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Photo by Reuters/Gazeta.ru
On Monday, October 6, the Russian market lived to see perhaps the worst day if its life. Despite several trading pauses, total market losses equaled to 19 percent. Some blue chips lost nearly 40 percent. Declining oil prices didn’t help either. The RTS index dropped to 867 points, while Micex stopped trading when its index dropped by 18.66 percent, reaching 749.66 points.
Russian companies saw value evaporate on both Moscow and London exchanges. In London, shares of Russia’s “Norilsky Nickel” lost 44.28%, VTB – 36.18%, “Tatneft” - 45,23%, «Uralkaly» – 47,78%, Rosneft» –39,77%, LUKoil – 36,09%, «Surgutneftegaz» – 31,25%, Х5RETAIL – 26,12%.
In Moscow, “Norilsky Nickel” plummeted 37.67%, “Rosneft” – 27.41%, Gazprom – 24.42%, LUKoil – 24.16%, “Surgutneftegaz” – 22.92%, MTS – 21.21%, Sberbank – 16.32%, VTB – 24.5%...
Continue reading "Russian Market Leads in Losses" »
Cathedral of the Holy Blood (Church of the Savior on Blood) - Photo by Charles Ganske
St. Petersburg is often called the “Venice of the North”, but historically it is the Amsterdam of the North, since Peter the Great chose to model it after that city. But, like either Amsterdam or Venice, one can take a boat trip through the canals, at least in season, and one should.
A westerner notices that there is something intentionally non-Russian about many aspects of the city. The “cathedral” of Our Lady of Kazan doesn’t look Orthodox at all. Instead, with its neoclassical dome and curved colonnades, it looks like an imitation of St. Peter’s Basilica in Rome. (The Russian word sobor is generally translated as “cathedral,” but it does not mean “cathedral” in the Western sense of the seat of a bishop.) St. Isaac’s Cathedral looks pretty classical too.
Continue reading "Russia Observed
St. Petersburg and Veliky Novgorod" »
Beginning tomorrow, Russia Blog will post a series of writings and observations by Howard Ahmanson, his wife Roberta and his son, David on their recent trip to Russia and other countries of the former Soviet Union. The first installment covers the Ahmanson’s visit to St Petersburg and its environs.
Ferrari cars are displayed just outside Moscow's Red Square to mark the opening of the new Ferrari and Maserati showroom in the Russian capital on Saturday, April 28, 2007, with some of the Red Square landmarks in the background. (Photo by AP, Comment by Daylife).
Download the PDF version of the report Luxury Goods Market in Russia
According to a recent study by PriceWaterhouseCoopers, Russia is home to the world's third largest concentration of billionaires (after the United States and Germany) and over 100,000 multimillionaires who have a combined $300 billion of cash on hand.(1) According to Associated Press, “Moscow is home to more rich people than New York.”(2)
Rising consumer demand for new and better products and increasing incomes have given rise to an expanding middle and upper class that “have caused an explosion in all types of consumption.”(3) The Russian capital, Moscow, is now internationally considered a Mecca for buying and selling the highest of the high-end.(4)
Continue reading "The Luxury Goods Market in Russia" »
Another interesting insight that appears, instructively, first in Europe, not the U.S.
Grozny in 2000...
...and Grozny in 2008.
It's Over, and Putin Won
Chechnya is being rebuilt with Russian oil cash and its leader obeys Moscow. Separatist ideas are on ice
By Jonathan Steele in Grozny
The Guardian
Originally published on September 30, 2008
No corkscrew. That's the first surprise about Chechnya. Unlike in Baghdad today or Kabul during the Soviet occupation, planes don't arrive high above the airfield and then dip one wing in a steep and terrifying spiral so as to reduce the risk of ground fire as they land. In Grozny they glide in over woods and villages, apparently confident there are no resistance fighters lurking in wait.
