Cyrillic Partners

40 Years ago today Russia lost the hero Yuri Gagarin to an airplane accident. Gagarin, the first man in space, is commemorated across Russia, perhaps most notably with the huge titanium statue in Moscow measuring 40 meters high.

Some mystery still surrounds the pioneer’s death. A 1986 report on the accident that cost Gagarin his life suggested the crash was the result of poor weather conditions and the wake of a nearby jet plane hitting its afterburners.

A 2005 investigation suggested the cockpit of Gagarin’s plane may not have been adequately sealed before take off. The loose seal would have lead to oxygen deprivation.

A bill to reopen the case and examine the sealed remains of Gagarin’s training plane was vetoed by the Kremlin in 2007.

Conspiracy theorists have had a field day with the incident, as RIA points out. Some say Gagarin was killed at the order of Leonid Brezhnev, the Soviet leader they say was jealous of Gagarin’s popularity. A Finnish source reports that he was abducted by aliens.

Whatever the cause of his death, Gargarin should be remembered for his bravery in making aviation history.

[Picture from Wikipedia]

The Amber Room, a gift from Prussian King Frederick I to Russia’s Peter the Great in 1716 and looted by Germans during WWII may now be found.

The ornately detailed room is believed to have been lost in Königsberg, Germany as the war ended. But German treasure hunters discovered a man-made cavern 20 meters underground in Germany near the Czech Republic, that may contain the looted remains of the Amber Room, they say.

It will take several weeks to dig up, the treasure hunters say. Read the whole story here.

[Image of a reconstructed Amber Room from Wikipedia]

We usually don’t cover politics—though its bond to economics is undeniable.

The link between the two disciplines stands to be even more overt in the Czech Republic, which will vote on a new president this February. The incumbent, President Václav Klaus, is facing a real challenge this year from economics professor Jan Švejnar.

Švejnar currently serves as the chairman of CERGE-EI, the Czech Republic’s most prestigious economics institute and Volha’s alma mater. He is also the chairman of one of the country’s largest banks.

Martin Jan Stránský has an interesting post about the race. He writes that it may be time for change in his country and says the progressive Švejnar is the man to do it:

Švejnar is running on a platform of EU integration, economic reform and open dialogue.

Klaus is not running on a platform based on anything, but instead claims that we should all be “familiar with his positions” based on his “previous statements and actions.”  Continue Reading »

Less than a week after VW announced it would open a production plant outside of Moscow (see story), GM has decided to join the Russian automarket, offering a bid to buy a slice of AutoVaz.

AutoVaz’s parent company, state arms exporter Rosoboronexport, was looking to offload a piece of the car maker just as GM was looking to expand into new markets. The U.S. automaker has seen its margins decline as people move away from highly-profitable SUVs and toward less-profitable cars.

GM sees Russia as an opportunity for growth. The two companies had a joint venture to produce the Chevrolet Niva sport-utility vehicle and the Chevrolet Viva sedan.

[Reuters has the story]

Germany’s Volkswagen opened a production plant in Kaluga, about 125 miles southwest of Moscow, signaling increased foreign confidence in Russia as an investment destination.

Reuters delivers the stats: Foreign direct investment surged 91.3 percent in the first nine months of this year to $19.6 billion and capital investment are up by 19.6 percent year-on-year in October, far above overall economic growth of 7.5 percent.

The auto market in Russia is expected to be Europe’s biggest by 2011, according to analysis by PriceWaterhouseCoopers.

“We are convinced that the Russian car market has huge potential and you can be sure that Volkswagen will make it a priority target,” VW Chief Executive Martin Winterkorn told Reuters. He expects 45 million Russian households to own a car by 2010.

Oskar Akhmedov, director of VW Group Russia, foresees dramatic growth in the Russian automobile market in coming years, according to a story in BusinessWeek: “The population is under-motorized,” he says. While Germany has 500 cars for every 1,000 people, Russia has only 190. Even in other former communist countries in Central Europe, the number is between 300 and 350. In Russia today there are 2.25 million vehicles sold annually. By 2015 that number will be 3 million. “Conservatively speaking,” Akhmedov adds.

[Image from TheLightIsGreen.com]

Six Apart, owners of popular advertising-supported blog site LiveJournal, sold the service to Russian Internet media company SUP for an undisclosed amount. BlogNation Russia puts the deal value at $30 million.

The service counts 14.3 million blog accounts and roughly 20 million visitors a month. Its writers publish more than 150,000 new posts a day. [Data from Reuters]

“The deal will allow LiveJournal to get the attention, and frankly, the investment, to allow it to flourish,” Andrew Paulson, SUP’s chief executive, said in a phone interview with Reuters.

CEO Chris Alden stated “This allows Six Apart to focus on their remaining three brands, Vox, TypePad, and Moveable Type. We have very ambitious plans for our remaining brand going forward.”

Eric Eldon points out the deal’s political implications at VentureBeat.

Poland has dropped its opposition to Russia joining the Organization of Economic Co-Operation and Development, a move that’s sure to make economists happy the world over.

The organization doesn’t have much in the way of real power, but it does do data. The OECD collects data from its members and puts it through rigorous testing and analysis. Then we get it and the real fun begins.

Still, joining the OECD could be a step toward economic clarity and economic efficiency. One of the organization’s programs is its Anti-Bribery Convention, which went into effect in 1999.

Coverage of the news from RussiaToday. The AFP has this useful bit of context: Relations between Warsaw and Moscow have been at their lowest ebb since Poland broke free from the communist bloc in 1989, notably because the Kremlin was riled by what proved to be crucial Polish support for the pro-Western “Orange Revolution” in Ukraine in 2004.

[Image from Wikipedia]

Microsoft has decided to open a datacenter in the northern-most regions of Russia, a smart move, designed, no doubt, to take advantage of inexpensive energy the region can afford.

The New York Times has the story. The company has yet to choose a site for its operations there.

The country is working through its e-government strategy, an initiative designed to deploy information technologies in government agencies.

Technology companies will increasingly see gains from operations in Russia, and inexpensive electricity to run datacenters is just the beginning. There’s a great wealth of human capital just waiting to find good opportunities.

Russia and Italy agreed to build a natural gas pipeline under the Black Sea, skirting the former Soviet republics of Ukraine and Belarus, which have recently been giving Moscow a hard time.

Details, as covered by BusinessWeek:

If completed, the $10 billion (6.74 billion euros) project would run more than 560 miles under the Black Sea and through Bulgaria. It could eventually distribute gas to northern and southern Europe, with an estimated annual capacity of 30 billion cubic meters (1.15 trillion cubic feet).

“The South Stream project is of strategic importance for Europe’s energy security,” Putin told reporters. “It is being implemented based on principles of transparency and taking into account interests of energy suppliers and consumers.”

Prodi said Russian energy and the EU go together like “vodka and caviar.” But Europe must be mindful of the ramifications of such a culinary combination. Letting Russia supply 40% of the EU’s natural gas and a third of its oil could result in a diplomatic hangover.

[Image by AFP’s Ria Novosti]