Russia reached an agreement with Georgia on a bilateral deal late Wednesday night that paves the way for its much-anticipated entry into the World Trade Organization, Reuters reported.
"We are happy that Georgia supported the draft agreement and that finally an agreement has been reached," said Maxim Medvedkov, Russia's top negotiator in accession talks, Reuters reported.
Russian entry, which now looks all but certain to take place by the end of the year, would come after 18 years of negotiations and represent the biggest step in world trade liberalization since China joined a decade ago. Russia, the largest economy outside the WTO, has an economic output of $1.9 trillion, or about 2.8 percent of the world economy.
After Wednesday's agreement, the next step on the path to membership will be a previously scheduled meeting of the Working Party on Russia's Accession, chaired by Stefan Johannesson, on Nov. 10 and 11. The group intends to complete its work and forward recommendations to a ministerial conference due Dec. 15-17 for making a final decision about approval of Russia's entry.
Russia then will have to sign a protocol of accession stating that it accepts the approved "accessions package." The parliament will have to ratify the protocol, usually within three months from signing. Thirty days after, the applicant government notifies the WTO Secretariat that it has completed its ratification procedures, the applicant government becomes a full member of the WTO.
Below is a breakdown of how entry into the WTO will affect some of the biggest sectors of the Russian economy.
Russia reserved the right to mete out subsidies to farmers after entry, but the amount of money will gradually decrease by 2017, President Dmitry Medvedev said in July. The government will also retain the right to increase import duties on some agricultural products to help the domestic sector, he said.
Oil and Gas
The impact of WTO accession is likely to have only a limited impact on the industry which provides 40 percent of government revenue, the exportation of natural resources. Oil and gas are exempt from import tariffs by other countries.
But Ildar Davletshin, an oil and gas analyst at Renaissance Capital, said that membership in the WTO could usher in some minor changes to the sector. There may be new pressure to lower natural gas prices from the European Union, which is seeking to reduce Gazprom's stranglehold on the supply market. And the oil and gas services industry, which provides equipment, may become more competitive. Davletshin stressed that any changes would be "marginal" and would occur "in steps rather than in one go."
With Russia's entry, imported consumer goods will become more accessible for shoppers, Alfa Bank chief economist Natalia Orlova said.
Most foreign goods in Russia are currently sold at 30 percent to 40 percent mark-up from their original prices on the average because of high import tariffs. WTO membership will eventually make prices on consumer goods more compatible since new products will appear on the market and importing goods will become cheaper, Orlova said. But an overnight "collapse" of prices is not likely, she added.
Russia's accession could result in domestic steelmakers increasing exports to the European Union, since the current restrictions for exporting Russian rolled steel to Europe are likely to be canceled, said Dmitry Smolin, an analyst at UralSib Capital.
Domestic steelmakers have been limited to exporting a certain amount of rolled steel to Europe annually since the European Union introduced quotas regulating Russian supplies in 2002.
"Theoretically, the WTO entry might result in canceling these quotas," Smolin said.
The companies are allowed to export a total of 3.3 million tons of rolled steel this year, compared with 3.4 million tons in 2010, he said.
However, it might take more than three years after Russia joins the organization for the restrictions to be canceled, since the WTO entry doesn't mean that the quotas will be canceled automatically, Smolin said.
Another problem is that demand for rolled steel in Europe hasn't fully recovered after the 2008 crisis and is likely to remain weak for the next two years, he said.
Planes and Trains
Aviation and railways represent a mixed bag.
"There's no straight answer because there are both positives and negatives for every company," said Vladimir Dorogov, an analyst with Alfa Bank.
In aviation, Aeroflot will lose at least a large portion of the fees it currently charges European airlines overflying Siberia.
The company does not reveal how much it makes from the practice, but the European Commission has said the fees cost airlines flying to Asian destinations $420 million in 2008.
At least part of the losses will be made up for by cheaper access to new planes and pilot hire, which will also benefit other airlines. But the impact will not be immediate: Medvedkov, Russia's chief negotiator on WTO accession, said last month that reforming the fees would be unlikely before 2013.
For aircraft maker Boeing, which has been at the forefront of lobbying for ascension in both Moscow and Washington for more than 15 years, the news will come as something of a victory.
"Boeing fully supports Russia's accession, as it has supported other countries in the past in the interest of free trade," said a Boeing Russia spokesman in an e-mailed statement.
Import tariffs on wide-body aircraft will be reduced from 20 percent to 7.5 percent in the four years following accession, according to data compiled by David Tarr, consultant and former lead economist at the World Bank. Russia has agreed to substantial tariff reductions in construction, agricultural and scientific equipment, as well as medical devices, he said in "Russian WTO Accession: Achievements, Impacts, Challenges." Tariffs in these sectors will average 5 percent.
Ascension will have little if any impact on Russian Railways, which is "physically and institutionally" isolated from Europe, but international documentation may ease transit of goods between Asia and Europe, said Dorogov.
Foreign and local drug makers are excited about Russia's accession, which is expected to facilitate sales of innovative drugs in the domestic market and increase its investment attractiveness.
After Russia joins the organization the data exclusivity regime aimed at protecting the data of pre-clinical and clinical trials of innovative drugs will start working locally.
This will result in foreign and domestic drug makers getting six years of patent protection for innovative medications to be sold locally, said Vladimir Shipkov, executive director of the Association of International Pharmaceutical Manufacturers.
The lack of data protection in current legislation makes foreign drug makers reluctant to register new medicines in Russia, since producers of generic drugs can use the data of original drugs' trials, causing losses for manufacturers of original medications.
"Getting the data exclusivity regime working in Russia is a longtime dream of foreign drug makers,' Shipkov said.
Russia will significantly increase its commitments to multinational insurance providers. It will allow 100 percent foreign ownership of non-life insurance companies upon accession to the WTO. Russian prohibition of foreign participation in mandatory insurance lines as well as Russian restraints on the number of licenses granted to foreign life insurance firms will be phased out five years after accession. Russia had restrained the amount of foreign investment in the sector to about 15 percent of total investment; but as part of its accession commitments, Russia agreed to increase this limit to 50 percent.
By the end of the year Russian Railways is to sell stakes in the Roslavl, Saransk, Barnaul and Vladikavkaz SM Kirov coach repair plants, Petuhovsky Casting & Mechanical Plant, the Ishimsky and Alatyr mechanical plants, NIITKD, TransWoodService and UralTransBank.
RUSSIA: European Bank for Reconstruction & Development has agreed a €22·5m loan to enable St Petersburg-registered Huolintakeskus to acquire more than 700 new wagons, increasing its fleet by 70%. Huolintakeskus is a subsidiary of Finland's Nurminen Logistics. It operates across the CIS and Baltic region, but has a particular focus on pulp and paper traffic between Finland and Russia. The eight-year loan announced on November 1 is EBRD's second to the company, and discussions on additional financing of €22·5m are ongoing. 'EBRD has a longstanding commitment to support reform of the rail sector in Russia and is pleased to finance expansion of an independent operator in this market', said Sue Barrett, Director of the bank's Transport team.
Consultants hired by EBRD estimate that Russia will need between 45 000 and 60 000 new wagons every year over the next 10 years.
On 3 November, Russia’s Presidential inner Cabinet met to discuss projects related to the investment programme and financial plan of Russian Railways in 2012 and 2013-2014.
The company’s total investment programme over the next three years is planned to reach 1.1 trillion rubles (€26 billion), including 411.6 billion rubles (€9.7 billion) in 2012.
The president of Russian Railways, Vladimir Yakunin said:
“We have always insisted that investing in infrastructure is the best way to commit public money. Today, this idea is being voiced by the Russian government.
“The Prime Minister has expressed the need to accelerate work on a strategy for the development of high-speed transit in Russia. He gave a direct order to the Government of the Russian Federation, the Ministry of Transport and Russian Railways to ensure that the work gets done.
“I think this is evidence of the government’s focus on the infrastructural development of railways, which is in the country’s interest.”
According to Yakunin, the state’s funding of Russian Railways will be used to launch a ‘range of innovative projects’.
Among other things, these include the joint project between Siemens AG and Sinara for the delivery and localisation of high-speed electric rolling stock, as well as the acceleration of the development of the transport infrastructure of Russia’s South and Far East.
The money will also be used to purchase almost 400 locomotives, and 460 self-propelled railway carriages.
Yakunin noted that the underfunding of Russia’s transport infrastructure could cause serious economic damage to the interests of an integrated Russian Federation, and that the volume of losses to the federal budget would be several times greater than the required amount of financial investment.
The financial plan of Russian Railways in 2012-2014 was prepared in light of the current volatility in global financial and commodities markets.
The volume of goods being shipped is forecast to grow at an average of 3% annually.
However, even under these circumstances, the company has assumed higher debt levels, has set reserve provisions at their maximum level, and has established that predicting the volume of work was one of the principal problems it must face in order to achieve a financial balance.
All segments of public transport — including airlines and shipping — have to replace outdated vehicles with newer models, Prime Minister Vladimir Putin said Tuesday.
As part of the effort, the government will spend 2 billion rubles ($65.57 million) next year to subsidize leasing rates for midrange aircraft, Putin said at a transport industry conference.
Deputy Transport Minister Valery Okulov has said before that the ministry proposed subsidizing three-quarters of the interest rate for banks that provide loans for purchases of foreign midrange aircraft by Russian airlines. Current rates reach 12 percent, he said.
The government will make efforts for the domestic industry to get the orders for new vehicles in the future, Putin said Tuesday.
In another segment, Putin proposed establishing a state program to develop a high-speed rail service — a goal prompted, he said, by the large size of the country.
He made the proposal as Russian Railways is preparing to announce a tender in December for four international consortiums to build a high-speed link between Moscow and St. Petersburg. Construction of the 658-kilometer line could cost as much as at 627.5 billion rubles, and French, German, Chinese and South Korean consortiums are the possible bidders.
A plan to build another high-speed rail line, between Moscow and Yekaterinburg, is in the works.
Putin on Tuesday noted progress in improving the country's railway system, saying Russian Railways had built or rebuilt more than 50 tunnels and bridges over the past four years.
But Russia has yet to make an "infrastructure breakthrough," Putin said.
"Isolated projects are not enough for a modern Russia," he said.
on November 8, 2011 in Europe
Before the end of 2011, Rossiiskie Zheleznie Dorogi (RZhD – the Russian State Railway) intends to sell stakes in the Roslavl, Saransk, Barnaul and Vladikavkaz SM Kirov coach repair plants, Petuhovsky Casting & Mechanical Plant, the Ishimsky and Alatyr mechanical plants, NIITKD, TransWoodService and UralTransBank.
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MSNBC Photo Blog
A new trio of International Space Station residents, Expedition 29 Flight Engineers Dan Burbank, Anton Shkaplerov and Anatoly Ivanishin, are set to launch from the Baikonur Cosmodrome in Kazakhstan at 11:14 p.m. ET Sunday aboard the Soyuz TMA-22 spacecraft, according to NASA.
Five days later Expedition 29 will end when crewmates Commander Mike Fossum and Flight Engineers Satoshi Furukawa and Sergei Volkov return home inside the Soyuz TMA-02M spacecraft.
If you've lived in Russia and have scribbled anything on paper, chances are you've left your mark on a Syktyvkar product.
Perhaps you are in a job that doesn't require you to write on paper. But you have, at some point, probably calculated a restaurant tip on a napkin. Then you, too, have appreciated Syktyvkar's bounty.
Even if you have merely flattened a cardboard box or blown your nose on a tissue paper — it will be hard to say you've never used anything from Syktyvkar.
The northern city is one of Russia's top suppliers of paper and pulp products. Its large wood and paper companies — Mondi Syktyvkar, Syktyvkar Tissue Group and Syktyvkar Plywood Mill — churn out more than 490,000 tons of office paper, 265 million toilet paper rolls and 170,000 meters of plywood, among other products, each year.
Local enthusiasm for pulp and paper dates back to 1926 when the now struggling Syktyvkar Timber-Processing Complex began to form. The complex secured a supply of wood products for the paper industry and even gave birth to some spinoff companies, including the Syktyvkar Tissue Group. And as time went by, the paper industry has progressed from supplying standard necessities for the Soviet market to the craftsmanship of three-ply, colored toilet paper to be shipped across Russia and other former Soviet republics.
The Mondi Group (2 Prospekt Bumazhnikov, +7 8212-69-95-55, mondigroup.com) is an international paper and packaging company that operates across 31 countries. It is Europe’s largest maker of office paper with key operations based in Russia, Central Europe and South Africa. Mondi Syktyvkar is one of Russia’s largest producers of paper products, and it employs 100,000 people in the city.
Syktyvkar Tissue Group (4 Prospekt Bumazhnikov; +7 8212-62-02-20; veiro.ru) is Russia’s third-largest company in the production of sanitary products. It specializes in market base paper, toilet paper, paper towels and napkins, which are sold widely across Russia and the CIS. The company’s managers planned to conduct its first IPO in May 2011, hoping to raise up to 700 million rubles, but the IPO was later postponed due to market uncertainties.
As a paperless alternative to Syktyvkar’s paper complex, Komitex (10 2nd Promishlenaya Ulitsa, +7 8212-28-65-01, komitex.ru) produces non-woven and synthetic fibers in Russia. The company’s product line offers more than 50 types of merchandise, which it supplies to more than 700 companies in Russia and abroad. Komitex also has branches in Moscow, St. Petersburg, Tolyatti and Kirov.
Getting these products to store shelves, however, can be a challenge for company managers. Syktyvkar's location in the Komi republic is fairly remote. The city is the end station for a railway line and two major roads. A journey by train from Moscow to Syktyvkar takes almost 28 hours.
