A Russia Today TV news clip about old Soviet bunkers under Moscow
Moscow has one of the largest subway systems in the world. This inspired Dmitriy Glukhovskiy's sci-fi novel (and the new computer game) about a group of survivors living in this subterranean world after a nuclear war destroys civilization. Think of it as Russia's answer to the cult-hit CBS television series Jericho.
Click on the extended post to watch a trailer of the new PC game Metro 2033: The Last Refuge.
Orange Fitness is perhaps the nicest full-service fitness club in Krasnodar today. The club is located in a newly constructed freestanding building at 185 Levenevskogo Street, just off of Severnaya Street, one of Krasnodar's main thoroughfares. Orange Fitness has four floors of fitness activities. The first floor (see below) has a full aerobic studio with treadmills, stair masters, elliptical trainers, and stationary bikes. There is also a full Nautilus-style equipment circuit and plenty of free weights. Personal trainers are available and are quite reasonably priced at around $10 per 30 minute session.
Moscow - Today Russian Prosecutor General Yuri Chaika announced that ten suspects had been detained in connection with the murder of the Russian journalist Anna Politkovskaya. On October 7, 2006 an unknown assailant shot Politkovskaya dead in her Moscow apartment building. The baseball-cap wearing gunman was caught on video tape as he left the building.
Perhaps most disturbing for both Russians and foreigners is the fact that the suspects include one police major, one Lieutenant Colonel from Russia's Federal Security Service (FSB), and three ex-cops. The other five men detained in connection with the plot are ethnic Chechens, one of them a lawyer in Moscow, who were allegedly part of a gang engaged in contract killings. Russian Prosecutors believe that the Chechen group could have been involved in the murders of Russian Central Bank Deputy Chairman Andrei Kozlov and Forbes magazine Russia editor Paul Klebnikov in 2004.
What Leading Global CEOs Think About Doing Business in Russia
Here is a short video clip from the 2007 World Economic Forum held last month in Davos, Switzerland (the next WEF will be held September 6-8, 2007 in the port of Dalian, China). The topic of the panel discussion was "Modern Russia: Strengths, Challenges and New Prospects - A Perspective from Business". The participants included:
Vladimir Evtushenkov, President and Chief Executive Officer, Sistema JSFC, Russia
Steve Forbes, President and Chief Executive Officer, Forbes, USA
E. Neville Isdell, Chairman and Chief Executive Officer, The Coca-Cola Company, USA
Andrei L. Kostin, Chairman and Chief Executive Officer, Vneshtorbank (VTB) Russian Federation
James S. Turley, Chairman and Chief Executive Officer, Ernst & Young, USA Lionel Barber, Editor, Financial Times, United Kingdom
Russian First Deputy Prime Minister Dimitri Medvedev
Russian Economic Development and Trade Minister German Gref
Click on the extended post to read what these leaders in global business had to say about modern Russia.
During the Nineties, Zhukovsky (Ramenskoye Airport) became known around the world for offering rides in MiGs and Sukhoi fighter jets to foreigners at $10-$25,000 a pop. Now the base is once again a showcase for Russian civil and military aviation and is drawing representatives from major aerospace firms around the world.
Krasnaya Yabloka (ÐšÑ€Ð°ÑÐ½Ð°Ñ Ð¯Ð±Ð»Ð¾ÐºÐ°): The Apple Store in Krasnodar
Here's a photo of the Krasnodar branch of a licensed Apple retailer called re:Store. The store is located inside of the Krasnaya Ploshad (translation: "Red Square") Mall. When driving up to the mall, stay right, pass the McDonalds drive-through window on your left, and then park behind the mall. The store is just inside the entrance on your left, next to Maria Rafaela boutique. Click on this link to view a map and directions on the store website.
The staff (just like at most Apple stores) is young, knowledgeable, and friendly. The store has almost the same feel as Apple stores in the U.S. and as far as I could tell, it had almost the same selection of electronics. All of the hardware is compatible with the Russian electrical outlets and all of the keyboards have permanent Cyrillic characters on each key.
In my Russia Blog posts I have written repeatedly about how the Russian construction sector is proving to be extremely attractive to global investors. Recent news reports confirm this view. In fact the U.K. Independent recently produced a short overview "A Global Property Boom: Russian Style" that describes what is going on in Russia.
"The place to be for booming commercial property development right now is Moscow. According to international property analyst Knight Frank, new developments of high-grade office space in the Russian capital have doubled since 2003, with a further 1.5 million square feet of space becoming available before 2011." As a Muscovite who has observed these tremendous changes firsthand, I can confirm this.
