow or prevent capital flight. But, in 2005, capital imports exceeded exports for the first time in many years. The government thus feels these restrictions are no longer warranted. 

“We have accumulated the potential to become a country with a steady currency, the stability of which is guaranteed for many years under any development scenario,” Kudrin said.  Removing the restrictions will make the ruble more attractive and be a draw to foreign investment, Kudrin said. Not incidentally, lifting currency restrictions is also a requirement for Russia’s long aspired accession to the World Trade Organization.

Meanwhile, the pro-Kremlin Duma is working on the political aspects of ruble convertibility: it may soon make government officials pay a fine for using the D-
word.

On May 24, the Russian parliament gave its initial approval to a bill that would punish officials who use the word “dollar” where “ruble” would have been appropriate. The size of fines has yet to be set, however, and there is talk of extending the measure to legislators and the media. 

Proponents of the bill, which must pass two more readings, say it will help the country overcome its postcommunist habit of calculating prices in dollars and will seal the Russian currency’s revival. Yet critics argue that the bill would be difficult to implement and would take the top spot in Russia’s list of ridiculous laws.

As the struggle for full convertibility continues, many Russians who have long kept their savings in dollars are following the developments with some concern. National pollster VTsIOM reported that 57 percent of Russians regularly monitor the dollar to ruble exchange rate (see Post Script, page 64). For them, a rising ruble means a better economy, but also a devaluation of their life savings.

 

Clean Sweep

Party of Power flexes its muscle

On March 11, parties loyal to President Vladimir Putin swept the polls in all 14 regions where regional elections took place. Meanwhile, the Kremlin shuffled the agency that oversees voting, less than a year before Russians will return to the polls to elect a new parliament and president. 

Most Russians see the regional vote as a touchstone for the upcoming elections. The head of the Central Election Commission, Alexander Veshnyakov, said in January that “elections on March 11 will be a kind of general rehearsal for the federal-level elections we will have late this year.” 

United Russia, the dominant pro-Kremlin party, scored a landslide in 13 of the contested regions, and A Just Russia, a nascent party loyal to Putin and labeled a token opposition by many observers, won in the southern Stavropol region, with total turnout estimated at just 39 percent. Other opposition groups denounced the vote as rigged and said they had been muzzled. 

A few days later, Putin replaced five members of the 10-person Central Election Commission. Then, on March 26, Vladimir Churov, a Duma member elected from the ultranationalist Liberal Democratic Party, was tapped to head the commission, replacing Aleksandr Veshnyakov, who has led the agency since Russia became a democracy. 

Local media speculated that Putin heaved Veshnyakov overboard because of the latter’s public criticism of Kremlin-sponsored election reforms, such as eliminating electoral turnout thresholds and removing the “against all” option on the ballot. 

Some saw a link between Churov’s appointment and Sergey Mironov’s renewed calls for Putin’s third term. Born and raised in St. Petersburg, between 1991 and 2003 Churov worked under Vladimir Putin in that city, and is said to have remained loyal to his former boss.  

 

NGO drudgery 

Non
profits face daunting reports

Russian non-government organizations were to be put to the test on April 15, when they had to file annual reports for the first time in accordance with new regulations. Many non-profits, particularly smaller ones, worried they would not be able to meet the deadline. 

“I think that only large organizations will be able to provide reports,”  Tatyana Kasatkina, executive director of the Memorial human rights organization, told Interfax. The quantity and complexity of the paperwork is beyond the abilities of smaller organizations, she said. 

Experts say the scope of reporting required is also too much for the controlling body, Rosregi-stratsia, which has neither sufficient staff nor facilities to handle the coming avalanche of reports.

Last year the government introduced more stringent registration and reporting procedures for NGOs and religious organizations, which many experts saw as a means of selective control over NGOs in advance of the presidential and parliamentary elections. Following outrage from religious leaders, the government promised to ease the requirements for churches. 

