a-g-spot

A Clean Slate

2007-06-24T01:45:00.000-04:00

Russia's a very strange place. It can alienate you, make life difficult for you, make you regret you ever heard about it. But once you're gone, Russia has an even more strange way of staying on your mind. For the past year since my return, I've been casting off the little things about Russia and Moscow that had crept into my life. It's been a slow motion ceremony of closure. This weekend I took one of the last, and perhaps most obvious, measures; I shaved off the beard I had grown while on the road in Siberia.

The beard was born from a lack of hot water and otherwise inconvenient accommodations while I was travelling in April and May last year. It certainly wasn't my style - I have never gone more than a day or two without shaving - but it somehow ended up fitting my image of myself. It was a semi-romantic notion I had about a russophile trekking across the great unknown spaces of Eurasia, on his own with his wit to survive. Of course, reality was a little bit different. I sipped tea on comfortable trains, went to ballets and operas, and never really lacked for anything. As far as travel goes, it was on the low end of adventure and not on the hardship scale at all.

Reality began to set in slowly when I returned. I liked the beard and thought it looked pretty good. But having a beard is an active commitment - the trimming, the daily careful shaving around it, etc. It became apparent that the maintenance aspect was an unseen cost of the rather passive decision to grow the thing in the first place. It no longer really made any sense to me.

So, I lathered up my shaving brush with a beautiful sandalwood soap and shaved my entire face for the first time since mid April 2006. It was a satisfying experience - the smell, the sensation, the scratching sound of the razor. When I rinsed off the suds and looked at myself in the mirror I was startled by the change.

I suppose I look the same now as I always did for all that time that I didn't have a beard at all. But then, how could that be possible? All the things I had seen and done in the meantime have surely made me a different person. And now, in that brief moment in the mirror, it seemed that all my experiences had been stripped from me, negated and washed down the drain.

Of course, that's a rather poetic overreaction. But for a flash, it seemed like I had turned the clock back 14 months. Of course, memories and experiences don't even need physical form to seem real to us. And, I have my blog and wonderful photo albums to recall my time abroad. So there was certainly no need to feel that shaving my beard from Russia had in any way distanced me from that time in my life.

I came back to my senses and had a little laugh in the solitude of my bathroom. After all, everything was exactly the same. And it was all extremely different.

Arms Length Self Portraits

New Family Ties

2007-06-15T01:26:00.001-04:00

In May, the Alfa Fellowship held its first ever alumni function here in NYC. All the important players from Moscow were there, as well as an impressive complement of former fellows, future fellows, and associated dignitaries. The press release does it better justice.

Russian Business Leaders Mikhail Fridman and Peter Aven Recognize Alfa Fellows

New York , May 22, 2007 – Over 50 Alfa Fellowship Program Fellows, alumni, and friends gathered on the evening of May 18 to celebrate the inaugural Alfa Fellowship Program Alumni gala. Distinguished guests and speakers included Mikhail Fridman, Chairman of the Supervisory Board of the Alfa Group Consortium and of the Board of Directors of Alfa-Bank, and Peter Aven, President of Alfa-Bank. Also in attendance were Ambassador Vitaly Churkin, Permanent Mission of the Russian Federation to the United Nations, and Consul General Sergey Garmonin, Consulate General of the Russian Federation in New York .

CDS International, a New York-based nonprofit organization dedicated to promoting international business training and intercultural exchange, collaborated with the Moscow-based international education and cultural exchange organization, Center for International Fellowships, to organize the Alfa Fellowship Program's first alumni meeting since the program's inception in 2004. Mr. Fridman delivered the keynote address and Mr. Aven presented awards to the Fellows in recognition of their participation on the program. During his keynote address, Mr. Fridman stated, “As Russia and the United States move farther from the days of the Cold War, it is vitally important that we each develop a thorough and accurate understanding based on the new realities which form the modern Russian–American relationship. We believe the Alfa Fellowship Program is one way in which this understanding can be fostered and enhanced, and we are proud to sponsor the program and look forward to its continued growth in the future.”

As mentioned, each of the returned fellows in attendance received a beautiful plaque commemorating our participation in the program. Its very nice looking and I have decided that it will be a central item on my "wall of power". I learned about the wall of power from Arkady, our director in Moscow. In his his restaurant, one corner of the lounge is covered in photos of him during his political career as an early democrat and Yeltsin man. Its really very impressive. I'd like to have one too, someday. So here's my first piece.

Perhaps we should all have one little corner where we display our bona fides, if for no one else but ourselves. It could serve as a mirror that reflects far more than just the physical. A mirror of our professional appearance lest we forget how we look to other people.

Anyway, one purpose of the meeting was to begin setting up an alumni organization for the returned fellows. Alfa and CDS would like us to create the stateside network for the Alfa organization. It really sounded like a good idea to the dozen or so of us in attendance, so a steering committee has been formed to start putting ideas together.

Somehow, my job was to come up with a vision and mission for the soon-to-be-formed organization. Perhaps because I waxed philosophical during our meeting about how we have a unique voice in the Russian-American dialogue and that we should be aggressive in our vision. After all, an enormous bank and a leading international educational exchange facilitator would like very much to provide us with any resource we could possibly need.

Of course, all meetings of Americans interested in Russia eventually end up in a bar. I'm sure I made good points, but I have to confess that I waxed even more philosophical than before. Since we're still in the vision stage, its acceptable. Right?

Bookstore Now Open

2007-05-20T23:04:00.000-04:00

Publishing, it seems, has become a hobby.

My photo books have received rave reviews from friends, family, Russians, Russophiles, and photographers. So, I've decided to offer them for sale here through the publisher's website.

In addition, the publisher now has blog functionality so I'm happy to announce that the entire blog (excluding this entry) is now available as a bound book. It's every entry ever made and a few additional photos. So, click here and grab a copy of the a-g-spot for the sake of posterity.

The small advertisements for the books that appear on the left hand side of this page also serve as links to the bookstore.

The publisher, of course, is blurb.com. The quality of these books is absolutely top notch. Even if you don't buy a copy of my work, please consider using this company for your own projects. They make it very easy to create impressive and high-quality books/albums/folios at a very reasonable price.

Another Look

2007-02-18T01:31:00.000-05:00

I just completed a class called "Economies in Transition" about all the former communist countries and their respective paths to market-based capitalism. This was a very challenging course, a sense of uphill battle against time made all the more pressing by voluminous readings and long lectures listing the hurdles that these countries faced. The impediments to not just success, but a state of 'non-failure', are so many that the current economic condition in most of Eastern Europe seems almost miraculous.

At the end of the course, we were required to submit a paper. Of course, my interest being what they are I strayed back into looking at equity markets. Here's what came of it. (footnotes didn't convert to the blog. If you really have to know, I'll send you the full text on request!!)

Emerging Economies, Emerging Markets:
Equity Markets in Russia and Kazakhstan

Russia and Kazakhstan Are Getting More and More Attention
Russia and Kazakhstan are two of the more prosperous former Soviet states. Despite their comparatively authoritarian political systems, the governments are relatively benign compared to successor regimes in most other soviet republics. As such, economic prosperity sparked by strong global natural resources demand has translated into better domestic prosperity and increased attention from Western investors. Indeed, equity markets in both countries have surged over the past few years. There are two principal reasons for examining these markets in the context of their domestic economies: First, understanding how these economies in transition have reached this point is important in characterizing expected, or continued, interest from overseas investors; Second, understanding the status of nascent equity markets in such emerging economies will determine whether those same investors will be able to participate in an historically rare opportunity.

The Oil Boom Has Changed These Countries
Natural resources in general and oil in particular have lifted the fortunes of both countries in the recent past. Russia and Kazakhstan are important producers of energy assets in an increasingly energy starved world. In fact, Russia is second only to Saudi Arabia in net exports of oil, and first in natural gas. Kazakhstan, meanwhile, ranks 14th in net exports of oil and has an attractive natural gas sector. Not surprisingly, such large export volumes of an increasingly valuable commodity mean that the energy sector represents a significant percentage of national accounts. For example, the World Bank estimates that the petroleum industries in Russia and Kazakhstan probably accounted for 25% and 30% of GDP, respectively, in 2006. Indeed, the impact of rising global oil prices certainly has been a significant factor in the strong GDP growth in both countries in the beginning years of this century.

The Macroeconomic Backdrop is Very Positive
Recent oil prices have certainly provided a favorable tailwind for both Russia and Kazakhstan. Thanks to those exports, both countries now run significant current account surpluses, with Russia’s at about 8% of GDP. A persistent effort by the central banks to “sterilize” the foreign currency inflows means that foreign currency reserves have skyrocketed. Russia’s hard currency reserve of $305 billion is third only to export powerhouses China and Japan. Kazakhstan’s meanwhile, topped $15 billion at the end of 2006.

While certainly an encouraging external environment, both governments have exercised notable internal fiscal restraint in the face of a huge cash infusion. In an effort to forestall a case of “Dutch Disease”, both governments have attempted to segregate the inflows by setting up funds where the oil windfalls can be isolated and kept out of the annual budgetary process. These “stabilization funds” have been earmarked for special infrastructure and social expenditures in the future. Russia’s stabilization fund is now about $88 billion and Kazakhstan’s topped $13 billion at the end of 2006. Tax rates on natural resource extraction and the legislation creating the stabilization funds lead observers to believe that the windfall accounts will continue to grow as long as the price of oil stays over $27 per barrel.

With the bulk of oil revenues isolated in these special windfall funds, the governments have still exercised good fiscal management. Russia runs consistent budget surpluses as high as 8% of GDP while Kazakhstan usually maintains a net neutral budget process.

Both Countries are Moving Beyond Oil
The oil revenues, and the positive outlook for prices in the near term, have certainly been a welcome windfall. This is especially true given the rocky road to global economic integration that both Russia and Kazakhstan may have faced as transition economies if they had not had such desirable natural resources to rely upon. Future growth, however, will likely depend more on how quickly these countries diversify their economies. While economists don’t generally oppose resource abundance as a path to growth, resource dependence is often considered an impediment to meaningful long-term economic expansion.

As a legacy of the centrally planned Soviet economy, neither country has any other significant export industry where it exhibits a comparative advantage. This has made the economies very reliant on revenues from oil. Indeed, despite efforts to sterilize the influx of oil-based tax revenue, Russian GDP in 2005 may have increased as much as 0.4% for every dollar that the prevailing oil price exceeded a baseline of $24 per barrel.

Revenue diversification is a major topic in both Russia and Kazakhstan. Each government intends to deploy assets from the stabilization funds into national infrastructure of both a human and fixed capital nature. More specific Russian ideas to boost research and development spending as a percentage of GDP through grants and tax credits aims to spur growth in the high technology and small business sectors.

Inadequate Domestic Financing Leads to Foreign Financing
A key characteristic of most emerging economies is that they lack sufficient capital to fund internal development. This is certainly true in both Russia and Kazakhstan. Despite burgeoning foreign direct investment, capital inflows to industries outside of the oil and gas sector remain rather inconsequential. Indeed, even FDI with gas and oil investments is still lower in these countries than in other emerging economies.

While Kazakhstan has a relatively robust banking system that extends credit to commercial enterprises even in its neighbor Russia, Russia is still hobbled by its relatively weak banking infrastructure. This is evident in the number of cross-border transactions that Russian natural resource companies are initiating. That is, there remains no effective mechanism for the ample capital generated by natural resources companies to circulate back into the domestic economy. In fact, commercial loans account for only 17% of GDP there when they usually account for more than half of GDP in developed countries.

The net effect of this is that companies often have to consider overseas investors for at least some part of their financing needs. As a result, the domestic capital market is heavily financed by foreign investors. Indeed, Russian and Kazakh companies often list at least some portion of their shares outside of their home markets. Current Russian legislation dictates that new issuers list at least 30% of their shares on domestic markets, leaving companies free to raise significant amounts of capital in London and New York. While the tightened US regulatory environment in the post-Enron era has led to a lack of new Russian issues on US exchanges, there are still some 60 securities listed either directly or through ADR programs. London has become a more desirable destination since, and the LSE alone has 70 listings between its main exchange and its AIM board .

There Are Other Factors Contributing to Economic and Market Growth
Increased foreign interest and involvement on the domestic equity markets in Russian and Kazakhstan, however, are only a contributing factor to the explosion in those indices. Each country has important domestic trends that are also significant contributors.

Both countries are inheritors of the Marxist legacy of underinvestment in consumer products and services. For example, services accounted for only 35% of Russian GDP in 1990. Now that the prevailing ideology is no longer hostile to providing personal services, that sector of the economy is free to grow. The World Bank estimates that, as a result, services topped 57% of GDP in 2005 .

The centrally planned economy was faced with chronic housing problems thanks, at least in part, to its allocation of resources to military and heavy industrial projects. Now, market forces are rushing to compensate for the longtime underinvestment in both commercial and residential real estate. In 2005, for example, construction and retail trade accounted for almost 50% of the expansion in GDP .

Both countries, as mentioned, have plans to use the stabilization funds for increasing R&D spending. Some officials look to boost the participation of small businesses in the economy by using the oil windfall as a sort of national venture fund . While plans are not certain and implementation may be questionable, any effort to create a meaningful small business sector should add to the economic vitality and diversity of both countries.

Other forms of support for market growth can be found in financial reform. In Russia, for example, the government is converting the national pension system from a pay-as-you-go system to a system with at least some portion of self-directed investment accounts. The PIF, or mutual fund, industry has seen steady inflows from middle-income Russians as they shift a portion of their salaries into the capital markets.

As a result of strong growth in other parts of the economy, oil has become proportionally a bit less important. That is, oil related companies accounted for 66% of the Russian stock market in 2005, but only 60% in 2006 . Given a relatively stable to declining outlook for global oil prices, the energy industry’s representation in the Russian market is likely to decrease further still in 2007.

Equity Markets Look Poised for Continued, and Balanced, Growth in 2007
Russia, with its 6 initial public offerings raising $17.4 billion, ranked among the top IPO markets in the world in 2006 . This tally was certainly helped by the placement of the enormous Rosneft flotation. Indeed, Rosneft was a watershed in other ways. The strong domestic demand for the shares has led to contemplation of a regulatory change. Instead of offering 30% of shares domestically, Russian regulators now believe that the home market may be able to absorb as much as 50% of new issues.

In any event, strong domestic market demand has prompted other companies to announce their intentions for public offerings. In late December, the tally of announced flotations stood at 10 companies intending to raise $21.2 billion . The list includes state-owned financial giants SberBank and Vneshtorg Bank as well as retailers and a technology company. Notably, about two-thirds of the total funds would be raised by companies not in the natural resources sector.

Market Structures are Well Developed, But Still Evolving
Capital markets in the former soviet states have gone through several incarnations already since their founding in the early 1990’s. They continue to evolve as their respective economies transition further away from the centrally planned legacy. Already, though, they have begun to serve important roles in their domestic economies. By linking capital-starved sectors of the economy to foreign and pent-up domestic funds , these markets are serving the critical function of capital allocation to growing businesses that equity markets do so well.

The Russian equity universe comprises around 750 issues of all types of share classes. Total capitalization has surged with higher valuation and a larger number of issues coming to market. In general, though, issues are separated into as many as 3 “tiers”. Definitions are not standard among market players, with some focusing on company market cap while some others make distinctions based on trading volumes as a percentage of float, or liquidity.

The equity market is dominated by two exchanges, the Moscow Interbank Currency Exchange (MICEX) and the Russian Trading System (RTS), which together account for more than 95% of total trading volumes. Some regional exchanges have maintained relevance in the consolidated national market by developing specialized trading in certain issues. In particular, the St Petersburg exchange focuses on trading shares of Gazprom.

