Ruminations on Russia

Group of Private Equity Firms Launches $36.12 Billion Bid for TDC. A collection of very smart people spending a lot of OPM to buy an old fashioned telecom company.

Are old fashioned telecom companies really a stable source of cash flow? Who do you sell it to?

Technorati Tags: Company, LBO, puppy, Telecom

The very clever Mr. Nash of Renaissance Capital opines that in fact the glass is half full. As he is very clever it has to be admitted that he has more than half a well argued point. It is unlikely that the Chinovniki will be any more successful at running car companies than GM for instance, albeit with lower health care costs. So let them keep their heavy machines and extractive industries and let us get on with retail banking and providing services to consumers.

My problem with his argument is that I spend most of my life (the part when I am not I am either asleep or trying to be) interacting with the the owners of the new businesses that drive VVP's economic dream. As the big bosses get their hands around such giants as Kamaz and Avtovaz (and they are welcome to both - as a Brit they equal the quality that was once Leyland, remember it? Exactly) the junior bosses are getting hungrier; the price for delivery of a container through Kotka, Finland before the end of the year increased Monday 1.8x (that's 180% for those of you who prefer stats that way). Of that 180% increase about 30% can be paid white i.e. it can be officially paid and can therefore be deducted from Net Income, in addition a special delivery by New Year price was introduced on the same day of $450 per container. So let's be clear - you could pay the 180% price increase and the risk is that the container would not make it in time for the big buying season unless you pay another $450 per container, or in reality $596 as it cannot be deducted from Net Income.

These rapidly growing businesses are always looking for more cash. In the absence of reasonable bank lending (in particular inventory financing) the private equity guys would appear to be a good port of call. But they demand that the businesses run on the white side of grey-white. Meanwhile their competitors turn to government-sponsored money and run grey-black under the quasi-government roof. Good management will win out at the end of the day, whichever way the business is run - it's just remarkable that they tend to be at the whiter end of the spectrum. But in the meantime unequal competition means that sticking to the clean road is not always easy.

The State also impacts entrepreneurial business through its access to cheap money. An infrastructure company I am a shareholder in, and board member of, was offered a 5 year 9% loan with 2 year capital repayment holiday by such a Government sponsored company. That's LIBOR plus 3 for a business that will generate $6mn in revenue in 2006 and will invest every $ it can gets its grubby hands on. In a WACC calculation that means the debt is cheaper than the equity. Not that WACC calculations are worth the time calculating, but that's another story. That's one hell of a market distortion.

So my glass remains sceptical.

Technorati Tags: Company, Economy, Russia

Today Gref announced the formation of 6 special economic zones. I was asked to get involved with a putative bid in Academ Gorodok in Novosibirsk which failed and with the Dubna effort which subsequently succeeded and two others that never got off the ground in Moscow. I turned down all the invitations as it was clear that the real reasons behind the bids were either fantastically idealistic (i.e. had not a cats chance in hell of succeeding) or were designed to assist companies that had political clout to make money on a. real estate and b. by lowering taxes on already profitable businesses or c. assist high profile unprofitable businesses compete unfairly against lower profile profitable ones (hint: if the CEO drives a new Merc and you lose $2mn+ a year the formula should return an ERROR.

It would be fair to say that Zelenograd SEZ will not assist micro-electronics in Russia nor will Dubna assist nuclear and physics technologies (sic). Dubna will find a way to build an offshore programming center which will fail to challenge Bangalore and Zelenograd will become the center for the manufacture assembly of PC's, notebooks and servers.

But the best job to get is the real estate developer. Funnily that was never on offer.

BTW my mood and the weather are in lock step and I will retain my heightened level of cynicism for one more month until I run for the sun.

Technorati Tags: Company, Innovation, Russia

According to Kommersant the reason is an order from on high to cut down on piracy. My friendly video kiosk is in the underpass that sits directly in front of MID (Ministry of Foreign Affairs) and could be relied upon to provide a never ending host of truly crap movies. You have to imagine that a number of WTO negotiators passed through the hallowed doors of MID and might have had a reason to go through the underpass.

Kommersant come up with two principal reasons both of which are probably true; firstly WTO negotiations are reaching the tipping point so Russia needed to show that it was serious about clamping down on piracy. Secondly because the Prosecutors office has pushed the Militsia to show that it can actually do something about economic crime that is just mildly obvious.