Rosregistratsia officials recently said that they were not planning any immediate measures against organizations that fail to report or that provide incomplete reports, but NGOs still worry that flaws in their reporting may rebound against their organizations, should the need arise.

“It’s like an axe hanging in mid-air,” said Lev Ponomarev, executive director of the organization, For Human Rights. “It may spare one neck but land on the other.”

 

Triple Tragedy

Three regions suffer disasters
on same day

On March 21, Russia mourned the deaths of 176 people who died in a trio of bloody tragedies four days prior. The disasters sparked the government to form a commission to determine their causes.

On March 17, a methane-gas explosion at the Ulyanovskaya mine in Novokuznetsk killed at least 108, with two still missing. Sixty-two more persons died when a retirement home caught fire in Kamy-shevatskaya, a town in Krasnodar Krai. And another six died when a Tu-134 plane crash-landed at the Samara airport, RFE/RL reported. 

President Vladimir Putin ordered the formation of a commission to determine how the events occurred and to provide aid to the victims’ families. 

Preliminary investigations re-vealed some 20 mine managers were among those killed in the Ulya-novskaya blast, including the chief engineer and chief mechanic, as well as a British citizen, Ian Macolm Robertson, according to Russian media reports. Investigators believe the explosion took place during an equipment test, Interfax said, though others dispute that finding. 

The high death toll in the retirement home fire resulted from a late emergency call, staff misconduct and the rescuers’ remote location, according to RFE/RL, citing the Emergency Situations Ministry. The home’s janitor twice ignored the fire alarm. Only four nurses were on duty at the time, and they failed to evacuate the building properly, Natalya Lukash, a ministry spokeswoman said, according to RIA Novosti. 

 

Forging Passes

Crime ring convicted
in Moscow

Six men were convicted of selling forged VIP license plates – the type used by senior Kremlin officials and presidential bodyguards – for as much as $200,000, Reuters reported on March 19. They were sentenced to two to seven years in jail.

Some of the plates allowed for the use of a flashing blue light, known as a migalka, which put the vehicle essentially outside traffic rules, and one package included a plate with special codes for the Federal Guards Service, which protects President Putin and other top officials.

Moscow’s Timiryazevsky district court also convicted the men of large-scale fraud, document forgery, bribery and complicity to commit a crime, RAI Novosti said. They produced, handled and sold forged documents such as special permits, Interior Ministry certificates, state license plates, special passes to enter the Kremlin and the presidential administration, and passes for large vehicles to enter central Moscow. 

The gang included a former member of the Foreign Intelligence Service, a former Moscow traffic police officer and a former federal Interior Ministry colonel. Sergei Stepashin, chairman of the Russian Audit Chamber, told law officers in February that the recruitment of retired members of powerful Russian agencies such as military intelligence, the FSB and the Interior Ministry by criminal groups is becoming “a huge problem for Russia,” RIA Novosti said.

 

Rostropovich 80 

World-famous cellist
feted at Kremlin bash

Acclaimed Russian cellist and conductor Mstislav Rostropovich looked frail but radiant as he entered the Kremlin for a tribute in honor of his 80th birthday, accompanied by wife Galina Vishnevskaya and President Vladimir Putin, one of his biggest fans. “I feel like the happiest man in the world,” Rostropovich said. 

Russian newspapers published flattering paeans to the acclaimed cellist – who worked closely with three of the 20th century’s leading composers: Sergei Prokofiev, Benjamin Britten and Dmitri Shostakovich – or his vast musical accomplishments and for his human rights activism.

Rostropovich once had less amicable relations with the country’s leadership, after he sheltered Alek-sandr Solzhenitsyn in the 1970s. Rostropovich and his wife lived in exile beginning in 1974 and were stripped of their Soviet citizenship in 1978 after Rostropovich spoke out against censorship. They had their citizenship restored in 1990, after the fall of Communism, and Rostropovich was actually in the besieged White House during the 1991 coup attempt. 

Rostropovich now divides his time between Russia, the U.S. and Europe.