The MICEX is two years younger than the RTS exchange, but handles much more volume thanks to its advanced technology platform that allows a higher proportion of remote trades. The exchange focuses on trading the top 150 most liquid issues in the economy. It allows trading on a cash settlement market denominated in rubles as well as on a delivery-versus-payment market. Given the relatively high counter-party risks of trading in an emerging market with only limited securities law, the “security present” safety of the delivery-versus-payment market is much more popular.

While MICEX handles more than 80% of the total trading volume in Russian equities, the story is more subtle. The top ten companies on the exchange, for example, account for as much as 95% of the volume of the market. Indeed, Gazprom accounted for as much as 43% of total volume after its first month of trading on the exchange (February, 2006). Midcap stocks, conversely, only represented about 0.5% of total volume.

The other main exchange in Russia historically focused on a different end of the spectrum. The RTS long centered only on the RTS “Classic” segment of dollar-denominated cash trading with settlement as long as 30 days after the trade. This section of the market lists 396 stocks issued by 279 companies of all market capitalization and liquidity levels. The limited liquidity of many issues also means that the “Classic” section of the exchange is quote-driven in order to address potentially wide spreads. In addition, the market is not anonymous and has high levels of counter party risk.

In order to address those deficiencies, the RTS introduced a delivery-versus-payment (or “T+0”) exchange for the top 8 most liquid issues. Other issues outside the top 8 have begun to trade in this segment, too. Much like the MICEX, not surprisingly, the RTS “T+0” volume is dominated by the most liquid shares in the country, like UES and Gazprom. In fact, the exchange reports “T+0” trade volumes net of Gazprom data.

A recent disclosure, however, has significantly changed both the market share picture between MICEX and RTS and the overall impression of liquidity in the Russian market. A regulation effective January, 2007 requires all brokers and market participants to report any OTC trade if the security is quoted on at least one exchange in Russia. The OTC market was rumored to be quite large, but the first daily data release in February highlighted that the market is, in fact, much larger than even the most bullish commentators imagined. While the RTS Classic exchange volume totaled 4,718 trades for $1.1 billion in December 2006, the OTC market totaled 14,066 trades for $4.6 billion volume in the first 5 trading days of February 2007 alone .

Equity markets in Kazakhstan, while in decent structural shape, are not nearly as important a part of the national economy as in neighboring Russia. The equity universe in Kazakhstan is much smaller, with 94 companies issuing 68 securities. The market capitalization of the entire market stands at around $65 billion. More important, though, total equity capitalization represented only 19% of GDP in 2005, while that tally was as high as 72% in Russia.

Diversity of economic activity in each country varies and may account for some of the difference. Kazakhstan, after all, is slightly more dependent on natural resources and agriculture compared to Russia. But that difference is much smaller than the wide gulf between equity capitalizations as a percentage of GDP. Instead, the difference is likely a result of at least two important structural discrepancies.

First, Kazakhstan has a relatively well-developed banking sector that has been more efficient at providing funding to domestic businesses. Of the 19% year-over-year growth in fixed capital in 2006, at least 50% of it was internally financed . Indeed, Kazakh banks are even aggressively financing businesses in Russia. Given the more efficient flow of capital from natural resources to the private sector, there may be less impetus for private companies to list their shares publicly.

Second, the difference may arise from the varying levels of privatization that the respective governments pursued in the 1990’s. Russia’s headlong privatization left much of the country in private hands after the 1990’s while Kazakhstan’s path was much slower. Indeed, the Kazakh government founded a holding company to manage the 5 leading strategic infrastructure firms in the country (electricity, rail, telecommunications, post, and oil & gas). Holding portions of such large industries outside of equity markets may significantly affect overall capitalization levels in the country.

Russia and Kazakhstan are Emerging Markets to Watch
Russia and Kazakhstan can be best understood through the lens of an emerging economy. As such, the economy is relatively uni-dimensional, capital markets need outside financing, and trading on exchanges is heavily concentrated in top “champions” that may have a heavy amount of government control.

Still, even a cursory look at data shows that economies and equity markets in both countries are moving toward more diversity. In the case of Russia, equity markets have been shown to be much more liquid and diverse than thought only two weeks ago. Both countries have attracted a flood of foreign capital at first interested only in oil profits. That will probably remain a significant part of the investment case for some time to come. In the meantime, however, both countries look to be emerging as more balanced growth markets.

Bibliography

DePoy, Erik. “OTC Market Emerges from the Shadows.” Alfa Bank Equity Strategy (Feb 7, 2007): 1-3.

External Relations Department, "Information Notice." Central Bank of the Russian Federation. 2 Feb 2007. Central Bank of the Russian Federation. 4 Feb 2007 .

“Raising Capital in Russia and Abroad: Trends and Developments.” MICEX/LSE Joint Conference. Moscow, 1-2 March 2006

"RESULTS OF TRADES IN CORPORATE SECURITIES." Kazakhstan Stock Exchage. 9 Feb 2007. KASE. 10 Feb 2007 .

"RTS Classic Market: December 2006 Market Data." Russian Trading System Stock Exchange. 11 Jan 2007. RTS. 2 Feb 2007 .

"Russia." World Bank Country Economic Report. 2006.

“Russia Country Profile.” Economist Intelligence Unit. 2006.

"Russian Economic Review." World Bank. December 2006.

Sachs, J. and A. Warner. “Natural Resources and Economic Development: The Curse of Natural Resources.” European Economic Review 45, 2001.

Spilimbergo, Antonio. “Measuring the Performance of Fiscal Policy in Russia”, IMF Working Paper December 2005.

"Stabilization Fund of the Russian Federation - Statistics." Ministry of Finance. Ministry of Finance of the Russian Federation. 2 Feb 2007 .

Tabakh, Anton. "Infrastructure Overhaul, Consolidation, Globalization." UralSib Russia Equity Research (2006): 11-17.

"Top World Oil Net Exporters, 2005." Offical Energy Statistics from the US Government. Energy Information Agency (EIA). 10 Feb 2007 .

Weafer, Chris. “Monitoring Investory Activity in Russia.” Alfa Bank Equity Strategy (Feb 8, 2007): 1-5.

Моя Россия - My Russia

2006-11-02T23:02:00.000-05:00

Last week, I reconnected with two colleagues from my first stint in Russia. We recalled the old days during an elegant wedding in Washington DC, far from the time and place of our early post-soviet privations. It was great fun, and great to see friends with whom reminiscence of common experiences is but one facet of our relationship.

Sean is among the better read people you could ever hope to meet, and perhaps as a result, he has an excellent facility with the language of emotion. He wrote me an email the other day that eloquently describes the allure of Russia. It floored me for being so evocative and accurate at the same time. I couldn't possibly paraphrase, improve, or otherwise capture his words.

So here they are.

After reading your blog, seeing your photo books, and hearing your stories I have a great yearning to go back, see it all again, take that train. Russia is just such a deep and transformative experience. There is something about the sight of a church, topped with onion domes on the edge of a field, the land stretching away beyond it. This is not just beautiful, but somehow, knowing that that stretch of land goes on and on into Asia and the Pacific, the small church seems all the more profound a statement of beauty, history, and human and divine aspirations.

Even the most beautiful churches and buildings in Western Europe lack that character of immense presence, which even the smallest of those Russian churches has, a presence that can only come from the history of human striving upon such a vast, harsh land and against such a brutal history.

Well, now, whatever else you do, you've made some part of that yours. That is something; more than most people ever do. There are a few lines from an early poem of Rilke's which I know well because they were in a book Tom had in Kalininigrad (Selected Poems of Ranier Maria Rilke translated by Robert Bly), and I copied them into my journal. They are the lines which open the poem:

Sometimes a man stands up during supper
and walks outdoors, and keeps on walking,
because of a church that stands somewhere in the East.

He wrote those after visiting Russia at the turn of the last century -- it was one to the great influences on his life. I think only a foreigner who truly experiences Russia can appreciate those lines and the almost indescribable lure of the place.

Hard Memories

2006-09-01T03:01:00.000-04:00

I finished a photo album – finally. It took months to select my favorite photos, process them with photoshop, and arrange them in a pleasing format. My ambition also included writing introductory overviews. In all, it was a heap of work and while I started well, I didn’t seem to have the necessary gumption to get the job done. At somewhere near the 90% completion level the progress stopped. And didn’t move. I lamented this until one day it just sort of came together.

Actually, I had to take drastic measures. I purposely put myself in a position where I could do nothing but complete the remaining tasks. A pen, a notebook, an iPod, and an uncomfortable seat in an overly air-conditioned starbucks put me over the edge. The project was finished at long last. Off to the printer.

I have used internet photo publishing software in the past, like Kodak and MyPublisher. This time, I took a gamble on a new company called Blurb and their Booksmart software. Kodak and MyPublisher have very low limits on the maximum number of pages available in a single book; Blurb on the other hand was the only publisher who would produce anywhere near the number of pages I would need to catalog all that time in Russia.

After I finished, I checked the pricing. A nearly 200 page book of photos would cost some $50. Reasonable, but that’s only marginally more expensive than a 30 page book published with Kodak only a few weeks before. Thoughts of comic-book quality paper went through my head while I waited for the delivery to arrive.

It came after a week, and I was shocked. The quality is exceptional in absolutely every respect. This doesn’t look like a photo album assembled on the internet. The binding, the custom dustcover, the print quality, make it look like a coffee table book from a bookstore. The real benefit is that the professional nature of the book makes my photos appear much more impressive than they really are. I can’t express how happy I am that an important part of my life is so well presented. Check out Blurb and use it.

I was so inspired that I completed another volume over the following few days. Where the first volume chronicled my coast-to-coast trip, the second volume offers general images from living and traveling in Russia over the course of 10 months or so. Another nearly 200 pages of images in a book designed to match the first tome.

It finally came today. Now, the speed with which I completed the second book really points out how much I dithered during construction of the first one.

In any case, there's a sense of accomplishment that goes with this. And in a weird way, a sense of closure. In some ways this is the real end of the journey. Luggage has been put away; life has moved on; and finally the photos have been bound into books. Books that will serve as touchstones of wonderful memories that have already begun to slip slowly into the past.

Prosperity Theology

2006-08-27T16:58:00.000-04:00

"Render to Caesar the things that are Caesar's, and to God the things that are God's"
~Mark 12:13-17

Manhattan, for all its long history, is really at best a study in change. Nothing has pointed that out to me more than being away for a year. Now, I walk around my neighborhood and notice the dramatic changes in that short time. Some are natural, some are strange, and some are downright discomfiting.

For the past couple of years, it seemed that Starbucks was going to take over the city. The chain's penchant for corner locations made the stores seem even more ubiquitous than they really were. I wasn't really prepared for the next step - mid-block expansion. Now it seems that one is never more than a few steps away from a standard-issue coffee shop. And it also seems that each one is doing pretty good business. Of course, at these prices the company may well be going for a high-margin, low-volume strategy. Still, Starbucks fills cultural, societal, business needs for large swathes of the Manhattan population. These stores have successfully become the living rooms, studies, and conference rooms of space-constrained New Yorkers.

But being plopped back in NYC after a year away has allowed me a new perspective. Starbucks isn't expanding in non-corner locations because of some sort of new location strategy. It's simpler than that - even the ludicrously profitable coffee business can't compete with the intense demand for this kind of corner real estate.

It seems that every corner in Manhattan south of 96th street has been converted into a bank branch. And these aren't small outposts in good locations. The banks are forcing supermarkets and other large-scale retailers out of these locations - and taking the whole space. No joke and no exaggeration. These branches are massive on any scale of analysis. And they're absolutely everywhere now.

That reflects, I suppose, the city's constant renewal and change. After all, it's Manhattan; there's probably no better symbol of the city than the rapid expansion of what are in effect money stores.

Except maybe one.

On W. 4th street near Washington Square Park, there's a grand old church. It's been there since 1860, and for many years has run a soup kitchen out of its basement on Sunday afternoons. That is, until recently. The building was sold, and is now being converted to housing. Not low income, in case you were wondering. No, this is Manhattan 2006. It's being converted into a handful of condo lofts selling for $6 million apiece.

The mind begins to boggle at just a glimmer of the symbolism and contrast.

And then it gets better. The sales slogan for the property is "Come Be Reborn." It's audacious, probably blasphemous, and insulting. As if salvation can be bundled along with a jumbo mortgage.

I suppose its fitting in some ways. Money and real estate are both religions in New York. Historically, it fits alright with Puritanism and Calvinism - strong currents in the early US. And now? Well, this is an era when the idea of prosperity theology - the belief that financial success is external evidence of God's favor - is gaining more and more traction.

In my belief system though, I have to believe that there's a special place in Hell for people who market luxury condominiums in a former church in this manner.

And a place for me, too, because I'd really, really like to have one for myself.

Bad News from Moscow

2006-08-22T23:42:00.000-04:00

I’ve always been an active observer of the news from Moscow. Now, as a former resident, I feel kind of personally invested in the pattern of events there. This week, though, events took on a very personal perspective.

Just the other day, a bomb exploded in an Asian part of one of Moscow’s largest bazaars, killing some dozen people and injuring a lot of others. As close as I can triangulate from the news stories, it happened in one of my favorite places in the city – a place that I frequently visited on the weekends.

It was always an overwhelming experience – Moscow somehow becoming more crowded and more foreign, perpetually gloomy – in this hidden hallway. One had to steel one’s nerves to get to the heart of the experience.

The Vietnamese Market is really only one narrow passage way in a vast winding maze of passages that sprawl around the marketplace. It is kind of hard to find, jagging away at a crazy angle from intersecting paths. And one small sign in Vietnamese is the only clue. Food vendors line the alleyway, selling all sorts of meat, produce, and fish. All of it, of course, in that typical Asian fashion – live fish in tanks, piles of meat being butchered on old tree stumps with strange cleavers. A second level, up a rickety steel staircase, is the services section of the market. Doctors, fortune tellers, masseurs, and other offices overlook the chaos of the filthy street down below.

Also on the second level is a small restaurant. The TV blasts Vietnamese variety shows. The décor runs to old-fashioned farm implements and pickled snakes in jars on shelves. Beverages are stacked in cases right in front of the pass-through to the open kitchen, a heat-belching place deftly managed by a sometimes shirtless cook. Asian vendors from the market trade huge stacks of currency and handshakes in deals conducted at the tables.

But for all its little idiosyncrasies, it’s one of my favorite places. The people were friendly and the food good and cheap. Oh, and spicy, too. In the blandness of the Moscow culinary universe, this is one of the great places to remind oneself that each of us is born with taste buds – what we do with them is up to us.

The strong point of the menu is the pho – a brothy noodle soup packed with vegetables and meat. Sprinkled with a bit of the spicy garlic and vinegar sauces, the soup is a filling, nourishing, tasty meal. And worth taking the metro 30 minutes to Partisankaya.

Once, I tried to take some pictures there. I got off a couple before two rough Russian guys suddenly appeared and told me that photographs were forbidden. They weren’t satisfied with me just putting my camera back in my bag, but a friend re-joined me from the restroom and provided a good excuse for me to just walk away. I scoffed at the notion that they needed such tight restrictions in the market. Surely, it had something to do with the cleanliness, the food handling. Typical official Russian response to a problem, I thought.

I suppose the situation was much more dangerous than I gave it credit.

I don’t wonder who did it or why. I’m beyond wondering about things like that in Russia. I wonder what it’s like now that more than 3 lbs of TNT ripped it all apart. Now that dozens of people lay in that narrow alley bleeding and dying. I wonder if the happy old woman who sold me those delicious sesame balls is alright. Or the guy who smiled for my photo while his buddy netted live fish out of a murky tank.

