The Atlas Medical Centre

The recently opened Atlas Medical Centre invited selected guests from the expat/Diplomatic community to a welcome evening and presentation to meet the medical staff and view the extensive facilities of the clinic and the group.

Short speeches explained the innovative and cutting edge medical work that the centre and the Atlas Group can now offer in Moscow including DNA testing to detect the presence of hereditary diseases and mobile blood testing.

Guests were taken on a tour of the impressive facilities and then had the opportunity to meet the Directors whilst enjoying delicious (but healthy!) canapés.

 

 

For People Who Suffer from Pollinosis

Selection_591

 

In Russia, people who suffer from pollinosis symptoms do not look forward to the arrival of warm weather in the end of March-beginning of April. Pollinosis (hay fever, spring catarrh, seasonal rhinitis) is a seasonal disease triggered by hypersensitivity to pollen. In this article I will cover some of the issues involved and offer simple recommendations that will help you to live through the pollen season as comfortably as possible.

Pollens are tiny particles, which are invisible to the naked eye, but contain large amounts of allergenic proteins. They can be carried by both insects and by the wind. It is the pollen of wind-pollinated trees (alder, birch, willow etc.), which causes the most problems, as trees produce large quantities of pollen that can be carried by the wind over long distances.

Typical pollinosis symptoms are sneezing, watery nasal discharge, frequently also asthma attacks, watery eyes, unpleasant painful feelings in the mouth and throat, and sometimes swollen eyelids. Hay fever affects about 0.5-15% of the population.

All it takes is for 10-20 pollen grains to be present in a square meter of air to set off a hay fever attack. Weather conditions greatly influence pollen concentrations in the air. Generally speaking, the drier and windier the weather becomes, the more pollen there is in the air.

Selection_592It is essential to consult an allergist two or three weeks before your seasonal problems usually begin so that you can be prescribed the right prophylactic drugs and receive individual recommendations. Early specific anti-allergic (desensitizing) therapy, which traditionally includes second or third generation antihistamines is also very useful. Prophylactic drugs should be taken until the end of the pollen season.

If you experience lachrymation (watery eyes), photophobia (hypersensitivity to light), a sense of ‘sand’ in the eyes, itching eyes, nasal congestion, sneezing, then using eye drops and nasal sprays is recommended. If you have more severe reactions such as coughing, laboured respiration or swelling, do not delay making a visit to an allergist. The doctor will assess your health status and adjust your treatment.

Pollen is something that is carried in the air, so it affects you whenever you are outside, however pollen can also get into the air inside buildings fairly easily, through open windows and doors. When the pollen season arrives it is crucial to reduce contact with pollen.

Selection_594

The vast majority of people with hay fever have ‘cross’ allergies with food products. We recommend that you maintain a diet that excludes certain foods, which can produce a similar affects on your body and thus potentially worsen your health.

One needs to remember that none of the drugs used to alleviate allergy symptoms can change the body’s reaction to allergens. Allergic diseases often rapidly progress: at first you may have only light manifestations and later they become more pronounced. Another feature of hay fever is that drugs that at first used to relieve symptoms quite well eventually no longer help. Furthermore, the response season may extend. For example, if at first your body reacts to pollen when concentration in the air is the highest, in the future the symptoms will bother you during the whole of the blossoming period. If you are already sensitive to one allergen, it is likely that you will also become sensitive to others.

Hay fever patients are recommended to take courses of allergen-specific immunotherapy (ASIT) once a year (usually in winter). Today ASIT is the main treatment that may change the body’s response to allergens and prevent further progression of allergies. This method has been used for a long time all over the world, and has been proven to be highly effective. The patient is injected with micro doses of allergens he or she is sensitive to in gradually increasing doses, as a result his resistance to the allergens is enhanced.

Please, remember that only a personalized and integrated approach formulated together with an allergist can ensure maximum effectiveness in fighting against this disease.

Selection_593

Moscow Good Food Club, Ritz Carlton December 2014

Selection_586

 

When one receives an invitation to host the Moscow Good Food Club at the Ritz Carlton in the centre of Moscow, one accepts with great pleasure. My personal previous experiences in this venerable location had not been the best so I was most interested to see how it had changed. Some may think that making all the arrangements for the Moscow Good Food Club is all about food and wine tasting, actually its not, it’s many discussions and negotiations to ensure that our members receive exemplary service, superb food and well paired wines at an amazing price.

Having made the initial discussions with the Director of Food & Beverage, I had a meeting with a young lady to make the final arrangements. She was charming, clever and listened carefully to all my comments and requirements. Then on the evening everything had been organised perfectly. Congratulations to the management of the RC for this amazing young lady!

So with all arrangements made the invitations were sent and our 40 seats were soon fully booked with members eager to experience the hospitality of the Café Russe at the Ritz Carlton. We were welcomed with smiles, canapés and of course an excellent glass of Prosecco specially selected by Somelier Anton Galkin. After a little time to talk we were requested to take our tables.

Chef de Cuisine, Fabien Gailly then briefed us on the gastronomic experience that he and his team were preparing. This started with 3-ways marinated Salmon, warm blini and sour cream accompanied buy a fresh Pouilly Fume from Domaine Chatelain. Excellent flavours and a spuerb pairing.

This was followed by Scallop Carpaccio with a citrus, lemon dressing. The flavours were slightly disappointing but still enjoyable and the choice of the Pouilly Fuisse from Louis Jadot was superb.

After a brief respite the main course was served with many oooh’s and aaah’s to be heard around the room. This superb dish consisted of Braised Beef Cheek with a red capsicum ragout with crispy potatoes and natural jus. It was perfectly balanced with exceptional flavour. The main dish was well complemented with the rich Mas La Chevalier, Laroche a deep ruby red where we could appreciate the great concentration of red ripe fruits enhanced with the spicy aromas of nutmeg and cinnamon. A really elegant wine and ideal for the course.

Despite canapés and 3 courses so far our august members managed to keep space for the dessert, a light Vanilla Napoleon with a red berry Coulis accompanied by an amazing Chateau Lange Reglat Sauternes.

With our taste buds duly scintillated it was time for our Critique and regular questions. Fabien Gailly and Anton Galkin braved the comments of our appointed spokespeople and accepted the small criticisms as highly constructive. As expected the overall ratings were high and praise was certainly due to all at the Ritz Carlton who had worked so hard for such a memorable evening.

As is tradition our well imbibed members were asked to answer some questions. Our theme for the evening was “A rather challenging year is coming to an end and traditionally it is time to make a wish! If you could make 3 wishes from prominent Russian politicians who would they be and what would be the wish?” Many of the replies could not be printed for a variety of reasons, but amongst those that we can are 1) Return the exchange rate to 1:40, 2) ask the Minister of the Environment for lots of snow, 3)allow French cheese and European fruit back into Russia, 4) allow peace to the world so that we can all continue to enjoy Good Food, Good Wines and Great Company!

The Moscow Good Food Club would like to express its gratitude to the management and staff of the Ritz Carlton for a superbly organised and excellent gastronomic experience.