The transportation situation is expected to improve with the completion of construction work on the Belkomur Railway, which will connect Syktyvkar to the White Sea ports. There is also work being done to build a highway from Syktyvkar to Naryan-Mar, a river port town that sits beyond the Polar Circle.
Syktyvkar's remote location was one of the factors that made it a popular exile spot for Russians and foreigners. The city became an exile destination in the second half of the 19th century and has gathered a variety of exiles and prisoners, including anti-monarchists, kulaks and German soldiers.
Sitting around the table with Syktyvkar residents can lead to a tangled mapping out of ancestral lines. Virtually everybody in the city has ancestors who were not born in Syktyvkar but came either voluntarily or by force.
Lidia Klimusheva first came to Syktyvkar when she was 6 years old to attend her aunt's wedding. She later returned to the city for her university years, got married to a local man and, she admits, fell in love with the city forever.
"Did I ever want to leave the city? No! Never!" she said. "Here everything is my own: the air, the people and the streets. Everything! Everything is close and dear."
For MTIvan Pozdeyev,
Q: Why should investors come to Syktyvkar?
A: Syktyvkar has a favorable economic climate. The city has attracted more than 500 million euros ($680 million) in foreign investment in the last four years alone. The timber, transportation, energy and utility sectors are definitely the leaders in terms of attracting investment.
Q: How is City Hall improving the investment climate?
A: We have adopted a strategy for the socio-economic development of the city that will be effective until 2025. At the moment, we are working with major city producers to come up with a program for the city’s economic development over the next four years. These documents will prescribe a range of activities for stimulating investment activity.
Q: Do you encounter logistical difficulties because of the city’s location?
A: Syktyvkar is located away from the main national and international transportation routes. Of course, this is a disadvantage. But the construction of the Belkomur Railway and the Syktyvkar-Naryan-Mar federal highway will solve the situation. These projects will give a powerful stimulus to the economic development of the city.
Q: What are your favorite places in Syktyvkar?
A: My favorite place is Kirov Park. The park is located on the banks of the Sysola River, at the mouth of which our city was born.
— Lena Smirnova
More than 70 different nationalities live in Syktyvkar, with Russians making up just over half of the population. Komi, the area's indigenous inhabitants, are the second-largest group. They became a minority population of about 30 percent following a rise in immigration to the Komi republic in the post-World War II period.
Komi have their own language, although this knowledge has been declining. The Komi language is no longer used in schools or government institutions, and very few local Russians speak it.
The indigenous populations subscribe to the Russian Orthodox Church, but their beliefs also show traces of their own Komi mythology.
One popular myth tells the story of the hunter Yirkap who makes a pair of enchanted skis for himself. The skis let Yirkap travel very fast, but also get him in trouble with two witches, one of which ultimately drowns him.
Syktyvkar's cold weather, like in Yirkap's story, is frequently mentioned in Komi folk tales. In the winter, temperatures in the city fluctuate around minus 15 degrees Celsius. The weather is often the first thing that outsiders ask about before coming to the city and the first thing the locals proudly bring up. But even though Syktyvkar residents are happy to prove that they are impervious to the cold, some city visitors wouldn't object to adding a couple more degrees of warmth.
"If I became mayor of Syktyvkar, the first thing I would probably do is move it closer to the south, somewhere in Crimea," Andrei wrote on a Syktyvkar city forum after visiting the city. "It needs to be closer to the sun and good weather, where you can abandon coats and jackets."
Andrei is from Ukraine, so perhaps his affection for warm weather is not surprising. Local residents, however, appear unfazed by such comments and embrace the cold winter months. As one Komi saying goes, "A cold summer is warmer than a warm winter."
And for those needing a more savory reason to embrace the weather, another Komi saying promises, "The winter is long, so everything shall be eaten."
What to see if you have two hours
For MTGerhard Kornfeld,
Managing director of Mondi Syktyvkar, one of the biggest foreign investors in the Komi republic and a branch of the international paper producer. Kornfeld, 42, is a Vienna native.
Q: How do you feel as a foreigner in Syktyvkar?
A: There are not many foreigners, but I do not really feel like a foreigner. I spend most of my time with Russians. I don’t have a lot of people to speak English with. But we find solutions for translation. Language is not an issue.
Q: What is it like running a paper mill in Syktyvkar?
A: Komi has the advantage of a good forest with a good work force, which is important. The location of the company is good: the river and a lot of forest. There are complexities like the lack of infrastructure — railways, roads. Also sometimes you cannot harvest in the winter.
Q: What advice would you offer an entrepreneur who wants to start a business in Syktyvkar?
A: Only do it when you have good support from the government and good coordination and support within the city and the community. You need a clear business plan. The logistics are very important to consider. There are many empty locations, including small villages and long distances. The weather is like in Alaska. It is more difficult to live in Komi than in Sochi.
Q: What do you like about living in Syktyvkar?
A: The forest itself is interesting, depending also on the season. The winter is nice, with the snow. I like to be outside. The entire infrastructure of Syktyvkar is quite good; there are restaurants and a theater. The culture and tradition of the Komi is interesting. This is a quiet place. I enjoy it.
— Khristina Narizhnaya
Walk through the streets of Syktyvkar to get a feel for the small city. Stefanovskaya Ploshchad is the town's central plaza with a statue of Lenin. Nearby is the newly reconstructed white St. Stephen's Cathedral. Walk to Teatralnaya Ploshchad to see the statue of the republic's first poet, Ivan Kuratov, surrounded by fountains that light up on summer nights.
To get a glimpse of the region's literary tradition, visit the Literature Museum of Ivan Kuratov, (2 Ulitsa Ordzhonikidze, 8-212-24-05-12, en.museumkomi.ru), located in an 18th-century house owned by the merchant Sukhanov and one of the oldest buildings in the city. The museum features a historic collection on the development of the area's language, literature and poetry.
What to do if you have two days
Sosnovy Bereg is Syktyvkar's Rublyovka, located a 10-minute drive from the city, on the picturesque bank of the Yelya-Ty Lake. Here you can visit the cottage village's park, see the city's elites, or just walk along the quiet lake and breathe the pine-scented air.
To find out more about local culture and Komi history, visit the National Museum (6 Kommunisticheskaya Ulitsa, 8-212-24-11-73, museumkomi.ru). The museum has a collection of more than 250,000 items pertaining to local history and culture, an extensive photo archive and often hosts master classes on Komi crafts and other educational events.
Where to stay
Hotel Palace (62 Pervomaiskaya Ulitsa, 8-212-39-14-00, palace-hotel.ru) is conveniently located on four floors of the city's largest, central mall, Torgovy Dvor. The recently built hotel boasts large rooms at prices ranging from 4,400 rubles for a single standard, to 7,700 rubles for a double luxury suite.
Centrally located Hotel Avalon (133 Internatsionalnaya Ulitsa, 8-821-225-7500, avalonhotel.ru/en/), built in 2007, is one of the newest and most modern hotels in Syktyvkar. Prices for rooms range from 4,200 rubles for a standard single to 10,400 rubles for a luxury suite.
