Ruminations on Russia

Philip Stephens associate editor and senior commentator at the Financial Times is my favourite columnist. He has written defendable sense ever since I first started reading him. They include some pieces on Northern Ireland which were truly fantastic. He may have been taken in by Blair's now a Christian, now a politician Jekyll and Hyde personality longer than the body politic - or maybe until his book was published - but it was not a fundamental error.

He is primarily a British political commentator who occasionally strays in to US politics. This comment (subscription only) on the relationship between VVP and the G8 is maybe a little outside his normal beat. Except that it was obviously informed from inside the British body politic. His comments regarding the differing views of VVP by Bush and Blair highlight fundamental foreign policy differences. More concerning were his distinctly unpolitic comments on the relationship between Berlusconi, Chirac and Schroeder and VVP are actually scary. It's rare for an article on Russia to leave me feeling depressed about both Russia and the EU. This did both.

Acting subserviently in front of the Imperium will leave only a sore ring. Whilst none of the soon to be ex-leaders-of-EU countries is a great believer in democracy (or the act of voting - which seems to be democracy's lowest common denominator) they are not, nor will they ever be as cynical about it as VVP and the Fifth Directorate Thugs. I remain ambivalent on whether democracy has been harmed by Putin's term in office. But Russia's ability to project beyond it's borders has grown massively. Fortunately the idiots running the lunatic asylum have yet to learn that their soft power is so much more powerful than their hard power. Lets hope that the EU develops a spine before the inmates elect someone whose competence extends beyond being able to resist a bottle of vodka.

Apologies for the quality of this post - read Philip's article.

The New York Times published a long article earlier in the week on the auto industry in Russia. There are lots and lots of great points on the opportunities for the global car manufacturers to sell cars with such strange accessories as brakes, windscreen wipers that actually remove the muck from the windscreen and, vitally important when its -10 outside, heated car seats. The article is worth reading.

If the NY Times could explain to me its headline Oil Spreads Wealth in Russia, and Russians Are Spending It on Foreign Cars and the inherent link. Now if the article was about how the Ferrari dealership sold out on the day it opened, or the Bentley dealership just down the road from Lubyanka whose opulence actually intimidates me I might be a buyer. But lets examine who is buying Hyundai's, and Ford Focuses and Kia's and Skoda's. They generally don't work for, own or steal cash from oil companies (the obvious link). A tiny few work for companies that service oil companies, auditors, lawyers, and the army that is required to look after the BP expats-wives (known locally as BP Princesses). But to be honest they always earnt enough to not have to buy a Hyundai. The lucky few who feed off the cash that falls from the tables of the super-rich oil men in Moscow have not grown more numerous over the past few years. Nor are the oilmen of Siberia driving demand. Nor are the Government's overflowing coffers causing cars to be bought. The cash that Putin just spent on pensioners, teachers and doctors is not going to buy cars. It might change consumtion patterns towards higher value goods, but they will still be necessities, not niceties like cars.

A better headline should be "Growing economy Sees Greater Wealth Trickle Down." This is a boom driven by local consumption that spreads its wealth far more rapidly than oil will ever do. Oil creates corruption and the corrupt don't drive Hyundai's.

Technorati Tags: Economy, Oil, Russia

My ex-colleagues at DFJ Nexus, are confident that they will have a first close of their tech fund targeting technologies emanating from Ukraine, Russia and the former Soviet Union. Venturewire has the article.

I remain an advisor to the Fund and wish them well. I fought to raise the same fund for 18 months with people who knew what they were doing - we failed. The fact that they are succeeding means that they are doing something better than we did. Notwithstanding I believe that making money is going to be a long haul.

Udachi.

Technorati Tags: Russia, Venture Capital

Siberian Light posts on the costs of getting a Visa for entry to Russia. Below are his direct and assumed costs.
Here’s (roughly) how I broke down the costs:

$350: My time for one full day (approx 1 full day)
$500: My colleague’s time (approx 3 hours)
$250: My Partner’s time (approx 30 minutes)
$500: Our Moscow office’s time (approx 1 full day)
$200: Actual visa fee (we were in a hurry, so had to express it)
$100: Travel agent (for courier to stand in line)
$100: Couriering documents back and forth

I had to liaise with our Moscow office, going back and forth, to ensure that my colleague provided enough information about his stay for them to fill in the forms and stand in line for hours at the Ministry of Foreign Affairs - just so they could get an official invitation
My colleague had to head out into town to get new passport photos taken (in matt finish, of course - and where can you find a machine printing those nowadays?), before collating all the documentation necessary to fill in his own visa application formI had to write an introductory letter, signed by a Partner, confirming that my colleague was indeed employed by the firm, and that they would be financially responsible for him
We had to employ a courier from a specialist firm, whose only responsibility was to queue up for hours on end at the Russian embassy, handover the paperwork, then collect the finished visa.