Selection_587

Selection_588

Selection_589

Selection_590

Novorrossiyisk, Southern Russia, LATE 1997.

Selection_586

“You see that’s the problem with Russia” Steve reasoned with the benefit of having lived in Novorossiyisk since the late eighties and having commenced drinking since the late afternoon. “She can only handle one issue at a time. Give the politicians simultaneous problems and all you end up with is a …is a.. is a bardak!” He thumped down his glass down to emphasise both his profundity and his mastery of Russian slang acquired at his day job, testing and treating cargoes loaded onto visiting oil tankers. Steve did have a point though, there were worrying signs with the economy, political in-fighting was rife, there remained tensions with neighbouring States and the latest weather forecast had everyone scared, most of all his Ukrainian borne wife who had rung repeatedly urging him to come home.

The previous year Boris Yeltsin had been returned as President thanks to a pragmatic West that provided temporary economic support to the faltering economy rather than see the Communist Zuyganov be popularly elected, and the leading Oligarchs who grouped together to finance and orchestrate an election campaign the like of which had never been seen in Russia. Coordinated by Boris Berezovsky and Vladimir Gusinsky they and a number of other newly enriched businessmen provided funding, media support – they owned many of the leading publications and popular television stations, and hired western campaign consultants to put the result beyond doubt. It proved to be a profitable arrangement, with their finances secured against grossly undervalued state assets which the businessmen later elected to keep. But after a brief period of relief and elation that followed the election, the fundamental problems returned. Inflation was worsening an economy already severely damaged by the recent $5Billion war with Chechnya and GDP was continuing to fall. Ordinary people were growing poorer again. Although a peace treaty signed was signed in May 1997 with the newly established regime in Grozny led by the former rebel Ashlan Maskadov, a deal partly brokered by Berezovsky despite no formal position in the Government, resentment and tensions remained among the Chechen clans, particularly along the Dagestan border.

Selection_587Disagreements also continued with the Ukraine although these were partly alleviated with the signing of the treaty for the Partition of the Black Sea Fleet. This divided the ships, artillery and aircraft approximately four to one in Russia’s favour but much more importantly, Russia retained Sevastopol in the Crimea. Like Novorossiyisk, Sevastopol is a natural deep warm water port. Unlike Novorossiyisk however which is a mainly civilian installation responsible for much of Russia’s dry cargo trade and western seaborne oil exports, Sevastopol is a military port and the home of the Soviet and now Russian Mediterranean Fleet. The 25,000 troops included under the twenty-year deal for the port were put there to ensure that this strategic location, which many Russians felt is their land anyway, would remain under Moscow control until 2017.

The real body blow to the Russian economy in 1997 did not come from disagreements or territorial disputes with neighbouring States however, rather it came from Asia in the form of a flu epidemic. It all started with Thailand, one of the new Tiger economies. In July the Thai Baht crashed quickly followed by the Ringiit and the Rupiah. Soon nowhere in south east Asia was safe and economies and currencies from Singapore to Hong Kong lost significant value to the US $. Although the contagion did not attack the rouble directly, Russia’s international trade was still comparatively thin, what it did do was create a worldwide economic slowdown and commodity prices, in particular crude oil, fell sharply. One thing you can bet on with certainty is when the oil price reduces so does the value of the rouble and in 1997 the crude price dropped from around $32 to less than $20 per barrel. The result was yet more pressure on the economy and the rouble itself now fell RUR 6 to the $ from parity in 1993.

“You mark my words, if the economy fails and if the West don’t stop interfering and criticizing Russia’s behaviour on its borders things could get nasty, like the storm that’s about to hit”, Steve said as he drained another glass of “Semyoka”, Baltika 7, a potent brew. The storm he referred to was the renowned Novorossiskaya Bora (mega-storm) forecast to hit that night. Capable of hurricane strength winds for days at a time, Boras usually appear in November or February when confrontation of the European Russian anti-cyclone with the Mediterranean cyclone system occurs. Unlike hurricanes, which develop at sea and lose their strength over land the Boras blow from the land over the Caucasus foothills and channel down into the harbour. Coming from inland at that time of year the actual air temperature can be -20C and the chill effect with the wind speed is considerably more. The effects can be devastating. Mature trees freeze solid and snap off in the blasting wind, power lines ice up and collapse robbing residents of essential heat, cars can be blown off roads, but the real damage is to ships. The sea spray whipped up by the streaming winds freezes almost before it lands covering the ships on their moorings in ice that can grow to many centimetres in thickness. This additional topsides weight coupled with the sea state and wind on the superstructure is capable of capsizing even large ships if the ice is not hammered away quickly enough. In just one storm in Novorossiyisk, six vessels capsized and several crew drowned only metres from the dock.

We got up to leave, intent on getting home before the storm grew. The wind could already be heard buffeting the windows. Steve, swaying even before getting through the restaurant door as if in preparation turned “I don’t know, low oil price, pressure on the rouble, disputes with Ukraine, I wonder what the future will bring?”

Is Baku The Future

Selection_582

Azerbaijan’s capital on the Caspian coast does not hit the headlines often. That is one of its charms: it is a friendly, relaxed place without excessive ostentation. Even the Eurovision Song Contest (winners 2011, hosts 2012) seems to have passed without doing too much damage. That may be about to change. Be ready to see Baku on the front and back pages more often.

Next summer, June 2015, Baku plays host to the first ever pan European athletics championships. Formula 1 hits the city’s streets – literally, Monaco style – in 2016. The World Chess Championships are the same year, and the Islamic Games follow in 2018. Soon you will be able to add skiing and eco-tourism to your to-do list.

Have you thought of a sojourn in this ancient and modern city? There are plenty of good reasons to come. At 40`N, the seaside city is a little south of Sochi, the Crimea and Monaco; on the coast, and a handy three hours flight from Moscow. The climate is agreeable, the prices and politics both tolerable. Be ready for pleasant surprises.

Let’s dig a little deeper. Oil and now gas are key. No need to dig: the first oil seeped to the surface to be used centuries ago, and natural gas flares remain one of many quirky tourist attractions. For a long time, Baku was the world’s largest oil producer, but mercifully the forest of smelly derricks of the 1900s have long departed, and “The City of Winds” blows the air clean quickly. The Soviet economy depended on Baku oil, and so did Hitler’s plans: the defence of Stalingrad was a miracle that saved us all. The old oil economy of Baku lives in the fields of nodding donkeys in the suburbs and surrounds. But the new wealth of the city comes from huge offshore oil and gas exploitation, deep under the Caspian. This is hi-tech specialist work, and so the city now has four working tongues: Azeri and Russian, universal English, and increasingly Scots. As I type, the sun is shining bright across the Caspian, and the fishy silver sea is dotted with distant oilrigs and tankers bringing the bounty back across the brine.

Azerbaijan has two thousand proud years of history, and longer of pre-history. The Caucasus (as in ‘Caucasian’ of course) is a cradle and crossroads of humanity, and the city has seen caravansaries passing along The Silk Road, waves of differing sects of Christianity, Zoroastrianism and Islam, and foreign investors and adventurers. Proud independence and strength have alternated with Persian, Turkish, Russian and Soviet flags atop the ancient citadel walls. Perhaps that is why the current renaissance was celebrated by erecting the (briefly) world’s tallest flagpole. Inevitably, regional squabbles and power struggles result from the impossible chequerboard map of peoples, languages, religions and traditions across the Caucasus, just like the Balkans. Their pivotal location, sandwiched between Turkish, Persian and Russian empires, with occasional eruptions from Greece, Arabia, Mongolia and others, makes for a rich and confusing history, ethnography and architecture. The Azeris are both proud and tolerant, and they are happy to adapt and interpret all strands together.

Baku is not quite Istanbul, even if Azerbaijani is the grandfather of modern Turkish, but all these threads can be traced in the city streets. The warm sandstone city walls have 1000 years’ stories etched into them; the greats of culture and history (no proscription of figurative art, in an essentially Islamic culture!) have labels in mixes of Azerbaijani-Turkish, Cyrillic, Persian, Arabic and English. Writers, poets, musicians and thinkers take pride of place in historical Baku. The current post-Soviet republic credits the founding president, and father of the current leader, with tributes in photos, monuments, place names, airports, streets and stadiums.

The tightly packed little lanes and alleyways in the walled city are as delightful as any Aegean village. Iconic wooden balconies push the thin line of sky to the limit. Come and visit soon, as too many of the traditional districts around the old town are being razed for modernity. All life is here, from washing and gossip to backgammon and chess; home grown fruit and vegetables being sold in front rooms and slipping onto the lane; and armies of small children playing vying for space with free range cats and kittens.

The city centre has been given a complete makeover, with the Caspian shore and central Fountains Square chic and stylish pedestrian areas, perfect for a stroll and a coffee, or better, chai. It is a bustling but relaxed place by day. Lonely Planet awards Baku the dubious title of the world’s 11th best nightspot. A bit OTT, surely, but there are plenty of watering holes and music venues for varying tastes (and no taste) of a weekend evening. Glassy skyscrapers are lifting the skyline with curious shapes, most famously the wobbly curves of the “Flame Towers” business centre, and the signature swooping slopes of the Heyday Aliyev museum.

In short, Baku mixes long history with modern vision, has a welcoming smile and an agreeable climate. Russian or English will make communication easy. The urban, littoral and rural landscapes are rich in interest and can be explored on foot. (Or take the mini-Moscow Metro, or a ride in a purple London taxi). A mini-Moscow by the seaside? You decide: join a modern caravanserai and explore for yourself.

CRISIS 2015

 

Selection_587

 

We are now well into (another) crisis. Many of us have been here before but the current situation is very different. Complex, with a multitude of factors each playing a role in the continuously developing scenario, the likes of which we have not experienced before.

Moscow is host to an estimated 170,000 expats and their families. For many it is their home and the place where a great number of expat businesses have been established with considerable investments. To some it is just a 4-year stint on an ever-revolving cycle of postings abroad. However we are all caught in the middle and whilst each has his/her own agenda for survival (or departure), we wanted to attempt to gauge the mood of our multi-cultural readers with a series of short interviews to enable a cross section to express their views and offer hope/advice/commiserations to our readers.

Our primary aim is to portray the real feelings and emotions of expats actually living and working here in Moscow in contrast to the emotionally written articles by our International colleagues that mostly portray a completely different view on our lives!

Those interviewed are a comprehensive of expats living and working in Moscow, who combined bring decades of experience dating back to the very early days of modern Moscow.

We asked 4 main questions and in this issue the cross section is mainly business orientated. We will continue in the next issue of Moscow expat Life, so if you have some comments or would like to be interviewed please contact me at Moscow expat Life [email protected]

Chris Helmbrecht, Partner at KOLLEKTIV, 11 years in Moscow.

Chris Helmbrecht

Chris Helmbrecht

 

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

We are cutting costs, keeping expenses down, looking for foreign business. Every crisis offers opportunities. We are trying to use the current situation to our advantage, offering Russian creative services for a low cost to our European and US clients and partners. It’s a win-win situation for everybody. Our creativity earns business and Euros, we make money and our partners get good quality work for much less than in their home markets!

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

According to my business/finance contacts, the worst is still to come. They forecast a never-seen-before-economic-crash along with running inflation for the first-second quarter of 2015. Hopefully they are wrong. In any case, the recovery will take a few years. As soon as we are through the bottom and recovery begins, I want to start two new businesses with the help of investors. I have planned these businesses already to start this year, but in the current environment, it would be stupid to start something new. I am sure, both businesses will benefit from the recovery/growth period, after the bottom is hit.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

In most cases not. But in my opinion, it’s NOT some sort of propaganda, but laziness on behalf of the journalists, combined with the general opinion within their target groups. The publishers’ editors want to feed to the readers/viewers, what they want to see, since it will generate more advertising revenue/profits. The general opinion about Russia just started to change to a positive one over the past few years, from the Alcoholic-Mafia-Rude-Russian image, but all positive image gains have evaporated in the last year. Nevertheless, from my frequent visits to Germany I know that there is an overall understanding of the Russian side (and it’s actions) within the German middle and upper classes, which is surprising.

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

An increase of blood pressure maybe. So far, the crisis hasn’t affected me that much, but I think it’s still the quiet before the storm. I am uncertain and afraid of what lays ahead. But, this is not my first crisis and I am positive that I will be able to stay in Russia and get through this. We may even benefit from the crisis in one way or another. I have decided to stay in Russia (as long as I can) and sit this one out. I will only leave if I can’t make enough money anymore to provide my family with its daily needs or (worse case), if the streets get violent (due to political social unrest or criminals). I’m also afraid, that (some) Russians will develop a hate rage against foreigners and there will be threats against us, because we are foreigners. Particularly from a country, which imposes sanctions on Russia. Hopefully none of that will happen and we can continue our businesses and do our part to support the Russian economy.

Bastien Blanc

Bastien Blanc

 

Bastien Blanc, VP Sales, Marketing & Business Development – Russia CIS, Interstate Europe Hotels & Resorts. 6 years in Moscow.

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

Indeed the playing field is constantly changing, particularly within the Hotel & Tourism business, as we are getting hit from all angles. We are getting less business travellers, international conferences are now nearly non-existent, tourism has dwindled, and costs have risen dramatically. Though as I repeat always to the team, crises mean opportunities, hence we are developing new partnerships in different markets, with different industries, to try to offset the drops. In such times it can be challenging to do better than the previous year but you have to perform better than the competition.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

To work in Russia is to accept the ups and downs of this market. It is a long-term investment and not for short-term players. Business will return as this market, and the whole CIS, still represents many opportunities for development in a variety of different fields. It might be the right time to invest locally in logistic infrastructure, which remains a main braking force to industrial regional development. Investment in hotels is still necessary, so that the country can prepare for the World Cup. Focus should be on how to rebound best beyond the removal of sanctions in July, hopefully.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

I have lived in many countries, and as a general statement, the press often only shows a biased picture, and this is even more so when talking about the western view of Russia unfortunately. Many people talk or write about Russia without having been here even once, or without interviewing people who are living here. I personally listen to different sources and try to get a real feeling about what is going on, always keeping in mind that face-to-face communication with team and partners is crucial.

