Tula Region

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If the Kaluga region has during recent years gained a name for itself as the region of Russia with the most attractive conditions for investment and industrial development, then in my view the Tula region is next in line. In many ways the area has more to offer.

During the tenure of the former Governor, much work has been accomplished; first and foremost in up-grading the aged infrastructure and creating the framework necessary for further development to take place. The hidden advantage in key areas having been neglected for so long (e.g. agriculture) is that vast stretches of potentially good farmland lie ready and waiting for new ventures to come along and make a fresh start.

In the manufacturing sector, the Tula region has a long tradition, stretching back to pre-revolutionary times, of industrial activity in food processing, firearms, heavy machinery, chemicals and metallurgy, transport engineering etc., and is renowned still for its famous samovars. Consequently, it is not difficult to find the level of technical expertise amongst a well-educated workforce necessary for the implementation of the most complex types of processes.

There are also a number of industrial parks, either already operating or under construction, to provide facilities and services for new investment coming into the area. One of the most prominent of these is the Tula Industrial Park. The instigator and CEO is Ilya Tolstoy, also General Manager of the family estate in Yasnaya Polyana, home of the novelist Leo Tolstoy. The TI-Park project is a joint venture with the Tula Development Corporation as a public-private partnership for the implementation of investment projects in “all spheres of life”. The priorities of the organisation are the safe support of business development, technology clusters and industrial zones in the Tula region.

Other organisations have been established with the support of the regional government to promote and foster the investment climate, providing initiatives, support and coordination for attracting inward investment to the region. The most active and influential of these is the Tula branch of the Eurasian Business Union, Delovoye Soyuz Evroasia, established and managed at federal level by Pavel Borodin, the former head of the presidential administration. Our company, ADC Realty Ltd., is one of the founder members and the general director, Alexander Zakharov, sits on the board. We will also chair the committee for foreign investment and thereby play our part in the future development of the region.

Social Movers – Don Craig

Don-CraigDon Craig

Well talk about a Leap Year, this one is definitely starting out as a leap of faith. As businesses keep closing, new venues keep popping up, and only the strong have survived. After 23 years of living here I have seen many things but though I still have faith, 2015 was one of the most difficult years I have ever seen and of course it affected the Restaurant, Club, and Bar business. We have seen entire buildings sweep away in a single night, the rise in cost of goods, and the government implementing rules and regulations in regards to alcohol sales further raising taxes making everything more expensive.

With all that being said, Russia is still a land for dreamers and if you work hard you can see that there is an open horizon ahead. The tourism business will excel this year, so will the food & beverage trade. Places like Imagine Café, Coyote Ugly, Dirty Blonde, Tap & Barrel Pub, Chicago Prime, and of course Papa’s Bar & Grill already have a strong foothold in the market so I believe you can depend on them being around for a long time. I know I repeatedly mention Papa’s over the issues but it is a strong example of a business giving people what they want, with record sales in the first two months of 2016 to prove it. On February 26th Papa’s opened a second venue called ‘Papa’Zoo Bar & Grill’ which looks to prove that the formula really works, so much so that I have put my project on the back burner to ride shotgun on this project.

Whatever your taste, Moscow still has a huge selection of places to go and see so get out there and have a look. Moscow is and will continue to be the city that never sleeps.

 

Social Movers – Chris Helmbrecht

 

Chris-HelmbrechtChris Helmbrecht

We are moving into spring and early summer, which are the best seasons for Moscow’s nightlife. Cafés and restaurants will again conquer the sidewalks. Bars and clubs will fight each other with the best open-air terraces and views. Moscow at its best.

Feel like catching some of the Russian pop star glam? Go visit Emin Agalarovs ‘Rose-Bar’, which he designed himself. The glass roof can be partially opened and the venue is trying to give you the feeling of being on a stylish yacht.

‘Motel’ is probably the most fashionable place to be these days, it seems inspired by 1970s styled hotels in the U.S. and Tarantinos movies. It offers a lobby and a few rooms, where people can hang out and sip cocktails, while listening to Mashup Pop Music.