Russian real estate developer Araz Agalarov Extended post photos by: Timothy Post
In this piece, Timothy Post, an American living and working in the southern Russian region of Krasnodar Krai, talks about Agalarov Estates, an exclusive new development in Moscow.
If you do not live in Moscow, the name, Araz Agalarov (age 51), may not be familiar to you, but you will hear it more often very soon. Mr. Agalarov, a native of Baku, Azerbaijan, is a Moscow-based real estate developer and one of the hundred richest men in Russia. Agalarov has built a number of projects which, despite some initial skepticism about their financial viability, have all gone on to exceed expectations. Agalarov's first major project in Moscow was a super high-end shopping mall called Crocus City Mall.
Completed in 2002, many thought the idea of putting an elite mall along the outer ring road around Moscow was ill advised. Would wealthy Muscovites fight traffic to drive to a shopping mall to buy their Prada, Armani, Gucci? Mr. Agalarov thought so and it turns out he was correct.
Crocus City Mall has since spawned a well-known brand called "Crocus" which, like the Trump brand, has been extended to a number of other projects. Since 2002, Mr. Agalarov has built a couple of expo centers, a yacht club along the Moscow River, a hyper market, and a number of condominiums.
Last week the leaders of Russia, China and several former Soviet republics met in Bishkek, the capital of Kyrgyzstan. Their goal was to promote more international investment and cooperation in the fight against terrorism in Central Asia. This year's summit caused a stir in the Western media because it coincided with wargames conducted by 6,000 troops from the Shanghai Cooperation Organization countries in the Russian Ural Mountain region of Chelyabinsk. While one senior Russian general insisted that the exercises were "not aimed at any third country", many Western media analysts and pundits have concluded that Russia and China are forming a military alliance to counter American influence in resource-rich Central Asia.
UPDATE: Prof. Nicholas Gvosdev has linked to our post here. Click on the extended post to read more and watch video clips from the SCO summit.
Bear Crossing (ÐžÑÑ‚Ð¾Ñ€Ð¾Ð¶Ð½Ð¾ ÐœÐµÐ´Ð²ÐµÐ´Ð¸): Russia Resumes Long Range Bomber Patrols
Click on the extended post to watch a video clip about Russia's Tu-95 Bear bomber
"Our pilots have been grounded too long, they are happy to start a new life."
- Russian President Vladimir V. Putin
"We certainly are not in the kind of posture we were with what used to be the Soviet Union. It's a different era...if Russia feels as though they want to take some of these old aircraft out of mothballs and get them flying again, that's their decision."
- U.S. State Department spokesman Sean McCormack
Click here to read an article in the International Herald Tribune about Putin's decision to resume long range Russian bomber flights over the Atlantic and Pacific.
"An informal winter music lesson featuring the outdoor church tower bells of Fyodorovsky Cathedral in the village of Tsarskoye Selo (Pushkin) Russia near St. Petersburg. The cathedral was originally built for Tsar Nicholas II. The great Russian poet Alexander Pushkin lived and studied here. Recorded in January 2001 by S. R. Schrier of Kalamazoo, Michigan USA with the assistance of Tatyana Sapogova of St. Petersburg."
You can see photos from Charles Ganske's visit to Tsarskoye Selo here.
The Dow Chemical Company (NYSE:DOW) is expanding its presence in Russia. The company has maintained operations in Russia since 1974 and according to some reports, it currently employs about 90 people supporting its activities in this country. While starting a new construction materials business in Russia is somewhat risky, Dow Chemical's average annual growth rate (about 30%) makes it worth a go.
In January, Dow Chemical started building its first production facility in Russia. The plant, located at Kryukovo, outside Moscow, will produce polystyrene insulation boards for Dow Building Solutions, one of Dow's market-facing business units (this was nicely described in the Around Dow corporate newsletter).
Expats who've come into Moscow from Sheremetyevo airport will recognize some landmarks from where the city limits meet the Moscow region, such as the Mega and IKEA stores. There is also a snapshot of a newly married couple continuing the Russian tradition of touring World War II memorials and other historic monuments on their wedding day.
Click on the extended post to watch another video, depicting the St. Petersburg-Moscow leg of the Mercedes-Benz E320 team's drive from Paris to Beijing.