It seems that most of the kiosks closed themselves down following a friendly hint from the local police. Time to keep your head down as the Militsia will need to replace their income sources.

The interesting fact that most of the retail points was locked up by owners themselves –that was their response to the action. “Those, who stayed open, took off all counterfeited merchandises and currently sell only licensed Russian games. Those, who sells DVD has only licensed copies of “9th Regiment,” the owner of the kiosk, which is located near Komsomolskaya Square, told Kommersant. “I don’t know when all this would be over. Some people say on Wednesday and some after the elections in Moscow City Duma.”

I love the Russian cynicism about their imminent return - maybe Wednesday....

I am not sure that I understand the point that they are making about the conflict between the Prosecutors Office and the Militsia (copied below for your enlightenment). Needs to be read in the original. The Prosecutor's office was the main instrument in the attack on Yukos (no link required) but if it is going to push the Militsia in to doing their job I might even be marginally less cynical about them.

"According to another point of view, the large-scale police operation is a consequence of the conflict between the General Prosecution of the Russian Federation and the Interior Ministry of RF. In September of this year, General Prosecutor of RF Vladimir Ustinov harshly criticized police for their inability to fight with pirates. “The antagonism between Interior Ministry and Prosecution over the investigation of the crimes for Article 146 of Criminal Code, is widely known. The quality of investigation documents provided by the police to prosecution in the pirate cases is awful,” Yuri Zlobin, head of the association Russian Shield. “I think, that in this case Interior Ministry wants to prove prosecution that it can fight effectively with pirates. The ministry hopes that after this action the law would get an amendments, which would allow police investigate these cases by itself (currently it is a competence of prosecution –Kommersant). Then, police would have a better ratio of cracking media pirate cases because it would collect the evidence, interrogate suspect and make arrests without constantly asking Prosecution for orders.”

Technorati Tags: Corruption, Russia

MosNews reports that TNT has taken Olga Romanova off the air allegedly because she reported that Sergei Ivanov's son would not be charged for killing a elderly women whilst driving. You would have to look pretty hard to find that piece of news in the Russian language.

It does not mark the end of free speech on broadcast television; it was already dead. It is however, another example of the 5th directorate thugs believing that they can control the flow of news when it proves to be embarrassing. The good news is that the Russian narod are at least 2 steps ahead of the thugs and no longer get their news from the television.

The king of broadband comment correctly points out that there is the beginning of a VoIP shakeout. To give him his due he is rarely wrong and admits it when he is.

I think that the more nuanced message that should make itself heard above the din of badly researched acquistions is that very few pure VoIP service-providers pretending to be pure communication devices will survive the death rattle.

I do like the technology that underlies the game. Global IP Sound is a little overvalued (work out the link) but there are others that have been built with smart engineers with an eye on the web and telephony that will make their owners a small fortune.

Technorati Tags: VoIP, Technology

This plain stupid. Victoria found some gas in Eastern Siberia (ergo no infrastructure) in a country where gas is uneconomic sold domestically and export gas is sold by Gazprom, which also controls the pipelines. Meanwhile, value trebles. Go figure.

Technorati Tags: Russia, Gas, Oil

I have been a little quiet in the blogging front due to the pressure of work (and the fact that it is dark in the morning which makes getting out bed difficult).

However the purchase of Korbina Telecom by Victor Vekelsburg of Renova fame forces me back to the keyboard.

As the Kommersant article points out a part of the Renova empire is the de facto majority shareholder of Comcor TV or Moscow Cable Com a NASDAQ listed entity (MOCC). For the financially-minded amongst you ignore the per household stats which are a result of thin liquidity not meaningful numbers of around $178 per household passed. MOCC's own stats page highlight the difficulty in selling premium pay TV services to a Russian public that already has access to 14 (or so) free-to-air TV channels. The problem is exacerbated by the lack of meaningful premium content. Discovery TV can be entertaining but it does not create a ROI on network investment.

Korbina, like its privately held competitor, Korvette Telecom (Russian only) (you will find both under the moniker of Corbina and Corvette Telecom K in cyrillic is C in English) (disclosure - where I am a shareholder), is deploying 10/100 gigabit ethernet networks in the sleeping regions of Moscow providing high-speed internet connection to retail subscribers. ARPU's (including VAT/NDS) tend to be in the $22/month region. In the longer established regions penetration rates are around 18% of households passed.