 

A Will of Their Own

Academics beat back 

Kremlin takeover

In a rare rebuke to the Kremlin and President Vladimir Putin, the Russian Academy of Sciences voted down a new, Kremlin-sponsored charter which would have given the government more control over the Academy’s management and research. The Kremlin wanted to subordinate the Academy to a government-controlled supervisory body. “We will not agree to the supervisory council under any conditions,” said Academy President Yury Osipov after the vote. The government argued that the Academy needs new management to better integrate it into the modern economy. 

 

To Mars Together

Russia and China to explore
the red planet

Moscow and Beijing signed an accord on Mars exploration that marries Russian technology and Chinese money with the aim of launching a Chinese mission to Mars and a Russian one to take soil samples from Phobos, the red planet’s satellite. The mission will kick off in the fall of 2009 and will reach Mars in 10 to 11 months. 

This joint program is a bitter slap to the U.S., which recently announced its own Mars exploration plan and is anxiously watching the Chinese space program as a sign of the country’s growing political ambitions. 

In 2003, China became the third country after the Soviet Union and the U.S. to send a man into space. The Soviet Union helped launch the Chinese space program in the 1950s, and in recent years Russia has assisted China’s space agency and even trained Chinese cosmonauts. 

 

President Ramzan

Chechnya gets a 

new head of state

 Ramzan Kadyrov, the Kremlin-backed strongman who has been the de-facto leader of war-torn Chechnya since his father, then-President Akhmad Kadyrov, was killed in a 2004 bomb attack, was sworn in as the republic’s president on April 5, becoming – at 30 – Russia’s youngest regional leader.

At the ceremony, schoolchildren wore T-shirts bearing portraits of a smiling Kadyrov, Agence France Presse reported. Security was tight across the province, with police stationed at 100-meter intervals along main roads. Portraits of Kadyrov hung from buildings, along with slogans praising him, according to AFP.

Kadyrov’s appointment came in February, following the resignation of his predecessor, Alu Alkhanov, whose departure is widely believed to have been staged so to clear the way for Kadyrov, who in October reached the minimum age for holding the republic’s presidency. 

Kadyrov has pleased Moscow by sharply reducing rebel activity in Chechnya, though human rights groups routinely accuse Kadyrov and his private army of personal involvement in kidnappings and torture. 

Kin-Dza-Dza! 

Reanimating a Soviet film

A beloved Soviet-era science fiction film, Kin-Dza-Dza!, is being remade into a cartoon. 

Little known outside Russia, this 1986 space travel story was an acidic satire about the dawn of the Soviet Union, and, despite a dramatically altered political landscape, Kin-Dza-
Dza! still ranks among Russia’s top comedies. 

Kin-Dza-Dza! holds particular reverence among Russians as the source of many quotations they drop into conversations with a smile, including, “We don’t need a violinist” and “I cannot live in a civilization which has no color differentiation in pants.”

Now Kin-Dza-Dza! is being adapted for children and an international audience as an animated cartoon. The original film’s director, Georgy Daneliya, is involved, and his wife Galina may do voice
overs. 

The original Kin-Dza-Dza! story line has been preserved, but the cartoon is adding a few new characters. Some of these may hail from Khanty-Mansiysk, where the film is being made at a local studio, Yugra-film, as a way of honoring local sponsors, Galina Daneliya said. The cartoon’s release is planned for December 2008. 

 

Keeping an Eye on “Our People”

Over 15,000 supporters of the pro-Kremlin youth movement Nashi (Our People) celebrated seven years of Vladimir Putin’s presidency with a mass demonstration in central Moscow on March 25th. Most students were bussed in from around Moscow. Several thousand wore the movement’s red and white colors and carried bags emblazoned with “President’s Messenger.” Nashi, whose funding source is “certain patriotically-minded businessmen,” is planning seminars and a repeat of last summer’s student activist training program. In December, the British embassy in Moscow complained to the Russian Foreign Ministry that Ambassador Anthony Brenton was being followed by members of Nashi, which had objected to the ambassador’s attendance at a July opposition conference. Above: Nashi leader Vasily Yakemenko before a huge photo of President Putin that wishes the movement “success.”