‘Kvartira’ became the hardest door of Moscow. The semi-private member club at Rochdelskaya is the favorite meeting place for Moscow’s rich and beautiful. They’ll meet at ‘Duran Bar’ for a few drinks on the open air terrace (Be aware! Its also a very hard to get in venue) and move over to ‘Kvartira’ for the afterparty. While you can always line up at ‘Duran Bars’ door and you might even have a chance, if you come early and are properly dressed for a Moscow elite place, you won’t have a chance at ‘Kvartira,’ unless you are on the guest-list.

Despite the need for some fresh, open-air, during this season; the secret hideout of Mendeleev, is still my favorite place and ‘living room’ these days. They manage to make the stretch between stylish bar and minimal techno club, where you can get some of Moscow’s best cocktails, but also listen to Berlin styled tunes.

‘Jagger’ is still the best party bar, especially with its summer terrace.

‘Konstruktor’ is a new underground venue. Its Art Director Sergey Sergeev used to be the director of places like Solyanka and LOL, so you know what to expect. You’ll find more of that on the art play rooftop bar ‘Rodnya’.

‘Time Out Bar’ is planning a roof for their terraces. I’ve seen the plans on Facebook and now I am wondering, when the construction will take place. It will make the terraces weatherproof, but also take away that special open-air feeling, which we all loved so much.

Social Movers – Maria Ushakova

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Maria Ushakova

As an active social mover on Moscow expat scene, I am involved in three major projects, which I highly recommend for you to take part in:

1) June 2016: Queen Elizabeth II 90th Birthday celebration in Moscow (www.qbcmoscow.weebly.com)

2) November 2016: Captain Cochrane’s Scottish Express (http://caledclub.narod.ru/histe.htm). A journey by train across Russia to celebrate Scottish and Russian culture.

3) One of a kind, cultural fund – ‘Vladimirsky Trakt’ (a project which supports Russian cultural heritage – Troikas, a global symbol of Russia) for regular events:
www.bogdarnya.ru

I still run Moscow Amateur Theatre, we host our final student’s production on Saturday, April 23rd in Metelitsa Theatre (Novy Arbat 21), please join us! We have four fantastic shows to share with you. For a real Russian cultural fix, check out great lectures organised by the editor of this magazine, John Harrison, held at Chekhov’s Library ‘Understanding Russian Culture!’ http://uruc.weebly.com/

For people who enjoy nature and would like to discover the wild side of Russia, join us on the first day of summer! We will be crossing from Europe to Asia by foot! Our hiking trip will last 7 days, traveling along rivers in the Urals, though the villages of Ust-Uls and Zolotanka. From now on, with each contribution to Moscow Expat Life magazine, I will be making a prediction statement (my grand grand mother was a white witch from Siberia – I have super power of prediction). This spring season’s prediction is: The UK will leave the EU after the referendum :) Long live the Queen!

A few of my favourite things, for spring-cleaning and perking-up. Made in Russia

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By Anna Jackson-Stevens, PR specialist

My first trip to Moscow was in March 1991. Any romantic notions associated with cultural characters and their creators were dispelled by greyness and heaviness: sky, snow, Stalin buildings, dripping icicles turning to daggers, then to mush then to puddles.

Actually I barely remember first impressions because the fun times that followed overshadow them: midnight swimming in the pool on the site of Christ the Saviour Cathedral; cartwheeling down Tverskaya to celebrate a gastronomic feast, which cost the equivalent of £5 for three; camping in a forest near Voronezh to avoid a dezhurnaya asking after my papers to mention but a few…

The mood in Moscow may not be quite as mischievous today but the exchange rate is almost as appealing for visitors and the urban landscape is definitely jollier. However, even the most positively strung may feel challenged during the thaw months. Beyond a vivid imagination and developed sense of humour I recommend the following pick-me-ups to brush away the winter cobwebs, all made in Moscow:

Little Joys by Anna Slavutina are exactly that and her workshop reminiscent of scenes in Snow White and the Seven Dwarfs. Earrings with names like Flora, Wings and Flower Buds remind us that summer’s on the way.  http://www.slavutina.ru

Charisma Fashion House for flirty day dresses in marine stripes and pretty polka dots. I’m tempted by their figure flattering sheaths in a range of soothing blues.  http://charismafashion.ru

No need to crawl the walls while sheltering from the elements – be bold! Add a splash of colour and adventure to your home with graffiti art by enigmastyle at http://artorder.ru

For aesthetic and aromatic pleasure, Fragrant Roses are so seductive. But how to choose between Prince Jardinier, Lolita Lempika and Lady Killer? http://fragrantrose.ru

Put a pep in your step with a beret on your head. Garin, specialises in male millinery which looks just as jaunty, should it happen to be swiped by the lady in your life! He does in fact offer a range for her too and will custom make to deliver within one or two days. Call the man behind the label Sergei, direct on 8 926 728 1958

As Anna Karenina said: “Spring is the time of plans and projects.” Time to move on!

Italian Sculptor and Mosaicist Marco Bravura

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Interview by John Harrison

Marco Bravura, a well-know Italian sculptor and mosaicist moved to Russia in 2007, with the help of the highly successful philanthropist and businessman Ismail Akhmetov. Marco now lives and works in Tarusa with his wife Daniela.

How did you end up here in Russia?

Everything started rather slowly. I’m from Ravenna in Italy. After living for 20 years in Venice and in other places in Italy and abroad, I finally returned to the town that I was born in. It was when I returned to Ravenna that I became more involved with mosaics. One day, a Russian called Ismail Akhmetov, came to visit in 2004. At that time I was creating a fountain for a public space in Ravenna, in a school with a large studio, with the help of about 12 students. The fountain was huge, it was made of two 9-metre blocks. When Mr. Akhmetov came to the studio he was amazed and said that he wanted to do something like this in Russia. He visited me in my private studio in Ravenna a few times after that. He liked my work and started collecting it; he bought almost everything I made. Then he suggested that I come over to Russia. I asked: “to do what?,” he answered: “whatever you want.” We [my wife and me] like to travel, and so we came here for a month. It was really beautiful. Then we came for two months, five months, and then 10 months. Eventually we moved here altogether.

What are you doing as an artist?

Let me tell you what happened to mosaics here. Mosaics were big in the Soviet Union and quite amazing. Mainly they were used for huge propaganda mural works. Ismail had a vision of building on what was done in the past but invigorating it with contemporary artistic expressions and processes. It is the same sort of thing as I was trying to do in Italy, where mosaic as an art form, until the 1970s was looked at as being something to do with cemeteries and the church, and nothing else. In the beginning we created many works and organised many exhibitions in his private gallery here in Moscow, MusivumGallery.

I personally love mosaics because of their colour; the potential is huge particularly in sculpture. Sculpture has been devoid of colour for so long, and mosaic is perfect to re-infuse sculpture with colour, thanks to new materials and techniques.

So this is your major challenge as an artist?

Yes, that is what I was trying to do back in Ravenna, and since then I have been developing this mission. I still believe in beauty, which is almost a sort of dirty word in art now. But a few people have offered support. As Patrick Mimran said: “Art doesn’t have to be ugly to look clever.” Mosaic has something to do with beauty, and it is a very labour intensive. In Russia, people are not disgusted by the idea of beauty as they are in the West. When they like something, they tell you. So Russia is a good environment to do what I am doing now. I feel I am in the right place.

Do you think that Russia has sort of by-passed post modernism?

Russian artists are very into what is going on in the rest of the world and they have become like artists everywhere. Today’s Russians don’t know a lot about what was happening in Art in the last century. I am talking about the mass of people, not a few individuals. Art itself has changed in that we do not have movements any more, like the PopArt movement and all the ‘isms’ of the 1900s. After that, everything collapsed, and another factor is that art is no more only in the hands of the Western world. Now with the Chinese coming up, with the Indians, it is not clear what is going on. You could say that globalisation is uniting us, but only if we talk about globalisation of individuals, not of movements.