I wonder if the Moscow I'll always remember will change violently or gradually. And I wonder who will pay the price for it.

Professional Statement

2006-07-26T12:40:00.000-04:00

There are several requirements for participants in the Fellowship Program. At the end, each is required to write a professional report on a topic related to his/her career, and a personal statement. The professional statement is meant to be a research article on a topic centrally related to the Fellow's work experience in Russia. Here's how mine came out.

Unfortunately, it isn't possible to import the tables and charts into the blog. (Blogger did automatically convert all my footnotes to endnotes, though.) I left some of the data in mangled form, however, since the text refers to it in some places. It may be difficult to understand without it.

Прогулка по Рынку: Observations on the Russian Stock Market

Introduction
Riding a wave of oil, favorable commodity prices for other natural resources, and some well-considered reforms, Russia’s recent macroeconomic advances have been reflected in increased bond ratings from the major rating agencies, as well as substantive improvement in the conditions for the population i.e. a declining poverty rate, real income growth, and climbing per capita GDP. While the situation certainly has room for more such dramatic improvement, the country is enjoying, and wisely exploiting, a rare confluence of favorable global conditions

Of all the potential symbols of post-Soviet Russia’s transformation into a capital-based economy, though, the country’s two thriving equity exchanges are quite possibly the most vibrant, significant, and easily quantifiable, measure of that change.

The equity market in Russia, however, is poorly understood by most investors both inside and outside the borders of the country. Translation of those positive macroeconomic trends into company performance isn’t always direct, and the capital markets on the whole suffer from a variety of characteristics typical of emerging markets.

This is an attempt to characterize many of those conditions in the marketplace, examine the main market index, and explain some factors that affect the conventional wisdom on recent market returns.

The Backdrop
The country’s economic growth has provided an excellent foundation for interest and confidence in the emerging equity market. Since passing through the disastrous crisis in 1998, GDP growth through 2005 has compounded at an impressive 6.4% per year[1]. Most projections for the near future predict a deceleration in the high growth rates of 2000 to 2004, but still remaining around a healthy 6% per year[2]. That rate challenges the government’s desire to double GDP in 10 years (a 6% growth rate implies 12 years instead), but stable inflation and projected growth in real incomes and GDP per capital should ameliorate concerns over failing to meet that aggressive timetable.

Russia’s legacy tax code was greatly rationalized in 2000, eliminating whole classes of taxes as well as lowering tax rates on businesses and individuals. Corporate tax rates, for example, fell from 35% to 24%, while a complicated personal income tax scheme was replaced with a moderate flat tax of 13%. The VAT tax was lowered, too, to 18% at that time – and recent proposals indicate that there may be a further reduction to the low teens. As a consequence of this simplification, government revenues have increased dramatically as business and individual taxpayer compliance rates have skyrocketed.

Global oil prices have also certainly been a positive tailwind for the macroeconomic conditions in the past few years, as well. Rising prices and the resulting emphasis on production increases have pushed hydrocarbons to account for more than 50% of the country’s export revenue. The windfall is being felt in every part of the growing consumer economy, but fiscal discipline on the government policy level has so far prevented any spike in the inflation rate or ruble exchange rate – the Dutch Disease, as it is known in oil circles. President Putin’s decision to allocate windfall profits to a “Stabilization Fund” dedicated to improving infrastructure for long-term economic development is a much more welcome move than allowing oil profits to simply flow into the normal, and corrupt, Russian government budgetary process. In all, Russia’s currency reserves quickly are approaching USD 200 billion, the fifth largest hard currency reserve in the world.

Russia’s debt position has improved dramatically, too, with oil revenues used for frequent and early repayment of Paris Club debt. Government debt as a percentage of GDP dropped from over 90% in 1991 to about 35% by the end of last year[3], comparing very favorably to international standards. For example, United States total government debt as a percentage of GDP is expected to reach 67.5% in fiscal year 2007[4], while the OECD member states (ex-US) had an average 47.8% debt-to-GDP ratio in 2003.[5]

Capital flight has decreased, too. In 2005, in fact, Russia posted a $300 million net inflow of capital. This represented marked improvement over the previous few years when YUKOS inspired fears drove capital outflows from USD 1.9 billion in 2003 to more than USD 8 billion in 2004[6]. While private capital flows still seem on the outbound direction, renewed confidence in Russia’s markets and companies more than made up for that; 2005 was a record-setting year for attracting foreign capital through bond issuances and direct investment in the equity market.

Concentration of the Index
Observers of the Russian stock market tend to focus on the returns to the Russian Trading System Index (RTS) as an easy proxy for general activity in Russia. This index, however, is not necessarily an appropriate measure of general economic activity or even of overall market characteristics.

Former state assets, both energy and other industries, are inheritors of the gigantism of the Soviet Union. Newer companies, at best only 15 years old, are naturally much smaller than these state and former-state assets. As a result, the index of 50 stocks is highly concentrated in the top 10 names.

The top ten stocks in the index, then, represent 75% of the value of the index. But even the composition of that top echelon is somewhat questionable. Surgutneftegas common shares and preferred alike, for example, are both included in the top 10. In addition, TransNeft – the state-controlled oil pipeline operator – is essentially a tightly politically controlled monopoly utility; its tariffs, profits and dividends are dictated by federal legislation. In fact, only 2 (NOVATEK and LUKoil) truly classify as independent entities.

The RTS index is not broken down with explicit sector representation in mind. Market capitalization weighted indices in developed markets tend to define sectors, and then use the constituent market caps of index members to calculate the sector weight. Absent that system, the rapid development and intense interest in energy assets has skewed the representation to give it perhaps more of a weight than it really deserves. For example, while representing some 50% of total Russian Federation export revenues in 2006, energy related equities represent that same amount on the RTS index. Energy exports are undoubtedly the lion’s share of the macroeconomic improvement in Russia over the past few years, but it is unlikely that oil and gas alone count for more than 50% of the total economic activity of the publicly held economy in the country. Indeed, the retail sector has been growing well in excess of GDP growth, driving services higher as a percentage of GDP. Meanwhile, industry’s share as a percentage of total GDP has remained around 35%.[7]

Most significantly, this discussion of the RTS index does not include Gazprom, the energy giant controlled by the government. Its inclusion in the index in mid-March 2006, after the so-called “ring fence” prohibiting foreign ownership was removed, further altered the industry composition of the index. While rebalancing prevented drastic change to the overall concentration of the index, the oil and gas industry is much more heavily represented than before.

Still, there isn’t much else to go on when it comes to the Russian market. Despite its flaws, the RTS Index will likely remain the most visible benchmark of the equity markets for some time. It is important, however, for investors to note that the RTS Index is not necessarily a good proxy for total equity market returns that may be experienced by a diversified portfolio of holdings.

Trading Volumes and Overseas Exchanges
Trading volumes on the Russian exchanges have surged over the past few years in concert with renewed international interest in emerging markets as well as the healthy atmosphere for local issuances of new stocks. It is important, however, to see the overall trading volumes in the context of a newly developing stock market.

Most emerging market stock exchanges are relatively thinly traded compared to developed market peers. Although daily average turnover on the Russian market (including both the RTS and MICEX exchanges) now exceeds USD 1 billion (and, in fact, exceeds USD 2 billion quite regularly), the standard deviation of volumes is quite high. In March 2006, for example, daily volume averaged USD 1.8 billion. The standard deviation over that time frame was USD 656 million, nearly 1/3rd the mean. Statistically, one can expect the average daily volume of Russian stocks to range between USD 1.2 billion and USD 2.5 billion - a very wide gap - about 68% of the time.

The same top-heavy nature that plagues the RTS Index can also been seen in an analysis of security specific trading volumes. This is indicative of liquidity issues in both the overall market and in particular stocks. As can be seen in the following graphic, Gazprom represented fully 13% of the total average daily USD volume of the Russian domestically traded stock universe during the month of March.[8]

A standard expectation of emerging markets, however, is that the domestic economy is not capable of raising the necessary amounts of capital to fund growing business ventures. Companies in that position often seek to list shares on developed capital markets, where there is greater access to a larger pool of international capital. Of the 20 IPO’s of Russian companies since 2004, 13 took place overseas and 7 were released in Russia.

Within that dynamic, there has been a distinct shift to the London Stock Exchange. Prior to 2002, the exchange of choice for Russian issuers was the New York Stock Exchange. Financial scandals in the US, however, led to much more strict regulation and accounting/management requirements for US listed companies; Sarbanes-Oxley is the most frequently cited example of the new, strict regulatory environment. In addition, Russian companies find fault with some of the finer details of natural resources reserve accounting and certification.

The dynamics of international demand for Russian equities has also played a role in the shift to London as a preferred exchange. Investment bankers discovered that US investor demand for such equities only approached 50% of an issue when listing on the New York Stock Exchange. In contrast, UK and European investors usually account for just more than 50% of demand for an IPO when the listing is made in London[9]. Thus, Russian issuers are increasingly drawn to the “home market” of the investors with the greatest appetite for their equity issues.

Together, the regulatory and demand dynamics have combined to cause a major shift to London. Of the 13 foreign-market-placed IPO’s of Russian equities since 2004, 12 have been launched in London while only 1 has been floated in New York.

All of the major exchanges have initiatives to attract more mid-cap companies to the public capital markets. Most notably, the London Stock Exchange has instituted an “Alternative Investment Market” (AIM), with less stringent listing requirements. This exchange occupies a niche just outside of the fully regulated UK marketplace. The relative ease of attracting capital through listing on this exchange should attract companies that want the prestige of an overseas listing but aren’t large enough to justify the regulatory expenses.

The total Russian equity universe, then, should include volumes traded on both the domestic and overseas exchanges. In this global perspective, overseas markets account for some 36% of the average daily volume of Russian equities.

New legislation in the Russian Federation, though, may slightly change this model of raising capital. A new law requires that 30% of a new issue be placed in Russia. It’s unclear whether that “30% Rule” refers to how much of the IPO is offered inside Russia, or if it refers to how much of the issue is actually sold within the country. In either case, there may be more of a push for listing on multiple exchanges as a result (both RTS and LSE, for example). Implementation of the rule by regulators will be key to its final interpretation by the market, but serious negative consequences on the ability of Russian companies to raise capital are not expected.

In fact, many Russian-domiciled mutual funds are registered offshore at least partially for the benefit of overseas investors. These often qualify as “foreign investors” in most statistics of market trading volumes, yet they presumably have excellent access to local markets. Offering 30% of an issue domestically, then, may just be matching demand with location just as well as listing in London does for other international investors.

Liquidity and Market Capitalization
Like most emerging markets, liquidity is an issue in Russia too. Market observers have generally broken the equity universe into as many as 3 “tiers”. Neither the definition of a tier or the cut off points between them, however, is standard between brokerage houses. While some list according to market cap in USD billion increments, others classify by liquidity and trading volumes relative to outstanding shares; i.e. by the actual availability of the equity.

This liquidity issue is no small distinction in the Russian stock exchange. Shares of some rather large companies can be somewhat hard to come by on the open market. Generally speaking, such limited float statistics are a result of concentrated holdings by state or other controlling entities.

For instance, Baltika Brewery, the largest brewer of beer in Russia, has a USD 5.5 billion market cap and represents 0.65% of the RTS index. The stock, however, traded only 11 times in the first 75 days of 2006. Despite being a bellwether consumer-products company, Baltika is a closely held joint venture with a low public float.

The effect, however, is often completely disassociated from market cap. Indeed, stocks in lower “tiers” may well be more liquid than supposedly more liquid index components. Kalina, a cosmetics manufacturer with a USD 500 million market capitalization traded on twice as many occasions during the first 3 months of 2006 as Baltika. By nearly any measure, Kalina’s trading history outdoes its much larger peer – its 99,000 shares traded equated to 1.02% of its float. Baltika’s 22,000 shares equated to only 0.02% of its float[10].

Many measures of activity, however, mistakenly focus on market capitalization as an indicator of either breadth or depth in the marketplace. This can be a very misleading statistic. For example, while the MICEX Exchange trades in excess of 80% of all Russian equity by value, it notes that the top 10 companies account for as much as 95% of the total volume. Indeed, Gazprom, at the end of its first month of trading (February 2006) on the MICEX Exchange accounted for 43% of the total volume of that exchange. Conversely, mid cap stocks only represented about 0.5% of total volume.[11]

Given the top-heavy nature of liquidity in the indices and exchanges, in many cases it seems that market cap is really representing a scarcity factor related to a particular lower tier stock. In an emerging market, whole industry sectors may be represented in the publicly traded market by a single equity with strong insider ownership and a low public float. Exposure to these sectors, then, requires fund managers to aggressively, but patiently, build positions over long periods of time.

Performance and Drivers
Against the backdrop of the improving macroeconomic situation, the major domestic equity market indices have advanced sharply. Russia has consistently ranked as one of the world’s best performing stock markets in pure price appreciation in 4 of the past 5 years[12].

Conventional wisdom, backed up by compelling evidence in the macroeconomic sphere, posits that advances in the Russian stock market are solely the function of advances in the price of oil.

However, casual observation alone brings this hypothesis into question. Oil prices have fluctuated in the past 9 months, but RTS Index returns have been quite consistently positive over the same time period (chart attached). Longer time frames only show the same experience. While the near-term oil future has advanced by 122% since January 2000, the RTS Index has increased more than 740% (chart attached).

Admittedly, examining two charts is a superficial way to seek relationships between variables. Further segmentation and regression analysis of the data, however, presents a much more nuanced – and perhaps surprising – explanation of recent oil and stock market activity.

In the case of 2005 and year-to-date (YTD) 2006 returns, the analysis returned some interesting results.

R-Squared
Time Frame SPOT 1 mo future 3 mo future 6 mo future
2005 0.42 0.46 0.44 0.45
1st half 2005
0.68 0.64 0.66 0.65
2nd half 2005
0.30 0.31 0.33 0.31
2005 – YTD 2006*
0.02 0.42 0.45 0.48
*all results are statistically significant at the 95% confidence level except the regression for 2005-YTD2006 SPOT (which barely missed hitting the significance threshold).

First, the results indicate that there is no real difference with the relationship between market returns and the length of the futures contract. One might expect a stronger relationship between near-term market returns and higher longer-term futures contracts. In this case, that would mean equity values would increase as participants in the oil market signaled their belief that oil prices were likely to increase or that stronger prices were sustainable into the future. The minor variations in r-squared values across the horizontal axis of this table, however, indicate that this is not the case.

Second, the results do not indicate a consistent relationship between oil and market returns over time. The 2005 whole-year r-squared between oil and market returns is about 0.42; at best, a moderately strong correlation of 0.65. Yet breaking the year into two 6-month periods shows a marked decrease in the correlation of the two variables over time. The r-squared for the first half of the year indicates a very strong correlation (about 0.83) explaining 68% of the variation in the independent variable (RTS Index returns). Yet the second half of the year is much weaker, explaining only 30% of the variation.

Third, perhaps not too surprisingly, keeping oil price performance in mind over the course of 2005 shows that the RTS Index returns were more correlated to larger changes in oil prices. That is, the correlation was strongest when the oil price was advancing the most, up 34% from January to June. In the second half of the year, when oil only increased 8% in price, the correlation was weakest. However, examining the coincident market returns in those periods does reveal a bit of a surprise.

Date
Oil
% change
RTS Index
% change

R-Squared*
12/31/2005
61.04
8%
1125.6
59%
0.30
6/30/2005
56.50
34%
706.4
16%
0.68
1/11/2005
42.12

607.6

*”R-squared” indicates the regression over the previous 6-month period.

