The Soviet Story (Padomju stāsts, 2008)

The Soviet Story (Padomju stāsts), a 2008 Latvian documentary about Communist crimes (in English and Russian with Latvian subtitles). Includes interviews with Russian and European historians, a Finnish EU Parliament Member, a former member of KPSU Central Committee, with the Soviet dissident Vladimir Bukovsky. Very worth seeing.


Part 1: http://irc.lv/video?id=YrHosaqsKcUW

Part 2: http://irc.lv/video?id=q8Fyk1CH4vUw


The very good thing about this movie is that it underlines that roots of Soviet terror lay in Marxist ideology itself. Stalinist USSR was not a misinterpretation of Marx' Socialism - it WAS Socialism just as Socialism was supposed be.

Hitler was a National Socialist and the Soviets claimed to be "International" Socialists. There's no difference as all of them were fans of social engineering and constructed totalitarian states that should define and control all aspects of a person's life. Hitler killed people according to their ethnicity, Stalin killed people according to their social status. I'd call that difference a matter of taste.

There must be a Nuremberg Trial for Communist crimes. Not really to forbid something - but for people to get the right attitude to the USSR and to left-wing ideology. Although it's "uncool" today to be a fan of Hitler and "not very cool" to be a fan of Stalin, it is still completely acceptable to be Marxist or Maoist and even "cool" to be a fan of Che Guevara. While there's not really a big difference between them all.
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Russian rouble to fall soon?

Seems like devaluation of the Russian rouble is on its way:

1. «Я не исключаю повышения гибкости валютного курса рубля <...> с некоторой тенденцией к ослаблению рубля в отношении иностранных валют», — предупредил Игнатьев.

"I do not exclude an increase of the flexibility of rouble exchange rate <...> with a tendency towards weakening of the rouble against other currencies" - Sergey Ignatiev, head of Russian Central Bank

2. На наш взгляд, резкая девальвация национальной валюты, с макроэкономической точки зрения, более предпочтительна, чем постепенное ослабление, так как в последнем случае значительные ресурсы страны в течение длительного периода времени отвлекаются от реального сектора и начинают использоваться в валютных спекуляциях. Мировой опыт подобной политики, в том числе и в России 90-х, показывает, что резкого падения курса национальной валюты все равно не избежать"

"In our opinion, a radical devaluation of the national currency is <...> more preferable than a gradual one<...>. Global experience <...> shows us that a drastic fall of the national currency exchange rate can't be avoided anyway" - Raiffeisenbank analysts
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Kinda debut...

Svyazinvest should not be broken up ahead of privatisation, AFK Sistema will participate in tender

Svyazinvest, the Russian, state-owned telecommunications group, needs to be privatised as as a whole and not be broken up in separate parts, AFK Sistema chief executive officer Alexander Goncharuk told dealReporter.

Speaking shortly before his resignation from the CEO position at Sistema last week, Goncharuk, whose company controls a blocking 25% + 1 share stake in Svyazinvest, said that the Russian government has already approved a privatisation plan for the company. He was, however, unable to reveal the plan due to confidentiality undertakings.

Both Svyazinvest and the Russian Federal Agency for Federal Property Management (Rosimushchestvo) that controls a majority stake in the company declined to comment regarding the future privatisation of the company.

In a formal interview in his Moscow office, Goncharuk said that it was his opinion that Svyazinvest should be privatised as a single entity rather than being broken into parts. He also said that the subsidiaries of Svyazinvest would be consolidated and then merged into the Svyazinvest holding company.

Goncharuk said that breaking up Svyazinvest would entail the separate privatisation of profitable and unprofitable regional service providers that are now subsidiaries of the overall holding. Of 18 companies in which Svyazinvest owns stake, only five are profitable and are practically used to subsidise the rest.

He said that the privatisation of parts of Svyazinvest would be difficult as prospective buyers would seek to cherry pick the company’s best assets and not the company’s loss-making operations.

He also said that the divisions of Rostelecom used for strategic government services will more than likely be separated and kept under state control. Also, there will probably be limitations set for future private owners so that the communication needs of the depressed and geographically disadvantaged regions, for instance, of the far north, will still be satisfied.

Goncharuk added that Svyazinvest has urgently to be privatised because of the company’s managerial weakness and inability to keep on track with technological advances. The company’s equipment does not get renewed and becomes increasingly obsolescent. Svyazinvest needs an efficient owner and this owner could only be a private one. Besides that, without a private owner Svyazinvest would not be able to cope with its current debts and attract new loan stock, Goncharuk said.

Goncharuk stated that AFK Sistema will definitely be among participants of the privatisation process. Among others, there will probably be interest from oil companies as they tend to show interest in high-tech and media sectors. An obstacle for them may be limits set to participants of the tender.