MOCC on the other hand employs a traditional hybrid-fiber coax ("HFC") network. Comparable capex per household passed seem to be $60-ish for MOCC's HFC network and $17-ish for the ethernet network. A recent network audit of the ethernet network by the previous director of network at UPC Broadband was exceedingly enthusiastic. Very simple (stupid) networks with high-throughput potential, well-engineered and very cheap to maintain. Today these ethernet networks only offer retail internet and provide no other services. It is clear that ARPU's will drop over the next 3 or so years to around $14/month so other services will have to replace the lost revenues. There is work ongoing and I would not be surprised if one or other of these companies becomes a trial user of meaningful IPTV-type services.

Possibly a good example of a technology leap-frog? The question to me is whether this will create a meaningful competition to the weight of money behind MOCC and StreamTV, part of the Sistema Group (Russian only.)

I bumped into MOCC's COO in the gym yesterday; whilst he was aware of the Korbina purchase there is as yet no explicit desire to merge Korbina's internet business with MOCC (Korbina is also a MVNO). I hope it stays that way for a while as a MOCC-Korbina merger employing ethernet networks would be a major competitor, in a market where there are already enough well-funded but customer unfriendly players.

Meanwhile the ante-deluvian Mostelekom (Russian only) is being fought over. Mostelekom connects 2.5 million of Moscow's approximately 4 million households with very old copper. If some real oil money gets behind it a large part of the market will be cornered.

Technorati Tags: Russia, Emerging Markets, Broadband

From the omnipresent Om Malik on the The Bill & Ozzie Show. A bunch of people more qualified to comment than I have done so - so I won't on the story. But I will on the process. As Om states;
So Bill Gates and Ray Ozzie dropped two memos to the Microserfs, and then somehow they got leaked to the media and more importantly to Dave Winer.

Which is pretty much how I read it on the FT with my muesli this morning - that it was leaked to the mainstream press as a strategy and therefore was not a leak. If it had been a real leak the first people to have reported on it would have been the blogosphere. It was supposed to be a clever piece of marketing that not only failed to hit its mark with me but achieved the opposite aim.

Could the marketing department consult with Scoble before launching a bollocks strategy like this.

Technorati Tags: Phyrric, Technology

It has been 13 years since the Soviet Union added the moniker former. However, I am still asked by acquaintances outside Russia about our ability to get hold of things. As if we spend half our lives in food queues. For the longest time we were unable to get hold of "english" sausages. This problem has been solved by our friend Rostov John. Proper, as opposed to American-type, bacon is still a problem, as is Marmite. As you can see what I miss here is cultural, not shortage-created - god forbid in this city which worships consumerism.

Bread however, good bread has always been a scarce resource. Local bread has a certain similarity to the northern German variety, hard and not great for a bacon sarnie - something to do with flour varieties. There is also a hangover from Soviet days when the rumour was put out that fresh bread was bad for you. My (english) father-in-law was told the same thing during post-war (WWII) rationing. The idea being that you finished the last bread before starting in on the fresh stuff. Hard and semi-stale bread is not a great mix.

Life has just got marginally better. This post is accompanied by a cup of espresso, freshly-brewed at home, and a chocolate croissant from the new French Bakery. Not quite as good as the real butter variety I consumed in New York last week but pretty damn good all the same.

Time for another.....

Technorati Tags: Russia

That old chestnut - how do you measure innovation? From the FT (don't think that it's subscription only).

"The warning should be heeded by those western observers who, dazzled by China’s rise in basic manufacturing, breathlessly proclaim it is destined to become a global leader in science and technological innovation."

Technorati Tags: Economy, Russia, Technology, Venture Capital

With thanks to Siberian Light for this one British Petroleum - Kremlin secrecy talks:

A lot of stuff from MosNews the long and short of which is.......The best outsourcing company in the world ever, otherwise known as the FSB scams itself more revenues.

A source close to TNK-BP said that the company was forced to replace foreign directors and to outsource all the work with maps and secret information to Russian companies.

To be frank the scams just get more pathetic. Look for the line in TNK-BP's accounts in 2006. Fees paid to useless idiots to do nothing in order to keep some malignant form of government of our backs.