Surprise number two is the amount of reconstruction in the Chechen capital. Five years ago when I last visited Grozny it still looked like the ruins of Dresden or Hiroshima, street after devastated street. Now new nine-storey blocks of flats, shops, and cafes flank the main streets. In the central square workers are laying the last paving stones outside what is described as Europe's largest mosque, a concrete replica of Istanbul's Blue Mosque, financed and largely built with Turkish aid and Turkish engineers.
Continue reading "The Guardian Reports on Chechnya, Terrorism, and Wahhabism " »
The article in the International Herald Tribune by two prominent Republican secretaries of state, Henry A.Kissinger and George P. Schultz (LINK), is likely to be read closely in Washington and Moscow alike. Isn’t it interesting that it ran first in Europe?
Finding Common Ground
By Henry A. Kissinger and George P. Shultz
Tuesday, September 30, 2008
The crisis over Georgia raises an issue familiar from history: In 1914, an essentially local issue was seen by so many nations in terms of established fears and frustrations that it became global in scope and led to the First World War.
There is no danger of general war today. But there is the risk that a conflict arising out of ancestral passions in the Caucasus will be treated as a metaphor for a larger conflict, threatening the imperative of building a new international order in a world of globalization, nuclear proliferation, ethnic conflicts and technological revolution.
Continue reading "Cold Warriors Kissinger and Schultz Scope Out Today’s Russia" »
Last night in Oxford, Mississippi on the campus of Ole Miss University the Democrat and Republican contenders for the White House clashed in their first presidential debate. The topic of foreign policy had been agreed to in advance, but given the extraordinary financial crisis impacting the U.S. this week, tax and spending policies were also key topics for PBS moderator Jim Lehrer. To Lehrer's credit, as usual, he didn't let either candidate excessively interrupt the other, while highlighting their areas of disagreement.
No surprise, Senator John McCain declared his distaste for the Kremlin. McCain said: "Russia has now become a nation fueled by petro-dollars that has basically become a KGB apparatchik-run government...I looked in Mr. Putin's eyes and I saw three letters -- a K, a G and B."
Click on the extended post to read a transcript of the debate.
Continue reading "McCain Slams Russia in First Presidential Debate
Both Candidates Support Ukraine, Georgia NATO Membership" »
John Wohlstetter, Discovery Institute’s Senior Fellow, was quoted in an article published by a Russian financial firm BCS. Below is the translation of the original article.
The Republican Party is actively working on the strong boost of “international experience” of Sarah Palin, as a vice-presidential candidate. Analysts believe that this flaw might neutralize the positive factors that the Alaskan governor is believed to be bringing into John McCain’s campaign.
During the annual UN General Assembly on September 24 Sarah Palin will conduct meetings with the presidents of Georgia and Ukraine, as well as with leaders of Iraq, Pakistan, Afghanistan, Colombia, and India. The “conversations” with the world leaders should help Palin in her preparations for the pre-election television debates with Democratic vice-presidential candidate Joe Biden. At the moment, he leads the Senate Committee on International Relations.
Continue reading "Short Course of Sarah Palin Features Opinion from Discovery's John Wohlstetter" »
Starting at 1 a.m. on September 20, 2008, Russian tourists can visit Israel without visas. All they need to have is a foreign travel passport valid for at least six months on the date of entry. (Russians have two passports – one for domestic use and one for travelling abroad). Russian visitors have to be ready to present booked return flights, hotel reservations or letters of invitation from relatives, and funds availability for the period of their stay. The entry to the country is free, and maximum visa-free stay cannot exceed 90 days at a time.
The agreement between Russia and Israel is mutual and was signed on March 20, however, it took half a year to figure out the legal nuances. The law is the result of close ties between the two nations. Many families have relatives in both countries, the result of the mass immigration from the Soviet Union to Israel in the 1970s and 1990s. Sixteen percent of Israelis are fluent in the Russian language, and Israeli government and businesses often provide information in Russian. The Russian language is semi-official in Israel and featured on roadway signs in some areas of the country.