For instance, a limitation can be set allowing only established telecommunication companies to bid. Foreign investors may be allowed to take part in the auction but are unlikely to. Recent changes in the government and the new role of former telecommunication minister Leonid Reiman do not change the situation significantly because decisions are made on a “far more senior level,” Goncharuk said.

However, a top Russian industry source said that Reiman was a key player in the government’s planned privatisation of Svyazinvest and will maintain an important role in the privatisation process.

While he no longer has a formal position in the current government, Reiman is a direct advisor to Russian president Dmitry Medvedev.

However, the deputy director general of Russian investment bank Kit Finans, Maxim Tsyganov, said he does not believe that the privatisation of Svyazinvest is currently the best option for the company. In his opinion, the privatisation must be preceded by significant improvements of the corporate governance and an overall reorganisation.

”A simple transfer of the company to a private owner is not in the interest of the government as the current shareholder,” Tsyganov said.

Svyazinvest is a unique asset that presents a good platform for telecommunication business development in Russia.

Due to the current stable economic situation in Russia, the state budget does not need additional finance, and can even make investments in Svyazinvest to increase the company’s market value. A possible scenario of the company reorganisation should start with a consolidation, followed by a business model improvement and only then should it be privatised, he said.

Still, Tsyganov did not state the probability of the government deciding not to start the privatisation process. Kit Finans would not invest in Svyazinvest if it were privatised, Tsyganov said, but it may buy shares of the company on behalf of its clients if they show interest in it.

Svyazinvest is a Russian state-owned telecom holding company that holds a majority stake in seven inter-regional fixed line service providers (CenterTelecom, North-West Telecom, VolgaTelecom, Southern Telecom Company, Uralsvyazinform, Siberia Telecom, Dalsvyaz), and holds stake in other companies mostly related to telecommunication: Central Telegraph (51%), Dagsvyazinform (51%), Rostelecom (51%), Giprosvyaz (51%), MGTS (28%), Kostroma GTS (37%), MobiTel (100%), Svyaz-Bank (1%), United registration company (9%), StarKom (25%) and RTComm.Ru (0.5%).

// me for dealReporter
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Belarus not in CEE?

An interesting research on Roland Berger's website: CEE Headquarters: Effectively managing a fragmented growth region

Belarus is for global business as usual a Terra Incognita in the centre of Europe: no information on Belarus on p. 6 (although the GDP growth rates and population could have been found easily), and an expressive "?" on Belarus' map for wage cost relation on p. 7 (my estimate would be around 27). The country simply does not exist for westerners. Not because they want to, but because it really does not exist as a place to consider as a potential investment goal. A pity now, but - may be a great opportunity for the future, when it will finally be over with the regime of Aliaksandr Lukashenka.
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On the Social and Political Role of Audit

Audit plays an important symbolic role in the economy and society. May sound odd, but one could speak of the social and political role of the auditing profession.

We are all used to the state having the central controlling function, meant to be on behalf of the society. But the more the society liberates itself from the state’s meddlesome “services”, the better. The state is per definition a bad and inefficient service provider, not only historically and in terms of its “corporate culture”, but also simply because of its scale: a small local enterprise will certainly be better able to concentrate on the demands of the local “small” ordinary people than a big universalized machine trying to fit all the interests of all the multiple different people at the same time. The same with the state: it has traditionally has the goal to be “everything for everyone”, grant welfare to all the people. But as a result it just wastes time, money and human resources; or is more often just an instrument of influence in the hands of certain immoral persons.

So, audit is exactly the instrument and hopefully only one of the first signs of how a society can take over the functions of the state. As far as not only the shareholders, but also the general public too, are users of the audited financial statements, here we see how a company builds its relations with the society. I don’t like the word “public control” as no one should control anything that is not his private property – and a private company is certainly anything but a “private property” of the public. But what we see here is exactly how a company communicates with the society and the society “has its eye” on the company without a slight participation of the archaic bureaucratic state in the process.

Of course, the bureaucrats are trying to put their fingers into auditing and establish their control there. Remember the stupid situation with the Russian authorities getting PwC to court for the audit of YUKOS.

At the end of the day, the auditing firm’s only real asset that allows it to do business is reputation. The auditor simply states that after having done some procedures it has the impression of the financial statements to be true and fair. Not more and not less then that, and whether to rely on the auditor’s statement or not – is up to the individual user of the financial statements. Of course one will be more likely to rely on them is the auditor is Deloitte or E&Y than if the statement comes from some unknown little audit company. But even if having trusted a brand – it’s always, always the user’s own risk and decision.

That’s how important audit is as a symbol of civil society’s self-regulation replacing the state. In some way it makes me proud to have worked in this noble profession, no matter how hard it was at some times and how much the work process itself has to be improved and will be improved as technology advances.
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"European Choice" As A Ticket to "Titanic"

A translation of my yesterday's post to http://www.pozirk.org/ by the guys from http://blogs.tol.org/belarus

The "European Choice" as a Ticket to the "Titanic"

It is more than popular in the democratic community now to talk about European standards and that Belarus should follow the European path, introduce “European reforms” to comply with “European Quality Standards”. No one explains what it is, being European, making a “European Choice”, but everyone for sure knows that it is something attractive, sweet, warm, and tasty. Chruschov promised every family to have a flat and live in communizm by 1980. Like this, lots of naive people in Belarus suppose that Belarus should join the EU by ANY means, and the effect of this accession will be close to that of getting into comunizm waters.