So far our (wife and I) costs this year must easily exceed $5k:

3 nights in Zurich airport hotel on way back from New Year holidays because the visa was not ready "due to the holidays." - 3x2xEuro150 = Euro900 (plus incidentals like eating)
1 Day Visa Processing Cost - Euro200 (ish)
3 Returns to Consulate in Bern Euro300 (one hell of a railway)

6 Months later
2 same day processing for visas - GBP800
2 return flights to UK (OK there are other reasons as well) - $1,800
Time spent with mine and my wife's family - uncountable.....

And we are still trying to get them registered.

Rather than emailing everyone who with a random joke I will post it instead. There will be a cultural miss here if you have no idea what Frosties are or who Tony the Tiger is for that matter.......

A blonde calls her boyfriend and says, "Please come over here and help me.

I have a killer jigsaw puzzle, and I can't figure out how to get it started.

"Her boyfriend asks, "What is it supposed to be when it's finished?"

The blonde says, "According to the picture on the box, it's a tiger."

Her boyfriend decides to go over and help with the puzzle.

She lets him in and shows him where she has the puzzle spread all over the table.

He studies the pieces for a moment, then looks at the box, then turns to her and says: -

"First of all, no matter what we do, we're not going to be able to assemble these pieces into anything resembling a tiger.

"He takes her hand and says, "Secondly, I want you to relax. Let's have a nice cup of tea, and then....." he sighed,

"let's put all these Frosties back in the box."

My wife (SWMBO) and I sat opposite Stoppard and Arkady Ostrovsky when they arrived in Moscow after Minsk. A classic bad Friday night after a long week we were drinking and eating and drinking to end the week, Stoppard was listening to his guests.

Not sure what made me Google him; this is the result. It's difficult to pick out outstanding sections of this. It's all outstanding; here are some quotations to convince you that I am right. read it.

This is a rubber-stamp "democratic republic", with the last collective farms, the last KGB, the last dissidents in the pre-1990 sense of the word, and - in President Alexander Lukashenko - the last dictator in Europe.

The journalist Dmitriy Zavadskiy was a young man who worked for the Belarusian affiliate of ORT, Russian public television. In July 2000, Zavadskiy was supposed to meet a colleague arriving at the airport. His car was found parked there. He hasn't been seen since.

The reason for his "disappearance", I was told, is that Zavadskiy was working on a story about the Belarusian special forces' presence in Chechnya on both sides. I had a friend with me, Arkady Ostrovsky, who reports for the Financial Times from Moscow and has pretty much covered the waterfront on Russian affairs. I saw Arkady blink and stare, and perhaps bite his tongue.

Last year Irina, now remarried to an American, made a statement before the US House Committee on International Relations. She told me the story she must have told a hundred times - "Anatoly and Victor drove away in Anatoly's car, to go to the sauna. Anatoly asked me to come, but I decided to stay home. Later, witnesses told investigators what happened. Anatoly and Victor left the sauna and got into our car. Immediately after they turned the corner, a car cut them off. My husband tried to back up but he was cut off by a second car. The doors of our car lock automatically if you hit the brakes. So the people who jumped out of those two cars broke the windows and pulled out Anatoly and Victor. Traces of Victor's blood were found at the scene. They were put into separate cars and driven away. Our car, a Jeep, was later towed away by one of the squad."
Irina says she is certain the two men were killed within a day or two. The cherry-red Jeep was never found. According to "information", it was flattened by an armoured troop carrier and buried.

Technorati Tags: Russia

Konstantin at Russia Blog posts lengthily on Why Russians Do Not Smile, in public at least.

I'll post his picture of The agrarian peasant (Saratov circa 1993) for entertainment.