Continue reading "Russians and Israelis
Will Visit Each Other Without Visas" »
Entrance to Micex stock exchange in Moscow
After nearly two days of mandatory vacation the Micex and RTS stock exchanges opened again and set a new all-time record for one-day growth. The RTS dollar index grew by 22.39%, reaching 1295.91 points, while the ruble index of Micex grew by 28.69%, reaching 1098.95. The exchange indexes almost leveled themselves out to the pre-crisis levels. The week of trading resulted in the lowering of the Micex index by 3.4 percent and the lowering of RTS by only 0.2 percent. However, Russian media point out that the growth was artificial and possibly due to high liquidity, a result of the Russian government’s unprecedented actions. Media disagree with many Russian financial experts and warn that external factors might precipitate a loss of market value once again.
Interestingly, the stock exchanges had to halt trading briefly on two occasions Friday due to the extremely fast pace of buying. Traders had only three hours of actual trading Friday, yet they managed to set a record. In addition to the measures described in Russia Blog’s previous article, the Russian Federal Service for Financial Markets prohibited trading of borrowed assets that weren’t fully owned and it prohibited the “short” sales. In addition, the Russian government made a firm statement that its decisions on tax cuts in the oil sector are definite and final. Several private companies, including Lukoil, bought back their own stock.
All the measures and actions aside, experts and media believe that the rebound was mostly influenced by the overall growth of the world market rather than the domestic actions of the Russian government.
Continue reading "Russian Markets' Historic Rebound" »
Russia and the rest of the world have both suffered a terrible week in their stock markets
A misleading calm prevailed in Russia this week after two days in which the Russian stock market crashed and another two days in which the market was closed. The recent plane crash in Perm, the worst in years, was bigger news in Russia than the sinking markets. Russia's news media presented plummeting share losses in a matter of fact manner, while wondering how the Russian government was going to respond to this harsh new economic reality. Markets remained closed on Thursday.
Russian markets fell 17 percent Tuesday, the biggest drop since 1998, bringing market levels to their lowest point since 2005. Gazeta.ru published these illustrative numbers at the moment of the unscheduled early closures of the dollar-denominated MICEX and ruble-denominated RTS stock exchanges: shares of VTB dropped by 32.5%, Sberbank (the largest bank by deposits in Russia) – 20.9%, FSK – 27.6%, Transneft – 24.1%, Tatneft – 15%, Lukoil – 13.5%, Norilsk Nickel – 8.2%, Severstal – 8.7%, Gazpromneft – 8.2%, etc.
Continue reading "Market Failure in Russia: America’s Problem, Nobody’s Problem or Doomsday?" »
Vesti TV footage of the Boeing jet wreckage
Last Sunday morning Aeroflot Nord Flight 821 crashed near the city of Perm in the Ural Mountains, killing all 81 passengers and crew members on board. The flight took off from Moscow's Sheremetyevo airport around midnight and crashed into a ravine several miles from the Perm airport at 3:10 a.m. Moscow time. The cause of the crash remains unknown. Russia's Air Accident Investigation Commission of the Interstate Aviation Committee is leading the investigation, with assistance from the American National Transportation Safety Board, the U.S. Federal Aviation Authority, and Boeing.
Continue reading "Russia Mourns Aeroflot Plane Crash Victims" »
The main railway station in Volgograd (Volga City), formerly known as Stalingrad, site of the bloodiest battle in world history
A Russia Blog reader sends these photos taken in August 2008 in and around southern Russia's city of Volgograd and the Volgograd Region, where the mighty Volga and Don Rivers flow. Enjoy the pictures!
Continue reading "Mother Volga in the Summer" »
U.S. Defense Secretary Robert Gates, left, and U.S. Secretary of State Condoleezza Rice, right, and Russian Foreign Minister Sergei Lavrov, back view (Photo by AP).
A report (download the report in PDF format) from a British group called the DAIWA Institute (a research organization affiliated with the European branch of a Japanese investment firm) is interesting in several respects. Nonetheless, the blame-pointing is not necessarily sound and the picture of both American and Russian policy options is, at best, mixed. I think the idea of a “Medvedev Doctrine” also seems peculiar. When did the United States ever say that it supports a “uni-polar” world? That would be ridiculous. But that apparently is what the report says Medvedev wants the world to think America is proposing.