Where to eat
Take in the city's sights, listen to live music and enjoy Mediterranean food at the Penthouse restaurant (62 Pervomaiskaya Ulitsa, 8-212-39-13-33, rpenthouse.ru), located on the 15th floor of the city's central mall, Torgovy Dvor. The menu, custom-created by chef Mario from Baden-Baden, includes delicacies such as penne in basil sauce with king prawns, escargot in garlic sauce and spices, grilled trout with almonds, vanilla creme brulee and raspberry panna cota. The average check for a dinner for two is 4,000 rubles ($130) with alcohol.
For MTMark Reznik,
General director of Syktyvkar Tissue Group,
a leading Russian producer of sanitary products
Q: Why did Syktyvkar Tissue Group choose to set up shop in Syktyvkar?
A: We didn’t choose our place of production. Rather, it found us. But we believe that this location is quite good. The main positive factor is the proximity to the main raw material producers. Also, the specialized local education system supports the paper and pulp industry.
Q: Why have paper mills been so successful in the city?
A: This is mainly due to the Syktyvkar Timber-Processing Complex. Its construction was organized in the Soviet Union with the grand scale typical of those times. The complex gave rise to the necessary educational and production infrastructure, which in turn became the basis for the emergence and development of several successful enterprises in the timber-processing industry.
Q: How is the business climate in the city?
A: Local authorities generally strive to establish a constructive dialogue between businesses and the government. In addition, the city has many small and medium-sized companies that serve the needs of large industrial enterprises quite professionally.
Q: What difficulties have you encountered in your work in Syktyvkar?
A: Despite the presence of a number of educational institutions focused on training specialists for the pulp and paper industry, there is a shortage of highly qualified personnel such as engineers and processing line machinists. In addition, there is a shortage of administrative personnel with experience in the industry, from suppliers to production planners. The only solution is to train staff yourself, put a lot of money and time into them, and then try to keep them.
— Lena Smirnova
Pushkinsky Restaurant (20/2 Ulitsa Pushkina, 8-212-21-62-29, restoran-pushkinski.ru) features several dining rooms with eastern, classic, green and hunter themes. The average check for a dinner for two with alcohol is about 3,000 rubles.
For a taste of the local high culture, visit the Savin State Academic Drama Theater (56 Pervomaiskaya Ulitsa, 8-212-24-31-92, komidrama.ru). The theater's repertoire includes classics like "Hamlet" and productions of modern local plays, including "Pannochka," based on Nikolai Gogol's "Viy," and "Wedding With a Dowry," a comedy about marriage that has won the theater praise nationally. The lineup also includes family-oriented plays, such as an adaptation of children's classic "Chipolino," an Italian story about an onion.
If you want to dance at a nightclub but are sick of bumping into drunk teenagers, head to the newly opened club SSSR (31 Ulitsa Malysheva, 8-212-29-74-80). The dress code is strict, and bouncers require you show a passport that proves you are at least 25 at the door.
Talk to the locals about the beauty of the local nature. The Komi republic has some of the best forests in Russia, which turn a variety of red, orange and yellow hues during the short but picturesque fall season.
How to get there
The Syktyvkar Airport, located a short drive from the city center, has flights to other cities in the Komi republic as well as flights to Moscow and St. Petersburg. Round-trip tickets from Moscow are about 8,500 rubles with Nordavia for the nearly two-hour flight. Keep in mind that the departure and arrival tableau does not always work, so double-checking with the staff may save you from confusion.
The 1,297-kilometer trip by train takes about 28 hours and costs, one-way, from 1,700 rubles for a coach car ticket to 3,900 rubles for a compartment. Trains leave daily from Moscow's Yaroslavsky Station
Russian railways, including those in the north, will definitely grow, Russian President Dmitry Medvedev declared at the opening ceremony of the last leg of the railway which connects the city of Yakutsk in the Russian Far East with the Baikal-Amur railway. The president said that this northernmost railway will be part of the huge network in our large country. The president praised the road builders because the construction was carried out in severe northern conditions.
The temperature outside is minus 30 Celsius but the residents of a Yakut village 15km from Yakutsk cannot stay at home. Today is a great event, the laying of the last “golden link” of the railway which will connect Yakutia with the Baikal-Amur railway. “We were ready to come here in any weather, - the people say, - because we had been looking forward to this day for many years.”
Only part of the problem has been solved so far. Yakutsk and the railway are separated by the Lena River. In winter people make a road on the ice and use ferries in summer. The worst periods are spring when the ice breaks and autumn when the ice is still too thin. The only way to reach the railway is by air. However, Russian President Dmitry Medvedev promised to solve this problem too:
“We must connect Yakutsk with the railway across the Lena by all means. Railways are built for people and not for keeping metal on the ground. We will provide the connection, never fear. We also have further plans of building railways in the north. I am sure that these plans will be implemented in the next few decades and we will be one of the most advanced countries in this respect.”
It is planned in the future that after a bridge across the Lena River has been built the railway will be extended as far as Yakutsk and its other branch will run to Magadan and the Bering Straits.
To make the project successful and the railway reliable, the ceremony opened with the ancient Yakut rite of the worship of the spirits of fire. The Yakuts believe that sacred fire scares away evil spirits and grants success in life.
Dmitry Medvedev did not only open the railway in Yakutsk. His agenda also included control over the region’s social problems. The most important issues were reforms of the system of public utilities, reconstruction of slum dwellings and support for large families.
Transmashholding’s latest electric passenger locomotives, the EP2Ks, have travelled more than 30 million kilometres.
122 EP2K locomotives are currently in operation on the Western-Siberian and October railways.
On the Western-Siberian railway trains run to Chelyabinsk, Mariinsk, Novosibirsk, Novokuznetsk, Belovo, Petropavlovsk, Ekaterinburg and Perm; and on the October railway trains reach St. Petersburg, Svir and Babaevo.
The first prototype of EP2Ê was presented in 2006 and locomotives have been in constant operation since May, 2008.
According to the development program JSC RZD, the design of a passenger DC electric locomotive became one of priorities in the reform of the transport branch as the similar equipment had never been produced, passenger DC electric locomotives were purchased in Czechoslovakia.
The average age of operated locomotives was round 30 years at the start of works on design of a new electric locomotive.
EP2K electric locomotives were certified for serial production on December 2010.
The Kolomenskiy plant will produce 40 electric locomotives EP2K under the order of JSC RZD in 2011.
It would be wrong to conclude that President Dmitry Medvedev can expect to have the prime minister spot in 2012 simply handed to him on a silver platter as payment for his past services and loyalty. In fact, the outgoing president is working hard to earn that post.
In the past two weeks alone, Medvedev has chaired a session of the State Council presidium in Khabarovsk that discussed an increased role for the regions in modernizing the economy, a meeting with media representatives of the Far East, also in Khabarovsk, as well as a visiting session of the public committee made up of supporters and regional members of United Russia and held in Yakutsk.