There is a lot of material on the Internet about Russia's gold mining industry and different ways to invest in it. Here at Russia Blog, I would like to present one example of a Russian company that is mulling an IPO later this year on the London Stock Exchange (LON:LSE) Alternative Investment Market or Canada's Toronto Stock Exchange (TSE:X). This mining operation is not large, but it shows the potential for greater investment in Russian gold mining. Renaissance Capital's Pre-IPO Fund has already bought equity in the company. (RosBusinessConsulting recently wrote an article about RenCap's pre-IPO fund which you can read here).
A Russia Today TV news clip about the apparent terrorist attack
Russia's Federal Security Service (FSB) confirmed today that a 4.5 pound bomb exploded on an express train between Moscow and St. Petersburg last night. The explosion happened at 10:43 p.m. local time while the train was travelling through the Novgorod region approximately 310 miles north of Moscow. The blast was powerful enough to derail twelve passengers cars and one locomotive. At least sixty people were seriously injured as a result of the attack.
Russian prosecutors believe that at least one of the suspects may have been captured on video surveillance footage. After diverting more than fifty trains following the attack, Russian Railways repaired the damaged section of track today and resumed regular train service between Moscow and St. Petersburg this evening.
Click on the links to the BBC and RIA Novosti to read more updates on this story.
In a post last month I mentioned that there are definite indications of interest from foreign banks looking for additional mergers and acquisitions here in Russia. It seems that July 2007 was a very active month for the Russian banking industry. On July 31, 2007, Vedomosti Daily published commentary regarding the acquisition of Russian and Ukrainian banks by foreign entities. The article was based on a study conducted by Dresdner Kleinwort showing that in Ukraine foreign entities own about 47% of national assets, while in Russia this number is just 10%. Here is a link to the table from the publication that represents the Russian side.
"If you do business in Russia, you will lose all of your money, because your Russian business partner will steal it from you, because he or she is a thief. And you will die, because the Russian mafia will murder you in your hotel bedroom when you visit Moscow or St. Petersburg (I'm happily surprised that so many of you survived the night)."
"This is the Wall Street Journal and CNN view of business in Russia...and it's 98.6% wrong, rubbish, garbage. Business success in Russia is the best kept business secret in the world. More rubbish is written and spoken about Russia than any other country on the planet Earth."
Cover of the July 2007 issue of Russia's Standard business magazine
The July issue of the Russian magazine Standard included a very interesting supplement -- the latest (as of July 10, 2007) arbor civilis of ownership in Russian telecommunications.
I happened to know a senior manager in this field, Leonid Konik, way back in the 1990s, when he started his project, ComNews. It is rather comforting to find out that he now runs a well-established and popular news project involved in telecommunications.
Anyway, the insert from Standard magazine shows who is who and what companies form the Russian telecommunications sector. I think that my readers may find useful the links to the websites that I am providing in the extended post.
Last weekend I took a nice stroll around rainy Moscow and noticed a new addition to the local landscape (see the photo above taken on Saturday, August 4, 2007). The ad says: "Every company has the right to IPO". Now, definitely something has changed in the minds of our financial consulting firms!
This ad was placed by the Otkritie Financial Corporation, which is nowhere near the top-ranked IPO underwriters and managers in Russia. However, the corporation has an extremely qualified Board of Directors that includes several prominent Russian businessmen.
Will China have rights to the North Pole? Most likely, yes. But first, let's take a look at who has rights to the North Pole today.
"Power, not international law, will settle the issue. Indeed, international law recognizes this fact by making title dependent on a nation's ability to exert control over an area," said Eric Posner, a law professor at the University of Chicago in the Wall Street Journal article "The New Race for the Arctic."
"This isn't the 15th century. You can't go around the world and plant flags and say 'we're claiming this territory'," said Canada's Foreign Minister Peter MacKay. U.S. State Department spokeswoman Leslie Phillips said "We wish the Russian scientists a safe expedition..."
Russian scientists, joined by the veteran Australian polar explorer Michael McDowell and Frederik Paulsen, a Swedish pharmaceuticals millionaire and co-sponsor of the effort, indeed had a safe and successful trip to the Pole and to the sea bed nearly two miles beneath it. The expedition amused the entire world, and only days after the historic dive, countries and legal specialists started wondering "What does all this mean and who really owns the Pole?"
Sharapova, Bondarchuk, Sobchak Top Forbes List of Russian Celebrities
The Siberian-born and Florida-raised tennis star Maria Sharapova leads the Forbes list of Russian celebrities, followed by the pop music diva Alla Pugacheva, film director/producer Fyodor Bondarchuk (son of the legendary Soviet director Sergey Bondarchuk) and Russian "it girl" Kseniya Sobchak, who (perhaps unfairly) is frequently compared to Paris Hilton. Meanwhile, the girls- kissing-on-stage band gimmick t.A.T.u dropped down from their spot on last year's list.