He was incensed by an article by Olga Nikitina “Combining a Rude and Very Hospitable Reputation.” In particular the assertion (albeit not directly by Nikitina) that it is as a result of the lack security after the collapse of the Soviet Union that causes public introspection catches his ire. Konstantin heads back back to the nature of isolated peasant communities (everywhere is isolated if you have to walk) as a more likely cause. His thoughts are worth reading.

Firstly Moscow for a 12 million person city rates way ahead of London and New York for personal safety (unless you count anti-social driving) Blaming public introspection on a lack of safety is indeed rubbish.

When I first arrived here in 1994 I was particularly struck by the fact that no one would catch your eye when walking down the street. It's changed now and Muscovites (which is not Russia) are as heads up a city population as you will find. I ascribed it to the travails of communism and whatever euphemism you want to use for the excesses of Stalinism and the KGB. Maybe Konstantin's take on the nature of peasantry not only explains Russian's outward reticence but also why it was possible for Beria et al to divide and murder.

Technorati Tags: Russia

The Daily Torygraph writes the standard why was Abramovich allowed to sell and Khordokovsky get TB here. It's fairly open about the alleged links between VVP and Abramovich. Certainly more explicit than a publication in Russia could be.

I wonder when we will learn the real Abramovich story - I somehow feel it will be a story my grandchildren will read about - and I don't have any kids.

Posted in full, and without comment, from David Hornik at Venture Blog on VCitis:
In a Woody Allen moment, I was reading the DSM IV (the American Psychiatric Association's diagnostic manual for mental illness) to make sure I didn't have the mental equivalent of a "tumor the size of a golf ball." But, as Woody Allen himself points out, just because you're paranoid doesn't mean people aren't out to get you, and sure enough, I've diagnosed myself with a full blown mental illness -- it's called Narcissistic Personality Disorder (NPD) or, as I've renamed it, Venture Capitalitis. Of the Personality Disorders available to me (Histrionic Personility Disorder, Antisocial Pesonality Disorder, Schizoid Personality Disorder, Obsessive-Compulsive Personality Disorder, etc.), Narcissistic Personality Disorder may be as good as mental illness gets. Which is a good thing because best I can tell NPD is running rampant on Sand Hill Road.
The DSM IV is the Fourth Edition of the Diagnostic and Statistical Manual of Mental Disorders. Its purpose is to assist mental health practitioners in diagnosing and differentiating among mental illnesses. Accordingly, it takes the form of a list of diagnostic criteria which, if met in sufficient numbers by a particular person, indicates that that individual has the particular mental disorder in question. The diagnostic criteria for NPD are telling. NPD is diagnosed by "a pervasive pattern of grandiosity (in fantasy or behavior), need for admiration, and lack of empathy, beginning by early adulthood and present in a variety of contexts," -- sounds like VCitis already doesn't it. Narcissistic Personality Disorder is "indicated by five (or more) of the following:"

1) Has a grandiose sense of self-importance (e.g. exaggerates achievements and talents, expects to be recognized as superior without commensurate achievements).

2) Is preoccupied with fantasies of unlimited success, power, brilliance, beauty, or ideal love.

3) Believes that he or she is "special" and unique and can only be understood by, or should associate with, other special or high-status people (or institutions).

4) Requires excessive admiration.

5) Has a sense of entitlement, i.e., unreasonable expectations of especially favorable treatment or automatic compliance with his or her expectations.

6) Is interpersonally exploitative, i.e., takes advantage of others to achieve his or her own ends.

7) Lacks empathy: is unwilling to recognize or identify with the feelings and needs of others.

8) Is often envious of others or believes that others are envious of him or her.

9) Shows arrogant, haughty behaviors or attitudes.

Failing to come up with anything useful to say about Gazprom's acquisition of Sibneft I am reduced to reproducing other people's thoughts. These are from the Economist

In one of the jokes Russians tell about Roman Abramovich, owner of Chelsea football club and until this week an oil tycoon, he complains that London is an expensive city. Punch-line: “He still can’t buy it.”