The United Russia gathering was the most recent of three virtually identical such meetings, each held in different locations. The meeting with journalists was announced as the first in a series of such gatherings to be held this month. The main idea Medvedev conveyed was that Russia had already achieved a great deal in its modernization drive and would accomplish much more through innovative economic development and by reducing the country’s dependence on raw materials and improving its political institutions.
And finally, the membership of the State Council presidium is approaching that of the expanded State Council. This is a type of enticement, as well as a means by which the regional political elite can demonstrate their loyalty and effectiveness to the Moscow leadership prior to the Dec. 4 State Duma elections.
At all of these meetings, Medvedev comes across as neither a president nor a prime minister. When Prime Minister Vladimir Putin chaired minicongresses for United Russia, he allocated government funding and made concrete promises, whereas Medvedev’s role has been to paint a positive picture of things and to act as the “moral engine of development,” as he so elegantly puts it. The perks Medvedev hands out cost little and are mostly symbolic in nature — for example, promising to give pensioners and students from the Far East free annual trips to the European part of Russia, something Putin promised several years ago.
Medvedev’s words to governors, who have been acting as regional lobbyists during the election campaign, would serve as a fitting epigraph to the discussion of modernization. The president said, “Russia is a country in which it is impossible to get by without large-scale projects that serve as an engine of development.”
It is arguable whether they are “engines of development,” but it is undeniable that such projects as Nord Stream, the Sochi Olympic Games and the plans for a so-called “Greater Moscow” provide a mechanism by which Putin can funnel the country’s oil and gas revenues into the bank accounts of his oligarch friends. Similarly, the plan to develop tourism in the North Caucasus is a way for the Moscow leadership to buy the loyalty of local political elites and their friends.
This practice became the hallmark of the
Putin-Medvedev term. Choice morsels were given out to satisfy the growing appetites of Putin’s loyal business elite, such as energy trader Gennady Timchenko, Arkady and Boris Rotenberg and Rossiya Bank director Yury Kovalchuk. These so-called “black oligarchs,” whose prosperity depends on their close ties to the Kremlin, have gained considerable strength since 2008.
Meanwhile, the same period was marked by setbacks for the old-school “white oligarchs,” owners of major internationally recognized firms. They did receive a major injection of funds from the state during the crisis, but they paid for it with a considerable loss of control over their assets.
During Medvedev’s meeting with governors from Russia’s eastern region — a meeting that was essentially a presidium of the State Council — a number of other major and extremely costly projects were mentioned: a high-speed railway from Moscow to Yekaterinburg, a third line in the Trans-Siberian Railroad, a bridge to Sakhalin Island and others.
No oligarchs have vested interests in many of these pork-barrel projects, apparently making them “people’s programs” to be exploited by the regional political elite. And, as everyone knows, those projects are not designed to be carried out, but to create the impression that everyone’s proposals have been heard and taken seriously. What is amazing is the way that these projects costing billions of dollars materialize out of thin air just before elections to satisfy the growing appetites of the political and economic elite.
Throwing money recklessly at these big-ticket projects also has the effect of reducing the conflict between political clans, which observers had predicted would result from a struggle over limited resources — all the more so since the money is promised at the regional, not the federal level.
What is important is that Medvedev — whether in his former capacity as deputy prime minister when he headed national projects from 2006 to 2008, or as president — has spent years as a sort of PR director operating within the limited authority given him.
And nothing has changed now that he is the top candidate for prime minister. His role remains the same in this political system dominated by a single individual. His job title might change, but he essentially remains a cheerleader for projects undertaken by “Russia, Inc.” headed by Putin.
Nikolai Petrov is a scholar in residence at the Carnegie Moscow Center.
Russian Railways and Alstom Transport sign agreement 30. November 2011
A memorandum of cooperation has been signed between Russian Railways and Alstom Transport on the application of lean manufacturing technologies. The cooperation will be maintained through the introduction of Iris requirements for international standard railway equipment. This also provides for the establishment of joint training for specialists from Russian Railways and Alstom to implement lean manufacturing technology. They will learn, adapt and implement best practices when servicing rolling stock over the life-cycle of its operation, and maintain joint engineering centres for the development and implementation of relevant projects to improve efficiency and quality. (ben)
Nicholas II - Royal Train-
Brunswick Rail receives Ba3/Stable corporate family rating from Moody’s
Brunswick Rail, Russia’s leading freight railcar operating lessor, is pleased to announce that Moody’s Investors Service has assigned the company a Ba3 corporate family rating with a stable outlook, citing the company’s strong position in the Russian railcar market and potential for growth due to the unsaturated nature of the operating lease market in Russia.
Among Brunswick Rail’s key strengths, Moody’s also noted the Company’s robust cash-generating business model and resilient financial performance during the downturn underpinned by predictable operating cash flows as revenues are secured by the long-term nature of the lease contracts and a strong client base. Moody’s also cited Brunswick Rail’s modern railcar fleet, adequate liquidity as well as supportive shareholders that have provided equity injections and debt financing to the company.
Brunswick Rail Partner and CFO, Nicolas Pascault, said: "We are delighted to have received a ‘Ba3‘ credit rating from Moody's. This is important recognition of the financial strength of our business as we continue the rapid expansion of our existing railcar fleet.”
This is the second credit rating which Brunswick Rail has received this year. In September the Company announced that Standard & Poor’s assigned it a BB-/stable long-term credit rating.
Russian Railways transports more freight 07. December 2011
In January-November Russian Railways transported 1.136 billion t of freight, 3% more than in the same period of 2010. Cargo turnover in November alone increased by 2% to 181 billion tariff ton kilometres. (ben)
Spanish company OHL's Czech unit OHL ŽS has won a €2bn contract from Russian Railways' subsidiary, the Yamal Rail company, for construction of the Polar Ural rail project.
It involves construction of 390km of un-electrified railway lines from Obskaja to Nadym and Salechard as well as a 2.5km viaduct over the River Ob.
The single line railway line will span from Nadym Obskaja station passing through Salechard City, on the northern end of the Urals mountains between the towns of Salekhard and Nadym to the east.
The project will be implemented in three sections: Salechard-Nadym, Obskaja-Salechard and the bridge over the river Ob.
Construction on the project is scheduled to begin in 2012 and be completed in 2015 while the Czech Export Bank (CEB) will provide strategic financing guarantees for the rail line.
OHL ZS said the project will be start after the closure of full funding of the project as the contract is closely connected with the signing of the mandate of the Czech Export Bank to finance the project with Russian banks.
The project is expected to facilitate transport of mineral ore from ore rich Ural region.
The entire project is being developed by Jamal Railway, owned by Russian Railways, Gazprom and Polar Urals Corporation - Industrial Urals (KUPUP).
As part of the deal signed between Russia and Czech Republic, Czech side will construct about a half of the 700-km-long railway.
OHL ZS will implement the project along with several Czech companies, including ŽPSV (OHL Group subsidiary), DT Prostejov, Trinecké Železárny and Vítkovice.
After signing the contract, OHL ZS CEO and chairman Michal Stefl said this contract extends the possibilities of collaboration of Czech companies on new projects in the Russian Federation.