As for Russia’s reserving to itself the right to protect Russian citizens anywhere, it is a striking concept, but it needs to be carefully defined. The U.S. has often intervened in the past to protect U.S. citizens around the world, sometimes deploying military forces to do so (the invasions of Grenada, to name one examples in the last thirty years). But then again, the U.S. does not do this often, for various reasons. So claiming the “right” to do so is strange. It would seem that every nation has the right to protect its citizens, but that right has to be clearly hedged by circumstances. So I can’t say I am impressed with this alleged new Doctrine.
The warning about nuclear conflict is correct, if even in the abstract. There really should be fewer public pronouncements now and more serious diplomacy behind closed doors where leaders from both sides can be both frank and mutually respectful.
Download the PDF version of the report Cosmetics Market Research Summary
I. Global Cosmetics Market
II. Market Opportunities in Russia
- A. Russia’s economy
- B. Russia’s retail industry
- C. Russian cosmetic market
- D. Consumer trends
- E. Cosmetic products
- F. Distribution and sales channels
- G. Russian Market Opportunities
I. Global Cosmetics Market
The global cosmetics and toiletry industries (C&T) had more than $270 billion in sales in 2006. Of this figure more than $140 billion is represented by the cosmetics and personal care sectors. (1) These industries are outpacing most others. The largest global segment is skin care and is estimated to have more than $31 billion during this same time period. (2) Euromonitor International forecasts annual global growth of 3.7% to reach international sales of more than $300 billion by 2010. The largest domestic market is in the United States, where sales in the cosmetics and personal care sectors are nearly $5 billion.
Continue reading "Weekly Market and Industry Report:
Russian Cosmetics Market Overview" »
On Tuesday, September 9th, The Economist started debating the West’s response to renewed Russian assertiveness for two-weeks as part of an ongoing, Oxford-style Online Debate Series. We thought readers of Russia Blog would find this debate relevant and wanted to give our readers an invite to participate and be heard alongside notable experts on the topic. Below is a sneak peek at the Pro and Con opening statements that posted on Tuesday.
Continue reading "The Economist Hosts Oxford-Style Online Debate
on Russian-Western Relations" »
Russian tanks crossing the Roki Tunnel (photo by NYT)
First compiled on August 28, 2008, this timeline is continuously being revised as more information becomes available. The latest PDF version can be downloaded from my web site.
This unified timeline of the onset of the crisis in the Caucasus is based on the detailed timelines available on the web sites of the Georgian Ministry of Foreign Affairs and the Russia Today news service. These have been supplemented with various Georgian, Russian, and international press reports (references in brackets refer to the list of sources at the end of this document: “G” for Georgian, “R” for Russian, “M” for miscellaneous). For convenience all local times have been converted to GMT (UTC) which, at the time these events unfolded, was GMT (UTC) +4 in both Moscow and Tbilisi. There is surprisingly little disagreement about the actual sequence of events. Those that exceed two hours are noted with italics. My comments, in yellow at the bottom, attempt to highlight some notable findings.
Continue reading "Crisis in the Caucasus:
A Unified Timeline, August 7-16, 2008" »
Edward Lozansky, President of the American University in Moscow and a frequent contributor to Russia Blog, is a featured speaker this Thursday, September 11, 2008 at “U.S.-Russian Relations: The Way Forward,” a conference the university is co-sponsoring with the Institute of Social and Political Research of the Russian Academy of Sciences. (For Moscow area residents, it is from 11 AM to 2 PM at the Academy's headquarters on Leninsky Prospect 32a, Presidential Hall.)
Speakers include:
Alexander Bessmertnykh, President, Foreign Policy Association
James Collins, former U.S. Ambassador to Moscow, Director of Russian Programs at Carnegie Endowment for International Peace
Vladimir Dvorkin, Institute of World Economy & International Relations
Rose Gottemoeller, Director, Carnegie Endowment for International Peace, Moscow Office
Andrei Kokoshin, Committee on Science and Technology, Russian State Duma
Robert Legvold, Professor of Political Science, Columbia University
Edward Lozansky, President, American University in Moscow
Gennady Osipov, Director, Institute of Social and Political Research, RAS
Sergei Rogov, Director, Institute of USA and Canada, Russian Academy of Sciences
According to the promotional announcement we received: “The events in Georgia have brought U.S.-Russian relations to a new low. Escalation of negative and confrontational rhetoric on both sides may result in the drastic reduction of the cooperative agenda. However, considering the grave implications for such policy one must concentrate on searching and preserving safe havens for continuous cooperation. The nuclear agenda, Iran, the Strategic Arms Reduction Treaty, and many other crucial security areas should not be made hostage to regional conflicts.”
For additional information and registration visit www.russiahouse.org/wrf
Russian Roulette CD cover by Accept
By Richard Hainsworth
Originally published in Moscow Times
When Russian troops moved into Georgia, foreign investors moved out and the Russian market plummeted. When U.S. troops moved into Iraq, foreign investors hesitated but the U.S. market barely blipped. Is this a double standard?
Not really. The difference lies in the way investor perceptions are challenged or fulfilled by the political decisions of a country's leadership. Investors create models about their investments -- how much they are promised at the point of sale and how much they are likely to get back in a variety of circumstances. These models can be simple, ranging from a conceptual understanding about a company and the environment it operates in, to a complex econometric simulation with all the macro indicators included. Investor models implicitly include uncertain factors, such as interest or exchange rate movements. Geopolitical decisions must also be included because investors need to know in advance the possible trajectories of government action.
Continue reading "Moscow Times:
Russian Roulette for Investors" »
Viggo Mortsensen plays Nikolai, a thief-in-law (zakon) in London
Just as movies about gangsters were going out of style in Russia, Eastern Promises came out in the West. Released one year ago today, David Cronenberg's crime drama about Russian mobsters in the United Kingdom grossed $51 million worldwide and won critical acclaim for the performance of its star, Viggo Mortensen, as a mob enforcer.
The film was also noteworthy among critics for its brutal scenes, including an opening sequence in which a rival mob boss is nearly decapitated in a barber shop, and for a knife fight in which a naked Nikolai (Mortensen) fights off knife-wielding Chechen attackers in a London banya, eventually carving them up with their own meat-cleavers.
Continue reading "Life and Death in Londongrad:
Eastern Promises Reviewed" »
The Kremlin may or may not have been justified in its initial attack (or counter attack) in South Ossetia. But its decision to keep pressing ahead and not to leave even the Georgian territory (the so-call buffer zone) is costing the Russian economy a lot. This article may be an "opinion" piece, but the figures are daunting.
Maybe "it doesn't matter." But is there a point where it does matter? Is it really smart to put the screws to Poland and Germany on gas supplies?
Please visit the extended post to read the original article.
Continue reading "Economic Consequences of the Georgia War" »
Download the PDF version of the report Russian Construction Material Market Research
Cement from Portland unloaded in Russia
The global cement and concrete additive market is experiencing rapid growth. The world market has been growing at more than 6.8 percent annually since 2005. (1) Developed markets worldwide are posting weaker gains than the world average at about 6 percent. Meanwhile the emerging markets of Eastern Europe are posting gains much higher than the world average at above 15 percent. (2) It is the perfect time for U.S. producers to look to the emerging markets to expand their customer base and diversify their risk. The emerging markets of Eastern Europe, and specifically, Russia, are perfect targets for Western companies that are turning their eye globally to increase their revenues.