How do you sell your work?

I am working on my projects. I see that investors buy art as a way to keep the value of their money. That is why they travel to Paris, London, New York or wherever. In London there are about 2,000 galleries, in Moscow, which has about the same population – 20 million, there are 200. So London is a centre for international art buyers who come from everywhere, and Moscow is not. On a cultural level, Moscow is a centre.

However, things are changing. We did an exhibition in Minsk which lasted two months. 54,000 people visited the exhibition, which would never happen in Italy or in Europe. The ticket sales alone were huge. But now we are getting commissions, that is, people with money have seen my work and they want to invest in it, but they also want something special. This is not the same as going into an exhibition in Europe or the States and buying something. In a way, it is like artists worked in the late Middle Ages: on commissions of the great patrons of the Renaissance.

How long do you see yourself living here?

As long as I have something to do, I am very happy to be here. I like the people very much, I really like them, they are not so closed when you get to know them. I have real friends here and I cannot say the same thing about other places. You feel that they understand you.

What do other Italians feel about life here?

We are post war children. I was born in 1949, our generation didn’t know anything about the War, and we used to go on holiday to different countries. But our fathers were killing each other. Then something started to happen in Europe. We believed that people should come together, there was this feeling of creating something, a new society. Here, I get the same feeling, a feeling of creativity. In Europe, we have stopped talking about the future. Here, it is all about the future. Maybe it will take blood sweat and tears, and people are not afraid of that. But you don’t see people complaining of this or that, they go on and on, and this is something that I appreciate very much. I hope that Russians can finally find a third way to live, that is not communist or purely capitalist, a third way. We are all tired and compromised. Russians have a balance between the Orient and the West. What surprises people greatly in the West, is that these people are not aggressive. When I used to go out in the evening when I was living in the United States, I did not feel safe. Here, I have never felt any kind of insecurity while walking the streets. My daughter lived here for more than a year and cycled back from her work. She never ever felt any feeling of insecurity, because there is not the consciousness of violence here.

So Russia is a land of opportunity, I do not feel like I have to leave here. I feel accepted.

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Father Plov

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By Nodira Sadikova

There are few places in the world where you cannot find the unique Uzbek dish ‘Plov’. In this article, I am not going to teach you how to cook this culinary masterpiece, but I would like to tell you about the pivotal role of a Uzbek businessman in promoting Uzbek Plov in Moscow.

Ilkhom Ismailov caught my attention with his positive and creative attitude towards his start up business. He has earned the nickname: ‘Father Plov,’ and there is a valid reason for this. He launched the online Uzbek delivery restaurant ‘plov.com’ and people can now enjoy real Uzbek Plov, cooked according to old recipes, with century-old traditions right here in Moscow. Nevertheless all the products except meat and water are carefully chosen and brought directly from Uzbekistan, which means that Ilkhom’s Plov comes complete with the flavour and the spirit of Uzbek cuisine. When Plov lovers order Plov online, they receive a piece of Uzbek warmness and hospitality, something that is naturally Uzbek.

Selection_197Ilkhom Ismailov worked at Troika Dialog for 4 years, and then for 5 years at Aton. In 2014, he launched the online delivery platform Plov.com. One of the essential parts of this successful story is the unique design and style of packaging with ‘plovinsims’ like ‘All you need is Plov’, I wanna be Plov by you’, ‘Plov must go on…’ Like many other successful people, Ilkhom gained experience in the finance world and transformed his hobby into a business. When you like what you do, you put all your effort and love into it. In this, Ilkhom is an example for all start-up entrepreneurs who would like to develop their business ideas or projects. It is important to note that he is not alone in the Plov business; he is actively developing it with his brothers Dilshod and Zafar Ismailov. So we can call this a family business.

The first beginnings of an online delivery Plov business appeared in 2008 when Ilkhom was working at Troika. He realized that his colleagues celebrated every corporate event with an office party. They always ordered sushi, pizza, Ossetian or Russian pies and noodles. But, there was no Plov on the order list. Ismailov decided to research this issue and find out about online Plov deliveries. It soon became apparent that there were no restaurants or cafés offering online Plov deliveries.