 

 

 

“As concerns the new head of the Defense Ministry, well, I can only express my congratulations to pacifists.”

Duma Deputy Konstantin Zatulin, on the appointment to
Minister of Defense of former Tax and Levies Minister Anatoly Serdukov,
who has little military experience. (Itogi) 

 

“Just as the Emperor once said that Russia has
two allies - the army and the navy, today
Russia has two allies – oil and gas.”

Duma Deputy Dmitry Rogozin. (Itogi)

 

“Anyone can find a party to fit their taste. If you are for Putin, vote for Putin.
If you would like a different Putin, vote for the other Putin.”

Political observer Sergei Markov. (Itogi)

 

“Many reputable corporations seem happy to loot the corpse of Yukos, the dismembered parts of which are being sold and handed off, over and over until the last drops of blood are cleaned away. That’s a disappointment, but not a surprise.”

Garry Kasparov, United Civic Front leader and former world chess champion.
(Wall Street Journal editorial) 

 

“You are an officer in the reserves. You have been awarded a parade pistol. If you have the honor of an officer, you know what you should do with it.”

Duma Deputy Pavel Voronin to Health Minister Mikhail Zurabov, on the collapse
of health reforms and pharmaceutical subsidies. (Komsomolskaya Pravda)

 

“Vice Premier Zhukov arrived in Shanghai and saw what has been done there – it looks better than New York and Manhattan. And from his mouth came these words, ‘So this is what you can do if you don’t steal.’ This slogan should be engraved over the government’s doors.”

Gennady Zyuganov, leader of the Communist Party. (Itogi)

 

“Walk around Moscow. You don’t have to smoke;
the air alone will kill you.”

Duma Deputy Gennady Raykov. (Itogi)

 

 “If we are going to measure all of Russia by one yardstick, then we need to start growing corn in Chukotka again.”

Deputy Chairman of the Federation Council, Alexander Torshin, on the need to take into account regional realities when implementing projects from Moscow. (Itogi)

 

“People do not want any more revolutions. People want the quiet development of the country, stable development, without shake-ups. They would like to see a president who can guarantee the succession of power.” 

Valentina Matviyenko, St. Petersburg governor. (New York Times)

 

“They tried to make Russia into America, but we got Columbia or Bangladesh, with bribes.

Gennady Zyuganov, leader of the Communist Party. (Itogi)

 

“Had there been a political party of Victims of Police Brutality in Russia, it would probably have made it into the Duma,”

Gennady Gudkov, of the Duma Security Committee
(and ex-officer of the Federal Security Service), on the recent report that
over 4% of Russians personally experienced police brutality in 2004. (gazeta.ru)

 

17% 

Russians who are over 60. By 2050, the figure will jump to 31 percent. 

20% 

Houses in London priced over $10 million which are sold to Russians. Of those sold for over $30 million, the figure is 50 percent.

3

Ranking of Russia among countries with the most billionaires, according to Forbes magazine. Russia added 20 billionaires since last year’s ranking and now has 53, trailing only the U.S. and Germany. 

730,000

Children in Russia who are homeless. Their number is growing by 130,000 annually. 

51

Life expectancy for males in the Koryak Autonomous Region – the lowest in Russia. It is highest (76) for males in Ingushetia. 

10%

Russian males who are in jail. 

1,300,000,000

Passengers served by Russian railroads each year. 

$3,100,000,000

Size of the Russian IT outsourcing industry today, versus $60-100 million in 1999. The sector is expected to grow an additional 40-45 percent in 2007.

2,000,000

Russians who purchased a new or used car in 2006, up 20 percent versus 2005. In the next four years, 15,000,000 Russian families are expected to get a car. 

1,150,000

Legal immigrants who were working in Russia in 2006, up almost 64 percent from 2005. Experts estimate that there are about 10 million illegal guest workers in Russia. 

1

Estimated number of Russian miners who die for every million tons of coal mined in Russia.

R72,000,000,000

Amount spent by the government on science in 2006; three times spending in 2001. 

R358,000,000,000

To be invested by the government over the next six years in the Russian Far East, out of which the city of Vladivostok will get R100 billion. 

 

Spying Up 

Russian spying efforts are back to Cold War levels, according to Joel Brenner, head of the U.S. Office of the National Counterintelligence Executive. Brenner said Russia is sending to the U.S. “an increasing and troubling number of intelligence agents.” While China, Brenner said, also sends its agents, it is interested in obtaining sensitive technology, yet Russia is seeking insights into the upper echelons of U.S. decision-making, thereby intending to regain some of its former superpower status. 

 

Dollar Sale 

The city of Prokopyevsk paid OAO Novolipetsk Steel one dollar for its cash-hemorrhaging coal unit, Prokopyevskugol, which the steel company purchased a year ago for $62 million. In the interim, Novolipetsk, owned by billionaire oligarch Vladimir Lisin, invested at least $24.4 million more in Prokopyevskugol to repay debts and implement safety improvements. Novolipetsk snatched up the coal unit last April as part of a package deal to acquire coke-producer Altai-Koks. Prokopyevskugol has been bleeding cash ever since losing about $50 million between April and December 2006.

 

Posthumous Award

Anna Politkovskaya, the Russian reporter killed last October, was awarded the prestigious 2007 UNESCO/Guillermo Cano World Press Freedom Prize for showing “incredible courage and stubborn-ness in chronicling events in Chechnya after the whole world had given up on that conflict.” Politkovskaya is widely revered outside Russia for her critical coverage of the conflict in the breakaway Russian region. The prize, awarded posthumously for the first time, will be presented on May 3, World Press Freedom Day, in Medellin, Colombia. 

 

Russians Who

 

 

feel the world was safer and more stable in Soviet times 47% ...today  34%

 

think that a new Cold War is likely 40% ...unlikely 48%

 

see a military threat to Russia from other states 49%

...don’t see such a threat 43%

 

believe the Russian army can protect the country from an external threat 65%

 

say the army should be conscription-based  41% ...volunteer  54%

 

would not want a family member to be in the army now 59% 

 

feel hazing pervades the Russian army  65%

 

feel the Powers That Be are putting
pressure on the Khodorkovsky investigation  40% 

...feel investigators are acting on their own initiative  22% 

 

are sympathetic toward Mikhail Khodorkovsky  18% ...are not 63%

 

consider Khodorkovsky a political prisoner  25% ...do not  49% 

 

receive all of their wages officially 68%   ...under the table 4%

...from a mixture of sources 13%

 

have a bank loan  19% ...plan to take one out soon  11%

...of those with a loan, say they would never default  93.9%

 

feel anti-corruption raids on the traffic police will improve performance  30%

...will have no influence whatsoever 60%

 

feel more stringent traffic laws will help reduce traffic accidents  29%

…will only increase bribes paid to traffic police 57%

 

own an apartment  66% ...rent one from the State  12%

 

have a driver’s license 62%  own a car  44%

Found in Chechnya

The secret grave of Georgia’s first president, Zviad Gamsakhurdia, was discovered in Chechnya on March 3 and his body was reburied in Tbilisi after Russian forensics confirmed its identity. A dissident nationalist, Gamsakhurdia led efforts to free Georgia from the Soviet Union’s grasp and became the newly independent country’s first president in 1991. He was ousted a few months later by armed opponents, leading to a lengthy civil war. He died in disputed circumstances two years later. Officially, Gamsakhurdia committed suicide, but his family insists that he was murdered. 

 

Georgia Sues

Georgia filed a lawsuit against Russia in the European Court of Human rights over Russia’s deportation of hundreds of Georgian citizens last year following the two countries’ spying spat. Georgian officials said that 2,000 Georgians were deported, many of them in cargo planes. Seven people reportedly died on their way home. 

 

Diplomat Convicted

A New York court found a senior Russian UN diplomat guilty of laundering more than $300,000 to help companies win contracts in the UN’s shuttered Oil For Food program in Iraq. Former head of the UN General Assembly Budgetary Committee Vladimir Kuznetsov will be sentenced on June 25 and could face up to 20 years in prison. His accomplice, former UN procurement officer Aleksandr Yakovlev, pled guilty in August 2005 to taking more than $1 million in bribes and helped investigators uncover the crime scheme. 

 

Shakhty-Cam 

The mayor of Shakhty, a small coal-mining town in southern Russia, has set up surveillance cameras in local officials’ offices, with the goal of improving services and curbing bribes. The cameras are monitored by the human resources department and called upon in case of complaints. Some locals feel the measure will lead to improvements, while others fret about the impact of Big Brother watching. 

 

Skating Fiasco

For the first time since 1962, Russia did not win a single medal at ice skating’s annual World Cham-pionships, held this year in Tokyo. The best result was scored by ice dancers Oksana Domnina and Maxim Shabalin, who came in fifth. In pairs, veterans Maria Petrova and Andrei Tikhonov withdrew after the short program (where they finished 11th). In men’s singles, Sergei Voronov and Andrei Lutay came in 19th and 20th respectively. In the women’s event, Yelena Sokolova finished 13th. 

Last year’s Worlds in Montreal was hardly any better: Russia took only a single bronze medal. 

After taking three gold medals at the 2006 Olympics, Tatyana Navka with Roman Kostomarov and Tatyana Totmyanina with Maxim Marinin all left the ice for the commentator’s booth or for ice shows, and no contenders have appeared to take up their mantels. 

Even Evgeny Plyushchenko (see Russian Life, Jan/Feb 2005) swapped his skates for a deputy seat in the St. Petersburg legislative assembly. But the disastrous results in Tokyo have prompted Plyushchenko to an-nounce he will return to the ice. His coach, Alexei Mishin, said Plyu-shchenko will compete in the 2010 Winter Olympics in Vancouver. 

 

Speed Demon 

Yevgenia Shapovalova set a world record in the 100m event at the Nordic Ski Competitions Sprint Tour held in Moscow in March. The 20-year old skied the distance in 13.94 seconds. The previous record holder was Norway’s Guri Strem Solli (15.47 seconds). 

Estonia Toppled

Striker Alexander Kerzhakov (now playing for the Spanish club of Sevilla) scored two second-half goals to give Russia a 2-0 away win over Estonia to keep the Russian national soccer squad firmly in second place in Euro 2008 qualifying Group E. Russia now has 11 points from five games, two points less than the leader, Croatia, which beat Macedonia -
2-1, and three points more than England and Israel, who drew 0-0 in Tel Aviv. 

 

Kramnik Wins Blind

Reigning world chess champion Vladimir Kramnik won the 16th Amber Blindfold and Rapid Tournament in Monaco with a two-point lead over runner-up Vishy Anand. It was Kramnik’s sixth victory in Monaco. He previously won the event in 1996, 1998, 1999, 2001 and 2004. The key to his success was a powerful performance in the blindfold competition, where the Russian scored 9 out of 11. Anand, meanwhile, dominated in the speed chess portion of the competition, not losing a single match. The total event prize fund was €216,000 (US $288,000). On each day of play there are two rounds, one a blindfold session and the second for speed chess.

 

Without Isinbayeva

Olympic gold medalist, World Champion and world record holder in the pole vault, Yelena Isinbayeva, will most likely finish her career at the 2012 Olympics in London. Thus she will not participate in the 2013 World Athletics Championships, to be held in Moscow (IIAF announced the capital’s selection in March). “I will be performing for 5 more years,” Isinbayeva said. “So, I  think the World Championships in Moscow will be held without me. Too bad, I wanted so much to finish my career at my home stadium in front of my home crowd.”