Russian Market Overview
Since 1999, Russia has experienced outstanding growth rates, constantly improving macroeconomic conditions, and a growing involvement in the global economy. These achievements, together with high world oil prices, political and economic stability, and skyrocketing foreign direct investment have all contributed to the growth of the country’s economy. Russia is the fastest growing economy in the G8 group of industrialized nations. Over the last seven years, Russia’s economy has grown by an average rate of 6.8 percent each year and is projected to grow at an average rate of 7 percent YOY through 2010. In 2006 and 2007 Russia’s growth exceeded all expectations, accelerating in several key economic sectors such as real estate, tourism, and retail.
Continue reading "Russian Concrete and Cement Market" »
A Russian Orthodox Church on the Crimea Black Sea coast
Russia Blog reader Elizaveta Babanova, a native of Ivanovo, Russian Federation, sends these photos from her recent vacation in the Crimea.
Click on the extended post to see more photos and to read about the history of this seaside region.
Continue reading "Summer in the Crimea" »
Wars often start for seemingly absurd reasons connected to tendentious issues of honor, perceived military commitments and, most of all, erroneous expectations that escalation can be limited and managed. No one anticipates a war now between Russia and NATO. That is what is worrying. Only when a nuclear exchange is imaginable does controlling one become truly feasible. Even if the chances of a larger war are small, the stakes are stupendous and ought to give leaders and opinion leaders a pause.
Please pause. The hot rhetoric could start an unnecessary fire.
Remember that World War I, the granddaddy of 20th century folly, was triggered by the act of an anarchist in the Balkans. When forces already are poised for confrontation, as they were then, it doesn’t take much to launch hostile actions, and often the fuse is lit by a minor figure.
In retrospect, it is clear that Russian-Western tension before the Ossetia debacle was much greater than almost anyone realized. This dispute is not just about ethnic rivalries and boundary lines in the Caucasus, but rather the whole post-Soviet relationship and “New World Order.” It is bigger even than Russia’s fear of “encirclement” or the fears of its near neighbors that Russia wants to swallow them up. Both sets of fears are genuinely held, but it is likely--as good diplomacy could show--that neither set is justified.
Continue reading "Russia and the West Are Entering the Danger Zone" »
Many Americans blame George W. Bush for the disastrous state of U.S. foreign policy in the region, but to be fair, the blame should go to the older Bush and Clinton as well...
It looks like the Western leaders, and especially two U.S. Presidential hopefuls, Barack Obama and John McCain, are trying to outdo one other in condemning Russia’s recognition of independence for Abkhazia and South Ossetia. Meanwhile, an impressive armada of U.S. and NATO military ships is docking in the Georgian port of Batumi or is on the way to the Black sea while Russia also sent three missile boats to show the flag. At the same time, British foreign secretary David Milliband has arrived to Ukraine to promote the idea of building some kind of anti-Russian coalition, and other EU leaders are making very tough statements too.
There is a great danger that if this verbal war continues at some point the inflammatory rhetoric will get out of control. To save face the West might be forced to follow words with deeds and we would arrive not just at the new edition of the Cold War but to something much hotter, perhaps close to 1962 Cuban Missile Crisis, or even worse.
Continue reading "Is the West Ready to Fight Russia
to Preserve Stalin’s Legacy?" »
Download the PDF version of the report
"Behold the Bear: Ten Reasons Americans Should Care About Russia"
The war in South Ossetia and Georgia, though appalling, resulted in fewer deaths and damage than originally reported. It is still not "over" and probably won't be for some time. Meanwhile, it definitely did serious damage to Russia's relationship with the West. In some ways, relations are worse than at any time since well before the collapse of the USSR--in other words, in roughly a quarter century.
We are going to say a lot more on this, and we are not inclined to be particularly laudatory to any of the players. The war has not made any country look good.
Meanwhile, before the war we wrote a report on Ten Reasons Americans Should Care About Russia. It follows, and, as you will see, it remains valid. Perhaps as tempers cool, people of good will can consider what is at stake; what there is to gain, and what there is to lose.
Download the PDF version of the report, or proceed to the extended post to read the online version of the publication.
Continue reading "Behold the Bear:
10 Reasons Americans Should Care about Russia" »
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