Last week marked the first listing by a Russian IT company on the MICEX Innovative and Growth Companies sector index. The company is OAO Armada (RTS, MICEX: ARMD) - a Russian provider of information technology services.
Armada grew from the IT Department of RosBusinessConsulting (RTC:RBCI) group of companies in 2007. Between 2000 and 2007 the company operated under the RBC Soft brand. Armada's solutions portfolio covers all IT market sectors, including software development, IT services and hardware. In 2003, while still part of RBC Information Systems, RBC SOFT was rated 15th among Russia's top 45 companies in the Standard & Poor's Transparency Survey in 2003. Armada's client base counts over 700 companies operating in various economic sectors and governmental organizations.
On May 23, 2007, OAO Armada's shares were listed on the RTS and MICEX exchanges, and now the company has issued an IPO listing another 20% of its equity. According to some analysts the company will likely raise anywhere from $ 30 to $40 million.
Maria Rafaela (ÐœÐ°Ñ€Ð¸Ñ Ð Ð°Ñ„Ð°ÑÐ»Ð°): A New Taxi Service in Krasnodar
In this piece, Timothy Post, an American living and working in the southern Russian region of Krasnodar Krai, talks about Russian entrepreneurs starting new businesses in his area.
Travel on the streets of Krasnodar just got a whole lot easier. All of Krasnodar is talking about a "crazy" new taxi service called Maria Rafaela Taxi, which is, gasp, using Mercedes B Class 170 white minivans. The taxi service, which sponsored a music concert in the main square to celebrate its launch yesterday, should quickly capture significant market share in this area.
Real Estate in Krasnodar: Kubano Naberezhnaya (ÐšÑƒÐ±Ð°Ð½Ð¾ ÐÐ°Ð±ÐµÑ€ÐµÐ¶Ð½Ð°Ñ)
The riverwalk in the Kubano Naberezhnaya neighborhood
With Sochi now the International Olympic Committee's choice to host the 2014 Winter Olympiad, the real work of preparing Krasnodar Krai for the expected influx of capital and visitors has only just begun. To give Russia Blog's readers a better picture of the tremendous economic development now underway in the region, we have asked Timothy Post, an American businessman working in the city of Krasnodar, to share some of his insights.
Kubano Naberezhnaya (Kuban riverbank) is quickly becoming Krasnodar's most exclusive residential neighborhood. The neighborhood is best known for its huge park which stretches for a couple kilometers along the banks of the Kuban River. Recently, the park has seen a large influx of investment with the building of a large water park, new entertainment rides, cafes, outdoor discos, and new restaurants. Each weekend, thousands of folks from Krasnodar gather to relax and enjoy one another's company along the beautiful river.
Eleven Reasons to Buy Russia (Though Not Necessarily Today)
1. Russia has not had a single debt-funded leveraged buyout (LBO). Zero. None.
2. Russia does not have a single sub-prime mortgage bond. Russian banks continue their old-fashioned practices such as investigating borrower's declared earnings and requiring down payments of at least 20%. Though there has been some risky consumer lending, it is covered by the outrageous spreads they charge (above 50%!)
3. Russia has an insignificant trade relationship with the US, and is not exposed to the US consumer in any meaningful way. It is substantially exposed to the Asian economies which (so far) have shown no signs of slowing on US economic concerns.
For more on this topic, check out Real Russia Project director Yuri Mamchur's commentary on the question, "How Serious is All This Talk of A New Cold War?" at the International Affairs Forum website. On the topic of missile defense, you can read more in these Russia Blog articles:
A few weeks ago I read a piece published in Money and Markets titled, "Steer Clear of the U.S.: Look to Asia!" which I found interesting. Although the author is extremely bearish about American markets, I think that his basic advice to investors to diversify their portfolios internationally and to have strong exposure to commodities and hard assets as a hedge against global inflation is sound. And I would add Russia to his list of good places to invest for rapid growth.
According to new data released by seismologists, the earthquake, which hit Sakhalin Island on Thursday, August 2, 2007 had a magnitude of 6.8, followed by the second quake of 5.9. 1,200 families were immediately left without housing. Sakhalin Island is the sister-city to Gig Harbor, Washington -- a beautiful city in the Pacific Northwest located just 50 miles south of Seattle.