Here, the data indicate that the market and oil prices were most correlated while oil prices were advancing strongly. Yet the market returns were lower in that period and higher in the second half of the year when the correlation had supposedly weakened. The conventional wisdom view of Russia as an oil economy would tend to support the idea that market returns and oil price advances were coincidental or slightly lagged at worst, when the opposite appears to be true.

Fourth, longer term annual analysis of the data is inconclusive at best (table attached). The relationship between spot and futures prices of differing lengths was much less consistent than the 2005 and 2006 data indicated. In addition, the regression analysis of year-by-year calendar returns showed that most of the correlations were in the moderately correlated range, and some relationships were actually modestly negative in some years. Oil prices had been advancing, however, in each of the years from 2002 to the present.

While oil undoubtedly has been a strong factor in the improvement of the Russian economy, the data show that its effect on the equity markets is much more difficult to quantify or explain. Certainly, it is a major driver of investment returns; saying that Russia is an oil-driven environment, however, doesn’t appear to answer very many questions about how to make money in the stock market.

Significant questions, of course, are raised by the data. If oil isn’t as direct a driver of investment returns as hypothesized, then what are the other drivers of undeniably steep advances in the local market indices?

Barring a full-blown econometric model to determine the influence of multiple variables on stock market returns, observation tends to lead to a few beliefs that should be tested. Breaking the oil price into certain price bands would probably be more instructive. That is to say, RTS Index returns may well be more correlated to the persistence of oil prices at a certain level.

For example, many researchers have tried to estimate the sensitivity of the Russian economy, in the aggregate, to the price of oil. Outputs differ with respect to the amount of the increase in GDP per capita and other statistics, but directionally most of the studies agree; higher longer-term oil prices augur well for GDP expansion in Russia. Most analysts in the energy sphere also have long-term estimates for what they consider the “balanced” price of oil; keeping supply and demand considerations roughly equal, barring unforeseen risk factors from geopolitical problems. Estimates of these long-term prices are generally in the USD 30 to USD 40 range, with only the most optimistic topping out around USD 45.

Combining both factors, and the realization that oil remains stubbornly well above that long-term average price range, may then be the key to understanding market behavior. For each day that oil remains in those price ranges above the long-term estimate, long-term estimates for Russian GDP growth must also be ratcheted slightly higher.

Certainly, another variable in a more comprehensive model should be related to risk factors; In particular, country specific estimates of risk need to be examined. The Arbitrage Pricing Theory (APT) is different from other valuation models in that it tries to specifically enumerate risk of individual factors. The Capital Asset Pricing Model (CAPM), in contrast, uses only the market risk factor.

As credit rating agencies raise their opinion of Russia’s creditworthiness, spreads between Russian bonds and benchmark Western government bonds have narrowed. In addition, stability in taxation, currency, and budgetary processes have also reduced the overall risk premium for Russian stocks. Again, this seems to relate also to price bands in the oil market. As long as oil stays over USD 50, for example, Russian government tax revenues on the exports will be higher than expected by a certain factor. This further reduces risks inherent in the more comprehensive definitions of the APT.

In summary, then, it’s possible to surmise that advances in oil prices are good for the Russian economy, and by extension, the Russian stock market. The relationship, however, is not nearly as direct as many observers of the market may expect.

Capital Flows - Liquidity both Foreign and Domestic
In general over this time, emerging market indices have out-performed stock markets in the US, Europe, and Japan. This out-performance has drawn the attention of foreign investors, and capital inflows are surging into emerging market funds from pensions, institutions, and individual investors as well.

Russia is mentioned among the most fashionable and profitable markets – the BRIC. The acronym was invented by an equity strategist to highlight his preferred markets of the future – Brazil, Russia, India, and China – and the belief that the combined GDP’s of these economies could outstrip the individual GDP’s of the current dominant economies (the US and EU) by 2050.[13]

As Russia continues to post decent GDP growth and market gains, its percentage share on the MSCI Emerging Markets Index[14] is likely to continue to grow. That means that capital markets in Russia are taking a slightly larger piece of a growing pie. Indeed, in the first 3 months of 2006, emerging market inflows of $20.9 billion have already eclipsed 2005’s record setting total of $20.3 billion[15] for the entire year.

At the same time, positive current account balances and healthy oil revenues have increased the odds of ruble appreciation against the dollar. Domestic institutions now prefer to hold assets denominated in rubles – a “long” ruble position. This may well be a factor in the steep decline in Russia’s capital outflows figures over 2005, and is likely continuing into 2006, as well.

Summary
The Russian stock market, then, needs to be analyzed in the context of an emerging markets framework. This involves specialized analysis of issues such as liquidity of an individual security; the overall appropriateness of indices and other “top-down” aggregate measures; and conventional wisdom about drivers of stock market performance.

Supply and demand issues aside, though, the Russian stock market should continue to draw the attention of foreign investors as macroeconomic improvements continue. As Russia is increasingly viewed as an engine of global economic growth –a member of the BRIC countries – capital will likely be drawn here in ever growing amounts. More capital means more business expansion, which means more profits, which attracts more capital. In all, despite its emerging status, the Russian market looks like it may be setting out on a multiyear virtuous cycle of advances only marginally related to oil prices.

Endnotes
[1] Economist Country Briefing.
[2] Economist Intelligence Unit, Troika-Dialog estimate (6.2%), UFG Deutsche Bank estimate (5.9%), Russian Federation Ministry of Economics estimate (6.0%).
[3] CIA World Fact Book, Russia Country Profile 2006.
[4] US Office of Management and Budget (OMB) statistics.
[5] Organization for Economic Development and Cooperation (OECD), Statistical Database.
[6] Central Bank of the Russian Federation, Annual Statistics 2005.
[7] United Nations Economic Commission for Europe (UNECE) statistics.
[8] Renaissance Capital Evening Market Wrap; March 1st – 31st, 2006
[9] UBS Investment Bank
[10] Bloomberg.
[11] MICEX/London Stock Exchange joint conference: “Raising Capital in Russia & Abroad: Trends and Developments”, 1-2 March 2006.
[12] Bloomberg.
[13] Goldman Sachs Global Economics Paper No.99; “Dreaming with BRICS: The Path to 2050”
[14] From the Morgan Stanley website:
“The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. …the index consisted of the following 26 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela.”

Personal Statement

2006-07-25T12:26:00.000-04:00

There are several requirements for participants in the Fellowship Program. At the end, each is required to write a professional report on a topic related to his/her career, and a personal statement. The personal statement can include impressions, recommendations - in short, anything that a Fellow thinks is worth saying. Here's how mine came out.

Personal Statement for the Alfa Fellowship

It’s been difficult for me to come up with an overall reflection that encompasses my experiences with the Fellowship. After all, the program started with stateside language tutoring and ended with a cab ride to Sheremetyevo airport more than a year later. In between, I worked and lived and learned and played for more than 9 months in one of the world’s greatest cities.

It’s also been difficult to sum up that experience since many points of reference have changed over that period of time. The Fellowship was an experience that enriched my professional knowledge, increased my curiosity about Russia, and generally - it’s no exaggeration to say – changed a lot of how I look at the world and myself.

So how, then, to put into words that which spans time and emotion and experience? Well, I’ll try to sum it up in the broad categories of how I define my time there.

Language
My Russian language tutoring while still in the US was an absolutely critical ingredient in my full participation on the Russian side of the program. I credit a fear of having inadequate language skills on the streets of Moscow, as well as having an excellent tutor (Nadia), for the success I had in preparing. Regardless of the motivating factors, the stateside language program transformed me from a rusty and hesitant speaker to a much more confident and intelligible communicator.

The Language program in Moscow served several important purposes. First, it was a continuation of formal training. Second, the overall language experience broadened considerably. Local issues of language that we were confronted with could now be examined in a classroom. And third, it put us in a situation with a local teacher who could offer advice and assistance during our initial transition period.

Our occasional “field trips” to cultural sites around Moscow were the highlight. It allowed unscripted, fluid conversation outside a formal classroom setting.

From my perspective, the language training was very worthwhile. It was difficult, at times, to maintain interest for several people of generally varying skill levels lumped together in a group. The end result, of course, is really the measure of a language class and by that yardstick I felt that the instruction dramatically improved my ability to understand and communicate.

I was fortunate enough to start my work assignment early (in August). That gave me 2 months to study for a half day and then work for a half day. I got to put into practice immediately our classroom lessons in a local work environment. The combination was absolutely invaluable. So much so, that I would strongly encourage the Fellowship Program to explore the option of combining the language study with a part-time work assignment “start-up” phase.

Work
Connecting to my professional assignment was a stable, predictable process that did not hold any surprises for me. In that regard, I seem to be rather fortunate compared to some of my colleagues.

It isn’t surprising that the smoothest assignment process was for a finance professional to be placed within Alfa. While the Fellowship is indeed a multi-disciplinary program, the reality is that Svetlana Smirnova can personally arrange any finance-related professional assignment in very short order. In my case, that involved an early invitation to meet with Svetlana and an Alfa division chief to discuss my employment.

My professional assignment at Alfa Capital was fascinating, engaging, and highly tailored to my interests and skills. The company gave me the opportunity and time to learn through my own research projects, as well as pitch in on their projects. So while my understanding of the local market increased, I felt that I made some contributions to the firm.

I’m not sure that I could envision a more suitable or productive posting.

The Fellowship Program
The formal parts of the Fellowship program were very rewarding experiences. The schedules were well designed, thorough, and comprehensive. Every possible need of the Fellows seemed to be considered ahead of time – especially food!

For as well-planned as our regional trips were, however, it was a bit surprising the extent to which the plan came together at the last minute; dates and even destinations weren’t known much ahead of time. Of course, flexibility is always a necessity in Russia. But that’s not a trivial distinction – more advance notice allows more advance preparation. Our schedule of events in Cheboksary, for example, included a visit to the PromTraktor factory. I was able to do extensive research on PromTraktor at work prior to the trip, and get a good sense of the financial situation of the company and asked a lot of questions during our meeting with management. I didn’t have the time, however, to do any more research than that.

The highlights of our regional trips, for me, were the opportunities to interact with local folk. Our trip to Chuvashia, however, was so tightly scheduled that we didn’t really have the time to do that. Nor did we have any flexibility in extending more interesting meetings. I have one particular episode in mind: a discussion with members of the local media. Just as the group was starting to open up and really share opinions, we had to rush off to a meeting with local government members where – as bad luck would have it – the exact same thing happened again.

In addition, most meals were looked at as some sort of opportunity to fete the visiting Americans. That made each meal a very long affair. The hospitality was certainly welcome at dinner, and very much appreciated. But a very long lunch in Novorossisk meant a shortened meeting with a professional and visionary director of a local chamber of commerce.

The Fellowship was also good at organizing meetings during our regular work period in Moscow. We were more often than not included in events at Arkady’s Center, as well as having an open invitation to events at the American Chamber of Commerce. Again, advance preparation would have made some of the meetings even more available. A short bio page would have gone a long way.

Life and Living
The Fellowship program provided me with an excellent, well-situated apartment very close to the CIF offices. It was a brand-new renovation, a fact announced by the presence of workmen in the apartment when I first arrived! Although they never did return to finish the work that they promised to accomplish the very next day, I have no complaints about the physical status of the apartment; it was a beautiful place to live.

And while I have no complaints about the other elements of the apartment (the kitchen and bathroom had been fitted out nicely by the CIF staff), I would point out the distinction between a new apartment and the older ones that had been secured. As the first tenant, it was my place to discover that there were a minimum of creature comforts. I wasn’t very put out when I discovered that my apartment lacked an espresso maker that another apartment did not. In particular, though, I wasn’t happy that it took several months for a phone line to be installed. Relying on my (fellowship-provided) cell phone was an expensive and inconvenient workaround that excluded the possibility of home internet service.

The phone/internet situation was remedied finally, but only when the second group of fellows arrived some 3 months later. While the CIF staff was generally very responsive to my needs, there were occasions where they didn’t seem to share the same sense of urgency. Or indeed, any sense of urgency.

That being said, I didn’t actually rely on the CIF staff for very much outside of the formal Fellowship functions. I lived across the street from their office, but I decided early on that a good Moscow experience would be one rooted in as much self-sufficiency as I could muster. I limited my contact with them to visa issues and other more formal program communications – very happy in the knowledge that the competent local staff was available to me at my discretion.

Post Fellowship
I enjoyed the cosmopolitan buzz of Moscow very much. After a few months, I formed a hypothesis that Moscow and New York were actually very similar places – at least in the abstract elements of life in a metropolis. But for all the reveling in big city excitement, a sneaking curiosity crept into my mind: what was the rest of Russia really like? A growing interest to find out was propelled into something like a burning passion by all the times I heard someone say that “Moscow isn’t Russia.” Indeed, even during our meeting with Mikhail Freedman, he mentioned Vladivostok and stated that “No one knows what’s going on out there.”
So, on the last day of our Fellowship I took an Aeroflot flight to Vladivostok on the Pacific Coast. I had no schedule, no tickets, and no accommodations – just a vague sense of what I wanted to find out about Russia. I spent the next 6 weeks traveling across most of the Eurasian land mass in search of the real Russia.

I’m not sure I ever really found it. It certainly doesn’t exist all in one place – elements of what makes Russia were evident everywhere. At the end, I knew I had seen the real Russia. Except that I had seen it over 6 weeks in a dozen cities and countless hours on the Trans-Siberian rail.

For as much as the Fellowship meant to me, the trip across Russia will always be the defining experience of my time in that country.

Conclusion
This fellowship was a wonderful journey – a career-enriching move that became an intellectual challenge and exercise, eventually inspiring me to push myself emotionally and physically while on the road across Russia. The work phase helped me tune my analytical capabilities to the realities of the country and its emerging equity market; skills that I hope to use to my advantage in business over the coming years. But what I saw of life in the Far East, in Siberia, and in a handful of cities practically unknown to the West, was a trove of complementary research material. That’s where I learned more about post-Soviet reality – how the country really works, how people really live, and – when all is said and done after a year in Russia – what I really think about it all.

Photos for a Heat Wave

2006-07-20T02:55:00.000-04:00

Ice in Khabarovsk

Ice a meter thick on Lake Baikal.

Ice on the Pacific at Vladivostok.

Picking up the Pieces

2006-07-19T02:26:00.000-04:00

"My name is Ozymandias, King of Kings:
Look upon my works, ye Mighty, and despair!"
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.
~Percy Bysshe Shelley

I didn’t know what to expect for a readjustment period. At times, I look and feel completely re-acclimated to life in New York. But I’m a bit disturbed to say that just under the surface not everything is completely in order.

My apartment is a perfect symbol of that. There are two things going on here. The first is the inability to organize that which I dropped as soon as I walked in the door. The second is an unwillingness to open up vestiges of a previous existence.

I was resident in this apartment all of 36 hours before leaving for Russia last June. Just enough time to not have any sort of routine for living here. When I returned, I unpacked a large backpack and took stock of where I had been. Part of that was to perform a survey, another part was to admire and record the booty. I laid out all my souvenirs on the coffee table and took a picture. Now, almost 2 months later, I notice that some of those things haven’t moved.

Some of the souvenirs have been shifted onto a side table where they remain completely undisturbed. Central to this pile is a stack of tickets and my tourbook and my passport – the things I was almost never without during the entire length of my time abroad. They sit there, awaiting categorization or archiving or for some sort of sense to be brought to them. I fear that’s a task that will take a very long time to complete.

I sense this because other tasks are in a much more active stage and they are taking a very long time to come to closure – no matter how much emphasis I put on them. Take the digital clutter of my thousands of photos, for example. The two month period during which I traveled across Russia is organized into a series of folders and subfolders. I’ve even photo-shopped them and laid them out in a publishable form. But I just can’t get the job done. I desperately want to finish it – to have a book I can share while my trip is still timely, something to share before my friends and family think it’s weird that I can’t stop talking about Russia.

“Look at this; this is where I was, this is what I saw. Do you understand?”

The sole remaining task to complete a 250 page photo book, though, is stumping me. I’ve broken the book into chapters corresponding to each city, with the intention of heading each with a brief summary of my impressions. It can’t be much more than very cursory stuff, really, only a couple of paragraphs at most. But I just can’t get it done. Absolutely nothing has come of all the occasions that I’ve forced myself to sit down and get to work. Nothing.

For that reason, I get a deep sense of foreboding when I stray into the area of the hard drive that houses photos from the other 9 months in Russia.

For as much as I want to get that photo album done, though, I’m completely blasé about accomplishing another important task – unpacking. I have not unpacked anything more than my backpack and one suitcase I shipped from Moscow. About one-quarter of my apartment is dedicated to an immense pile of boxes from my previous dwelling in New York. For some reason, I’m very uninterested by what’s in them.

I’m wearing the same half-dozen t-shirts I’ve been wearing since April. I’m wearing the socks I bought for 11 rubles a pair in June. I’m rotating between the 2 pairs of jeans I’ve had available for the last year. My one indulgence has been to buy a pair of shorts. Still, when I do laundry it all fits into one machine.

Life and the seasons will change a bit, and no doubt I’ll want and need some items from that huge stash. As for now, I neither want nor need the vast majority of those things.

Indeed. I remain stubbornly incurious about what’s in all those boxes.

This will probably all evolve over time. I suppose I’ll begin to gravitate toward getting things done, toward actually assuming a lifestyle that those boxes necessitate – a convergance toward the material possessions I’ve carefully accumulated and carefully stored. I’ll probably get back to the state where I can finish the enormous meals served to me in restaurants.

Right now, though, it all still seems just a little bit out of reach.

Black Like Me

2006-06-13T09:29:00.000-04:00

I wrote this post on May 12th, just after my return to Moscow and a string of sketchy incidences with the police. I was bitter about my treatment here - I'm a russophile, for God's sake - and that tone certainly comes out. As soon as I wrote it, I decided to hold off from publishing; perhaps I was worried about thumbing my nose at fate. More likely, the act of writing was cathartic enough not to necessitate posting a bitter rant. Much later, and much calmer, it seems interesting enough to warrant a post - but with this explanatory note about context.

For a short time, I was just being a bit lazy and a bit cautious. Then, I decided that it was turning into an interesting social experiment. The result was a wildly different experience of Russia. And all of it from simply not shaving.

It started in the Far East (as Russians call their Pacific provinces) on a couple of overnight trains - attempting to shave on a lumbering train is probably suicidal. Then, it continued in a couple of Soviet-style hotels. In Vladivostok, I had a mirror but no sink - it was necessary to straddle the toilet to get in front of the mirror. I decided not to shave. Another overnight train. Another Soviet-style hotel where I couldn't see more than a small portion of my face in the postcard-sized bathroom mirror.

By that time, somewhere around Ulan-Ude, the act of not shaving became the act of growing a beard. Still passive, mind you, but no longer unintentional. I decided, also, that I looked quite dashing and rugged with some growth on my face.

I'm a white man of European heritage - of that there is absolutely no disagreement from even casual observers in the US. But the interesting thing is that my dark hair and - the part of it that isn't coming in white - beard further distinguish me from a lot of Russians. Guesses on my nationality have begun to stray way off the mark. Usually my accent (I think) leads people to guess either German or English. I had heard nationalities like Serbian once before, but for the first time I was being pegged as Spanish, Moldovan or Caucasian (ie Georgian, Armenian).

This is interesting, but it's not necessarily a good thing in Russia. The population here is almost universally, stridently racist when it comes to what they call "the blacks" - people from Central Asia and the Caucausus. In 9 months of living in Russia, I was checked for documents a total of twice. They were perfunctory, mandatory stops.

Since I started growing the beard a month ago, I've been checked 4 times. And they have been markedly more aggressive and probing in nature.

The director of my Fellowship program is a former chief of police in Moscow. He warned me when I first arrived last summer that I was likely to be stopped by the 'militsia' with some frequency. When he asked me at the end of the Fellowship program last month how many times I had been stopped, he registered surprise. He looked at me and considered it.

"You're dark," he said, "but you have a very American face - open and smiling."

So it seems that the beard has covered some of the openness of my face. I'll take the credit - or blame - for that. But if I'm smiling less - well, I know exactly what to blame for that.

Home Again, Home Again

2006-06-09T00:23:00.000-04:00

A spring day in New York City is a wonderful thing. The air is full of warm promises of summer with lingering hints of cool winter. The parks and trees are deep, lush green well before the searing heat introduces sun-burnt browns. Spring in New York is a far cry from the concrete gray of dismal winter. For me, just arriving from Moscow, New York looked different in a lot of ways.

I headed out to the local bagel shop for breakfast. There’s always a line, and the happy chaos of shouting countermen and ordering patrons. But in my new, post-Moscow idiom, I could see the differences right away. The New Yorkers formed a well-defined line that snaked single-file from the cash register. Any questions about the line were handled with proper deference – Excuse me, is this the end of the line? – in an effort to seek out the least offensive way to join the queue.

But in Moscow? Ahh, now that would be a very different scene. There would be no discernible line, and folks would march right up through the gathered crowd to shout questions at the clerks before milling around and then asking some follow up questions. They would stand right next to you, stare into your wallet, and impatiently wait for you to pay; their proximity, however, blocking egress. But they barge forward at your sign of having completed the transaction and cause the awkward situation of one person forcing a way in while another forces a way out.

And all of this would take place without any of the rich polite vocabulary in the Russian language. Not an excuse me, not a thank you, and more than just a little bit of personal physical contact. As I stood in line and marveled at the behavior of these natives, the person in front of me carried on a conversation with the person behind me. When the counterman shouted “Next”, I sensed the opening and a little brusquely asked the woman in front of me if she had ordered. In retrospect, it was perhaps more than a little bit brusque and it was certainly lacking in all the niceties of our language – please, excuse me, etc.

After I ordered, the person behind me tapped me on the shoulder. “I’m sorry if we held you up at all,” he said. And he meant it. I was shocked.

I got several more “excuse me’s” and a couple of “thank you’s” before I could get out of the store. Where were the famously short-tempered Manhattanites? The cutting comments one should expect from the sharp-tongued residents of a city so storied? My head spun from the coffee and the bagel and the crashing reality that the hard-boiled New Yorkers of American lore don’t hold a candle to the Muscovites.

I needed a walk to clear my head after that scene of unimaginable civility.

New York’s orderly grid of streets is patently rational and easy to navigate. Their regularity means that none are so large as to prohibit walking across them – the highways are banished to the edges of Manhattan. In Moscow, however, the antique and random arrangement of some roads – enlarged into huge highways – forces pedestrians to cross most intersections underground.

I walked toward Central Park, crossing Park and Madison Avenues – imagine! - on the surface. Add the tree-lined side streets in Manhattan and I couldn’t help get the feeling that New York was a sleepy little town compared to Moscow.

Most parks in Russia are best described by our word “forest”. Perhaps in recognition of their short growing season, Russians generally refuse to trim nature back into an orderly scene. Trees grow where they want; lawns quickly become high weeds, etc. Central Park, in contrast, looked like the world’s largest, most immaculately tended garden. Absolutely every path, lawn, bench, pond, and streetlight was in top condition. It rivaled the condition of the royal parks at the Peterhof and Catherine Palaces outside St. Petersburg.

I underestimated, however, how hard it is to get around the city during a weekday. I left what I thought was plenty of time to get to Penn Station from the Upper East Side. Shortly into the cab ride, I realized that traffic was so bad that I was in danger of not making the train. So, I asked the driver to get me to the subway on the Westside and I’d continue the rest of the trip on the metro. No luck – somehow we ended up going further and further east.

I missed the train by 5 minutes. Of course, the next departure to my destination was an hour late leaving the station. More about Amtrak at some other time perhaps.

Everything in New York seems kind of strange and new to me. After something like 10 years here, a brief 9 months is all it takes for the landscape to change – new stores, new buildings – to make a little bit of discovery necessary. But I love that about New York.

And it makes me a little nostalgic for when I first moved here. A little bit of wide-eyed wonder when walking down the streets may just roll back a bit of the jade screen the city helped me erect over all that time.

Communication Breakdown

2006-05-21T12:58:00.000-04:00

The blog and my nearly year-long habit of updating it were no match for the arrival of 7 American friends. The sightseeing, travelling, catching up, dining, and general having of fun crowded out the opportunity to write.

As my friends arrived at the airport on different flights over the course of a day, I thought I was burned out on Russia. Everything seemed to be both difficult and aggravating - the purchase of a SIM card for my cell phone for some reason involved close inspection of my legal status in the Russian Federation, for example. And a lot of everday things began to annoy me, too.

But as I wrap up my Russia experience with 5 days in St. Petersburg, I find myself curiously coming back around. There's beauty here, and culture, and an urban-yet-sane pace of life. I resolved to not let things bother me - and I've had much more fun than I did in Moscow over the previous few days.

So I've begun to refine things. I think I was burned out on travel, not being in one place for more than a couple of days over the past month plus (remember Kiev and Novorossisk in the total travel tally).

But being essentially homeless in Russia dooms me to that fate. When travel plans of the visiting American contingent changed, I decided to opt out of further adventure in Russia between now and my scheduled departure date at the end of May.

Instead, I moved the plane ticket forward.

Blog entries from this point, then, will be from stateside. I'll try to wrap up with things I have learned, seen, figured out, or failed to understand from my time in Moscow and Russia. I'll post pictures, too, that are illustrative or interesting or maybe just funny.

But the big adventure is over - at least the Russia chapter - and everything from now on will be from the domestic perspective of someone who once had an inside track, a ringside seat, for one of the world's great spectacles.

Welcome Back - Now, What Are You Doing Here?

2006-05-11T08:46:00.000-04:00

I really wasn't fair to Nizhni Novgorod. I should have paid more attention. I should have had more stamina. Instead, at a critical decision point I pulled the plug on more time in the city formerly known as Gorky.

It happened at the ticket counter in the train station. When the agent asked when I wanted my ticket to Moscow, I went through a list of considerations: my 6am arrival, my 12 hours of wandering around the city, my aching feet, my sore shoulders. In a flash, I answered "Tomorrow."

So I was heading back to Moscow on Thursday - a day earlier than planned. It was chickening out, for sure, but in the grand scheme of things it was a minor few hours at the end of a month of travel. That's what I tell myself.

I explored the city a bit more after dinner, but I was back at the station early the next day for the 5-hour trip to Moscow. The train wasn't a sleeper, but I stretched out and slept anyway. I had visions of Moscow in my head the whole way. Perhaps, I got a bit too sentimental about returning.

This city has a way of welcoming people back. It's an icy bear hug that's both friendly and menacing at the same time. Moscow's pretty sure that you can't live without her - and she treats you accordingly.

At the Kursk station, the main hall was closed - forcing hordes of people to clamber over tracks and weave through a drug store to exit the station complex.

After I secured my hotel, I thought I might go for a restorative stroll in the park across the street. The leafy green trees and grass (the first I've seen in Russia since last fall!) enticed such notions.

There's no such thing as a simple stroll in the park in a country like this. Alas, another document check by the police.

"What are you doing here?"
"What are you doing in Russia?"
"What's in your pockets?"
"How much money do you make in New York?"

A string of questions, some of official nature and some just plain curiosity. The conversation veered back and forth from interrogation to chat. But conversations like this always have the potential to end in statements, not questions. And they usually aren't too good.

"You are in the country illegally."

I pleaded my case and pointed out my very fresh Moscow registration from the hotel across the street. The policemen were suitably confused by all the stamps on my visa - and its official 'social-political' status - and decided to let me go.

"All the best," the militia men said as they handed back my passport and papers - and pointed me on my way back to the hotel. Thanks for the concern for my safety at 3pm.

All the best. Indeed.

Nizhni Novgorod

2006-05-10T10:50:00.000-04:00

Nizhni Novgorod is a big place; a sprawling industrial center with more than 2 million residents. That seems to affect the aspects of how it presents itself - from the past to the present.

The city is at the intersection of the Oka and Volga rivers, and has always been a strategic asset. One look at the massive Kremlin riding high on a bluff over the river junction will remove any doubts about that. The Kremlin is still the administrative center of the region, and is packed with office buildings and workers among the leafy parks and monuments. Its also notable in that its possible to walk along the tops of the walls and get a look at both the city on the outside, and the governmental city on the inside.

Its a beautiful place, providing sweeping vistas of the rivers and the rest of the town. Its also interesting to see an ancient power center still function centuries later as a power center. Most castles and keeps the world over have become irrelevant. But here in Russia (Moscow, Kazan, and Nizhni Novgorod anyway) the Kremlin is still the real heart of things.

Outside the kremlin, 'Nizhgorod' is a bustling metropolis of big streets and big traffic and big hurries. In all, I think its safe to say that its the most Russian city I've been to, as well. Its all a bit chaotic, a bit rundown, and a bit ... well...Russian.

So how to explain a thing like that? There appears to be very few traffic lights in this enormous city. 5-way intersections with speeding cars and weaving pedestrians are the norm in the center of town. The tram stop at my hotel is in the middle of 6 lanes of cars -it's up to you to get back and forth to the tram safely. The main pedestrian street is just that - a street, not a cobblestone walkway - where cars randomly appear and honk their horns at the crowds of people strolling along.

But for me there's one more important characteristic. In the very center of town, it's possible to buy kvas (a bread-based beverage from an old lady sitting next to an enormous yellow barrel on wheels. That's a disappearing site in most cities in Russia - but one I'll always identify with this country. And happily, too; I love kvas.

So Nizhni Novgorod is a fascinating place - and one that's gotten the short end of the stick for a long time. 'Nizhni' means 'lower' in russian - a moniker attached to distinguish it from a much older city. And then, in Soviet times, the city was named after a revolutionary writer who changed his name to Gorky - or 'bitter' - to reflect his outlook on things.

So first lower, then bitter. Unfair. It really doesn't deserve either.

Home is Where the Crowds Are

2006-05-09T10:50:00.000-04:00

Somewhere between my 9th and 10th city I decided I was an expert on a lot of things. It happened while writing on a train speeding along the shore of the Volga. "I'm no expert..." the note began; but it stopped there.

Between my education and practical and professional experience, I really do have a lot of things pretty well figured out. Sometimes it even borders on the eerie - like a sixth sense. For example, today when I passed a bored traffic cop on the side of the road. The look on his face, the way he wore his hat, the way he idly swung his useless baton on a traffic-thinned holiday afternoon, the way he looked at me on the sidewalk. All of it screamed 'document check'.

Bang! Right on the money! So I congratulated myself as he flipped throuhg my passport and looked for local Kazan registration. He was a bit intimidated by the purple blur of registration stamps on my immigration card. At this point in my travels, even my registration stamps have registration stamps - post-it notes stuck onto forms to provide more room. I pointed out the Kazan stamp and he silently, expressionlessly, and brusquely, thrust the passport back at me.

I know of only one other person who has been 'pulled over' for a document check by a traffic cop (an entirely separate police force here). So I now have the honor of belonging to a very small, and apparently suspicious-looking, group of people.

I must admit, however, that for all my supposed expertise, I can't figure out why the conventional wisdom is so wrong about one thing in particular - the widespread belief that people in smaller population areas are more friendly than people in cities. My travels so far have taken me from Moscow - population over 15 million - to Ust-Bargusin population 8000. And I've found that the exact opposite is often true.

So, here comes the theory. In smaller towns, people aren't used to seeing anyone different let alone a total stranger who looks and dresses differently. In cities, the population is accustomed to seeing strangers with strange ways on a daily basis. They may glance, but are too busy and too inured to bother much. In small towns, though, they stare and talk about you to their friends and speculate on where you're from and where you're going and sometimes stop and watch where you're walking to next. And then one of them hits you up for change or cigarettes.

By far the friendliest people have been train conductors and museum staff. Both are groups that, in my opinion, have every reason to be blase about both strangers and foreigners.

There have certainly been exceptions, and I'll be the first to admit that my theory needs a lot more work. But in the meantime, it feels pretty good to be back in a string of major population centers.

Kazan

2006-05-06T04:43:00.000-04:00

For a variety of reasons, I've always wanted to come to Kazan. It has a long history, a different ethnic background, a long reputation as an important provincial capital, and an intriguing modern story of politics and oil. After spending my first day here, I'm happy to say that it was well worth the wait.

Kazan has a massive kremlin complex that is still the administrative heart of the Republic of Tatarstan - an oil-rich region. As such, its in immaculate condition; its monuments, office buildings, new art galleries, and presidential palace. It also has a sparkling new mosque, too, replacing the one destroyed by Ivan the Terrible in 1552 when he captured the city.

Much of the city has the same feeling of careful renovation, too. The main pedestrian street is an architects dream of styles. And its being extended in both directions in a massive civic project. Its lined with nice shops and great cafes. Being here on one of the first warm days and watching the fountains get turned on - the city, in general, waking up - is a special time.

The city obviously has the stamp of a very firm hand on it. The president of the republic is a rather strong ruler with a rather strict style of governance - a privelege he seems to have won from Moscow after dropping independence claims in the early 1990's. The government is not averse to spending its petro dollars on grand projects of his design. Its obvious everywhere - condemned buildings, new buildings, a new metro system, new streets in new neighborhoods, the feeling that anything can be accomplished anywhere in town.

But while that means renovation for much of the city center, sometimes history is a poor match for such outsized grandeur. Kazan celebrated its 850th anniversary about 20 years ago. Last year, to match its new wealth and power and status, the anniversary was upped to 1000 years. Archaeologists assure everyone that the historical record has been filled in considerably in the intervening years. But just getting a look at this newly gorgeous city gives the feeling that everything is possibly subject to a convenient facelift if necessary.

Ekaterinburg

2006-05-05T04:24:00.000-04:00

Ekaterinburg is well over a million people in population, making it the biggest city I've been to so far on my journey. It's an attractive, vibrant, dynamic place that seems to hop somewhat comfortably between its varied historical eras.

Conversationally, and as far as the railroad schedules are concerned, Ekaterinburg is still Sverdlovsk - the name the city had during the Soviet period. The 19th-century city center is interspersed, too, with good examples of Soviet architecture. That is to say, examples of good Soviet architecture - from modernist constructivist buildings to Stalinist classicism. My hotel, for example, was designed to house KGB families during the 1930's. More strikingly, it was designed to look like a hammer and sickle from the air. It makes for a long walk to your hotel room from the lobby, but its kind of fun to think about the ideological frenzy in which it was built. On the whole, the new buildings give the city a modern vibe while it still retains its historical character.

And history, after all, is an overbearing force in Ekaterinburg. This is the city where the last tsar was imprisoned and executed along with his whole family - on the orders of Sverdlovsk himself. I took a guided tour of the enormous, lavish cathedral that occupies the same spot. The next day, I took a suburban train to the middle of nowhere and hiked into the woods where the remains of the royal family were found decades later. The church is constructing a sprawling monastery there to honor the royal family as martyrs for their faith.

It's all a little bit of a stretch at times, a little emotional at others. Nicholas II is probably one of history's most criminally inept rulers and responsible for literally millions of deaths. But at the same time, gunning down a man and his whole family in a basement in the middle of the night is not my idea of 'regime change'.

So, I've gone full circle on the Romanovs. I've seen where they've started, how they spent 300 years in power and how they lived in extravagant luxury. And now, I've seen the muddy hole in the ground where they dumped the body of the last Romanov tsar. Poor Nicholas II - the last man at the party - the guy who got stuck with the check.

Actually, the last tsar was exiled first in Tobolsk, the city I had just left. I got a decidedly better reception than he did in the Ekaterinburg of the future; strolling its streets and parks and shivering in its outdoors cafes. In all, a wonderful place for a couple of days.

Tobolsk

2006-05-02T00:40:00.000-04:00

Tobolsk was once a very important city, but it hasn't been for a very long time. A day's walk around town will provide all the evidence necessary to support that belief.

The city was once the frontline of expansion of the Russian state. But as time went on, the frontier moved further east and with it the trade and administrative functions that had enriched it.

The northern part of the city is divided into 'micro regions', basically blocks of soviet buildings in clusters along a broad avenue. The boulevard leads right to the Kremlin complex, and impressive collection of cathedrals and towers on a high bluff overlooking the plain along the Irtysh River. At the bottom of the bluff lies the old town - a devastated wreck of a place that looks like some hostile army sped through on its way somewhere more important. The wooden buildings that aren't slowly sinking into the mud have been left as burned out shells. The old town is a very bleak place.

But Tobolsk is trying. The Kremlin is a major restoration site and if initial results are any hint it will be an extraordinary spot when they're done. Even in the old town, some of the most hopeless buildings have official blue signs indicating imminent reconstruction. Most of the many dilapidated churches in town are in similar states.

It'll take time and alot of money, but if Tobolsk can pull it off it'll be a very special place indeed.

Speaking of special places, the Slavyanskaya Hotel here is worthy of note. It's Siberia's first 4-star hotel or something like that. More importantly, it feels like the 4 star hotel that gets built before anyone is sure whether they need a 4 star hotel. Every amenity and luxury imaginable - all just a little bit under-utilized. The fountains in the elevator lobby on every floor have been converted to flower beds. Long hallways have no lights on - the guests all seem clustered in a certain wing. But still, it's really very nice; it's just something you'd expect to find on a highway in Maryland rather than in the middle of Soviet apartment blocks.

It's all very shocking to me. As I laid in bed and soaked in the ridiculous luxury of it all - at a numbingly cheap $70, too - I was jolted out of my post-banya torpor by the phone. "Wouldn't you like the company of a pleasant young lady?" the voice on the phone asked. Well, sure I would. Who wouldn't like company? Oh...you mean.....ohhhhhhhh.

I get pretty lonely on the road all by myself - but not that lonely. Anyway, one more star for the Slavyanskaya Hotel!

The Long Road to Tobolsk

2006-05-01T00:23:00.000-04:00

In Krasnoyarsk, I purchased tickets for the next leg of the trip at a travel agent. She routed me through Tyumen to get to Tobolsk. At first, I thought of stopping in Omsk and spending the day. But after my forest adventure, my legs were screaming for a day off.

There was plenty of time to rest up since the train to Tyumen took some 30 hours. Or close to that, I'm not too sure. All train schedules in Russia run on Moscow time. In Vladivostok, for example, a noon train listed on the board is actually a 7pm departure. And so on across the country.

With so many time zones, anchoring the entire country to one fixed time maybe the only practicable solution. But it makes for a disorienting experience mid trip. I usually end up staring at my watch; I've travelled x hours across y time zones. Which means it is current time on my watch minus y time zones equals local time plus z hours difference to Moscow. Luckily, the train attendants keep pretty close tabls on the passengers and make sure they don't miss stops.

The attendant on the train to Tyumen, Alexandra Ivanovna, was an especially wonderful woman. She kept stopping by to chat with me. She's worked on the railroad for 15 years - and is very grateful for the stability of wages and employment it provided during some very tough times in Russia. Next year, however, she's going to retire and become an Amway agent. She excitedly shared brochures and marketing materials as we talked about it.

Amway came to Russia about a year ago. They opened a distribution center but didn't really know what to expect; everyone told them that russians were too lazy for an independent distributorship model. They figured they'd do X dollars in the first year here - not great, but worthwhile.

Instead they did 3 times that figure, and are racing to meet demand.

After a short layover in Tyumen's shiny new train station I continued on to Tobolsk. In the coupe, I met Sasha - already travelling some distance and with another full day to go. On the holiday-thinned trains he had been alone the whole time and it was obvious he was desperately in need of a chat.

He was travelling from Perm to Surgut, a major oil and gas field in the North - -20 degrees yesterday, he said proudly. He's interviewing for a safety engineering job with Schlumberger. Moving his family north doesn't thrill him, but he and his wife agreed that work with a major international firm would make it worthwhile.

I wished him luck when I got off the train at 3am local time in Tobolsk. 3am, I decided, was too early to take a gypsy cab into a city I don't know looking for a hotel I'm not sure about. I checked into the 'resting rooms' at the station instead - essentially a dorm for weary travelers with a long time between trains.

The beds were narrow and the toilet had no seat, but the place was deserted and, frankly, nearly as nice as some of the hotels I've been in at a much higher cost. For $8, I crashed out in a clean, comfortable - and stationary - bed.

Tobolsk can wait a few more hours.

Dream a Little Dream of Krasnoyarsk

2006-04-30T00:33:00.000-04:00

Irkutsk to Krasnoyarsk - 19 hrs 11 minutes by train

Two and a half days in Krasnoyarsk can pass pretty quickly if you know what you're doing. It also helps if you don't know what you're doing too - large portions of time slip out of your control in that case.

Krasnoyarsk is kind of an attractive city perched on the banks and cliffs of the Yenisey River. It's got a couple of charming nineteenth century streets that fill in as the main promenade. I got to windowshop to the refrains of antique american jazz and swing classics (hence the title for the post) - the whole street is wired for sound.

The city is an important cultural center in Siberia, as evidenced by the plethora of events. I chose Prokofiev's "Romeo and Juliet" at the central theater over Ultimate Fighting at a nearby club. The choice was made mainly on the assumption that the ballet crowd would be a lot less likely to get drunk and violent after the show. The total fracas at the coat check, however, proved I was at least half wrong about ballet lovers.

I sampled some of the natural splendors as well, a decidedly less successful endeavor. There's a large national park here that showcases a series of strange volcanic rock formations. The park is set back from the road some 7km, and spreads over 17,000 hectares - many of them viciously uphill. I'm not exactly sure what a hectare is, but I'm quite sure that I stepped on each and every one of them in the 8+ hours it took to get into - and then out of - the park.

I even bought a little map, but couldn't find my way around this enormous reserve. The winter path was really the only option and didn't correspond to the map. Like any good Russian place, there were signs everywhere describing all manner of prohibited activities - but not one sign offering directions. Or even announcing that one exit on the map was completely impassable. I had to turn around and head back out the way I came in after hours of trekking.

Adding to the problem, the volcanic rock formations were nice but nowhere near "8th Wonder of the World" status as described in so many places here. Perhaps no one can really agree on the first 7 anymore, but that doesn't mean we should allow a million-way tie for all the pretenders to 8th place. And I, for one, will gladly strike the moderately impressive and inaccessible rocks in Krasnoyarsk from the list.

The real problem with the park experience, however, is that I think I broke something. My sense of adventure, perhaps. My love of wandering around in nature, more likely. But it was ugly when it happened - it involved tearing up a map and screaming obscenities in a silent mountain top.

By the time I got back to the hotel around 9pm (still daylight!) I was in a very "take no crap" mood. I marched up the desk and laid out my commands: the banya for an hour, two bottles of mineral water, and a table at the restaurant afterwards. I didn't wait for an answer and just marched off. It all went as ordered - and went a long way to restoring a feeling of being in control.

Oil, Money and Nature in Irkutsk

2006-04-27T00:16:00.000-04:00

Like any city in Russia these days, Irkutsk undoubtedly has a raft of serious issues it needs to confront. But it's not hard to see what the major topic for the population is; it's literally written on the face of this beautiful city.

Both the state oil monopoly and the state oil transport monopoly want to build a new pipeline from northern oilfields to the energy thirsty markets in Asia. The big problem, however, is that the pipeline would pass distressingly close to Lake Baikal. So close, according to the population of Irkutsk, that it would needlessly endanger the health of one of Russia's greatest natural wonders. The health of which, it shouldn't go unnoticed, is likely to be critical to the burgeoning tourist trade here.

The kremlin backs the current plan for the pipe. Not terribly surprising since oil, its production, transport and profitability are all inseperable from the Kremlin these days. The powers that be (or the "power that is" since power is still a singularity in Russia) don't want the added cost of rerouting the pipeline and believe that their engineering (admittedly, a redundantly secure pipe) will preclude any accidents.

The prospect of even one such low-probability accident in such and ecologically pure areas as Baikal, however, gives people fits. And they have taken to the streets to say so: mass rallies against the pipeline are common features of life in Irkutsk nowadays. But their effectiveness is questionable. As the attendant at one museum said to me: "Maybe in America you can change things. Here they don't have to listen to us."

So it looks like the protest has taken to the streets in other ways. Well-placed graffiti decries the potential ecological damage with a dramatic picture. An outline of Baikal, bright blue except for the northern third in inky black. It's accompanied by slogans - "No to the pipe" or "And you aren't saying anything?"

My favorite is a rather colorfully, and obscenely phrased one that says "Yes to the pipe - Screw Baikal." It would be a lot funnier if it didn't feel like that was about to happen.

Irkutsk - Springtime and Rebirth

2006-04-26T06:07:00.000-04:00

It seems like springtime is finally coming to parts of Siberia. After a blustery first day in Irkutsk, I spent today toddling about the city in brilliant sunshine and pleasant breezes.

I wasn't the only one to notice. It seemed like the city came alive today - crowds of people in the parks enjoying the weather. Hordes of workers cleaning, sweeping, painting and generally trying to scrub away remnants of the winter. Flower beds and fountains being prepared for the real onset of spring.

But let's not jump the gun. It's still a Siberian spring, after all. No buds at all on the trees. No grass. So while it remains the perfect weather to optimistically buy an ice cream and walk through the park (it won't melt onto your fingers), or sit on a bench with a beer (it won't get warm before you finish) the really good weather is still just a little bit further into the future.

Irkutsk is a very pleasant city with a youthful, cosmopolitan air about it. There are lots of universities and institutes here, lots of business and industry, lots of hustle and bustle. But Irkutsk has always been an important place; and the city looks it. It has wonderful museums housed in impressive buildings, many theaters offering all sorts of entertainment, tree-lined streets with grand 19th century architecture, quiet sidestreets with log homes slowly sinking into the mud.

In the week after Easter, the background noise in many Russian cities includes the incessant ringing of church bells. All the belfries are open for anyone to come and toll the bells - all the better to spread the good news of the resurrection, so the tradition goes. I've been climbing steeples and belltowers for the better part of two days and happily clanging away at whatever they'll let me touch - and in one case, soemthing I shouldn't have touched. I strolled up, grabbed the clapper and let it have a good "bong" - the monk winced; "It's a really, really old bell," he said. "We try not to hit it so hard."

Several good things about this tradition in russia.

One; most belfries are separate buildings. That means a much shorter staircase than climbing into, say, a steeple at the top of a gothic church.

Two; Russians don't move the bell - instead, they move the clapper. That takes a lot less energy and allows even more cacophony.

Three; looking over a city and making noise is satisfying. It changes the nature of being in a belltower from passive to active. You're no longer looking at a city seething below you; you're adding to the din, noisily making a contribution signalling your participation in the whole mess.

Russia is coming back to life in so many ways this week. At the local art museum I blundered into an historic scene - the return of the Forbes Faberge collection to russia. The legendary collection was sold several years ago to one of the Russian oligarchs who decided to bring it back home and sponsor a tour around the country.

The museum was mobbed with people on a Wednesday afternoon. The tour guide used all the emotionally charged words the Russian language has for "homeland" when describing the prodigal nature of the luxurious items. And the locals ate it up, gawking at a part of their patrimony and cultural heritage that was overseas for so long.

When the sale of the items was announced a few years ago, I was a bit sad. The Forbes Collection was one of my favorite under-the-radar spots in New York. A jewel in my back pocket to amaze out of town guests, and never crowded like the Met or MOMA. But today, after seeing the grand tour of these items in the Russian hinterland and how the crowds uniformly reacted to getting a glimpse of these baubles, I've had a change of heart. Now, many more people are getting to enjoy this collection and to learn something about their own collective past at the same time.

So no matter how much I might miss the collection's presence in New York, I guess I can't begrudge anyone that.

The Welcome Wagon

2006-04-24T06:42:00.000-04:00

I took the bus back to Ulan Ude today to catch a train to Irkutsk. It was the same painstaking journey that I made in the opposite direction. But today, there was a slight twist.

In the town of Turka, we came upon a roadblock. Two AK-47 toting Interior Ministry soldiers got on board. I was wearing my russian jacket and my russian knit cap, but they "made" me immediately and bee-lined right for my seat.

"What's your citizenship," one of them asked.
"USA," I said.
"Where are you going?" he continued.
"From Ust Barguzin to Ulan Ude," I answered.
"Stand up, please."

Yikes - this is the moment when you grab your things and get hustled off the bus for further interrogation. I know because it's happened to me in the Baltics, Poland, and Belarus.

As I stood there, the other soldier looked at me and said to his companion: "Too tall."

Then the first soldier made his announcement. "The bank has been destroyed and a large amount of money stolen. We're looking for a shortish man, in bad clothing, black and white patterns on his pants."

I didn't fit that description at all. Not even close. They didn't mention that they suspected an american or a foreigner in general. Its just another example of why Russia will probably never make the league tables for attracting tourist dollars.

But on the bright side, my international criminal gang's plan for robbing small banks in desolate, impoverished Russian villages is well on track for success.

Kristos Voskres!

2006-04-23T06:18:00.000-04:00

I celebrated orthodox easter with Sasha, his wife Galina, and their daughter Masha on Sunday morning. They had decorated eggs and kalich, the traditional easter bread. We even played the "crack the egg" game that's a highlight of the day. It was nice to feel like part of a family while I was so far away from my own.

Then, Sasha and I headed to a neighboring town called Barguzin, which hosts the first church in the region. After services, we explored a little. There's a monument in town to two brothers, Decembrists, who were exiled here in 1825 or so. I've been to St.Petersburg where they lived. Now I've been to Barguzin where they were exiled. Its hard to comprehend the disparity between the imperial capital and this dusty collection of wooden huts.

Later, we drove over some of the worst roads ever. Road, in this part of Buryatia, seems to be defined as the absence of trees in a semi-linear path. Seasonally adjusted, of course, with the addition of mud or snow or ice. Or like today, all three.

We were driving Sasha's station wagon. At one point, we slid off the crest of two ruts, and got stuck in adjacent deep mud-filled ruts. The car bottomed out with a crunch, and I got out to inspect. The wheels spun freely in the filth, clearly not touching the bottom. Pushing had no effect, since the whole weight of the car was on its bottom.

Suddenly, thankfully, and miraculously, another car came up behind us. They were in a wonderful mood and joked around with us while helping. One guy looked at me and asked where I was from. The answer caused uproarious laughter. An American in a mud puddle in the middle of rural Buryatia! Imagine! "Take pictures," they said, "so you can show everyone back home what its like here."

They hauled us out and we found another path to our destination, a large valley on the opposite side of the mountains from Baikal. The ecology there is completely different, more barren and wasteland like - asia's northernmost steppe. But stark and severe as it was, it was very beautiful. At one point, we were beneath a hilltop crowned with rock formations.
"Do you want to go up there and get a closer look?" Sasha asked.
"Sure," I said.
"Go ahead," he said. "I'll be down here waiting for you."

Darn. Tricked into hiking up a hill. And what a hike it turned out to be. At points, it seemed like a 45 degree angle - though that perspective could simply be due to my hunched over wheezing position. The up-bound direction was positively brutal.

But I was rewarded at the top by outstanding views of the plains, the mountains, the valley, little villages below me closely hugging the bends of a river. Amazing.

At another rock outcropping, much more accessible, we inspected rock paintings from more than 3000 years ago. A really amazing experience to see so many things in one area.

It was an incredible day - to top it off we found some of the roads that we needed to take back to town were completely impassable. And for a road in Buryatia, that is a real distinction.

In honor of the holiday, dinner included some homemade vodka produced from berries that grow along the lake shore. I toasted their hospitality for making me feel like family on such an important holiday, and they toasted my successful travels.

That sort of wound up my rural experiences with my host/guide. It was enough to keep my eyes and head swimming with the impressions for a long, long time to come.

Lake Baikal

2006-04-22T05:28:00.000-04:00

Today I saw Lake Baikal with an excellent, experienced guide. It nearly overwhelmed my camera, and is likely to do the same to my ability to describe it.

My guide, Sasha, has been an ecologist at the Baikal National Park nearly since its foundation about 20 years ago, and has become a well-known expert on the ecosystem here. He's a somewhat taciturn fellow with gnarled hands, bespeaking his country life. With a glance, he notices things that simply flew by the windows for me. And his quiet nature notwithstanding, he's not shy about sharing his knowledge.

Sasha and I headed out around 9am after loading up his truck. The van looks like a VW bus, but is as spare and unstoppable as a Range Rover - the real kind, not the kind they sell to yuppies. We picked our way through town down to the waters edge, drove off the shoreline, and shot out onto the ice.

Despite the lake's vast size it freezes over completely in winter. I waited what I thought was an acceptable period of time before asking exactly how thick the ice is. Sasha just smile as we hurtled over what qualifies as the only smooth road in Buryatia. "That's always the first question," he said.

Baikal is profoundly deep - more than one mile deep in the center. And the isoquants on the map are bunched tightly around the shore and the islands. That is to say, the lake gets very deep very, very fast. Only a few dozen meters from shore its possible to find depths of hundreds and hundreds of meters. Nonetheless, it freezes over to a thickness of more than 3 feet. That is a reassuring statistic when one is in an old truck and in every direction the shoreline is quickly receding into an icy haze.

The landscape is nearly indescribable in its beauty. Every direction is a dramatic scene of snow-capped mountains, thick forest, rocky islands, and cliffs. The lake is ringed with mountains - even a peninsula in the middle has its own mountain range - guaranteeing a jaw-dropping view at every turn. I felt inconsequential in the midst of it all, holding a dinky digital camera and wondering how I could possibly capture even a glimmer of the sense of being here. The short answer, I think, is that one simply can't do it.

We went to several fishing camps out on the lake, where we got out and chatted with the locals; all of whom, it seems, Sasha knew. They showed me how and what they were catching and made jokes about saying hello to America when I took their pictures. Then, we drove around a few islands where I got to walk into some ice caves along the water line.

I was never really in any danger with such an experienced guide nearby at all times. But it felt like I was going to freeze to death at several points of the trip. The icy wind howled across the featureless giant ice cube, driving the snow along with it in high-speed rivulets. It cut through everything I was wearing and viciously attacked my fingers when I took out my camera. In a word, while everyone else was enjoying what they considered spring weather, I was brutalized.

At another fishing site we saw an entrepreneurial operation run by a friend of Sasha's - the "Brigadier". While they prepared to haul in their nets through a hole in the ice, we had lunch in the truck - a delicious, warm, long process that involved a good amount of vodka.

The "Brigade" laughed and clowned around in what they considered fine weather while they prepared the catch. It was an interesting and efficient operation, aided by diesel powered winches and a tractor and some other modern technology. But some things don't change on Baikal - most of the equipment was hauled out to the site by two horses attached to sleds. And the nets were tended with long, hand-carved poles as they slowly emerged from the ice. But it all still made sense; the horses can go where machines can't, and the specialized wooden tools won't damage the nets.

Then the nets came in, loaded with a local fish called Omool and a local perch. We watched along with the Brigadier as the team loaded trucks and sleds with their catch. The captain gave us 2 big buckets of fish to take home.

When we got back, we picked out the biggest perch - tipping in at almost 1.4 kilos each - cleaned them, put them on stakes, and cooked them in the fireplace. That night, the whole family ate like royalty of Baikal.

Ust Barguzin

2006-04-21T02:05:00.000-04:00

Ulan Ude to Ust Barguzin - 250 km, 6 hours by bus

I took a journey into the heart of the wilderness today. I took a microbus to the edge of Lake Baikal, and got a trip into the past as well.

The bus left at 745am from a non-descript intersection that, somehow, got designated as a bus station. Everyseat filled up and we were on our way.

The road to Ust Barguzin is, in large stretches, unpaved. The remainder, it can be said, is quickly reverting to that condition. Each seat on the bus really should have come with a kidney belt and a mouthguard. The result was a slow trip - for every kilometer that we traveled, we probably traveled a tenth of a kilometer from left to right avoiding potholes.

As we pulled into the village, the babushka next to me asked where I was going - the bus stops at whatever address the riders shout out. "Everyone quiet down," she shouted. "There's an American here who doesn't know where he's going."

The driver had spoken to Andrey just before we left Ulan Ude. "Don't worry," he shouted back, "Sasha's waiting for him at his office." Sure enough.

Ust Barguzin is a rather dismal collection of wooden houses on a grid of winter-scarred streets. It is, however, perched on the shore of Lake Baikal. The mountains and forests that surround it make up for the condition of the village.

Sasha's wife, Galina, gave me the rundown. The 2 big plants in town - a timber mill and a fish plant - both collapsed along with the USSR. Both industries remain the mainstay of the local economy, but on a much lower level of private enterprise. Also, nothing gets processed here anymore; the raw materials are shipped out.

So then, I went and had a look for myself. There's only one or two paved streets in town and many streets are dotted with wells. Dogs wandered about, unperturbed by anyone walking by. The dirt streets are so ravaged by winter, that its easier and faster to walk than to drive. As a crank on a well squeaked, I had the odd sensation of having jumped back in time as much as a couple of hundred years. With any luck, I said to myself, they'll worship me as a god.

Down by the shuttered factories I stopped to take a picture of the rusting fishing fleet, hauled up on shore to decay. A man from and adjacent construction site shouted to me that the view was better on his side of the fence, and invited me to come through the gate. As we started chatting, he invited me into the unfinished building -soon to be an inn - for tea.

Vladimir Alexandrovitch is 58 years old, retired (on pension) for 9 years already, and a grade A character. He told me colorful tales of his Cossack childhood in Buryatia, and explained a lot about local landmarks and landscape. The next day was his birthday - as he counted out the years he estimated that he had about 7 left to go. "Anyway", he said cheerily, "let me show you around." He gave me a tour of the little hotel his nephew is building and the fleet of touring boats that go with it. He invited me to come back in better whether - when the hotel is finished.

Ulan Ude

2006-04-20T01:38:00.000-04:00

I arranged for local tour guides through a friend from Moscow. On Wednesday, I met up with them in the shadow of an enormous Lenin statue - well, just his head, actually - on the central square of Ulan Ude.

Andrey and Svetlana are a really nice couple in their late 40's. They're professional guides now, shepherding around tourists brave enough to get off the Trans-Siberian Railroad and explore Buryatia. They do pretty well at it, but there aren't too many takers at this time of year.

We immediately drove some 20km outside of town to a datsan, or Buddhist temple. This particular one is the center of Buddhism in Russia, long a traditional religion in these parts. The complex is dramatically located on a windswept, desolate plain with snowpeaked mountains in the background. Svetlana showed me around and explained the finer points of theology and how they are represented in the art and architecture. We saw chanting monks, spun the prayer wheels, watched prayer flags flap in the icy breeze, and got a blessing in one of the temples. The blessing involved a somewhat solid knock on the head with along wooden scroll box wielded by a monk.

We had lunch in a yurt and talked about a trip out to Baikal. Andrey showed me beautiful pictures of the lake in full freeze, amazing jumbles of ice that they drove their car out to see. "Wonderful," I said. "When did you take these?" - expecting an answer like January. "Last week," he answered. "You'll be able to do this now。Â

Next to the yurt is the ethnographic museum, an outdoor collection of wooden houses representing the different populations of the republic. It was impressive, and since most of the staff knew Svetlana, they lifted the ropes and unlocked doors to let us into the exhibits themselves.

The next day, Andrey took me to an even more remote datsan in the foothills of the mountains. We pulled off the crumbling highway and drove over a grassy plain to get there. An ancient man and a young monk went door-to-door looking for the keys to the main temple. Actually, they'd walk up to a house and bang on the windows, not the doors. No one could find the keys, though, in the small cluster of adjacent houses. Then they realized that they were wrapped in cloth and stuffed into the door jambs right next to the heavy padlocks.

We drove further toward the mountains over a path in the fields in Andreys station wagon. The frame squeaked and groaned as we picked our way across. He told me about similar trips in the snow and how the monks twice had to come save him.

At the end of our path we found a children's camp where the caretaker is an old friend of Andrey's. Adjacent to the cam is a spring that bubbles up and runs off into the woods.

The caretaker hitched ride back to "town" with us (the village near the datsan) and talked about how he hasn't had lights in 2 months. Which is to say - no electricity at all. He pointed out areas where he sees bears, where wolves hunt in packs, etc. All of which, mind you, he was going to have to walk back through to get back to the camp.

"I've known that guy my whole life," Andrey said as we dropped him off for cigarettes in the village. "Well, except for the 15 years he was in prison, that is." As our passenger gesticulated, I noticed the telltale prison tattoos on his hands. Andrey assured me that he was a completely changed man. In any case, maybe the bears and wolves are the ones who should watch their step in the woods.

We drove to another village along a royal rod built in one day in 1991. Princess Anne visited the area to help organize international charity efforts, and the authorities had to scramble to put an infrastructure in place to even facilitate a visit: bridges, roads, and this one street that leads off the highway to the front door of the village medical center. That is, the former medical center; I guess the charity efforts didn't go so well after all.

In the village, I had a cultural lesson at a charming Buryat woman's house, Geerla. It was interesting but had the potential to be a little canned. They were excited to have aRussiann speaking guest, though, and that allowed me to get them off script and have some fun. I got to ask insightful questions like "Exactly what is a Buryat" and hide under the cover of being a foreigner with weak language skills.

Train Keeps a Rolling

2006-04-18T07:25:00.000-04:00

Khabarovsk to Ulan Ude - 48 hours

Travel can be an enlightening experience. Especially if your accidental acquaintances are interesting and talkative people. Otherwise, the miles and miles of birch forest leave only the oportuntity for introspection. It's better to find something else to do.

I've got all of my worldly possessions (in this hemisphere, or even continent) strapped to my back in an army surplus rucksack. Reading material is little more than deadweight. Still, something to read was sorely missed during some of my down time. So, in Khabarovsk I stopped by a shop before the train departed. They had the standard Russian bookshop selection of Jack London, Agatha Christie, O. Henry, and a few others that have been favorites here for a very long time. In fact, one cabin mate on the train from Vladivostok was reading a collection of O. Henry stories in Russian. The nasty twists of fate at the end really appeal to a Russian sense of impending doom.

I settled on a Graham Greene title "Stamboul Train" about passengers on the Orient Express. I realized why I hadn't heard of it after a couple of chapters - it's remarkably anti-Semitic. Still, the main thing is that I underestimated so many factors in this choice of book: length of book, length of trip, number of hands of "doorak" (a Russian card game my cabin mates taught me) one can play before suddenly, and inexplicably forgetting all the rules. The book lasted 24 hours - half the trip. That's still a lot of time leftover for staring out the window.

Actually, it was a lot more interesting than that. I spent the time well with my fellow travelers who were quite curious about life in the US. I was equally curious about their experiences, and pumped them for information on what to see in their part of the world. I played cards, I helped out with the crossword puzzle, and on 3 separate occasions I was treated to a long discourse about how things were better under socialism. They poked fun at me - saying I had arrived in Vladivostok on a submarine from America as the "first wave" - but were so genuinely hospitable that it made it feel like traveling with old friends. I sampled their salo - pork fat back - and shared chocolates in return. When they reached their station, they bid me a warm farewell and lots of luck on my trip.

These are the memories of travel that everyone wants to recall. Not the hotel clerk who called the cops; not the restaurant car waitress who screamed at me for asking for carbonated water; not the train attendant who interrogated me when I took out my camera. They all have a place in the story, of course. I'll just put them on the opposite side of the ledger page from the folks with whom I shared the train to Ulan Ude.

Russia and Foreigners

2006-04-17T06:03:00.000-04:00

Being outside the US is gives another perspective on things and makes people react in perhaps different ways. Take the recent demonstrations about the immigrant question, for instance. Now, when some Russians meet me they look at me straight in the eyes and say, with feeling, "You know, we have a similar problem here."

A Moscow cab driver was one such example. I hailed him last week and had quite an opportunity to chat as we sat in gridlock. He brought up the demonstrations in the US and talked about race in general. "I saw a street scene there. So many blacks," he said, using a not-so-pleasant catch all phrase for moderately to completely dark-complected people.
"Well," I said, "That's our history and our way of life."
"Who said that's bad?" he retorted. "Not me."

But his sense of moderation began to dissipate as he strayed onto the subject of Muslims. He enumerated the demographic changes in Kosovo over the past 100 years leading to a total inversion in the present day - before moving on to Russian muslims. "Ahhh, these Muslims," he said, "they multiply like cockroaches."

On the train to Ulan Ude I had a long, interesting talk with my cabin mates - a really wonderful older couple. I asked them about the increasing Chinese presence here. "There's about 10x more of then now than 5 years ago according to my friend in the police," Nikolai said. "And that's only the officially registered ones." His wife agreed and noted their presence in the markets and said that, in general, they're everywhere. "They're like, like - I don't know - (wait for it, wait for it) - like cockroaches."

To be fair, there are a lot of Chinese on this side of the border. And the Russians are well aware of their demographic state. In particular, they're aware of what it could mean in a few years time - minority status in their own country.

The Russian suspicion about foreigners is in large part the basis their for laws and culture. They're generally suspicious of my presence, but polite and tolerant. There have been notable exceptions, of course; but the standard question in Russian for finding out where someone is from is the charmingly phrased "Tell me, please, where you are from if it is not a secret."

All serious countries need immigration. Perhaps the Russians should even be flattered that others would want to come here. Maybe they should take it as a reflection of their improved living standards and economy. But in either case it's clear that Russia has a problem. I'm just not sure whether it's with immigrants or with cockroaches.

Khabarovsk

2006-04-16T05:41:00.000-04:00

Vladivostok to Khabarovsk - 12.5 hours

Khabarovsk is a wonderful city that succeeds in so many areas where Vladivostok fails. I don't suppose I'll get to know much about life here in only 2 days, but my experience in Moscow gives me some clues as to how things really are.

The central city has 3 main avenues toward the Amur River, a broad, currently ice-choked flow that comes from China only 15 miles away. The two adjacent avenues are more like parks, delimiting the central area of town from the neighborhoods. The central avenue is wide, tree-lined, well paved with attractive paving stones in geometric designs. Both sides of the street are lined with beautiful buildings in fine condition. And all of it is scrupulously clean. Not Russia clean, but world standard clean.

The main avenue - named after the first military governor of the territory - spills down to the broad, beautiful park along the river bank. It cascades down in terraces and staircases to a wide boardwalk, all well lit and well kept. It really was a pleasure to explore the waterfront in such pleasant circumstances; despite the cold wind that came off the snow covered mountains in the distance and picked p additional force over the river.

Its a great city to explore. Just off the main avenues, the city becomes older and a bit more rickety - but still nice. Its easy to find timber construction buildings with rioutously ornate woodwork on these side streets.

There's a huge Chinese presence here evident in the kinds of restaurants, the kinds of cars, the faces on the street and in the market. Khabarovsk has more than its fair share of chinese traders selling weirdly worded clothing - a bag with Mikey and Mimi Mouse, for example, or a jacket proudly emblazoned with "Camp Boy: Wilder Cutter and Livelier Town". Even the russian merchants hawk Chinese domestic goods.

The city is completely decked out with banners for both Victory Day (May 9th) and City Day (May 30th). Every business, every window, every lightpost has something on it well in advance of the holidays.

There are two beautiful, reconstructed cathedrals in town, too. One in the very center near the river, the other a massive construction on a hill next to the WWII memorial. I caught a Saturday evening service there with the local bishop and saw the place in full swing. Very impressive.

But its still Russia, after all. As I walked a couple of blocks back to the center. I noticed a man with a bucket toddle out of his ancient house. He walked over to an electric pump in the courtyard and drew water noisily and messily. Right next door to the publicly financed cathedral and across from two blocks of brand new elite apartments.

In all, Khabarovsk is a beatiful, impressive city. And it reminded me of Moscow. All in its place, clean, orderly, organized. The Cathedral even has a plaque announcing the government's financing of its reconstruction. All just like Moscow. It really speaks of very strong, determined city government with a clear vision of what life should be like here.

Like Moscow, there are probably plenty of people who disagree and get trampled over. But in the meantime, its an awfully nice place to visit.

Final Thoughts on Vladivostok

2006-04-15T07:44:00.000-04:00

Some things occurred to me while on the train to the next destination. There are three observations in particular that stuck in my mind.

First, the pyan-se. It's a steamed bun, chinese style, but filled with a pretty russian combination of cabbage and meat. A bit more flavor than typical russian fare, though. They are really tasty, and for 16 rubles they are especially filling. It's a huge bang for your buck - well, make that about $0.60.

Second, it's taking your life in your hands to cross the street in most places in this country. There are no "pedestrial rights". This situation is greatly exacerbated in the Russian Far East by the cars themselves; a vast majority of which are right-hand drive imported from neighboring Asian countries. Russia, however, is a "keep-right" country - making the traffic situation all the more confusing.

Third, Vladivostok is a city of cranes. The port, naturally, bristles with cranes for handling cargo. But the skyline is also spiked with construction cranes for commercial and residential projects alike. Most of the city seems to be under construction, indicating that the trade corridor here is very vibrant.

Ah, Vladivostok. Now I can always say that I saw it for myself.

Vladivostok - Take Two

2006-04-14T23:56:00.000-04:00

I spent another day walking around Vladivostok before my night train to the next port of call. Most of my previous impressions remain unchanged, but it was a really pleasant day nonetheless.

The day started at the local fortress, a series of concrete bunkers on a height overlooking an approach to the harbor. The museum was a collection of cannons from all eras outside, and historical artifacts inside. A strong museum, over all, and well documented in english. The real highlight was the noon gun. A soldier uncovered one of the cannons, loaded a gleaming shell, and when the radio station toned 12 noon, he let loose. I was photographing the whole thing but probably missed the crucial shot. Mainly because the cannon was, I believe, too loud.

I'm not sure what I was expecting from a ceremonial noon cannon, but the enormous boom scared the daylights out of me and I dropped my camera - the neckstrap saved the day. The other soldier, sitting on a lawn chair in a tee shirt, smoking, got quite a laugh out of the whole thing. He couldn't say goodbye through his guffaws, and could only wave to me as I walked off. So much for the solemn ceremony.

Vladivostok's aquarium is kind of cool. A few exhibits have local critters in their habitats - small aqauriums full of plastic plants. Most other exhibits have been given over to more prosaic things, like goldfish. Not too much excitement seeing a goldfish in an 80 ruble per ticket aquarium, but then, I've never seen goldfish cared for by a dedicated staff of marine biologists. They were probably as close to the aristotelian archetype of a goldfish as one can get in a post-modernist world.

I discovered a couple new areas of town, and enjoyed strolling about in the bracing sea air, sunshine, and cold breeze. Off to the train station and Khabarovsk on the overnight train.

Lord of the East

2006-04-13T23:38:00.000-04:00

Moscow to Vladivostok - 4284 miles, 8hrs 25 minutes, +7 hours Moscow Time

Aeroflot took me to the Far East on one of their very ship-shape Boeing 767's. In all, it was a better flight experience than I've had in some time (including Delta).

People in Vladivostok all know how to speak English, if you - like them - limit the English language to the phrase "One Hundred Dollars". Taxi from the airport? "$100". Hotel? "$100". It takes a bit of pleading in Russian before you stop looking like a Bank of America ATM to them.

But it doesn't always work. Most taxi drivers walked away from me when I counteroffered in rubles. A hotel clerk was trying so hard to disqualify me that she called the police to check my visa - she doubted that my Moscow registration was in order.

So, there's a warm welcome for you - extorted for 3x the price of things (literally, in both cases) and having the police called to comment on my recent travel. But then, what did I really expect from a place that has passport control at the door of the airplane on arriving domestic flights?

I spent the day walking around the center of town, along the bay and the ocean sides of the city. The views were quite nice, which leads me to my first blush impression of Vladivostok; It may well be the world's best situated crappy city.

The city straddles and spills down steep hills to an awesome protected harbor on the ocean. It is a very dramatic and scenic location that prompted someone to once call it the "San Francisco of Russia". Someone, of course, who had never been to San Francisco. And maybe not even Vladivostok; I can't image someone coming here and saying "San Francisco must be just like this."

Vladivostok is a jumble of crumbling, indistinguishably ugly soviet buildings, tumbledown shacks, and industrial fixtures. The monotony is occasionally relieved by a few charming buildings and shops, but they are few and far between. In all, the awe inspiring landscape struggles to make up for the city that blights it.

The best vantage point, and symbol of this problem, is the overlook as that top of the funicular. The scene is panoramic and really striking. But the overlook also includes the world's largest collection of broken bottles. It's hard to concentrate on the natural beauty the city enjoys when picking a path through shards of glass.

Still, a vista is a vista and Vladivostok's location offers up plenty of them. I stared out to sea and contemplated the thick ring of ice that surrounds several islands not too far offshore.

Some day, perhaps, a real spring will come to the Lord of the East.

A Few Days in Novorossisk

2006-04-11T04:09:00.000-04:00

The Fellowship Group traveled to the northern Caucasus for our final regional trip. Our destination was the port city of Novorossisk, on the shores of the Black Sea.

The city is along the sides of a deep water harbor (30m) that cuts into the surrounding mountains like a sharp wedge. It’s a striking setting, made all the more dramatic by the mountains, the sea, and the massive industry that rings the harbor.

Novorossisk is Russia’s largest southern seaport, and a principal port of exit for its oil exports. There’s an enormous cement factory, as well, that mines the adjacent mountain for minerals. It’s an industrial landscape of epic proportions, but somehow made softer by the ships at anchor in the Black Sea and the other beautiful scenery.

The city was the front line in WWII, and there are monuments all over town to various heroes and heroics. The Nazi push toward the oilfields of the Caucasus was stopped here, earning the city the title of “Hero City” – a title that is proudly used even in casual conversation.

There isn’t too much to see in a cultural sense in the city – it was completely leveled during the war and rebuilt along soviet functional standards. It’s a nice enough place, in that context, and the city fathers have gone some distance toward beautification with parks and walkways along the harbor.

The real seashore activity takes place at some surrounding towns, like Gelendzhik – a charming seaside city with a stunning view and a brand new promenade from which to enjoy it. The tourist trade here is booming, and all the towns are racing to improve their infrastructure for the swelling crowds of the Russian middle class that come flocking here in the summer. It was still a few months from the season and while progress was being made, nothing was exactly moving at a fevered pace on a somewhat lazy Saturday afternoon along the waterfront. I made a mental note to come back in season some day.

The real culture here is the culture of the grapes, with vineyards from the days of the first ancient Greek settlements still lining the slopes of the mountains beginning just outside of town. We visited a winery on one day, and a Champagne factory (?) on the next. Both were pretty interesting, but the champagne method was fascinating. Production here dates from the late 19th century, and closely follows the official French method. We were fortunate to see the corking phase, too, when the sediments are removed and the bottles corked and labeled. I did my Laverne and Shirley impression – “Schlemiel, Schlomozel, Hossenfeffer Incorporated” – as we toured the inspection line. Of course, none of the Russians got the joke.

We also met with representatives from the two leading ports in town. We talked about their growth plans, the pace of business, the competitive issues of having two independent ports in the same city, the international issues of the Black Sea and host of other issues.
It was an interesting trip – except for the 4 hour delay on the way back to Moscow. We got to see remnants of the past, and a whole lot of what the future of Russian business will probably look like. And all of it in the context of a hero city that honors a past that was practically wiped off the map.

The convergence of all those things was neatly summed up in one monument. Brezhnev was a commander here during the heroic defense, and when he became leader of the USSR he showered attention on the city as the scene of his youthful adventure and glory. The citizens still respect him for it, it seems; just two years ago they erected a statue in his memory.

Kiev - Day Two

2006-04-02T07:07:00.000-04:00

I awoke early on Sunday; my train was scheduled to depart at 6:30pm so I had a lot to do and see during the day.

My first stop was near the University metro stop – St.Vladimir’s Cathedral. Its an impressive heap, but the real attraction for me was that the entire interior was executed by a very famous Russian artist – Vasnetsov near the end of the 1800’s. True to billing, the cathedral was absolutely stunning in its decorations, all of which it seems, were done over a heavy layer of gold leaf. It shone brightly as the morning sun streamed through the windows. I stayed for a good part of the service before heading down the street.

Just nearby is the Golden Gate, a major portal through the city wall in the 12th century. Its been completely rebuilt although no one knows for sure what it really looked like. Its in the middle of a nice park in a very charming neighborhood that looks much more European than Russian.

That neighborhood stretches some distance actually, and gets noticeably wealthier as one walks around. The architecture from every period is just superb, and the streets are dotted with little cafes and shops and the curbs lined with mercedes’ and BMWs. It was an accidental journey, really, but one that ended up being a highlight of the trip.

I followed the winding streets down to Sofia Square, a monastery in the center of town that operates as a museum. The grounds are peaceful and beautiful, made all the more beautiful to my Moscow-hardened hide by mild weather and plenty of sunlight. The main cathedral is a jumble of arcades and baroque roofline additions, and golden domes. But surprisingly, the interior is a nearly untouched, pure example of 10th century Byzantine construction. I got the lay of the land from the bell tower (209 steps!) and set up a little bit of plan for the rest of the city.

Then, I followed some more winding streets, somewhat blindly, down to another baroque church and the street market that surrounded it - a huge bazaar of trinkets, knickknacks, and art that stretched for blocks. I stopped to admire a few watercolors and got to chatting with the painter.

He was interested in my impressions of Kiev and how it compared to Moscow. Central Kiev is stunningly gorgeous – but I still hadn’t been outside a more than a mile or two radius from the hotel. A bit hard to compare, to be fair. