Arts update on the Bolshoi… oh, and something new on Tartarstan

I have finally caught up with the sadly inevitable news that the Bolshoi’s main stage – under restoration since 2005 – will have its opening delayed yet again. At least, though, I shall still (just) be here to enjoy the old girl again. Before it closed, I only went there about a dozen times and, in retrospect, it is kind of worrying that the cracks in the building were so bad we were all, in fact, just one overly-resonant top ‘C’ from the great chandelier coming crashing down on us all in the Stalls.

And to think much of the real damage was done to the old girl from the ground-crackingly deep extension being built next door at Tsum. I hope someone has sent Tsum the appropriate bill…

Bolshoi snobs decry the ‘New Stage’, where the Bolshoi hangs out these days. Actually I quite like it. Sight-lines and acoustics are fine. Well I usually sit Stalls’ rows 1-5 for ballet; 5-10 for opera, so from there it’ll always look and sound superb.

There hasn’t been a huge amount on this month to grab my fancy; but in the last week of February I have booked:

The Mariinsky (formerly known as the Kirov - the naming of it is a tale in itself), on tour at the Bolshoi. Thusly to reignite that old debate, ‘which is the better ballet troupe? Bolshoi or Kirov?’

I have also scored, from my usual dealer, a night of three one act ballets – including the Twyla Tharp (about which I have written here, here and here). I am conceivably hooked on this piece.

In between I am going to the Stanislavski-Nemirovich-Danchenko to see (fourth time?) them dance Chaika.

Tartarstan - a quick shout out: spin-merchant, Mmd, has published a regional guide to Tartarstan. Fascinating place: and to think at one time its secession was considered much greater a threat to the survival of the Russian Federation than Chechnya’s. Much redistribution of assets there right now and plenty of investors piling in. My humble advice? You need brass balls to invest there. Potentially very high returns 'tis true; potentially, also, huge political risk 2009 onwards: ‘velvet-reprivatisation’ definitely a risk.

Trivia: it seems that Barak Obama and the Tartastani share nearly the same catch motto (Buldırabız! - We can!), or so it seems…

Nerd that I am, I am staying up until the small hours to watch the exit polls come through from the USA.

Off-topic but worth it: political zeitgeist for the post-hiphop generation

If I were a US Citizen, I would undoubtedly be a registered Democrat, and a political-factoid nerd. I love elections, any election - I would run a campaign for City dog-catcher if asked - but US elections are the summit of the hack-heap. By inclination, I am a Hillary fan. Sadly, then (in that context), I suspect Barak Obama has the big mo' and will triumph on Super Tuesday.

Ahead of then, this has popped up on YouTube: 'Ich bin ein Berliner' for the hip-hop generation:

Expat postcard: moody crustacea, bootboy rebels and guns

I am in a strop with Arkady Novikov: Moscow’s eponymous Restauranteur. Knowingly or not I kind of live in his elitny eateries, for both business and pleasure. Last night I was having a crab-fest at Nedal'nij Vostok – Kamchatka crab at its best – with a tiny splurge of Beluga which, if not ecologically-PC, was damned fine. Life in Moscow without Novikov restaurants would be much less onctueuse.

Nedal'nij Vostok is cuisine-butch. Go for one of the tables near the central, open-plan kitchen and watch the kitchen floor-show. Watching a live lobster being sashimied is a curious experience. The chef took one lobster after another, lovingly stroked each down the back of its shell with the blunt side of the knife, before dispatching it, Roman-style, tip of the knife’s blade quickly through the thorax. Then he sliced the still-moving lobster in half, from jaw to tip of the tail. After being bisected, the legs still move for quite a while. My fellow diners were horrified, but I was fascinated, and vaguely recall its movements are more reflexive than brain-driven. Aesthetically this is gunk-free slaughter.

So why the strop with Novikov? My favourite deli in town, Globus Gourmet, has stopped accepting Novikov discount cards. Added to the fact that neo-Novikov joints, Vanil and Indus, have also stopped taking the cards, frankly I have to question why I shell out RUR 10,000 for it (10% off restaurant bills, 5% off shops, caterers and …er…a luxury florist). My card expires in April and I am not sure I shall bother to renew it.

The other day, after a breakfast meeting in (Novikov's) Vogue Café, I decided to drop into the Marriott Aurora Hotel to have my shoes cleaned by the boot-black there. Every two weeks or so I send my housekeeper to the Aurora’s boot-black, with all my boots and shoes (other than the ones I am wearing) to be cleaned. It is an indulgence of the essential, ordinary kind. Especially in a city whose streets are as filthy as Moscow’s in winter.

Incidentally I am nervous about the phrase boot-black: I hope it means ‘one who blackens boots’, rather than ‘the black person who cleans your boots’. The phrase being originally American, I am uncertain as to its proper etymology. But, anyway, bootblack is the phrase I use: shoe-shine boy sounds ridiculous after-all.

My capitalist-but-liberal sensitivity is enhanced by the fact that, in Kyiv, the rather ancient bootblack I prefer is, actually, black (remember seeing a non-white face in Kyiv is rare indeed). And fascinating.

Originally he was a Moscow-backed rebel leader fighting for the MPLA in Angola in the 1980s, but then he found himself in exile in the Moscow of the USSR. Somehow he ended up in Kyiv, with wife and child, just as the USSR collapsed and his Moscow-pension disappeared with the Great Struggle. So there he is today – half a planet a way from the home from which he is exiled and can never go back, his patron-state having disappeared – seemingly utterly forgotten. And now he cleans shoes at the Dnipro Hotel in Kyiv. He does an excellent job, BTW. Tip generously. His life story is well worth hearing.

PS: go the Dnipro hotel only for your shoes to be cleaned. It is an awful dive: more whorehouse than hotel; although very popular with regional government officials; Scandinavian engineers and – oddly – Italian importers. The restaurant is Soviet-era ghastly.

This week has proven very long, but somewhat typical of Moscow-business-season. I particularly enjoyed the 20.30 meeting (which went on until 23.45) close by the airport; at the office of a mini-oligarch. I counted 7 armed guards from entrance to boardroom: you don’t see as many armed guards as you used to in Moscow offices. The city is getting soft. Or more subtle.

Potemkin Economics? And a wry aside way off topic…

A friend and colleague points me to remarks made by Prime Minister Victor Zubkov, at a meeting with the management of the Syktyvkar timber processing business:

"You are in great luck - you run your business in the most stable country. The financial crisis [elsewhere] in the world will, of course, affect the operations of many enterprises abroad.

“You work in a stable country, with a stable political system, stable taxes: that is why your business is on the way up"

And who can blame the Russians for enjoying the economic weakness of America, as they also take advantage of US foreign policy log-jam in Iraq?

But two sets of stats out of Russia give pause for thought and remind us that Potemkin economics is never far away, as a risk. Beyond hydrocarbons – whose pricing can be highly volatile if world demand falters on US consumer-led recession, not least in terms of demand for Russian raw materials from China – I think that the big economic risk for Russia 2010-2015 is that the manufacturing base won’t cope with burgeoning demand and that this will see the benefits of consumer demands leak away to overseas manufacturers.

The early signs of this may already have begun, if the Institute for the Economy in Transition is to be believed (noting, of course, that the IET is a vehicle for Yegor Gaidar, whose views are hardly neutral). At the same time, Russian wage inflation continues to soar; way out of kilter to GDP growth.

This is good, at this stage of the election cycle, for the ruling elite to shoe-in Dmitry Medvedev as President, on a landslide victory. In the long term, however, the combination of soaring wages and manufacturing capacity growth seriously lagging behind, leads to structural mess in supply side economics, and doesn’t bode well for President Putin’s laudable, long-term economic ambition: diversification of Russia’s economic base (away from oil, gas and metals).

An increasingly wealthy, free-spending Russian consumer is good electoral politics – and makes the retail sector and retail/warehousing real estate a strong buy – but it may lead to economic gains being lost to ramping inflation.