Following the signing of the Russian contract, OHL's project backlog increases to €3.915m (without VAT) ensuring future growth and strengthening its position in civil works contracts, the company said.
Caption: The railway will run through mountainous terrain and landscapes, such as these, near the village Saranpaul in the Northern Urals.
Prime Minister Vladimir Putin said he is "very disappointed" by asset-stripping schemes discovered at electric energy companies in the country, and expressed surprise at the compensation of some of the sector's executives.
"We need to bring order here," Putin said after announcing the results of the probe into energy companies' operations at the meeting of the governmental commission on the electrical power sector taking place in the Khakasia republic, in south-central Siberia.
Putin named two executives of OGK-3, who have left the company's management and are now claiming compensation of 324 million rubles ($10 million). "What did they do personally? Capitalization was increased as a result of the electrical power reform and investments by the state. Just look at those amounts!"
The prime minister also said he was requesting government agencies to do a thorough
review of state companies to check for corruption schemes and their offshore activities.
"I request the Energy Ministry, the Economic Development Ministry, industry agencies within two months to check companies with a government stake such as Gazprom, Vneshekonombank, and it wouldn't hurt Sberbank either," Putin said.
He added that he was not speaking only of power engineering. Similar checks should be documented at all companies with a state stake and all infrastructure facilities.
"I request infrastructure companies with state involvement — Gazprom, Transneft, Russian Railways, Sovcomflot, Vneshekonombank, Vneshtorgbank, Rosatom — to report on adopted measures," he said.
"Unquestionably, this should be done together with law enforcement bodies," he said.
"I hope law enforcement bodies will make relevant decisions where direct breaches of law are apparent, and where a conflict of interest is apparent we must adopt personnel decisions as fast as possible and think of advancing the regulatory groundwork," Putin said.
Shares in RusHydro, the country's largest renewable energy producer, dived the day following Putin's statement that the company should cut its prices by 12.5 percent on average next year.
Putin requested the Finance Ministry and VEB work out a financing plan to ensure RusHydo carries out planned investments.
Russian Railways ends 2011 with positive result 09. January 2012
Preliminary forecasts see Russian Railways achieving a net profit of RUB 17.7 billion, or approximately EUR 424 million (under Russian accounting standards). Operating income increased by 7.3% in 2011, compared to 2010. Taking into account the structure of operating costs at Russian Railways, the company's operating costs in 2011 increased by more than 13%. The firm's costs on transportation for the year will rise by only 7.1%, however, due to the effective containment of cost increases. (ben)
Apart from ITJ editor Andreas Haug, Russia’s prime minister Vladimir Putin was also forced to cancel his attendance at the second railway congress of Russian Railways on 18 and 19 November in Moscow at short notice. But in deputy prime minister Victor Zubkov and ITJ correspondent Christine Kulke-Fiedler, host and RZD president Vladimir Yakunin could nevertheless welcome excellent replacements.
«Russia’s rail industry achieves absolutely top global figures with a rail network of 85,000 km, a freight volume of more than 1.2 billion t this year and a transport performance of approximately 2.1 trillion tkm. Its significance for the economy, foreign trade and social development of the country is huge,» said Russia’s deputy prime minister Victor Zubkov, getting the more than 3,000 delegates and guests who had come to Moscow in mid-November to attend RZD’s second railway congress in the right mood.
Successful progress of reforms
The rail company’s president Vladimir Yakunin took stock of the groups activities since the first congress was held in 2007. He referred to this period as one containing the most significant changes in the 175 years of Russian Railways’ history. The company has made good progress in railway reform and the implementation of its strategic development tasks. Following the third reform phase, the market for cargo wagons has been almost entirely liberalised. Important structural changes have been made and large subsidiaries established.
«As a result, a holding has been created whose subsidiaries alone employ more than 200,000 people and which post more than RUB 500 billion (EUR 12 billion) in sales,» the railway president explained. Despite the difficulties arising as a result of the financial crisis, over the past four years the equivalent of more than EUR 24 billion has been invested in upgrading and expanding the railway infrastructure. The group also has a good reputation in financial markets. It is increasingly raising money from private investors for upgrading and development projects and even trading very successfully with shares in its subsidiaries. Amongst other things, Yakunin referred to the auction held on 28 October for 75% of the shares held by RZD in First Cargo Company PGK.
Cooperation with leading companies of the international rail industry, such as Siemens, Alstom and Bombardier, to upgrade the national rail sector, has been expanded. In response to a question asking whether it was expensive to buy Western technology, Yakunin said that «it’s very expensive – but also very beneficial.»
Problems and solutions
Despite the company’s successes, the current situation does not satisfy the RZD management or the railway’s customers. Yakunin and other members of the executive management openly spoke about the problems and presented possible solutions. As such, the speed of growth in goods handling and transport performance has not been sufficient so far to make up for the crisis-related drop recorded. «The cargo transport performance in RZD’s network is almost reaching the same levels as in 2007 this year,» RZD’s first deputy president Vadim Morozov said. At the same time, he referred to rising demands from consignors in respect of the growth of cargo transport. Cargo performance growth is expected to leap by more than 12% by 2015.
An effective rail sector is needed
Consignors have not sensed any improvement as a result of the completed reforms, conceded rail head Yakunin. What is more, the usage of the infrastructure has also not improved. The declared merger of the private operators has not yet taken place, because no regulating measures or economic incentives have been created for this. Yakunin called for effective regulations for the consolidation of private operators, as otherwise the effective operation of the rail sector could not be secured in the interest of the economy. «The objective of the reform,» Yakunin explained, «is above all to improve the efficiency and attraction of transport by rail for end customers.»
Privatization Schedule Updated
26 January 2012
Russia’s delayed privatization plan includes the sale of a small stake in pipeline monopoly Transneft alongside a host of other companies over the coming six years, according to a schedule distributed by the Economic Development Ministry.
The plans, presented by Economic Development Minister Elvira Nabiullina at this week’s meeting of President Dmitry Medvedev’s modernization council, are an update of an original draft released in the summer of 2010.
Volatile market conditions have delayed plans to sell several stakes, originally aimed at raising $200 billion for the state budget as well as improving corporate governance and efficiency at major companies.
The latest schedule gives the following timelines:
Oil pipeline monopoly Transneft was placed on the government’s first privatization list but was later removed after opposition from the company’s management.
Activist shareholder and blogger Alexei Navalny had accused it of embezzling $4 billion connected to the construction of a $25 billion pipeline, allegations the firm has denied.
According to the latest schedule, the government’s stake is 78.1 percent, and it aims to sell 3.1 percent (minus one share) by 2017.
The country’s largest oil company is already listed following its bumper $10 billion initial public offering in 2006, and the state now wants to sell its remaining shares.
The state owns 75.1 percent and aims to sell 25 percent (minus one share) by 2015 and exit entirely two years later.
Russia’s second-biggest bank kicked off the state’s privatization plan with a secondary listing of a 10 percent stake in London just under a year ago, raising $3.3 billion.