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

Like all Muscovites I am experiencing price increases, from Aeroexpress tickets which are up by over 15% to my coffee, which is up by over 6%. Some products have totally disappeared after a couple of months of sanctions. Only my local market babushka has kept her prices pretty stable so far. But here again, when I see some programs on European TV, it looks like shelves are empty, which is absolutely not the case. Many items from different origins have appeared. I do experience the lack of cheese! Luckily there is Belarus!

Robert Knights, COO Work Service, 22 years in Moscow.

Robert Knights

Robert Knights

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

Our clients are behaving cautiously and calmly, they are not making any snap decisions, but business is slowing down. We have more client requests than ever before, because businesses are considering all options when it comes to the provision of services including labour, but the translation into business and contracts is slower.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

We have recently moved into new offices, and are investing in the future. We have opened a new business unit for the supply of outsourced IT Solutions, and signed co-operation agreements with several new service partners. We remain 100% committed to this market, to our clients and to our team. We are taking a long-term view.

This is my fourth crisis here in Russia and each has had its own unique DNA. Russia has emerged from each one of these crises a stronger nation and economy. This crisis has the added dimension of sanctions. I believe that this crisis will take longer to emerge from than the previous events. I do not think that business will return to normal as it was pre-crisis. Future direct foreign investment will be limited and investors are likely to be very cautious, especially those from Europe and the USA. Investment may come from China, India, Brazil and other developing nations who are seeking a healthy and robust relationship with Russia.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

For a number of years now Russia has been receiving a disproportionate amount of negative press and that has intensified. Currently I do not believe that there is an attempt by the Western media to even understand the current situation in Ukraine from a Russian perspective. The reporting is not balanced and it’s quite often misleading.

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

Well it’s now becoming very obvious that prices are rising rapidly for basic foodstuff, particularly dairy, meat, poultry, fish and fresh fruit and vegetables. I am consciously shopping at outlets which are giving reasonable quality and value. I have changed my shopping habits and I can imagine people that are on a limited and fixed rouble budget are really struggling. I am also conscious and wary as to where I travel. I have spent 22 wonderful years in Russia and I hope that I can spend another wonderful 22 years here with my family.

Luc Jones

Luc Jones

Luc Jones Partner & Commercial Director – Russia & Kazakhstan, Antal Russia.  20 years in Russia.

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

Recruitment is always a good barometer for business in general, with companies hiring more people when times are good and doing the opposite during downturns – it’s basically feast & famine! Business certainly hasn’t stopped since clients realise that there is still a shortage of good people available, and even if a few firms are letting some staff go, they hardly get rid of the best ones first! As a rule of thumb, those companies already active & well established in Russia will stay put but we are unlikely to see many new entrants in the nearest future!

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

Define ‘normal’? Many would say that putting ‘Russia’ and ‘normal’ in the same sentence is an oxymoron, as least as far as foreigners are concerned – Russia is never likely to be normal in the Western sense. However, if you mean economically stable & having strong relationships with the western world, then this is unlikely to happen in the foreseeable future, unfortunately. My feeling is that both sides have bitten off more than they can chew here (The West didn’t realize what Russia would do to prevent Ukraine from joining NATO, and Russia underestimated the reaction to annexing the Crimea) and neither sees much benefit in achieving a quick compromise.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

Russia has always been an easy target for lazy, foreign journalists – and in any case, who wants to read about the trains running on time; far more exciting to write a story about the Russian mafia trying to sell plutonium to Kim il Sung! Granted, the Russian government certainly doesn’t do itself any favours; I get the distinct impression that they like the ‘cold, tough, hard man’ image, assuming that if outsiders aren’t frightened of us, then they won’t respect us! Recently the western press is particularly one-sided – when you live in Russia for a considerable length of time as an expat, you at least begin to see things from the Russians’ point of view (even if you don’t necessarily agree with it) and why they act the way they do! Just imagine if the boot was on the other foot and that Russia had supported the Scottish independence movement, or was funding UKIP? This is Russia’s ‘Cuban Missile Crisis’!

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

As I have a mortgage in the UK, yes! My salary (paid entirely in RUR) is essentially worth half of what it was only a few months ago. However, when you work in emerging markets, you have to be prepared to take the rough with the smooth – I did well during the boom of 2004-2008, and sent sufficient cash abroad to tide me over for the coming months, but not indefinitely! If you live locally, you won’t experience a huge difference, apart from airfares, so unlike in 1999 when bars & restaurants were empty, this isn’t the case now, as Russia is more self-sufficient than it was 15 years ago.

Anonymous (Banking Sector).

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

The crisis triggered by sanctions is strongly affecting the financial sector. Before the US and EU sanctions, Russia was a growth market for European banks. Current sanctions and anticipation of new ones adversely affect business.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

In my view this crisis is different. Crises in the past reflected mostly an economic weakness. This crisis has a political background. I expect business to return to normal only after politicians start to talk to each other again.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

The way that Russia is portrayed in EU press is disturbing. The western press in general does not accurately reflect political developments. This is sad.

A senior expat with 20 years experience

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

As pressure mounts on cash flows so companies review their expenses. This is bound to put all financial advisory firms revenues under review.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

This is unlike other crises as it is being driven by a political agenda. As such we cannot rely on the normal cycles that are created by economic events. This has the potential to be long and drawn out.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

The Russian bad guys sell newspapers, books and films. Sadly what we are seeing now is that both Russia and the west have reverted to their characters of the other.

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

Immersed in a sea of bad news it is ever more important to protect our personal motivation. I have taken to ensuring I attend the ballet or concerts at least once a week.

John Kopiski, Dairy Farmer/Agro-tourism 23 years in Russia

John Kopiski

John Kopiski

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

Is the crisis a result of sanctions? I think not! What is the cause of the current sanctions – the answer is oil and shale oil and the politics that surround this!

The current exchange rate is a direct result of oil, and not the sanctions, not even Crimea or Ukraine. Hence one just has to sit out and wait for the oil-politics to end! Who, where and why the oil politics are the way they are, is beyond the reach of us, the normal voter! If the war in Ukraine was solved tomorrow, would the price of oil fall? The current global crisis is beyond the control of normal people business people.

For domestic producers, using domestic resources, the exchange rate should not affect costs. However, as a dairy farmer I face problems like many, concerning the cost of spare parts that I have to import. Hence there will be a direct effect on costs.

On my dairy farm, I wait to see what policy the [milk] processors make, as they control the price of milk which I am paid. Hence I am not really in control of my long term policies, other than to reduce costs, reduce labour and hope not to be forced to sell assets to provide cash flow.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

My business will return to normal when exchange rates return to normal, or sales prices react pro-rata to my cost increases. In the meantime I am studying how to process more of my Russian milk, with Russian equipment to produce Russian products and hence not rely on imports. The term to use is long-term. Make higher profits when one can and bite the bullet when hard times come! Do what we preach! Do as we tell the Greeks.