Now don’t get me wrong. Russia in 2008 will still bring in one of the world’s best GDP growth performances in 2008. But it won’t be entirely unaffected by the recession in the USA and Europe. For the reasons mentioned elsewhere, I would guess GDP growth in 2008 will come in under the Russian government’s forecast of 6.4%: I would say closer to 5%. Inter alia, this does suggest a tighter leash on P/E-led valuations for stocks on the Russian stock exchanges.

Off topic?

Ah yes. The humiliation and fall of UK Conservative MP, Derek Conway (who decided the public purse was a good way of ‘keeping it in the family’ and whose political career began its death tonight).

Some years ago – when he was between seats in Parliament having lost his seat in the 1997 UK General Election, he was casting about for a job in political lobbying. Not getting one he decided to go it alone. At the time he said: “I have met these New Labour Consultants and basically all they know how to do is pour gin & tonic for Peter Mandelson” (approximate quote as I can’t find the original).

He was talking about me.

The prat had come to me for a job and – not thinking much then of his brain or his understanding of what people like me do for clients – I politely sent him on his way. His sneering comments came a week later and, Tory mates at Westminster (I had, and have, a few bizarrely) pointedly said he had me in mind...

Well now, mate, you can pour me a G&T.

In pursuit of further randomness

At 04.00 am the snow-plough that helpfully clears our streets of this weekend’s heavy fall slightly prangs the Lexus parked below my bedroom window: its owners sleep more heavily than me so I listen, sing-songly, to the car alarm for 24 minutes (2 ½ minutes of alarms, in nicely varying tones, followed by a thirty second interval of silence, before it starts all over again).

As the snow-plough withdrew, taking what I guess was a fender with it; it made a soothingly crunching sound…

So, 04.09 am, I find myself thinking about ruble re-valuation – apropos yesterday’s post – it comes to me that there is a very good reason for Russia to re-value.

The Ruble is storming in the forex markets; and structurally has lots of strength to come. Russia hates the US dollar ideologically and, given its last four years’ performance against the RUR, Russia hates it financially as well.

An OPEC-for-gas between Russia, Iran and Qatar (that gas-field with a flag) is looking more likely. But would they want to price gas in USD? They would not. If you had an OPEC-for-gas it would be their choice as to their pricing currency. The Euro is a possibility, but ideologically, the Euro is hardly more popular with either Russia or Iran.

Why not piece gas/MMbtu in Rubles? You revalue the Ruble – at, let’s say 1 RUR = US$4 – and then it makes a good reserve currency for gas. And Iran would love it. Qatar would not object. Ruminations on Russia had a pithy comment on why an OPEC-for-gas should not work; but since when did economics get in the way of ideology?

And why not change the reserve currency for oil? You see Venezuela complaining? (actually, I think China and Japan would, so scrap that). And friends in the Gulf tell me the Emirates and Saudi are sick of their currencies, pegged to oil prices of course and therefore to the USD, slip-sliding as well.

The Ruble as the reserve currency for hydro-carbons? Oh yes. Definitely a possibility. And a *huge* political win in Russia. Instant hero-status for a newly-minted President Medvedev: “Russia *is* the beating heart of the world economy” etc. Fab spin.

Separately, a great brokers’ note from RenCap today, on matters Ukrainian:

“The government has prepared a decree allowing customs and the tax service to countermand 'illegal' court rulings….

“The aim of the new measure is to reduce corruption in the judiciary, sending a message to bribers that the rulings for which they pay will not be enforced, and to judges that they will be held more accountable in future.

“Though the intention is laudable, we think any measure that allows court rulings to be ignored, no matter how exceptional the circumstances, is a fundamental threat to the rule of law and gravely misguided. Unless the government provides substantial clarifications as to how its idea will work, it risks sending the wrong signals to the investment community and electorate alike.”

Personal experience reminds me – having had a client on the shit-end of this stick – you can buy a Ukrainian Supreme for about $50k a decision. Remind me, why was the Orange revolution such a break with the past?

Democracy, with out an independent judiciary, is not progress at all. There is no democracy without rule of law. And there is, literally, more rule of law in Russia.