Therefore when I read those calls to come to European March, I simply don’t know what to feel or think. Please don’t misinterpret me: we should go there - but for a different reason.

Calls for eurointegration resemble calls to provide everyone with free meet for the rest of their lives: here is an example of a typical logic employed today:

"Belarusian pension is something you can only cry on, not live on. Like an elderly lady who had worked all her life like an accountant asks why a German accountant who had worked at the same job, with the same responsibilities (but only in Germany) gets 600 EUR pension and can travel on that. Whereas she gets only 150 USD. They both worked the same time, with the same effort, but the Belarusian lady can survive only with her sons help, whereas the German Frau can travel around Europe. This cry shows all! The lady wants to live in Europe, get European pension for a European work . And the only thing that barrs her from that is that she lives outside Europe. Just a bit outside… "

So, what are we being offered now? That Europe is a magic key to all our problems. Should it come - and our life will turn into heavenly succession of problemless days. But it is never immediate. The German and the Belarusian accountants did DIFFERENT things as they worked for different economies. The Soviet woman worked for an ineffective socialist economy which was destined to die, sooner or later. This is the real tragedy, and not only of that lady in question, but of millions of people who wasted their effort to do useless work for a useless system. C’est la vie.

Democratization and europezation won’t GIVE people their long-wished well-being: they will ALLOW them to EARN it through hard work. It is difficult to fight agains Lukashist populizm without being a populist yourself, but democratic populism still remains demagogy, from whatever side it comes. Or may be Belarusian nation can not accept more complicated arguments?

No one asks a question how long European heaven will hold and what will it bring us. We just hear a “hardtalk” which all the time finishes in a conclusion that “we should move to Europe coz we are Europeans”, and that “when we join the EU, we will start earning like the Europeans”.

However, eventual accession of Belarus to the European Union brings lots of negative things as well. Bureaucratic apparatus created by Brussels weighs so much that the “old Europe” economy almost does not grow. This is the reality where shops are forbidden to work after 7 and where tax pressure exceeds 50% on average. These tax money are further redirected into such welfares when unemployed people get subsidies reaching an average salary in their country. They are also transferred into salaries of bureaucrats in Brussels. Salaries which are more than high.

This is a real social union. And social union (or state) is inflation plus unemployment, and that exactly what we see in the EU case. If it had been limited by just some states - one could carry that, but such standards are being imposed on all new members. Say, Estonia had to stop its several liberal trade programs and even increased import tax for some non-EU goods just because membership conditions required that.

European socioeconomic model does not simply deeffectize economy, but turns some categories of people into parasites (in a milder form than in social economies, but they still think that the state should take care of them in difficult situations).

And this is the main thing that immigrants living on subsidies in their ghettos learn about European life. And what is the awfulest thing here - that those people living on subsidies are RATIONAL in their behaviour: “Why should I care when the state will take care about me. Why should I work when the industrious pay half of their income to support such lazybones like me?”

// Source

Actually, there was also a second part of the post published today, hopefully they will translate it as well

UPD here it is:

Talented people were usually leaving Europe for America and Canada, and had been doing that till the very recent days. Entrepreneurs could realize their ambitions much easier in more liberal United States, Australia, or Canada, than in socialist Europe. Just recall Arnold Schwarzenegger who quitted his European Austria for the US dream.

Demographically Europe is dying, and after 50 years is going to turn into one big house for elderly people. That concerns not just the age, but also dinamism, innovativeness, proactiveness of position. Even now Western Europeans are the people who need nothing else from the world but to have their social guarantees and a croissant in the morning. They are sure the state will take care of them. And as a result, European culture is retreating under a passionate influence of active immigrants from Turkey, Africa or the Middle East.

Economically, countries of South-Eastern Asia together with the USA, Brasilia, India, and China are going to dominate in the world of the 21st century. Ok, adding up Russia whose oil influence will not decrease until Chinese economy is growing. The EU has no strategy for development, and has no clear view for the next 10 years. This might end in one of the 2 variants; either acceptance of liberal values and imminent economic and political increase, or a crisis with a post-acception of liberal values. Now Europe walks more the second way.


Once having joined the EU, there will be no way back. Accession to the Union means loss of state sovereignty. Once and forever. And this is not just about national honour, but about a simple ability to act as you want without a repressive influence of the social bureaucratic EU machine from outside. The machine which has no idea of what is going within. The Union is bound to centralize more as time passes, with local and national powers being left just with current-day questions to solve. As a small country, Belarus will have no weight inside the EU. And when joining, the EU will centralized more than ever.

Do we want Belarus to become part of such construction? After mere 15 years of independence to have come after 300 years of historical absence, do we really want to become pensioneers of this world?

There is a sence for Belarus to become a part of NATO. Accession to this organization will mean a guarantee for us that we are not going to assaulted again; this is a sign of democratic, choice in favour of freedom, democracy, and progress. A guarantee that not a single Eurasian empire will take our country out of that.

We need a non-visa and free-trade regime with the EU - exactly like with the other neighbors and in general with as many countries - as possible. But by no means we need to hang ourselves on the chain of eurobureaucrats, which depend on those social regime, and by no means we need to abandon our state sovereignty.

We should say NO to fetishization of the EU; we don’t have to behave like Georgia or Albania begging to accept us into the European family: we ARE Europeans. We should aim not at the EU accession, but at building a market competitive economy which would allow all people to earn decently and live with honour, which is based on democratic principles. Eurointegration might be a means on that way, but not an objective in itself.

There is only one valid argument in favour of European choice which can cross all arguments against. Pragmatic reality often dictates the choice which is far from the desired one. After years of anti-NATO ideology and in the wake of the fact of the NATO allergy people have now, the only option against new integration into an “Axis of Freedom” of some Eurasian dictators or into some new formation of the CIS which strengthened revanchist Russia will start assembling is a socialist, but at least democratic UE.

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Good news!

After quitting smoking, having one or two drinks a day is the best single thing you can do for your cardiovascular health. It's better than losing weight, better than getting more exercise, and better than lowering your cholesterol.

[...]

The benefits to alcohol consumption are absolutely clear. Drinking five to six drinks a week reduces the risk of sudden cardiac death by 79 percent. It cuts heart attack risk, both in men who exercise and eat right and in men with hypertension. It also protects against type-2 diabetes and gallstones. In middle-aged women, moderate consumption of alcohol is associated with a 17% reduction in death from all causes.

// Wisebread.com


I'll quit smoking one day, I promise! )
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Atlas Shrugged

My essay on Ayn Rand's "Atlas Shrugged", kindly translated from Belarusian by the guys from TOL Blog Belarus

***

written by czalex
translated by meramo

The world of Ayn Rand might seem exaggerated, but if you take a minute and look around, read the news, you can see this world: a world we live in. Characters of corrupt politicians, of so called "public opinion leaders", for whom "there's no black and white" but only gray unscrupulousness – all these things are described in the book. Positive characters – strong, conscientious men and women. They, may lack some "human" features, some liveliness or human weakness. But it's so because Rand first of all a great essayist, and only then – a writer.

"Atlas Shrugged" is a famous novel by the American philosopher Ayn Rand. It's among the first books in the genre of a business-novel, and is the first fiction book in the library of 3dWay. The novel was published in 1957 and was later recognized as one of the best and most important literature works of the 20th century. The story takes place in an unclear period in the future in the United States. Almost all countries of the world have become socialistic "people's republics". The USA is one of the last democratic and market-oriented countries, but is following other countries' path very quickly. The economy is in recession and survives only because few profitable enterprises led by talented and skilled businessmen. One of these companies is Taggart Transcontinental, a railway company . Its chief is Dagny Taggart, the book's main hero, has to fight for her business under the press of corrupt bureaucracy, which introduces more and more restrictions of the business initiative and as by that only worsens the situation.

Ayn Rand describes an absurd world and society where a person's disadvantage is the cause for rewards, where the initiative, intellect and ability for a creative work are punished by the obligation to take care of losers. This world is ruled by people who can talk about spirituality and refusal of the material while living in dirty bungalows instead of prosperous cities burned as a result of their Utopian "human-loving" projects. The rich ones have to take care of the poor, the strong ones – of the weak , the successful ones – of losers, the talented ones – of the untalented and the intelligent ones – of fools. Sweet speeches about public interests hide the real faces of amoral and corrupt people. Public life in these cruel conditions becomes entailed by oppression and violence, which lead the country to a complete disaster.

But there are people who resist the system, the "atlases" who hold this world on their shoulders – the business elite. The state uses them as it wants. But as they give wealth, technologies, working places – they are more and more blamed for selfishness and "oppression of the working people". As this happens, they one by one disappear, leaving the society to the hands of people, who curse them. When the working people have rights to strike, so the businessmen take this right for them too – and very soon it becomes obvious, what is the key element in economy. Labor can do nothing without intelligence and business talent; it is nothing but an instrument in the hands of businessmen.

The world of Ayn Rand might seem exaggerated, but if you take a minute and look around, read the news, you can see this world: a world we live in. Characters of corrupt politicians, of so called "public opinion leaders" and "philosophers" for whom "there's no black and white" but only a gray absence of any principles – all these things are described in the book. Positive characters are strong, conscientious men and women. They may lack some "human" features, some liveliness or human weaknesses. But it may be so because of Ayn Rand's being first of all an outstanding essayist, and only then a writer.

The economy of a country has to be maximally efficient, therefore maximally rational, therefore maximally liberal. The caring about other people can not be put above giving the chance to care about themselves to those who are able to.

The same works in politics and social life. When we hear that some monumental goals have to be put above a person's private interests, the road back to Stone Age begins. And it doesn't matter whether these goals are used to camouflage some hidden agenda or are a product of naivety. Fascism, theocracy, socialism – all regimes, which legitimize themselves in any ways but a neutral and cold-blooded democratic procedure, or that start talking of Utopian ideas – these regimes are unfair, irrational, and therefore inefficient, and therefore wrong.

The system of values, where people doing their best to achieve their own purposes and wealth is the best basis for love and friendship, because the relations between people in this way grounds not on charity, but on the mutual respect and utility.

All these things are described in the novel. Rationality is the only criteria for determining the social order. Any excesses are excessive and harmful. A very talented description of the way a society not following this principle develops is the main thing that makes "Atlas Shrugged" a book to be read by every educated person.

Source
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Blogging about blogging

Thanks to Andrew Kable I started discovering the English speaking business blogosphere - and I'm very happy to do that!

For example, Penelope Trunk's blog has a very interesting series of articles on blogging.

I have my Belarusian-Russian blog since 2003. First it was just a diary, then a means to communicate with friends who also have a blog at Livejournal and to find new friends among Belarusian speakers. Livejournal is very popular in post-Soviet countries exactly because it offers broad opportunities to communicate and not just to blog. Practically, it developed into a social network above a blogging service.

Finally, it more and more became a blog on current political issues concerning Belarus, leaving less and less place for private stuff. Currently I have more than 440 Livejournal users subscribed to my blog, and landed among Top 30 Belarusian Livejournal bloggers a couple of month ago.

There is still much personal stuff there, and it'd probably make sense to transer this part to a new blog. I see the problem that a huge part of my Russian real-life friends who subscribe to my blog are not much interested in politics, especially in Belarusian politics, and mostly do not even speak any Belarusian :) . On the other hand, some people interested in politics may find it less interesting to read about travel, jokes and other life impressions.

But an argument against that is that serious essays and columns are also posted to http://www.pozirk.org and/or http://bielarus.3dway.org, so that interested people might subscribe to it there and http://czalex.livejournal.com may be left over as a portrait of my interests in common.

A completely different thing is with the blog you are currently reading. The blog was originally created to practice English and German, then there was a a period of it's being inactive, and now it is being revived as a blog in English (except for the tag names :) ) on professional issues. It's still far from some specialization and a concrete niche - but I hope to develop it as I grow professionally.

At least some directions covered here might be named:

- Business, economics of Belarus and Russia

- Personal career experience

- Notes on audit, consulting with an accent on banking industry

- Rare inputs on social issues in Belarus, like my Belarusian articles translated by TOL Blogs Belarus.

Even this list of 4 is too broad if I'm aiming to attract people with what I write and not just real-life friends. But I let time show what's gonna be the blog's final specialization.


-> Gotta find some interesting blogs about strategy consulting, audit and finance to add to my Google Reader
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The US Budget graphically

http://www.thebudgetgraph.com/poster/

Might sound shocking for a post-Soviet: 67% of American state expenses go for the Military and for National Security.

"Evil American Militarist Imperialism"?

No, just what a state is actually there for.
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Sports

It's very important to do sports for a successful career.

- A success comes from the inner motivation to succeed. And the taste of success comes from past successes and from small victories from the every-day life. A won football match, a distance run or rode by bike – that all gives the feeling of having achieved something, supported by the relevant physical impressions

- Every football or basketball match you play is training on team working skills, first of all on psychological level

- Every bike ride is you ruling the space, getting the flying feeling of from your fast move and therefore a physical impression of changing the reality on your own wish

- I'm not a specialist in medicine and may therefore sound naïve, but I know that sport makes the organism produce hormones and initiates processes inside you that improve your productivity

- Sports just give you a good feeling and a fit look. And if you feel well and look well and know you look well, you’ll do better.

When I was small I was a child who preferred to sit at home, watch an interesting movie or read an interesting book or play Lego instead of going out and play some football outside – and therefore I tend to like single sports like swimming or bicycle. That's something I'd like to be changed - but nowadays my low football skills may be a problem :(

The main thing s to get the time for sports, and this may be a problem when you leave work at 9 PM.

Yeah, now I’m motivated to go to the swimming pool tonight! :)
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From E&Y to the embassy

From 22 January 2007 – Ambassador of the Republic of Hungary to the United Kingdom.

Borbala Czako, Country Managing Partner of Ernst & Young in Hungary and Deputy Managing Partner Central Europe South worked as the TAS service line leader of the firm between 2002 and 2005. She joined Ernst & Young in January 2002 from the World Bank Group, where she worked for 10 years. She was the Chief of Mission of IFC with investment banking responsibilities in Hungary and the region. On special assignments from the WBG she worked in Washington D.C. and Africa as well.

She has extensive experience in large private sector transactions in greenfield investments, privatization, mergers and aquisitions (Westel, Matáv, TetraPack, Suzuki, Pannonplast, Rambox) and financial sector investments (Raiffeisen Unicbank, InterEuropa Bank, First Hungary Fund, Euroventures). In her recent assignments Borbala worked on securitisation, environmental, energy efficiency, SME, health and educational projects.

Embassy of Hungary in the UK

// originally read about in Accountancy, march 2007

That's a career of my dream.

Grown up in a diplomatic family, in my childhood I inertially imagined my career as a one in foreign relations - but pragmatism prevailed as when it was to decide where to go after school, and international economics was the correct decision :)

Now, as I do not work at a foreign ministry (inclusively because there is no foreign ministry I'd like to work for: neither the Russian, nor the Belarusian until it's over with Lukashenka), my only possible way of becoming diplomat is to become something comparable to Entrepreneur of the Year (as this lady did) and then be invited for ambassadorship for the sake of prestige.

Gotta do that!
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Russia: Authoritarianism Means Ineffective Economy

Right as I was writing the reply on Karolus' comment here about that foreign investors are not afraid of political risks involved with Russia, the Russian fund market started its fall. I just wonder at what stage to sell my investment fund shares.

MICEX Index last week

Yeah, and somebody thought here that democracy and economy do not relate to each other and that you can make business without taking care of politics as if it was something from a different planet. Indifference towards politics is common among my fellow yuppies and generally among Russians - they just go and vote for Putin without actually knowing a bit about what this man is.

For the Russian society as a whole the absence of democracy means the following:

- No transparency of state governance caused by lack of freedom of speech, especially in the regions outside Moscow and St. Petersburg. The media are state-controlled and therefore dependent on people in the administration and have no possibility of objective coverage of their faults

- No or blocked legal ways of influencing and adjusting the state policy: no democratic elections means no democratic parliament. Currently the only opposition party in the Duma are Communists. The governors’ elections were cancelled after the Beslan tragedy as a means to “fight terrorism” (yes, it was really said so). Instead, governors are directly appointed by the president and have therefore no accountability before the region’s population

- No guaranty of property rights, see YUKOS affair, the current raid on Russneft. In the regions the whole is, again, much harsher than in Moscow or St. Pete. Once a local authority sees an attractive business, it does not take too long for him to make the owner sell it for a low price after a couple of fiscal, medical, fire inspections coming across and after a “warm and confident” talk in the bureaucrat’s office

- Absence of independent courts and therefore no chance for victims of state despotism to bring the authorities or entities related to them to trial and, especially, to win. Judges are bought and sold.

- Monopoly rather than Oligopoly, both in politics and economy. Instead of Yeltsin era “oligarch clans” we now have the “different towers of one Kremlin”, several groups inside the ruling junta (e.g. “siloviki”, remainders of the Yeltsin “family” etc). Gazprom is becoming an anti-Utopian-style empire corporation with its own bank, media, football club, airlines and soon even armed forces. Rosneft is going the same way.

- No or blocked legal ways of publicly discussing the state policy except for the internet. Without publicity and exposure to criticism the state is limited in sources of creative ideas

- Corruption has nowadays a much greater scale than at worst Yeltsin's times


For businesses it means:

- Extra expenses on corruption: a sad but true fact is that budgets of most investment projects have bribe and kickback expenses a special article

- Extra bureaucratic burden: difficulties in registering a business, taxation – it all goes hand in hand with state authoritarianism

- General decline in [business] ethics in the society, therefore development of an unhealthy business culture and business climate.


So for all that we see a wave of non-resident investors leaving the Russian fund market last week.

I sometimes have the feeling that we are in danger to see the BRIC missing the "R" in a mid-term perspective. For this to be prevented, Russia must get back to the democratic path as soon as possible - at least to the limited democracy of Yeltsin times. A sort of a chance is coming up in 2008 where we'll have presidential elections. The elections will of course be anything but fair and democratic, but we have a chance that the new czar will be more liberal and democracy-oriented (Russia's democratic and modernization tendencies always depend on who's head of state). It seems that Putin's appointing of Dmitry Medvedev (current deputy Prime Minister) as The Kremlin Candidate would give us better chances than the of militarist former KGB-spy Sergei Ivanov, an other vice PM and #2 prospective Putin's pick.
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Work/live convergence

At the office full of twentysomethings where my girlfriend, Niki, works, everyone was comparing their salaries, and the owner of the company got really angry. And his being angry made for a tough week, so Niki asked him if she could take Friday off.

He said, “If you’re going to be successful you need to start putting your career before your life.”

Of course she took the day off.

When she told her mother about the situation, her mother said, “If you don’t put your life before work you will never be happy.”

Hearing this conflicting advice from two of the most influential elders in your life is confusing. What does Niki’s boss say to his kids when he gets home? Does he tell them to put work before life? What would Niki’s mom say to young people she works with? Would she tell them to go home early?

This whole notion of needing to separate work and life implies that your career, which takes up about 75% of your day, is something you simply try to get through so you can go home and do what you really enjoy for the other 25%. What a terrible way to live.

Interesting post at penelopetrunk.com

The main thing is that you really enjoy your work so that it does not leave your interests and potential unrealized. Plus, very important is that your friends and/or family members work with you. Plus a maximally flexible working schedule.

The answer is own business
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It's time to win

My article on the Manifesto of new generation f Belarusian politicians

- kindly translated into English by the guys from TOL blog Belarus

and

quoted on Global Voices Online
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Following a scandal

A strange feeling to find an account of one of the money laundering SPEs mentioned in a recent money laundering scandal at the bank currently audited. (see (1) and (2), both in Russian)

Russia is a country of thieves run by thieves. Everywhere you step in business, you can always expect something semi-illegal, and the further the more. Anywhere the state has a role - everywhere, absolutely everywhere there is corruption. Hardly a single sign of things like business ethics or simple human moral. And there is also a plenty of people in the West who take benefits from the Russian intransparent undemocratic regime and money laundering by the KGB&oligarchia-driven Russian semi-criminal economy, just like the former German Bundeskanzler Schröder.

Even if the article by Natalia Morar or the Frenkel Letters, about the Cyclopean schemes of milliards of USD flushing to unknown accounts of unknown people, are not 100% true, they do perfectly reflect Russian reality. In the wild 1990ies the criminals wore vulgar pink jackets, golden chains and sports pants, now they wear Brioni, drive Bentleys, have a "Yedinaya Rossia" party member's card and a "honorable veteran of the KGB" certificate in their pocket together with a second passport of some Maldive islands.

Every bank is surely involved in some money laundering, or "obnalichka" (something like the opposite of money laundering, i.e. hiding illegal usage of legally earned money) or at least tax avoidance schemes via bloody Cyprus. And while auditing it is even senseless to look for fraud, because 1) it is obviously there and 2) if you find something, reporting to authorities will not bring anything because some people in the authorities are most likely to have a share in the scheme themselves.

It's rational for people to violate over-strict and unlogical, or even harmful, laws that are not strictly defended by the corrupt state. And the more the laws get violated, the more strict and unlogical they become. We end up in a vicious circle that forms a culture of principal disrespect to laws and rules and value of evasion of legislation. That's the situation in Russia.
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Russian banks are fit for IPO

My article for The Deloitte Times on IPOs of Russian Banks. Yeah, IPO is a trendy topic they're really fit or it! ) It's good that their going public will at least nominally reduce the state's role in the banking system. Though, this fact is rather like a water drop in a desert...

Russian banks are fit for IPO

Russian banks must raise equity through IPO to secure their own finances. Alexander Chaichits Čajčyc argues they are fit for the challenge.

Russian capital markets are set to take a new step in their evolution this year with the flotation of the first major banks and other financial institutions. Two large Russian banks, Sberbank and VTB, are conducting IPOs this spring.

Sberbank is the largest national bank in Russia and one of the few with shares already traded on the stock market. A successor of the Soviet system of savings banks, it has over 20,000 branches and sub-branches, and the value of its assets is six times higher than that of its nearest rivals. The bank is also fourth among Russian companies in market capitalization. The bank’s share placement in March, known as the “people’s IPO” from the state’s efforts to distribute shares among the public, raised RUR 230.2bn (USD 8.8bn) by selling 2.587mn shares. Funds raised will finance the development of the bank for the next three years.

VTB (former Vneshtorgbank) has the second largest net assets among banks in Russia. Amongst debt issued by Russian banks, VTB’s bonds and Eurobonds have the highest credit ratings with Moody’s and Fitch. VTB’s IPO is the next step in a large-scale strategy to expand into the Western European market of investment services.

The current major shareholder of Sberbank and VTB is the Russian government, with a 99.9 percent share in VTB. The bank’s IPO will decrease the Government’s stake by to 75 percent plus one share. The state’s majority ownership of Sberbank fell from 63.7 percent to 60 percent in its March offering.

The media and business communities are keeping a keen eye on Sberbank and VTB to see who will secure a more successful IPO. Analysts predict that the stateowned banks’ IPOs are just the beginning of a future IPO boom for Russian banking.

The advantages of a public offering for banks are generally the same as for non-financial institutions. As the bank grows, it becomes unfeasible to sustain the debt/equity ratio required by the Central Bank by simply regulating loans raised. To have its two feet firmly on the ground, the bank needs to increase its equity. This may be done in three ways: by raising funds from existing shareholders, by selling a stake to a strategic investor, or by issuing equity or debt on public markets.