On Friday, one day after the earthquake, transport planes loaded with emergency supplies did not make it to the area affected by the disaster, due to harsh weather conditions. While there are no emergency or life-threatening conditions at this point, some parts of the island have experienced shortages of food and water, as well as overnight tents and blankets.
President Putin demanded a complete report from Russia's Minister of the Emergency Situations Sergei Shoygu by August 7. The report will include a complete plan of action regarding rebuilding housing for families affected by the disaster, recovery of the region's infrastructure and reconstruction of damaged schools before the beginning of the new school year. Please click on the extended post to view photos of the area affected by the earthquake.
The Soviet-built Druzhba pipeline, Russia's main natural gas link to Europe, runs across the territory of Belarus
Once again Russia's state-owned natural gas monopoly Gazprom is making news, this time threatening to cut off 45% of gas supplies to Belarus, unless the two sides can reach an agreement by the end of today. Belarus' natural gas transport service, Beltransgaz, reportedly owes Gazprom $500 million. Minsk has fallen further behind on paying its debt to Moscow since Gazprom effectively doubled its prices on January 1, 2007, raising the rate from $45 per thousand cubic meters (tcm) to $100 (in comparison, Gazprom's main customers in Germany and the E.U. pay more than $200 per tcm). When it agreed to the new price hike, Beltransgaz also sold shares of its stock to Gazprom as collateral on its previous debt.
UPDATE: Beltransgaz made a down payment on its debt today to avoid any shut off, according to this press release from Gazprom.
Families left without homes collect blankets for the night at a shelter
A strong earthquake near Sakhalin Island in Russia's Far East on Thursday killed two people and injured up to 10 others, generating small tsunami waves (1 to 3 feet) which struck northern Japan. The quake, with a preliminary magnitude of 6.4, struck at 11:38 a.m. on the southern tip of Sakhalin, just north of Japan, according to Japan's Meteorological Agency. It was followed by a second quake of magnitude 5.9 at 2:22 p.m. One woman died when a building roof collapsed in the small port town of Nevelsk. Another man there died of a heart attack. Six hundred families lost their private homes, while the bigger condominium buildings survived the quakes.
A Reuters reporter on Sakhalin said he felt three tremors over a two-hour period. The third, at about 4:00 p.m., was the most intense. Local office workers ran on to the street fearing the third tremor was a major quake they had been anticipating. "Just about everybody in the building dashed to the street," said Anastasia Lekhnova, an employee of the Yuzhno-Sakhalinsk security firm Troop Service. "We've been hearing so much about earthquakes in the news recently, and after knowing about the two quakes today, we thought that this was 'the one.'"
An expedition aimed at strengthening Russia's claim to much of the Arctic Ocean reached the North Pole yesterday afternoon.
An advance party of six researchers flew to the North Pole in a helicopter early Wednesday and spent 11 minutes on the ice scouting the route for the icebreaker Rossiya and the scientific research vesselAkademik Fyodorov.
Nuclear-powered icebreaker Rossiya
Mir-1 and Mir-2, the mini-submarines, each carrying one pilot, reached the seabed at a depth of 1,311 meters (4,301 feet), 47 nautical miles (87 km) north of Russia's northernmost archipelago, Franz Josef Land in the Barents Sea during the test dive on July 30.
Mini-sub Mir during the test dive. These mini-subs are best known for doing all the under-water filming for the blockbuster movie Titanic
Old Russia Meets Modern Russian Capitalism - An exhibit at the MICEX Stock Exchange Museum showing ads and the Moscow exchange building's numberplate ("Stock Exchange Sq # 1") at the beginning of the 20th century
Here are a few facts excerpted from a press release issued on Friday, July 27, 2007 by the Moscow Interbank Exchange:
As a result of daily trading at the MICEX on Thursday, July 26, 2007, the volume of transactions in securities amounted to 226.59 billion rubles ($8.92 billion dollars). This is a new record high for the MICEX, which was launched in March 1997. The previous record of 223.83 billion rubles ($8.74 billion USD) was registered on June 15, 2007. The MICEX logged over 232,000 transactions last Thursday.
The new IXSP stock exchange is coming to St. Petersburg - but when will it start trading?
In April 2007 ("NASDAQ Entering Russian Stock Market?") I wrote about the OMX Group's (STO:OMX) plans to establish IXSP -- a new Russian stock exchange that is targeted towards small to medium sized enterprises (SMEs). It seems that this process is accelerating. Now the IXSP has its own web-site -- a very nice but simple one, listing major ideas that the promoters are planning to execute.