Blogging tonight in my usual haunt – memo to self: sort out home Wi-fi – I can barely hear myself think. There are only 11 people in the bar. Six of them, sitting together, are damn near shouting. Every other word is ‘f******’; they are drunk and being staggering sexist; indifferent to the fact that all the staff speak fluent English. These are braying, arrogant, appalling expats: 40 minutes in their company and I am coming round to Zhirinovsky’s POV.

PS: if you are about to do business with CB Richard Ellis in Moscow, tell them to have their boys learn how to behave when out in public (the downside, boys, of loud, drunken conversations is we know who you are!). Although illuminating to hear one of you say: “I won’t get out of bed for any deal worth less than 1,000 sqm to me”; which at current market rates I calculate is about $83,000. Tossers!

Three more random facts of life in Moscow

There’s an open-air pop concert on Pushkinskaya right now. Of course there is! After all, it is only minus 3 out there. I am blogging at the bar of Scandinavia: my internet router at home has died and I am taking advantage of their free (and fast) Wi-fi. While down the street, on Tverskaya, by the old Telegraph building, the regular rock band is holding its weekly impromptu concert; it draws a hardy but enthusiastic following which somehow manages to dance despite the lethal sheet black ice all over the sidewalk today.

Separately, rumors from two sources (one close to the CBR) reach me that, in April, the Central Bank will revalue the ruble. By 100 times! (this would be the eighth 'modern' Ruble.) This has been whispered before and April would make perfect timing. How better for President Medvedev to settle in and underline Russia’s roaring new strength than tell people ‘the new Ruble is worth US $4!’ (and would buy GBP £2). We’re talking new banknotes here, of course, rather than an excuse to place a big play on the forex markets.

Of course, ever trying to seek the underlying meaning of things – and you know you’ve been here too long when you do that about everything – I wonder whether such an announcement will be tied into a development about that much-heralded Federal Union of Russia and Belarus. And if that happens, then what will VVP plan to do then (new constitution, new career possibilities?)? Well, I'll stop theorizing there…but the next Belarus-Russian summit has just been announced so…

Anyway, finally, Friday we eventually had our staff ‘Old New Year’ party. I let the choice of venue / event / format down to the team (my job is just to pay the bill, after all and it is *their* night). In other countries, staff parties have tended to be of the dinner/dance variety. But my team – a quietly studious lot in the office (yeah, right) - like to party when they let their hair down.

Last year was a raucous affair in a Cuban dive off Taganskaya Ploshchad: with, I gather, the dedicated hard core partying until dawn, fuelled on absinthe, so I hear. Suggestions for this year included taking over a banya (an idea which I quietly, desperately, vetoed). They opted instead…for a karaoke extravaganza.

Oh well.

Actually it was huge fun. They had booked out the slightly Ottoman-looking ‘VIP’ lounge at the Jelsomino Café on Petrovka Ulitsa. Made famous by the fact it was ‘graced’ by Paris Hilton that extraordinary time when she was paid $2 million dollars to visit Moscow for Fashion Week. Completely sound-proofed from the public club, it is way cool and unambiguously ‘lounge-lizard’. When I did venture out public-side, for a toke on a sly fag, there were clearly some wannabe-boybanders out for a vocal warm-up.

It is the classic New Moscow yuppie night out (I am sure there is a better word for such a nomenclature, something more authentikny: does either reader know one?).

The evening featured:

- VIP room draped in silk everywhere
- Bottles of Irish whisky (my team are so cute they know how to get to my good side) – actually only in Moscow do I consider it perfectly normal to order whisky by the bottle; like those Saudis I used to know who holidayed in Lebanon when I was there. Obviously everyone was drinking whisky because there seemed to be three bottles on the bill. Martini Bianco seems to be the ladies’ weapon of choice
- Vast plates of sushi: actually the rice-green fish roe-eel thingy was disconcertingly tasty
- The singing. Oh yes the singing: the guys are all very talented at what they do but, boy! half of them could seemingly be entrants into ‘Russian Idol’ (dance moves included).
- Party games (yay). My guys love ‘em!

I like to think my 01.00 exit was still dignified. I did just once sit back and watch them have a ball and think “gosh, they are wonderful”. Four years ago there were just six of us (none too brilliant the crew I inherited and I out-placed and re-hired PDQ). Now we’re 30-odd. I have been running teams doing what we do for 12 years: and this lot, of all the teams in all the countries… well, when the time comes, I will miss them a lot.

Why Kosovo should not become independent: and how Russia is not helping Serbia’s cause

Today I was more than mildly amused by this piece in the alerts I receive from http://www.businessneweurope.eu/; the actually rather good news service I subscribe to for central and eastern; south eastern Europe; Russia and central Asia:

Hollywood stars to back Serbia over Kosovo
Bne

Hollywood stars George Clooney and Sharon Stone have voiced support for Serbia's attempt to retain control of the breakaway province Kosovo, according to a report by Serb language German daily Vesti.Clooney said "I will, with my colleague and friend Sharon Stone and her childhood friends, who are of Serb origin, organize a protest soon over the attempt to have Kosovo declare independence," the paper quoted him as saying. The Serbian news agency Tanjug reported on January 21 -- citing unnamed foreign media -- that two other stars, Sean Connery and Richard Gere, have also voiced support for Serbia's case.-18-240108

[Incidentally, the great thing about BNE is the investment banking, banking and corporate newswire service it has. Its political commentary, while colourful, is I find a little more eccentrically hit-and-miss].

It is often pre-supposed that all Westerners support independence for Kosovo. Not true.

This is not because I am slavishly pro-Slav: the pan-Slav political bloc, as a cohesive geopolitical force, has raised its paranoia to an almost psychotically delusional level. The world is not pathologically anti-Slav. Moreover, not supporting an independent Kosovo is not, for a scintilla of a moment, to excuse the appalling behaviour of the Milosevic-era Serbian state in the 1990s. NATO was right to intervene as it did in 1999. Still, it is nice for once to be on the same side as some liberally-minded celebs...

Breaking the world up into ever smaller and smaller micro-states, based on ethnicity, is not a sensible way forward. It only serves to enhance ethnic and religious divide in the world, not establish sustainable cohabitation. Microstates:

- Find it more difficult to protect citizen interests against the behemoths of global super-sized corporate giants
- Generally suffer in global capital and foreign exchange markets
- Find infrastructural investment more difficult and more costly per unit
- Over-spend on central government services as a proportion of GDP and yet, paradoxically, find their ability to fund social and welfare programs more compromised
- Are more vulnerable to global economic shocks
(And these were just the reasons I pondered on the Metro home tonight).

In the giddy heyday of the post-Cold War era, we were all (I think) much taken with the concept of soft power over hard power. As Britain is finding in its relations with Russia today, soft power doesn’t work: it is no power at all. Dividing Europe into ever smaller and smaller pieces – and this applies just as much to ETA-conceived Catalonia; and to other would-be secessionist regions - only serves to weaken the voices of European citizens, not to strengthen it. It goes against the grain of developing a multi-polar world and, frankly, only America stands to benefit.

Russia and China – not only for the obvious reasons of Chechnya and Taipei, respectively – oppose secessionism. But for Russia this is a rather… er… nuance-lite argument based on Slavic nationalism, religiosity and, in short, a ‘grand plan’ spoiling of US and EU/NATO policy in the Balkans (‘Russia getting back into the Balkan game’). It is hardly noble: nor, to date, terribly effective.

A much more reasoned argument for Russia – using both hard power and elusive soft-power – is to demonstrate the constructive benefits of keeping a unified Serbia. Which, BTW, includes the Russian government stepping up to use its now vast wealth for infrastructural and industrial investment in Serbia, including in Kosovo: on an ethnically-blind basis. Allowing Gazprom to buy Serbian energy monopoly, NIS, is not what we’re talking about here. We’re talking structural, long-term macro-economic aid.

It would make a nice change for Russia to be someone else’s deep pocket of last resort; rather than relying on the EU/EBRD. Ultimately, Serbian policy, over the long-run, will follow the money. Selling off energy assets aside, Russia shouldn’t be too surprised if a weakened Serbia has no option but to follow an EU/NATO track (because enlargement-era history shows you can’t join the former unless you’ve joined the latter).

There is a good case to make for keeping Serbian intact: but Russia isn’t making it.