A company who uses my services is raising money at the moment. The company imports stuff, quite a lot of it really. A potential investor wants to know how "white" they are.

a - "Except for customs; completely...."

q - How much does it save you

a - nothing

q - why do you do it

a - because we like our goods to arrive in the same millenium

The rules have changed recently - now the real rules are applied. It just costs more to get a certificate that badminton rackets are not dangerous ($1,000 per consignment through DME) and storage costs for non-storage in customs now equal 60% of COGS. All in costs to play according to the rules - "other" in COGS = 90% of COGS.

Long live the Chinovniki.....

Technorati Tags: Company, Corruption, Russia

Start with a large one. Screw your best friend. Have him made persona non grata. Invest in a President to ensure that your stay-out-of-jail card remains valid. Invest in a football club. (Employ a bunch of useless bankers, sorry the first letter was a w) and at the end of the day, or at the end of the end.

A SMALL FORTUNE.............owned by someone else.

However, Sauer believes the motivation is simpler. He lives in a posh suburb of Moscow, where his son plays football with Abramovich's, and after 16 years in Russia he is an anthropologist of the oligarch tribe. Sauer explains: "These people have money, but they don't have status, so what do you do? You try to acquire status. In 1920s America there were tycoons who did exactly the same. They bought newspapers, went into art, that sort of thing

Oil Money Pumps Into Football - and who said I could not make it as a Sun headline writer.

p.s. congratulations to Derk who got out without selling his soul. Unlike his successors.

If you care I live here. Who says there is no free press.

Interesting piece from Wired on blocking Blogs from Investment Banks. No Longer Safe For Work: Blogs. Not necessarily because it says anything that we don't know about Investment Banks ability to bury their head in the sand, but because of what James Enck has to say about the value of research to his buy-side clients.

The sort of research that I mostly require comes from Blogs. From time-to-time I need hard numbers, but mostly I need smart people to think about how the future, both immediate and medium-term (tomorrow to 5 years). People such as James do a great job of doing that.

From today's FT. It requires subscription so I have pulled out a line. There remains a mental block amongst the political elite that the Narod have a sort of mind of their own. It can be influenced but is increasingly resistant to manipulation. The greatest risk to economic stability is a failed transition of power.

Manipulation alone is not enough. Real appeal is required.

Khodorkovsky Sent To Remote Siberian Camp:

"Our country is headed by small-minded, vindictive people. Mere revenge -- that's the only motive."

Pretty difficult to be any clearer about the Fifth Directorate Thugs.

What's the Difference Between a Developing Market and an Emerging Market



None; they both make money. A grab from the front page of this evening's FT.com

Technorati Tags: Emerging Markets, Russia

My mornings are fairly standard, albeit that crawling out of bed thing gets harder as winter approaches. Sometime between 8 and 8.30 I am sitting at my computer scanning the overnight email and reading the morning news. This is a combination of RSS feeds via the wonderful NetNewsWire and traditional news websites.

It struck me last night that these break down in to two separate groups. The international news I read via RSS feed, including my sports news but with the dishonourable exception of The Deal. Any news that I read on Russia has to be read on the original website.

A comment on this Blog reminded me of Esther Dyson's $10,000 bet that Russia will be the world's leading software developer by 2010. Brilliance in software engineering is a good thing, but if that code is written in isolation then it may not serve a greater good. Web2.0 has the technology world jumping and down with joy, particularly if you are Sergei and Larry. There are deals being done all around the blogosphere. Wikis and Tiddlywikis (my current favourite if I can work out how to make it work for me) will make a significant difference to how we work in the future. If you are not deep in to this then the chances are that you will not be engineering software to change the future.

Offshoring companies like Luxoft (by the way you desperately need to change your ad copy) and Epam Systems probably don't care. I do because if Russia does not address innovation and soon the very bright will go and work elsewhere.

Technorati Tags: Innovation, Russia, Technology

Yet more geniuses, or is that geniae, at work Russian Securities Agency Wants to Limit IPOs Abroad. Has been tagged as a Kanutian policy(as in King Kanute).

Update - I decided, on reflection, that it is not only Kanutian but also Phyrric.

Technorati Tags: Phyrric, puppy, 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.