Ilkhom noticed the same habit to order sushi and pizza when he started to work at Aton. One day he recommended his colleagues to order homemade Plov prepared by his friends. The demand for Plov grew, and this led to an unexpected change in Ilkhom’s career – he decided to change his occupation, from investment banker to Plov-Maker businessman. He believes that if there is a demand for a product, there should be nice and attractive supply to meet that demand.

The online restaurant menu consists of three sections – three different types of Plov and appetizers in the form of vegetable salads and Uzbek bread (Lepyoshka). The menu has been created with an aim to make it easy to place an order (see table 2). ‘When you go to a Japanese restaurant, the main course is usually embellished with ‘Philadelphia’ or ‘California’, in an Italian restaurant with ‘Ceasar’, pasta and pizza ‘Three cheeses’. It is unbearable!” – Ilkhom said. Despite the fact that Uzbek cuisine is very rich and diversified, the Ismailov brothers have placed Plov as the main dish in their menu. In the future, they want to expand their menu list by offering Samsa (small Uzbek pies with various fillings) and pastries.

In today’s busy world, people have a tendency to prefer ordering food rather than simply going to restaurants. (See table 1). Ilkhom designed an online Plov delivery system based on his own taste and creativity. One of his principal strategies is to deliver everyone unique and age-long taste of national Plov in stylish and eye-catching manner.

 

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Customer Outreach Is About Creating Value

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By Chet Bowling

I frequently talk to CEOs of foreign companies operating in Russia, and with increasing frequency, we discuss how to reduce the cost of attracting new customers and keep the loyalty of existing ones. In solving these issues for Alinga I have developed an approach that has proven results: a quarter of our potential customers become actual customers, and more than half of them come back to us again. So I often tell people what I’m about to tell you.

There are three rules to client outreach that I hold to and that I teach my team.

Be proactive

Our managers and I regularly meet with clients regardless of whether they are experiencing any problems or have any questions. We talk about a client’s goals and the projects they’re currently involved in. For an outsourcing business this is especially important since a provider generally gains information on clients’ transactions after the fact. If we learn about them in advance it’s possible to have an impact on the result, for example by advising on how to better close a deal or consulting on compliance with legal standards. This is undoubtedly valued by our clients and increases their loyalty.

It’s clear that it’s physically impossible to meet tête-à-tête with each client and partner. I do try to meet up with them at events held by the American Chamber of Commerce (ACC), the Association of European Businesses (AEB), and others. Chief executives are among those who attend these events, and a lot of issues are taken care of quickly. The magazine Moscow expat Life that you’re reading now holds really useful networking events. Networking takes up about 60-70% of my time.

Establish, maintain and analyze your contacts

Business breakfasts – meetings in a small circle of people to share experience and discuss pressing challenges – provide another good opportunity for communication. We regularly hold them for CEOs from our client companies and other foreign companies working in various industries in Russia. Recent meetings have been devoted to HR policy, risk management, working with management teams, and opportunities for growth. Our function leaders and invited experts hold webinars on professional topics for employees at our client companies. This is how we create a community of leaders and specialists who take an interest and have confidence in our expert assessments.

Be useful

Companies that have already become your clients should feel added value by collaborating with you. We actively share our knowledge during business breakfasts, webinars, and in our newsletter Vestnik. It’s devoted to the practical aspects of doing business in Russia and comes out every two months in both Russian and English.

As for business acquaintances, one of the most valuable things is to analyze them. It’s not worth selling your services aggressively. Your task is to express good feelings and trust, and be a competent and useful conversation partner. You need to find common topics, express interest, and share your experience solving relevant problems. This works when it comes to building any relationship.