The second question is: are the deal, and the trend it represents, good for the Russian oil industry, and Russia itself? After the Yugansk and Sibneft transactions, the share of Russia’s oil production controlled by the Kremlin will approach a third. The state also influences oil exports via its pipeline monopoly; Gazprom has monopolies both on gas pipelines and gas sales outside the former Soviet Union. True, the Russian government still has a weaker grip on the energy sector than the governments of many other petro-states. But as one Moscow-based tycoon puts it, the problem is not with state ownership per se, but with this state in particular. The growth of Russian oil production has already drooped. More state oversight—meaning more graft and less efficiency—is unlikely to help.

Still, why is Mr Putin, hammer of the oligarchs, letting him walk away with all this cash? With whom will he be sharing it? There are rumours.

Couldn't really work out how to describe the Gazprom/Sibneft merger. Adam Landes from Reniassance Capital cuts to the chase.

"Clearly, this deal is way below the market price and below a fair estimate of [Sibneft's] market value," said Adam Landes, an analyst at Moscow-based brokerage Renaissance Capital. "From an industrial point of view, it adds very little for Gazprom, and strategically it's a waste of time."

From the Daily Deal.

Technorati Tags: Company, Russia

If you read my ramblings you probably don't need me to tell you that the domestic economy is booming. Not just in Moscow, but in the Volga heartland, the oil towns and in strange places such as Novosibirsk. The growth in consumer spending is drawing in the multinationals from autos to cheese in search of growing markets and driven on at the board level by Goldman Sachs BRIC report (Brazil, Russia, India and China) (the link is to the original Goldman Sachs pdf report.) Russia provides a surer path to profitability than I & C but worse beaches than Brazil. I have half an eye on Russia's agribusiness industry, in particular the dairy and beef end of the business. Two headlines over the past couple of weeks caught my attention. Chronologically the first was Kraft's that they intend to be a major player in Russia's booming cheese industry. The second and the one that caused me to think about this post was Wimm-Bill-Dann's interim reports. Most analysts tend to focus on WMD's surrendering its leading position in the juice business to Lebedansky. To me the most telling statement related to its dairy business;

Sales in the Dairy Segment increased 20.1% from US$399.1 million in the first six months of 2004 to US$479.5 million in the first six months of 2005, while the average selling price rose 13.7% from US$0.73 per 1 kg in the first half of 2004 to US$0.83 per 1 kg in the same period of 2005. This increase was primarily driven by ruble price increases. Gross margin in the Dairy Segment declined from 24.1% in the first six months of 2004 to 23.8% in the same period of 2005. This change was primarily driven by the increase in raw materials costs and stronger demand for raw milk intensive traditional products in the regions.

In short what drove margins down despite above inflation price rises were a lack of raw materials. Domestic raw milk supplies are effectively flat. Any increase in sales has to be offset by an increase in dry milk crossing the border from the near abroad - Poland and Estonia. The supply problem is further exacerbated by the very poor quality of domestic milk. Maximum bacteria parts per millimeter in raw milk in the US is 100,000. In a dairy plant in western Siberia I trawled recently they were not particularly concerned by the count but did measure it. The average for the hot summers day that we were there was 700,000. Somatic cell counts were also very poor. The long and short of which being that the milk was worse for you to drink than unpasteurized milk and would be useless for dairy products that require high fat content - cheese for example.

I am sure that a behemoth such as Kraft is not going to announce a major expansion in to Russia without first securing its supplies. I just have not seen any evidence that there is meaningful investment in agribusiness that would supply Kraft, WMD et al. WMD made a strategic decision last year not to invest in upstream production. A mistake in my mind if they want to maintain an interest in the dairy business. It will be interesting to see how long WMD can pass on its costs increases to its customers.

Technorati Tags: Agribusiness, Russia

Maxim Kononenko the author of the smile worthy satirical take on the daily life of Vladimir Vladimirovich Putin vladimir.vladimirovich.ru (Russian only) provides the only logical answer as to why the powers-that-be decided to cancel the visa for Khordokovsky's US/Canadian lawyer, Robert Amsterdam.

Khordokovsky is off to a penal colony somewhere where the sun don't shine for the next 8 years, it looks like his side-kick Platon Lebedev, probably won't come out alive. His appeal was a travesty of justice; fair enough, so was the trial. Why make the news last any longer - it's just plain stupid.

Without translating the whole of Friday's piece a quick synopsis. VVP is talking to Patrushev, the head of the FSB, and asks why they decided to expel Amsterdam. A non-literal translation goes something like this - "we have to do something truly idiotic from time-to-time; they expect less from us as a result."

Could not have put it better myself.

And to ensure that coverage is even a dig at George W. And my favourite joke of the moment.

Donald Rumsfeld is giving the President his daily briefing on Iraq. 
He concludes by saying:  "Yesterday, 3 Brazilian soldiers were killed."
"OH NO!" the President exclaims.  "That's terrible!"
His staff sits stunned at this display of emotion, nervously watching as the President sits, head in hands.
Finally, President looks up and asks, "How many is a brazillion?"


Technorati Tags: Russia, Visa

Ultra Motors one of my favourite bizarre technologies to emerge from Russia makes its way on to the pages (sic) of Red Herring. Good work by Russian Technologies and Flintstone Technologies.

It has taken a while for the Company to make the break through that it's technology deserves. As always bringing in a good CEO in Paul Dyson seems to have made a huge difference.

They are out looking for cash right now.

Technorati Tags: Russia, Technology

I should really start a section on the Reiman/Alfa battle. Back from my summer hols, obligatory school essay to follow, to discover that the MinSvyaz has convinced the Prosecutor's office to open a criminal investigation in to kompromat.ru (a Russian-language scandal website) for reporting that documents lodged with the courts in the British Virgin Islands allegedly show that Reiman took a $1mn bribe for easing a British businessman's way to obtain a license. Here's the link in the Moscow Times it will degrade in a day or so. I'll update when I find a permanent link.

The only thing that it proves is that the "law" is whatever the authorities want it to be.

Technorati Tags: Reiman+Alfa, Russia

A phone that is smart enough to make you part with vast amounts of cash to acquire it but fulfills neither the function of a phone, a PDA or a camera (as if having a below par camera makes up for having a crap phone and PDA)

In the case of my Treo650 it also has French Workers syndrome. Thus if it is doing one thing and is required to do another the whole thing shuts down and takes 15 minutes of coaxing to get back to work.

Technorati Tags: mobile, Treo, Smartphone

From the eponymous Moscow Times reporting on the collective head in the sand approach by Julia Tymoshenko announcing that there is no crisis in Ukraine.

The only crisis is that March 2006 cannot come soon enough for her so that she can stop pretending that she is working for Yushchenko.

Ordered yesterday to "dump their arms" (from the Economist)the IRA's legitimate campaign finally spluttered to something like a halt yesterday. Though if someone could translate "dump their arms" that feeling of been here, done that may also come to a halt. It has that weazle-worded feeling that the IRA specializes in.

It will be interesting to see what happens to the likes of Slab Murphy who according to Families Acting for Innocent Relatives is more interested in his business activities. This Google search link provides more links and thanks to the advent of blogging more truth.
To paraphrase the Republican song; no more armoured cars, tanks and guns come to take away our sons

An excellent guide to the habitat in Moscow from the eXile. Once Moscow's most notorious newspaper (sic) unfortunately a rather poor imitation today.

From A Russian Blog more thoughts on bribery in Russia, the whole post is here; Civilized Way of Bribing:

I picked this particular quotation from the bottom of the post because I think in an otherwise well thought through take on the changing rules of bribery in Russia this one is wrong.....

"The irony in this matter is that Russian businessmen know exactly that they are still giving good old bribes. Western businesses operating in Russia act as a crowd in a fairy tale delighted by the emperor new clothes. American, European or Japanese businesses hire a Russian – ‘a guy who solves problems’ – and are very happy with his incredible effectiveness and luck."

Technorati Tags: Bribery, Russia

However close your relationship with VVP is I for one would not want to take on Alfa Bank.

This fairly lengthy report from the Moscow Times details the latest back and forth in the ongoing spat between Alfa and Reiman that is being played out in the courts. Having been stymied by Jeff Galmond's bare-faced lies to a court in the British Virgin Islands, Alfa have convinced the German's to investigate the less than open relationship between Commerzbank and Telekominvest/TCI/First National Holdings (an entity that was on Commerzbank's balance sheet in 1999) under money-laundering rules.

I would guess that the fall out will be sufficient to condemn some ex-Commerzbank bankers now "working for" Jeff Galmand. Eventually Jeff himself will also be unable to travel to Europe. It should be fairly clear to anyone with half a brain that a very bad lawyer and a worse businessman did not suddenly end up with a pan-national mobile license for free without some "help."

My assumption is that proving the money-laundering charge will be very difficult, allowing Reiman and his close associates to escape censure in Russia. It is however, increasingly close to home for certain members of the Presidential Administration and I am sure that Alfa will struggle to win this set.

Just in case you happened to be on Mars for the last couple of weeks; there were a number of bombs in London on July 7th. 55 people have died so far.

So working on the theory that lightening does not strike twice in the same place, and that the original bombers were seeking an early meeting with the virgins, my wife and I are heading for London for a visa run (and the subject of a whole new post).

Which leads me to the point of this post; the relationship between Islam and Britain.

Some guides to my politics;

• I come from that part of UK society that make me a “Foreign Office Arabist”
• I have immense respect for Jewry but very little for the State of Israel
• There are very few areas of foreign policy on which George W. Bush and I would agree
• I know more people who have died from the results of terrorism than old age

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Technorati Tags: 7/7, UK

It was not the first, it will not be the last. That alone will ensure that London returns to normality within weeks.

As the apocryphal member of the IRA said to the apocryphal soldier in the early 90's;

"we only have to be luck once, you have to be lucky all the time"

2008 and the Lesser of Two Evils:
The Kremlin's current inhabitants have no knowledge of how to run a business or state. Yet they are highly professional in their ability to craft special operations and diversions and to manipulate public opinion. Operation Lesser Evil is right up their alley.

Wither Russia?

Or where has it been recently and where is it going?

The Financial Times had an editorial piece on Russia's forthcoming Presidency of the G8. As the author correctly pointed out, an organization that is dedicated to free markets and democracy should not be headed by a country whose support for both of the above is questionable.

The recent past has not been Russia's most glorious since 1992. The Khordokovsky affair was not good, what happened to Yukos was worse and is another example of wealth acquisition by a group who were not clever enough to do so the first time around, at somebody else's expense. In case that is not clear; it was Rapine pillage.

There are rumours that certain 5th Directorate Thugs are being reigned in. I personally don't believe it - but for clarity; the strong Russia natural resource policy is a smokescreen behind which some individuals are enriching themselves. Expect further bizarre behaviour that is clearly not in Russia's long term benefit. It will continue to make good FT/WSJ/NYT headlines to say that democracy is being hindered by media concentration and the direct appointment of Governors. At best the case is unproven that democracy has been harmed at all. Neither the media nor local politicians act in a way that is in anyway democratic. The instinct is anti-democratic; the outcome is open to debate. It's clear that the commanding heights (what a crass phrase. Try telling an entrepreneur that his chain of sandwich shops is not worthy of a commanding height) are being concentrated for the wrong reasons, but Russia is a country of 140mn people and the rising tide is making their Roubles available to all of us.

There will be battles over economic control whoever sits in the Kremlin for some time yet. Short-to-medium term policy is substantially more important. Which leads to my largest worry: Gref vs Fradkov (with Fradkov playing at home) Either Gref feels that he is strong enough to take on Fradkov, or so weak that it no longer matters that there is open warfare. The pessimist in me says the latter.

More important than the personal battle is the actual policy. In spite of Yukos, inward investment is picking up again; concentrated in autos and consumer sectors. Ford (apparently) has a 12 week waiting list to acquire a locally produced Ford Focus. Despite the increase in tariffs on foreign produced cars 2/3rds of all cars bought today were not made in Russia. There is growth evident in every aspect of the consumer sector. Cheese imports, for example, are growing 30% y-o-y (and that's just the reported imports.) Oil is no longer driving growth, it's impact is mostly being neutralized by the reserve fund and a taxation policy that is more favourably skewed to Russia than previously. Still inward investment is not stubstantial enough to kill off inflation driven by an excess of demand over supply. Russia's largest trading partner (the EU) is having a self-induced crisis, as is the $ (one induced by a political elite, the other by credit cards). So it does not matter whether the Rouble is appreciating or the $ and € are depreciating the result is the same. Rouble wages are not inflating as fast as real Rouble inflation. Whilst the Russian Economic Forum week in London is one of the best shopping weeks in London in the year (when did you ever see an underdressed Russian girl (except the strip clubs) Russia's growth is about the Roubles that are being spent by the people who are working for my wife (SWMBO) and thousands of mid-size businesses across Russia. The long awaited middle class. My gut feeling is that they are feeling poorer and less secure. The Ford statistics/rumours and the HUGE number of people going on holiday at Domodeydevo Airport today would not support my gut feeling. My only excuse is that a rising tide is adding to the people who get to go to Anatalyia for the first time, but those who have been through this process before are less secure. An economy that is grown on the seeds of oil, gas, gas, oil, steel and oil and an underserved consumer is storing up substantial problems for the future. In case anyone whose economics education extends beyond mine reads this guff tell could they tell me what happens when you have internal inflation as a result excess demand over supply, a current account surplus and substantial problems in your counterparts currencies.

So on one hand we have an investment climate that is tempered (good choice of word) by Yukos (not Khordokovsky,) Gazprom/Rosneft and directional insecurity and on the other a dynamic consumer sector that is crying out for investment.

Both medium-term (Private Equity) and strategic investors are bullish across a range of sectors. Portfolio investors are wary but then their access to Russia's real story is limited and the market will flit about on UES restructuring and GAZP de-ringfencing - which is not where money is being made today.

I think my money is with the long term investors. There will be good times, there will be better times and there will be worse times but even when the measure is not good my guess is that very little money will be lost.

Technorati Tags: Russia

No longer will this be Ruminations on Russian Tech and Venture Capital Investing but just plain Ruminations on Russia.

There will be a de-emphasis on the technology part, more on the joys of investing in this part of the world and more on this part of the world generally as viewed from my privileged window.

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Technorati Tags: Russia

A German in Moscow blogs his observation of two Mercedes bumping in to each other and the benefits of being able to call “supporters.”

Too add to the; it's summer therefore in addition to trying to kill myself with a combination of vodka and swimming (it's a break from vodka and ice-fishing during the winter) I'll try the summer sport of high speed crashes whilst failing to observe a. the rules of the road b. traffic lights or c. any form of “society” in which you might want to help your fellow man.

However, as a cynical observer and (eager) participant in the road rage game of; there are no rules but the ones that I am making up at the moment the likelihood of crashes comes with the territory. So as we headed to the Dacha (dacha; noun
a country house or cottage in Russia, typically used as a second or vacation home) two weekends ago we were involved in an incredibly low speed accident; we were stationery and the truck that hit us was going at least 3km/hr.

Usual story; traffic jam ahead - three lane road becomes a 5-7 lane road as we all try to get 5m further ahead of anyone else in a classic portayal of the zero sum game / prisoner's dilemma. We were in lane 4-5 1/2 (i.e. not one of the lanes that the Russian government has painted lines on the road to encourage us to use) and were trying to edge ahead of a large truck. We were trapped and the truck was not - result a 2m gouge down the side of the car.

Now the fun starts. After a crash you are not allowed to move your car until the traffic police arrive - we crashed at 13.30. they turned up at about 17.00. Fortunately the sun was shining so we sat by the side of the road. Once they had turned up it took another 90 minutes of form filling (and 3500 rubles to “expedite” matters) to get a form from the police to use with the insurance company.

Pictures to be added on my return from Novosibirsk.

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Technorati Tags: Russia

A blog from a Peace Corps volunteer in Andijon, Uzbekistan where latest “revolution,” apparently this one is Cotton, is or is not underway. She has now been evacuated to Tashkent.

I like her take on the background to the troubles;

It would be “reductionist” to interpret this as a purely religious movement, or a drive for democracy. I maintain that the worsening economic situation for the general population, coupled with increased taxation, systemic corruption, and a host of other factors converge into a force of disobedience that leave no other choice, no other outlet for people who need to find a way to improve their lives, even if it means risking it. There's not much else to lose...

I defy you to agitate a man on a full stomach

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Kevin Laws from Venture Blog on the similarities between Peacocks having sex and making VC investments; Why Are Startups Like Peacocks?

I take his point that signaling in the VC world, as opposed to the Peacock sex world, can be ultimately disadvantageous especially when taken to the extreme. However, its pretty hard to argue a company is doing well unless some of the signals are being flashed. Nothing makes people happy like revenue, especially when its early and in greater volumes than expected, which is not like.......an analogy too far.

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