The state now owns 75.5 percent and aims to sell 25.1 percent (minus one share) in 2012-13 and exit completely by 2017.
The largest lender in the country, 57.58 percent of Sberbank is owned by the state, which had planned to sell a 7.6 percent stake via a secondary share offering in London late last year, but postponed the plans after a sharp drop in its valuation.
It now hopes to float the stake in 2012 or 2013.
The 100 percent state-controlled Russian shipping group is expected to be privatized by an IPO some time in 2012 or 2013.
The company could raise $750 million to $1.25 billion from the flotation of a 25 percent stake, said sources close to the potential placement in July, while the new government plans state that a 50 percent minus one share stake could be sold.
The company owns the world’s largest fleet of Arctic, Aframax and ice-class LNG tankers. Its net profit fell 11.3 percent in 2010 to $164.3 million.
The rail monopoly is in the process of selling off various divisions to private investors while the government plans to offload a 25 percent minus one share stake from 2013.
The rail operator is desperately in need of cash to upgrade aging infrastructure. The country’s vast rail network is vital for the transportation of oil, metals and other resources from the heartland to major cities and for export.
The flagship airline is in the process of merging with five regional carriers, tightening its grip on the Russian market, after which it should proceed with privatization.
The state owns 51.17 percent and aims to sell it by 2017.
Media tycoon Alexander Lebedev, who owns Britain’s Independent newspaper, owns a 15 percent stake.
Russia hopes to combine the Moscow airport with smaller Vnukovo, renovate them and sell them off, Prime Minister Vladimir Putin said last year.
Sheremetyevo, home to national carrier Aeroflot, has been overtaken as Moscow’s biggest airport by the privately owned Domodedovo, which is also reported to be up for sale.
The state owns 100 percent and aims to sell this by 2017.
Russia’s biggest hydroelectric power producer is also on the auction block, with the government hoping for a full sale of its 58 percent stake by 2017. The company is valued at $9.8 billion, down from $14.4 billion in the past six months.
The national power distribution grid company is 79.11 percent owned by the government and has been penciled in for a 4.11 percent stake sale in 2012 or 2013.
The utilities sector has seen its value plummet due to government dithering over tariff reform ahead of this year’s presidential election, but FSK has been shielded by its focus on industrial rather than household consumers.
The company is valued at $13 billion.
The $10 billion technology holding intends to invest in promising high-tech companies and help create a so-called innovation economy.
The tech industry is close to the heart of gadget-loving Medvedev, who wants to modernize the economy and reduce its dependency on oil and gas.
Rusnano is run by Anatoly Chubais, the architect of Russia’s post-Soviet privatization in the early 1990s.
The state owns 100 percent and aims to sell 10 percent in 2012-13.
The diamond monopoly, jointly owned by the government and regional municipalities, is the world’s biggest rival to De Beers and has long been touted as an IPO candidate.
The company revealed its reserves — 1.3 billion carats — for the first time in May, while the chief executive said in March it could raise up to $3 billion in a share sale in 2012.
The state owns 50.9 percent and aims to sell this by 2017.
The agricultural bank, the fourth-largest Russian bank with assets of $38.95 billion, is a government agent for federal programs in the agro sector. The bank works with the rural population and has more than 1,600 offices countrywide.
The state owns 100 percent and aims to sell 25 percent (minus one share) by 2015.
The energy explorer develops oil and gas fields mainly abroad, in countries like Vietnam and Cuba.
The state aims to sell its 100 percent stake by 2017.
United Aircraft Corporation is the state’s holding company for aircraft manufacturing, responsible for military and civil planes, and is 82.95 percent government owned.
It is responsible for the SuperJet 100, Russia’s first passenger plane since the fall of the Soviet Union, as well as a range of fighter planes.
The government hopes to sell the company by 2017
Read more: http://www.themoscowtimes.com/business/article/privatization-schedule-updated/451661.html#ixzz1kgFAUP00
The Moscow Times
The Moscow authorities plan to complete their work on the all-in-one tourist card, which will include a transportation ticket, a season ticket to the Moscow museums and a discount card for restaurants and museums. Moscow is doing its utmost in a bid to attract foreign tourists and to show them that it ranks among 5 tourist centres which are developing fast. Relevant information is posted on the big tourist portal TripAdvisor.
More than 4 million foreign tourists visit Moscow every year. In several years’ time the number of tourists may top 7 million. Should the visa-giving regime be simplified, more cheap hotels be built, freight prices be lowered, and information centres for tourists be set up, the above-mentioned task will be easily resolved. Plus it is necessary to adopt the experience of St. Petersburg, Stockholm, Vienna and many other European cities and to work out a tourist card.
The St. Petersburg tourist card includes a season ticket to 25 museums, a ticket to several general tours and a public transport ticket. Besides, it can be used as a discount card in hotels, cinemas and cafes. The pluses of such cards are evident: they save tourists’ time and money.
In Moscow private business will be involved in the implementation of the tourist project, Head of the Moscow Committee on Tourism Sergei Shpilko says.
"Both the development and the fulfillment of such projects is the prerogative of private investors, meaning first of all their ability to reach agreement with popular museums."
An expert with the Public Chamber of Tourism (Russia), Roman Bobylyov, has a different opinion. He says that the Metro passes and the ground transportation tickets present the main problem here.
"Will the Moscow authorities be able to regulate the public transport fares? The point is that this is the main issue here."
Probably, a bank card will become a new global payment document for tourists, Roman Bobylyov says. And still, it is clear that a very complex visa giving procedure and also high prices on air tickets and on railway tickets remain the main problem for foreign tourists visiting Moscow, Sergei Shpilko says. European tourists usually travel without visas and buy cheap air tickets, Sergei Shpilko says. Besides, there’s a lack of hotels in Moscow, Roman Bobylyov added.
"There’re many expensive hotels in Moscow while a segment of worthy 3-star hotels of European class is practically non-existent in Russia."
There’re information centres for tourists in many megapolises abroad – in the historical part of the city, in airports and at the railway stations, with the foreign language speaking staff. The personnel members give tourists city maps and guidebooks. Such centres will appear in Moscow later this year.
Sergei Dorozhkov, the director of the Pereslavl narrow gauge museum,
has forwarded to me the following particulars of a proposed excursion from Moscow
to the narrow gauge Alapayevsk system in the Ural mountains, Russia's
last common-carrier narrow gauge line and also proposed trips to the
Goos'-Hrustalny narrow gauge line peat around 130 miles east of Moscow.
Particulars and contact details are at http://www.poezdnaprokat.ru/.
It's in Russian only but intelligible via Google Translate.
The 2012 rail tour season opening is planned for April, with one or
more (dependent upon the number of requests) one-day weekend tours to
Goos'-Hrustalny peat narrow gauge 200 km East of Moscow, where a
diesel with passenger coach takes the group out to the bogs for 4-5
hour long train journey with photo stops and runpasts. Some shunting
can be organised at the main station.