All three capital raising initiatives have their pitfalls. Existing shareholders are not always ready to absorb the complete issue, especially when it is a large amount. The sale of a large stake to a strategic investor requires care and precision in the search for an investor, which will in turn result in the emergence of a new power balance among shareholders, and changes to the management structure. Again, a strategic investor’s resources may not be large enough to cover the needs of a fast-growing bank.

The most reliable tool in this respect is an initial public offering. First, the market is more able to cope with a large issue than a strategic investor. Second, capital dilution through an IPO does not necessarily result in the emergence of a new major shareholder which challenges the existing power balance.

Floating a Russian bank on a stock exchange and complying with tough issuer requirements on reporting and transparency can demonstrate its business management standards. Publicly traded shares are liquid and quoted in real time, making them sensitive to the continuing performance of the bank. All this makes a positive impact on the bank’s reputation, which should potentially allow it to raise additional capital at a lower price.

2005-2006 saw the IPOs of three Chinese and three Japanese banks, as well as others in Austria, France, Greece, and the Netherlands. In 2006, two new world records were set for IPO capital raised. Both the world’s largest IPOs were from state-owned banks.

On 1 June, the Bank of China placed its stock on the Hong Kong Stock Exchange, raising USD 9.7bn. In the six months following this, the record IPO volume was beaten again, also by a Chinese bank. In October, the Hong Kong and Singapore Stock Exchanges started trading shares in the Industrial and Commercial Bank of China, which managed to raise almost USD 22bn.

Sberbank is one of just a few Russian banks currently traded on the stock market. Last year, AKB Rosbank prepared for an IPO, but the whole package was sold to a strategic investor at the last minute. Many large and mid-sized banks intend to go public, encouraged by The Central Bank of Russia. All this is evidence of a potentially massive inflow of banks’ shares to the stock market: Russian banks are considered fit for IPO. Much of the preceding IPOs’ success will depend on the pioneers, Sberbank and VTB, which explains the particular interest in their placements. Hardly anyone doubts that the first fry will be far from a flop.

Alexander Čajčyc, Deloitte
Rosbank, Russian Banks and Brokers Reports

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Tropical Moscow

The weather is purely tropical here in Moscow. +30 degrees, and we auditors as usually get sat the into most stifling room. And moreover I have missed my session of swimming pool (
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Solidarity with Belarus

The 16th of every month is a Day of Solidarity with the victims of political repressions in Belarus

One of the few things we can do to support the people struggling for democracy in Belarus.



The Belarusian community of Moscow usually puts flowers to the monument to Janka Kupała, one of the most important Belarusian poets of the 20th century who died under unclear circumstances in Moscow in 1941. There are versions that his fall from a stairs in the Moskva hotel was inspired by Soviet secret police - just as in 1999 the politicians Viktar Hančar, Jury Zacharanka, Anatol Krasoŭski disappeared [and were obviously killed] and Hienadź Karpienka died of a "heart attack" in the moment when they all were most dangerous to the dictator Lukashenka.

More photos on my Belarusian-Russian blog
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Eurovision'2007

Eurovision Song Contest

Every year everybody says that Eurovision is crap and they do not want to see it. But still, for at least several days it becomes the most discussed topic in Russian media and blogs.

The winning song from Serbia is though not bad, but nothing special at all at the same time. Just an other whiny ballad in Serbian - I even liked the Bosnian song that took 3rd place on ESC'2006 more.

Ukraine's trashy Verka Serdyuchka - that's who was supposed to win! :)

The man (hm!) is famous in post-Soviet countries for his unfunny humorist shows and sketches, and only a couple of years ago he started to sing songs that were of bad taste too but still something good for moving one's body after some vodka on a village disco.

An important topic discussed in Russia is now whether it says "Lasha Tumbai" or "Russia, goodbye!" in Serdyuchka's song. Some Russian bloggers already proposed to boycott him just as they hysterically called for a boycott on Estonian goods a week ago because of Estonian government replacing a Soviet monument in Tallinn. Ridiculous and lächerlich! As most neighbors with a complicated history of relations do, many Russians and Ukrainians don't like each other. As I have noticed, Russians express this in rudeness and aggression; and Ukrainians laugh Russians off and put them in situations where they look stupid. This is a typical case.

Russia's Serebro and Belarus' Dźmitry Kałdun aka Koldun were nothing special at all. Just an other two Eurovision songs: not bad, but not brilliant neither. Much more I liked the songs presented by Germany, Latvia, Lithuania, Ireland (I can't believe they got the last place!).

As to me, the very best song of this year's contest was Sopho Khalvashi of Georgia with "Visionary Dream". The promo video is as marvelous as the song itself!



That girl just broke my heart! The song got few votes - but that's because it's just too good for Eurovision, if you ask me.
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