What does normal mean? If normal means working as in Europe, then this means lower profit margins; higher salaries and less dividends! If one means ‘normal’ as ten years ago the answer surely must be ‘no’ because as the market matures the approach to business becomes more long term, without such large profits. The Russian market will grow. With current politics now imposed on Russia, there is a chance the new ‘normal’ will mean more rouble deals; more BRIC deals.

Politically or commercially? Commercially – business is business. Exchange rates are exchange rates. I see no difference about investing here today, than two years ago. It is a place to invest. Western politicians provide the wrong portrait to serve their purposes! The purpose today… seems to be to make the public think that Russia is expansionist and risky. There is a lack of bank finance, or at exorbitant rates and terms and conditions. There are price increases on anything imported but marginal price increases on local production. Disposable income is being reduced.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

The western press these days does not just report on a situation! It opines on a situation and hence follows policies.

Anonymous, Real Estate

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

For the moment, there are no currency controls, and therefore, we expect potential clients to continue buying but with reduced budgets.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

We expect Russia to become more self-sufficient and less dependent on imports due to sanctions and absence of foreign credit. Providing there are no currency restrictions and the currency—whatever its value remains convertible—we expect business to continue. Pundits from Kudrin to Chris Weafer predict the crisis should lift within 3 years. There are very good opportunities at the moment for manufacturers of agricultural and food processing/packaging equipment with a link-up for leasing with a Russian bank or foreign bank working in Russia. There are no restrictions by the West in this sector at the moment.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

No, the West has turned Russia into a Pariah state; it will take many years, if ever, to restore the friendly relations created as a result of the dissolution of the Soviet Union.

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

Challenging! We shall find new products adapted to the new situation.

Adrian Cooper, CFO Region EEMEA for a global food processing company

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

We see locally supplied prices for materials and services rising in-line with inflation, plus a trend for payments in other currencies [EUR or USD]. With currency and borrowing rate changing frequently, we need to update pricing mechanisms far more frequently, and look to hedge any exposure we may have.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

No, not in the next 18 months, I think this is a new ‘reality’. This is only the start of a slowing-down of the economy. GDP grew by only 0.6% in 2014, and will fall by between 3 to 4% during 2015. Capital flight continues, and the oil price seems to have stabilized at a lower level than Russia needs to cover its spending. This is leading to cuts in Government spending and jobs, that will further exacerbate a slowdown.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

What I read in Reuters, the FT or The Economist [as examples of foreign press] seems to indeed mirror a close representation of what is actually happening to the economy, in terms of data and facts. When Russia emerged from their last recession in 2009/2010, it seemed to me that the Government was content to rely on a buoyant oil price to ‘balance the books’ / increase reserves… without maybe investing more, faster, in local manufacturing, with still a high reliance on imports. Of course in the local press, it’s all the fault of the US..!

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

One very real challenge was telling employees that they had to settle for only a 50% of Inflation pay-rise in December. This will impact them directly in 2015, as real prices in shops rise, but I was surprised by their level of acceptance to this. It was though they were hardened to this reality, having seen it many times before.

Anonymous, IT Sector, 8 years in Moscow + 7 years in Kazakhstan.

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

It was evident already towards the end of 2013 that Russia was still suffering from big underlying structural problems and that we were heading for a slowdown. Crimea, Ukraine, sanctions have all merely exacerbated that weak situation. For our business we have already lost four employees (out of 11), downsized to a new office three times smaller and switched pricing of our products from roubles to Euros to protect us against exchange rate swings. We have a contingency to further downsize or even close the office if necessary and work through a local dealer.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

We really have no optimism at all regarding the future. This current crisis differs from the previous one in that it is almost completely stand-alone and self-manufactured. Politics, saving face and not backing down seem to play a large role, so based on current activities do not expect things to change for the better. Indeed, like in most other countries there is always constant debate, particularly in harder times. I have not seen that here.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

Yes, it’s fairly accurate, although the real situation is even, at times, worse.

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

On a personal level, real income has dropped substantially. We are paid in roubles but have at least 50% expenses in GBP and EUR. Add double-digit inflation to that and we are all suffering.

Russia was generally a fairly lucrative place to work in the past – now the situation has changed. If you include the fairly dire quality of life in Moscow, particularly in the winter months then outside of friends, family and tradition, it’s difficult to find a reason to stay.

Don Scott OBE

Don Scott OBE

Don Scott OBE, President of the British Business Club 26 years in Moscow.

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

Yet again we find Russia in a very difficult and challenging situation, however we should remember that this is not the first time Russia has been in this situation over the past 25 years of independence. I think the most important thing to keep in mind here is that through every period of difficulty Russia has gone through, it has come back, bigger better and stronger. Russia is not dead but going through enormous growth pains and still finding itself in the global geo-political landscape. I have heard many people say that this ‘crisis’ is worst that all the rest. I seem to feel that much of that statement is used by less experienced and younger expats in Russia, in fact it is no worse than other crisis periods, but it is different.

In 1998, peoples material expectations were much lower than today. Nobody could dream of having a mortgage back then. Today it is fairly commonplace and so the cultural mass learning of debt is now being felt. Back in 1998, oil was less per barrel than it is today, but as Russia grew over the last decade and invested with increased margins, it is now feeling the pinch, something that it is not used to! All in all, the current climate is not pleasant, however, life goes on, business will continue and things will get better again. It is not for the faint hearted, but then again Russia never was. Russia will still be here in 20, 30, 100 years, it is a long-term investment in time, life and money, but for those that stay and persevere, the rewards will come.

Andrew Quayle, CFO Heineken Russia, 3 years in Moscow

Andrew Quayle

Andrew Quayle

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

Our industry (alcohol) has been under siege for several years already by the government, with additional legislation and increased taxes on an annual basis. So in some ways it is just more of the same and we know how to deal with it. The difference is, of course, that this time around the whole economy is struggling and a recession seems imminent, if not here already! Our strategy remains sound and we will keep planning ahead for the ‘good times’, when they return, and on a daily basis to focus on the things we can control and not worry too much about the things we cannot.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

We see two years of recession and realignment of the economy… then all will be back to ‘normal’… whatever that is! (ever the optimist!).

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

No, most if not all of the western media seems to have a negative, biased view of Russia. What I see on the street and hear in the office is not what I read in the press.

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

There are some food challenges as western-sourced products are not available. This is an inconvenience but hardly more than that. Prices are beginning to react, but surprisingly slowly.

Oliver Eller

Oliver Eller

Oliver Eller, General Manager Hotel Baltschug Kempinski Moscow.

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

The economic situation is not very favourable in Russia at the moment, but I am sure we will manage this challenge. I am an optimist by nature and I am looking forward to the future with confidence, otherwise I would have never come to Moscow. Crises always open up to new opportunities. The most important thing is that our guests are loyal to us, which means they trust us and are ready to stick with us through any crisis. Many people ask me about sanctions and I respond that the sanctions are actually not my business. My task is to satisfy the guests no matter if sanctions are applied or not. Of course, we needed to adjust to the current conditions and have changed suppliers to local ones, but we did not decrease the quality, which is most important to our clients.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

The first time I came to Moscow in 2007, it was also in a crisis two years’ later. I was a part of the opening team of a deluxe Moscow hotel, which was a true success story, so I think you become stronger and more creative, gaining experience through challenges. But I would also like to point out that at the moment, there are many negative insinuations around the booking situation in hotels. In reality, the figures are not so bad. Over the last couple of months we managed to increase our occupancy in comparison with last year by 25%.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

The Baltschug is famous for being a media-friendly hotel. We invite all journalists to stay in our hotel and experience true Russian hospitality. More media players should come to Russia and give an objective portrait of the Russian reality. I am sure the general image of Russia will then be changed.

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

I know that economic situations influence all the aspects of our lives. As an executive leader, I do everything possible to keep my boat (otherwise known as my hotel) stable, to avoid the storm and huge waves. I make sure that my team rows the boat in the right direction. But frankly speaking, I forget about the crisis when I come home. I recently returned to Moscow with my wife, who is Russian by the way, and my nine-month-old son. I am a happy man and I think that a lack of money or a decrease in the exchange rate or the price of oil can never destroy the true peace in your heart.

Mark Smith, Managing Director Sunbury Heights 27 years in Moscow.

Mark Smith

Mark Smith

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

The construction industry is always prone to downturns caused by economic crises. While the clock speed of our industry may be a little slower than some, a downturn in the general economy will hit developers looking for investment immediately, architects within 3 months and project managers and general contractors within 6 months. The present crisis in Russia has been long in the making and before the onset of the most recent downturn our industry was already suffering. Even before the intervention in the Ukraine, Moscow office vacancy rates were higher than any other European city, outside of Greece. The appetite for new office developments therefore was low at the outset. Now the crisis has deepened, that trend has become considerably more pronounced, with very low demand for most commercial design and construction services. I see that paucity of demand as being likely to continue for at least another 2-3 years.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

I think the current crisis is of quite a different order to the others we’ve all lived through in the 1990s and in 2008. Those crises were largely financial crises and while they affected Russia badly, Russia could turn to two pillars of support that are simply not available now. Firstly, Russia was an established and accepted member of the global financial community, allowing it to operate on global financial markets without let or hindrance. Now, Russia has been expelled from that community of nations and is actively ostracised by a very large part of the global community – this is not simply a U.S.-Russia conflict for instance.

Secondly, during those previous crises, the world oil price maintained a degree of buoyancy. This is the bedrock upon which the Russian economy is built – Russia having no other significant source of income excepting the sale of weaponry. The oil price is now at a significant low, with most analysts accepting that changes to oil exploration, including the availability of shale reserves, means that the price will stay low for a considerable period ahead.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

This is rather a leading question and invites one to take sides in a way that I don’t think I’d like to do. I would say however that the question would be more telling if we were comparing state controlled publications in the various countries – then we could conclude something meaningful. The media in Russia is almost universally state controlled, so comparing that with independent sources of opinion will always lead to differences in approach.

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

Personally, as a result of recent events we’re focussing more on expansion overseas. I think the present crisis will not go away anytime soon and the prudent decision for any business leader is to protect overall revenue streams, rather than being patriotic or overly sentimental about one or other location. That is the business of a politician or apparatchik, not a businessman. From a personal standpoint, the environment has led me, after 27 years residency in Moscow, to relocate to Berlin with my family. It’s a decision that saddens me, but one, which I fear, is weighing on the minds of many expats in Moscow.

Anton Greiler

Anton Greiler

Anton Greiler, General Director Julius Meinl Russia Involved in the Russian market since 2001.

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

As we are selling mainly imported goods, the RUR/EUR exchange rate affects us and our selling prices directly. The first price increase was by 10% at the end of October last year and that continued at a very fast rate during the weeks which followed. Our ideal solution is to switch clients with RUR-prices/pricelists to EUR-pricelists, invoicing in RUR on the day of delivery based on the official central bank exchange-rate. Not all clients accept this, but we monitor our profitability constantly and we are not delivering, if we make losses.

Last year we had our absolute record in sales in Russia and we are in the meantime the biggest importer of roasted coffee to the Russian Federation. We continue with a strong sales-momentum and we try to compensate margin-losses with additional volume and market-share, which will set up a great base for the time after the crisis!

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

The economy is not a one-way street. There are always upswings and downswings. After every crisis there was and will be a boom and we have to prepare now to get stronger for the huge opportunities which are ahead of us!

Luckily, I am paid in EUR, so the effect is limited, but I definitely saw the value of my RUR-accounts here decrease and imported goods are becoming more expensive (in RUR). On the other hand, I just noticed that going out eating in ‘expensive’ restaurants is currently much cheaper (counting in EUR), as most of them have not increased prices (yet). Russians are travelling less abroad, as it has become basically twice as expensive as only one year ago.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

I see and feel a real ‘propaganda-war’ between the view from the west and from the east. The media are telling stories, which are fitting to their ‘view of the world’ and not showing ‘reality’ (whatever this might be).

David Gilmartin, General Manager, Troika Relocations 19 years in Moscow.

We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

As our main business is working with international companies and their incoming expatriate assignees, our industry has been affected quite seriously. Since the last round of US sanctions, and the Russian ban on imports of European foods, many expatriates have left the country. Many of these would have been employees who simply found that their jobs no longer existed.

Since the December crisis, we have witnessed a more worrying trend. Many long-term expats have left, or are planning to leave, as they feel it is no longer i nteresting, both personally and financially, to stay here. For those who are earning in RUR but still have outgoings in Euros, for instance school and college fees, it may no longer be viable to stay here.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

I have been here long enough to have witnessed the 1998 crisis. At the time, that was a challenging experience, and I don’t think anyone predicted that the country would recover as quickly as it did.

This time around, I am afraid to make a prediction, as there are so many factors involved in the equation. The economy will of course recover, and some companies will be in a position to take advantage of that, but it will take longer for other international companies to commit once again, as they see the recent events as being self-inflicted and avoidable. In the long term, they will all return as Russia is simply too big to ignore.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

No!

Anonymous. Restaurant business, 23 years in Moscow.



We are now well into another crisis and the playing field seems to change on a daily basis. How is this affecting your industry/company and what immediate policies are you making?

Sales are down 15%. We are having to watch all aspects of the business daily and adapt immediately. We are in the process of reducing staff and monitoring CGS. We are also looking closely at the effectiveness of all our marketing.

Many of us have ‘survived’ previous crises, what is your prognosis for the future? Will business return to normal?

Unfortunately this is not going to be a short-term crisis. The economy has serious systemic problems! Even if oil goes up, sanctions go away and Ukraine stabilizes it will not result in a strong economy. The Government appears to have the wrong priorities which they will not change and it will take years for capital investment to return as they will be discouraged by the risk and corruption.

Do you feel that the way Russia is now perceived by the non-Russian press accurately portrays the real situation in Russia?

No it is a lot worse than they can imagine. Drive 100km from any major city and you will see the real Russia. It is sad!

How is this crisis affecting your personally? Are you experiencing price increases or other challenges?

My personal income has been seriously reduced. Inflation is growing – quality food is seriously increasing in cost. Why? Because here is no competition with quality imports. The sanctions imposed by Russia are only really hurting the Russian people!

A Passion for Quality

Selection_571

Richard Knight, ACSI, Client Advisor,

Why are the products that you are offering in this market important, what makes them different from other financial services products being offered here?

To answer the first question ‘why are the products important’ I need to get a little philosophical. As you make your way through your working life it’s almost a certainty you will need to employ the services of people from three professions, they are Medical, Legal and Financial. For medical services you visit a doctor, you buy a property or have a legal issue you go see a Lawyer and for Financial service?, (no… not the bank!). Medium and long term financial planning, that’s what we do. So if your doctor is successful at keeping you alive and your lawyer keeps you out of jail, our aim is to provide the funds you’re going to need so you maintain your lifestyle wherever that may be and regardless of your nationality.

The correct answer to the second question: ‘what makes them different from other financial services?’ is nothing. The products we use can be and are offered by other brokerages in Moscow and around the world, the difference is the advice and service you receive in return for placing your trust with your broker.

For Russian nationals, the main requirement is security. Russia has a long and colourful history but until the powers that be diversify the economy, Russia will continue the roller-coaster ride from one financial crisis to the next. This is a big worry for Russian nationals as previous financial crises have seen their entire family life savings wiped out overnight, and sadly history has a strange way of repeating itself.

The products themselves offer their own level of security via the Investor Protection Scheme, which for the client means peace of mind, and one less headache for the brokers. The Russian government does have a personal financial insurance scheme, which has recently been doubled from 700,000 to 1.4 million roubles. But exchange rate volatility has halved the true value of this scheme, so in reality all that is happening here is that the local scheme is treading water. In the UK, the insurance covers savings up to £85,000 and they are considering raising this figure to a cool £1 million.

Selection_572Who are your clients: Russians or Foreigners?

Nationality doesn’t come into it. My client base, however, is mainly Russian, in my eyes, they have a bigger need. For the expats here, it’s a case of being aware of, and making use of the tax advantages whilst you can. Many expats are simply unaware of many changes and modifications in legislation whilst being offshore. For example, there are new changes in the tax law coming into place in April specifically aimed at non-residents who have property in the UK, and a lot of people don’t know about these. It’s all about being tax efficient as far as the expats are concerned, whilst you have the time. If you go back to the UK, then you can readjust and/or repatriate, but that doesn’t mean that you shouldn’t use your time wisely, whilst you are here.

Do you offer a personalised service?

Absolutely, this business is very much a people business and every client is an individual each at a different stage of his or her life. I have clients who are just making small regular savings, because they want to build capital for some future expenditure. I have other clients who have multi-million dollar accounts, their goal is security and growth; In both cases the clients need, and get a completely personalised service, which is what sets Key Investments apart from the crowd. ‘A Passion for Quality’ is all about service, it’s all about people.

We are in a very difficult situation now, at least as far as expats are concerned. Are you offering any different services now which are different from those you offered a year or two ago?

In the main no; the products remain the same, although the strategy may change. Every ‘crisis’ is a golden opportunity for those who can take advantage of it. They will reap serious rewards for their careful and calculated investments.

Our responsibility to clients would also ensure each client is diversified so that as markets move up and down, the client will maintain steady growth. The ‘crisis’ is here in Russia, but in Europe, the USA, China and in ASEAN countries, people are all making very good progress. Our average growth for 2014 was between 8% – 12% in what was quite a flat year. So far in 2015, we are averaging 21% and as I write it’s the 1st March, so once again the crisis is local; nothing more than that.

We look for two types of clients, those who want to be active in the markets and not sit on the fence sucking their thumbs, and those who became active and feel let down by their existing broker. We’re not a big company and if I’m honest, nor do we want to be. Our remit is to look after the clients, get them into the right funds, at the right time be they: mutual funds, ETF’s (Exchange Traded Funds), stock’s, bonds, and structured products, and to keep the clients informed in all market conditions.

Do you like living and working in Russia?

Yes very much so. I’m still here after 5 years, although I have seen a lot of people come and go. But I can understand why some people can’t get to grips with the culture shock, Moscow is very much a working city and I love my work.

Key Investments
10 Vozdvizhenka Street
Moscow, 125009.

Mobile +7 915 058 6656

[email protected]

www.key.investments

Chris Weafer

Selection_569

‘Buckle up, it’s going to be a rough ride for the next three to six months, but the long term outlook is not that bad…’

Despite all the hype and the disastrous backdrop prevalent throughout all of 2014, the results for the economy were actually not so bad. Many of the alarmist reports in both the international and domestic media, which, for example, suggested that the country would suffer a recession similar to that of 2009 or that there would be a severe credit problem which would hit the banking sector and even lead to problems for Russian companies servicing their international obligations, proved to be just that; alarmist.

But that is not to say that the economy has survived the crisis intact and all will be well from here, especially if the efforts to secure a lasting peace deal in eastern Ukraine are successful. Far from it. Almost regardless of where oil trades and how much optimism there may be over an easing in sanctions, the economic indicators for the next three to four months, possible the full first half year, will be borderline disastrous. That is now almost a given. What happens in the 2nd half and how much optimism there may be for a recovery in 2016 will be determined by oil, sanctions and whether we get an effective government strategy. But none of that will stave off the severe downturn the country is now in. The effects of that will hit almost everybody in the coming months and into early summer.

But first the good news. The economy actually grew in 2014, albeit by a very modest 0.5 per cent. The decline in retail growth, which over the past 14 years has been the main economic driver, to only 2.5 per cent and the contraction in investment spending and the construction sector were partially offset with a pick up in demand for locally produced goods. The sharply weaker rouble and the ban on some importer foods contributed to import substitution. The continuing rise in defence sector spending also contributed to the gain in the manufacturing sector and the housing market expanded by 15 per cent as people rushed to use depreciating roubles and lock in lower interest rates.

The federal budget would have reported a full year surplus equal to 0.9 per cent of GDP had the Finance Ministry not transferred 1 trillion roubles to a fund which will provide support for the banking sector this year. That transfer meant the budget actually reported a 0.5 per cent deficit. That is a very good result given the 52 per cent decline in the price of oil, which, along with the gas sector, contributes just about half of all budget revenues and two-thirds of exports. Capital Flight did rise, to over $150 billion last year, but most of that was the repayment by Russian companies of external debt (they had no choice due to last Augusts’ sanctions). Total foreign debt fell by $130 billion to end the year at $599 billion, or 30 per cent of GDP. Not a bad ratio when one considers the over 100 per cent debt to GDP ratio most developed countries, and China, have to service.

That’s where the good news mostly ends. The hangover from 2014 is now kicking in and it will be painful. At the end January, the headline rate of inflation was already at 15 per cent and it seems very likely to exceed 20 per cent in the early 2nd quarter. That means the Central Bank will not be able to cut its still crippling benchmark Key Rate of 15 per cent until it is convinced that the inflation rate has peaked and started to reverse. That may not be until its policy meeting on June 15th. Whether inflation will have peaked by then will be largely determined by where the rouble trades and that is almost solely a function of the oil price.

Selection_570

The price of Urals crude has defied most predictions and, by mid February had climbed back towards $60 per barrel rather then testing the 2009 low of $40 per barrel. It is far too early to be confident that the worst is over and interim bounces have been common during previous periods of oil price weakness. What we can say is that if the oil price does again track back to the low $40’s then the rouble will again test the high 70’s against the US dollar. The Central Bank will not use resources to prevent that as the weak rouble provides a lot of protection of budget rouble revenues and acts as a soft stimulus for domestic manufacturing. But, while there is a clear correlation on the downside, this is not the case when oil rallies. Instead traders switch their fears to eastern Ukraine, sanctions and the decline economic indicators. So the recent oil rally and the more hopeful news from Ukraine may combine to rally the rouble a little, but the greater likelihood is for a continuing nervous currency market, which a greater downside risk, between now and late spring.

Real disposable incomes fell by 1 per cent last year, the first decline since 2000, and that squeeze will be worse this year. Nominal wage growth is a lot less than inflation and Russian employers have a preference for cutting salaries rather than staff. So good for the unemployment statistics but another reason why retail sales and other consumer sectors will amongst the worst hit in the coming months. An early indicator was January’s vehicle sales, which were down 25 per cent on the same month last year.

The government’s crisis management, which was very poor in late 2014, has improved. Changes to personnel in the Central Bank and the trillion rouble transfer to support the banks are positive moves. There is also much greater clarity about exactly how much foreign currency debt needs to be paid in 2015, i.e. $60 billion when offshore centres are excluded, which is almost equal to the current account surplus of last year, and the fast-track support facility for 199 strategically important companies also adds some confidence compared to the fact vacuum of last year.

But while the newsflow is better, there is no doubt that the strategy from the Kremlin is one of survival and damage containment only. There is no recovery strategy and none is expected until there is stability and directional clarity in some of the key variables, such as oil and sanctions. The earliest we may start to see that response could be around the time of the big economic showcase set for late June in St Petersburg.

The main theme for that event this year is very likely to be self-reliance or import substitution. This is a theme, which President Putin has been beating the table about since late 2010 and without much progress. The current crisis, especially sanctions, provides him with another opportunity to pound the table harder. To make that work the country will need the continued involvement of western companies and experts. That is something, which was accepted many years ago and is not impacted by the reset in political relations. No doubt the Kremlin’s relations with western countries will remain bad indefinitely as a result of the events in Ukraine. But that should not affect the open door policy for western companies and investors. Previous assumptions that the so-called Asia pivot would replace the need for western expertise have been discredited; China has no spare cash for Russia and is only interested in the materials and transport sectors, which help bolster its economy.

In summary, the key message is ‘buckle up, it’s going to be a rough ride in the economy for the next three to six months’. But the country has the financial and cash flow base to survive the crisis and some positive, long overdue, changes may yet come out of this recession. That said, a return to the boom times is impossible as the base conditions have changed irrevocably. But, with the right strategy and some basic reforms, companies and investors will still be able to make above average returns in Russia.

Sebastian & St James International Financial Advisers

Selection_567

Sebastian & St James International Financial Advisers Limited

Sebastian & St James International Financial Advisers is an international financial services company serving clients throughout the world.

We specialise in all aspects of financial advice, offering a financial consultation service which encompasses a wide range of investment and pension based solutions.

Our main aim in Russia, as with all of our clients all across the world, is to deliver exceptional customer service.

At Sebastian & St James we recognise that every client is different so we provide a service tailored to the requirements of each individual.

As part of our exceptional customer service we aim to establish strong working relationships with our clients. We spend time talking to our clients to ensure that we fully understand and appreciate their requirements, current financial situation and financial aspirations.

Why use Sebastian & St James?

One of the fundamental aspects of our service is to communicate with the client to ascertain whether we can help.

We expect to spend time talking to clients, answering questions and giving information. We have clients who have approached us with very defined ideas of the investment they want, and we welcome the opportunity to discuss these and make their ideas reality.

We also have clients who are new to investment and need information and guidance to help them make decisions. We understand how important it is for our clients to know that their investment will be handled with diligence, integrity, skill and care.

We always encourage clients to ask as many questions as they need to ensure that they are happy to go ahead and use any products and services.

The Sebastian & St James Team

The Sebastian and St James team bring together unique experiences, background and knowledge to make a winning team.

Our advice is independent and covers the whole of the market, and we have access to the major insurance companies and investment houses across the globe.

For clients with additional requirements we have affiliate businesses which have expertise in the fields of tax, insurance, life insurance.

We are also able to offer the facility to open bank accounts in Dublin without the need for the client to be present. Clients who would like more information on this service please email [email protected]

Sebastian & St James are also looking to recruit advisers who would like to work with a forward looking international financial company providing exceptional service to their clients in Moscow and on a worldwide basis.

 

Motorsport in Russia

Selection_565

Selection_566In Soviet times, motor racing did not enjoy a huge amount of public support in Russia, and developed mainly due to the activities of individual enthusiasts. The most well-developed motorsport discipline in the Soviet Union was the rally. Soviet ‘Lada’ teams with their Lada cars appeared for several years in the World Championship (classical) Rally (WRC). By the late 1980s they created a sports team at the Kama Automobile Factory in the city Naberezhnye Chelny.

From the early 1990s onwards, dozens of Russians drivers began to take part in various foreign auto-racing competitions and were able to show satisfactory results at races and rallies.

By the 2000s, the team ‘KAMAZ-Master’ was the strongest team in the rally trucks championship, and competing with it in many cases became virtually impossible. From 1996 to 2011 the team was a seven-time champion of ‘Dakar’, two-time World Cup winner, and winner of the title of ‘Best Russian Racer’ in 2003. KAMAZ Master has made significant progress, thanks to a successful policy to attract sponsors. The first major partner of the team in 2005, became the bank VTB.

In the 2007 – 2008 rally season, we saw the debut of star Russian rally driver E. Novikov. He helped bring the WRC and other rallies back into the spotlight of Russian fans and sponsors. He signed up with Citroen in 2009 for a full season. After a year off, Novikov returned to the World Rally Championship in the 2011 season with M-Sport. Novikov scored a few podium finishes and stage wins, but most importantly, he opened the way for other Russian drivers to take part in European and World Championship Rallies. In 2010, Vitaly Petrov made his Formula 1 debut. Thanks to Novikov and Petrov, Russian motorsport has benefited from a huge popularity boost. Russian and European brands have begun to take interest in sponsorship and marketing through motorsport in Russia.