Knowing your rights following lay off or redundancy

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By Luke Conner, Conner & Company LLC, in association with Alexey Kokorin

T he recent financial crisis, including the onset of sanctions, the seemingly ever decreasing oil price and the resulting devaluation of the rouble, has done little to help the employment prospects of expatriates in Moscow or elsewhere in Russia. Indeed, a large proportion of the expat community have lost their jobs, whether through lay off or redundancy. This article aims to provide a lawyer’s perspective on the situation and a brief guide to your rights should you ever need to rely on them.

One of the first myths to debunk, is that lots of expatriates have been ‘made redundant.’ Under Russian law, a distinction is made between genuine redundancy, where a company is liquidated or a particular position in the workplace is closed down completely, and termination of an employment contract by mutual agreement, where an employee is asked by his/her employer to leave (perhaps because of the current market climate or an internal disagreement of some kind) and agrees a severance package. In our experience, such termination by mutual agreement is far more commonplace than genuine redundancy, although the two are often confused in practice.

So what are your rights in the latter situation? Effectively, if you are being asked to leave and you have not committed a gross violation of your official duties as an employee and your position is not defunct, then you can agree a severance payment with your employer. The most common practice is for employers to offer 3 months’ salary (net of taxes) in line with the maximum that would be payable in case of redundancy. That said, there are often cases of employers paying 5 or 6 months’ salary and sometimes employees may accept a lower payment of, say, 2 months’ salary. The agreed amount should be documented in a contract of termination, which should also specify the day when you are expected to leave the company.

Your rights as an employee who is being made redundant (i.e. where your position in the workplace is completely eliminated) are to 2 months’ advance notice. During this period, the employer should offer you other vacant positions within the company. If there is no suitable alternative role or you do not accept the employer’s offer, your employment will then terminate on the date when the 2 month notice period expires or on such other earlier date as you and your employer have agreed. You will be entitled to 1 month’s average net salary as severance pay, plus up to 2 months’ average net salary if during that period you remain out of work.

Whatever the reason for your contract being terminated, you are entitled to all outstanding salary amounts and to a payment in respect of all accrued, but unused, holiday entitlement. Additionally, on your last day of employment, the employer should return your work book to you with an appropriate entry.

One point worth noting which may be relevant for certain expatriates, is that CEOs (i.e. company general directors) are subject to slightly different rules, and may have their contracts terminated based on a decision of the shareholders of the company. Such dismissal does not require notice, but the CEO will be automatically entitled to 3 months’ average net salary (if a larger amount has not been provided for in the employment contract). CEOs’ employment contracts may also contain separately negotiated grounds for dismissal.

If you have any further questions on the above or other local legal issues, please do not hesitate to contact Luke Conner at Conner & Company LLC, based in Moscow.

Empathizing with Gogol

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By Christopher Weafer

Eighteen years ago I arrived in Moscow. I had every intention of staying one, maybe two years before returning to Bangkok, from where the push of the Asian financial crisis and the pull of Troika Dialog persuaded me to leave a comfortable existence in a city where you could actually see the sun all year round for a ‘Moscow adventure’. Today I am a fully paid up member of that group of foreigners who have found themselves addicted to the Russia soap-opera. As with all good soap operas you always want to see what happens in the next season.

For all of the past eighteen years I have lived in the same neighbourhood of Moscow. My first apartment had a view of the north-east section of Patriarshiye Prudy, the spot where, in Bulgakov’s The Master and Margarita, the Devil appeared to the literary critic Berlioz and where the latter subsequently lost his head under a tram. Many an hour was wasted watching tourists risk their life for a photo staging that scene. Also for many of those eighteen years my journey to work has involved walking past the statue of Nikolai Gogol, set in the small courtyard of the house at the junction of Nikitsky Boulevard and Novy Arbat, where Gogol lived his last four years and where he died.

Those familiar with the statue know it to be of a very depressed looking Gogol. It was originally placed at Gogolevsky Boulevard, beside the Cathedral. It is reported that people were stunned into silence when the statue was unveiled in 1909 because instead of the dignified image of the literary genius they were used to, they saw, as one commentator wrote at the time, ‘a heartsick figure muffled in the raincoat and grieving on the verge of despair.’ During Stalin’s reign the statue became such a symbol of national despair that it was eventually removed from sight in 1951. Several years later the statue was placed in its current location. One of the features of the statue is that, like a painting, the eyes appear to follow you as you walk around it. Not so much an admonishment to ‘stay off the grass’ – more a ‘you’re doomed’ look.

For many years I would walk past the statue and think that Gogol would have hated modern Moscow. The city had become vibrant, full of (relatively) cheerful people with growing optimism. These days it seems as if Gogol is saying ‘I told you so.’ The city with which he was more comfortable has returned.

I am not going to run though all of the reasons for economic gloom nor the depressing scenarios so beloved of Russia’s critics. There can hardly be anybody living and working in Russia who is not familiar, and equally fed up with, the long list of problems. I will simply reflect on the fact that the economy performed relatively better in 2015 than had been expected (the good news) but also that the trend in the current quarter, and probably in the next quarter, remains downward (the bad news). The stark reality is that conditions for most people and most businesses are much more likely to get worse than to improve until the autumn.

The two key conditions for arresting the decline and creating conditions for recovery are a) a rally in the price of Brent to $40 per barrel or higher, and b) an easing, if not removal, of financial sector sanctions. The other sanctions don’t matter. Until one, if not both, of those conditions are met the government will remain in damage limitation mode while avoiding, if not culling, investment programmes. There is a lot of increasingly credible discussion about creating new economic drivers in the economy and boosting industries outside of extractive industries, for example in agriculture and food production. But, being realistic about it, given the scale of what needs to be done, it will be many years before the results of any investment made today can start to improve the top line in the economy.

Meantime there are basically only two issues to pay attention to in terms of what will determine how long the economy remains in the current slump and how long it will be before optimism returns and passers-by can again dismiss Gogol’s restored smugness.

By far the greatest determinant of the rouble’s exchange rate is the oil price. The Central Bank stopped using it’s reserves to try and support the rouble in early 2015 and since then the correlation between the rouble and oil has mostly been very close. For the rouble to rally oil must recover. For that to happen there needs to be a reduction in supply. Saudi Arabia has made it clear that it is prepared to continue toughening out current conditions and will not cut supply. Instead it is waiting for the low oil price to cut into the output from its nemesis, the US shale industry. That is only happening slowly so far but it is reasonable to assume that an oil price average close to $30 per barrel will force more of the high cost producers to shut down in the coming months. A reduction in US shale output is, therefore, one of the key requirements for creating conditions to allow the oil price, and the rouble, to recover. It is always possible that OPEC’s resolve will crack or that Iranian sanctions will be re-imposed or that some other unexpected event will cut supply. But, for now, where the rouble trades against other currencies depends mostly on what happens to US shale production.

The second issue is political stability in Kiev. Since the start of this year there has been greater engagement between Russia and both the US (in particular) and the EU with a view to progressing Minsk-II. It seems more and more that the critical factor may be President Poroshenko’s ability to get the necessary legislation passed by an increasingly fractious and hostile Rada. Another, seemingly inevitable, political upheaval in Kiev will delay the process past the next sanctions review in July. The question may then be whether the US and EU will give Moscow credit for effort or whether sanctions will be extended into 2017? Damage limitation will remain the priority policy for the Kremlin until the Finance Ministry and the country’s big corporations can again access international capital markets at competitive rates. That implies a continuation of muddle-through economics at best.

Demonic figures have long been a regular feature of Russian geo-politics and Russian literature. Apart from Bulgakov’s Master and Margarita, Gogol used this theme in Petersburg Stories, Dostoevsky in the Brothers Karamazov and Lermontov in The Demon. It is fitting somehow that the devil should also have had a role in Gogol’s death. Gogol blamed the devil for forcing him to burn the only manuscript of the second part of Dead Souls in February 1852, in the house next to where the statue sits today. He was so distraught at what he called the devil’s practical joke that he refused all food and water from that day and died nine days later. That was the trouble with Gogol; he took such events and comments far too personally. We can only hope that those in the big red house down the street are more pragmatic.

 

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