May 1-2 will see an annual charter on the last common-carrier narrow
gauge railway in Russia - the Alapayevsk system in the Urals. The full
trip from and back to Moscow takes about five days. The program itself
takes two-days with overnight on the narrow gauge train, visiting the
local museum and a unique narrow gauge wagon-church.
Provided there is enough interest (both in Russia and elsewhere),
other tours shall be organised, including the broad gauge logging line
with opportunity to travel on the front open platform of the railcar.
VLADIVOSTOK, March 11 (Xinhua) -- Two freight trains collided Sunday morning in Russia's far eastern Jewish Autonomous Region, causing one of them to derail and injuring two people, RIA Novosti news agency reported.
The collision threw three locomotives and 23 cars of the freight train carrying coal off the tracks, local media reports said. Two train workers were injured.
Rescuers and firefighters were working at the scene, the reports said.
Rail traffic on a section of Trans-Siberian Railway was suspended.
Note that some of the quoted statistics are nor correct-
Russian railway boss Vladimir Yakunin is trying to keep his company, country and President on track
One of the most powerful men in Russia, Vladimir Yakunin, talks to Alistair Osborne.
Vladimir Yakunin would like to make one thing clear. He may be many things, but he’s not crackers. “Look at me. Do you see any signs of lunaticism in me?” asks the president of Russian Railways with a hearty laugh – the cue for similar guffawing from his rather jumpy entourage.
I have just asked if he fancies taking over one day from Vladimir Putin. After all, his name crops up on lists of potential successors to a Russian president who’s just been freshly elected amid allegations of vote-rigging.
The pair, both from St Petersburg, go back a long way – though Yakunin, 63, dismisses as “fairytale” talk that he is part of a crony elite all with neighbouring dachas. Even so, he has one of the most powerful jobs in Russia. And, being something of an ideologue, he’s added a populist twist. His extra-curricular activities include the promotion of traditional Russian values and religious orthodoxy – both of which have political currency.
Yakunin’s not averse to the odd reactionary rant, either, over “the way the minorities are taking over” – one topic being what he sees as “homosexual propaganda” over same-sex marriages. Married himself for 42 years and with two grown-up sons he declares at one point: “I would like my family to develop normally. I am fond, you know, of the beauty of the nature of the ladies. Should I be criticised for that?”
All in, it adds up to quite a bit for a railway boss – but stops short, he insists, of wanting to run the country as well as the trains.
“I am not against responsibility,” he says, in his accented but fluent English. “I am not terrified of responsibility, but I know my level. I like my job and would like to fulfil as manager those projects I have started.”
Yakunin, who last year had his position at the state-owned rail company extended for another four years, can put it more colourfully, too, once noting that he loved his job and “when you’re in love, you don’t ogle other women”.
The job, put simply, is to run one of the world’s most important railways. He reels off its 85,200km of track (third only to the US and China), 1bn passengers a year (fourth after the previously noted countries plus India), 1.2bn tonnes of freight and 1m employees. He shows his steely side, too. One junior with the temerity to chip in with his own statistic is told bluntly: “Don’t interrupt me, please.”
No statistics convey, though, the geo-political significance of a network that links Europe to Asia (not least China) and which has become a crucial barometer for the Russian president.
“Mr Putin once said that if you want to know the status of the Russian economy, you should look at the papers of the president of Russian railways with the daily reports of the amount of cargo, the directions of delivery and amount of passengers,” says Yakunin.
Current figures show that the rail network is “still 7pc below the level of pre-crisis operations but getting better”. Restoring volumes is only part of the job, though. Yakunin is also implementing a plan, announced in 2007, to spend a colossal 13 trillion Roubles (£280bn) by 2030, upgrading and expanding the network. The 2018 World Cup is one deadline for improvements.
It partly explains why he has pitched up in London. Between now and 2015, Russian Railways intends to invest R600bn. But, as Yakunin explains, “we have a shortage of financing of approximately R400bn. So we are planning to borrow on the financial markets."
This week, he will return for the start of a roadshow for a potential R70bn eurobond issue – part of a plan to raise about R100bn of debt from investors annually over the next few years. Russian Railways, which had a turnover of almost R1.2 trillion last year and net income of R67bn, has the same BBB rating as the state and Yakunin says: “Judging by the interest from banks in the West who are approaching me with different plans, we are very positive.”
The fundraising is part of a plan to add 30,000km of track by 2030, including improving links from Siberia to Far East ports and to St Petersburg and Murmansk, as well as beefing up security. “Now the world has gone crazy, we need to spend a lot of money to secure the security of our passengers and our operations,” says Yakunin.
He relates how the railway, which employs 30,000 armed security guards, has had two recent attacks. The latest was 2009’s bombing of the Nevsky Express between Moscow and St Petersburg, which killed 26 people.
The Russian government is also kicking around a part-privatisation, with rumours it could sell a 20pc stake. “I cannot say that this is a plan,” notes Yakunin. “A plan is when you have a paper from the government and a signature. This is just evaluations.” He accepts that privatisation is “one of the possible ways” to better develop the network but cautions that even Deutsche Bahn balked a few years ago at a sell-off. “They stopped because it is too vulnerable for the entire economy to make mistakes with the privatisation of infrastructure,” he says.
Putin appears fairly hands-on, too. Last October he ordered Yakunin to Siberia to sort out a shortage of rail cars for shipping coal and then declared, during a televised meeting: “I hope that next time you won’t wait to be told but will stay on top of the situation yourself.”
The incident does not appear to have damaged their relationship. “Mr Putin knows me for quite a time,” says Yakunin. “We came from the same city and even if it is 4.5m people, some circles are quite narrow. I’m supportive of the policy to create re-industrialisation of Russia. I’m positive about the creation of civil society in Russia and those are the features of Mr Putin’s Russia.”
To the observation that, from the outside, “lawlessness” appears another feature, Yakunin bridles. He has just stressed that the Russian language has three words for “morality”, scribbling "nravstvennost" on a pad and declaring it means more than duty.
He’s also professed his belief in God and explained: “I was brought up in the Soviet Union. I know the brightest side of this system. I know the darkest side. The major education we got was to be faithful to society, to your state and to carry your responsibility in the best way you can.”
What does he make then of Britain’s courts being filled with warring oligarchs (think Roman Abramovich versus Boris Berezovsky, for example)? Or how BP’s attempt to strike a deal with Rosneft led to a litigious scrap with four Russian billionaires?
“Disgusting,” is his one word take on that, before explaining that the situation reflects badly on both sides. He says, not only British lawyers, but the “great British society” seem quite happy to “shake hands” with litigious Russian oligarchs. “Why don’t they feel this is disgusting. That is the question,” he says.
He would like to distance himself from all of them as he attempts to tap investors for funds. “Listen, ask the president of Barclays or JP Morgan. Or the CEO of Siemens or Alstom if they have any problems in communicating and doing business with Russian Railways and Mr Yakunin. I am positive you will get a positive answer, that they don’t need any support, they don’t need any protection in dealing with me.”
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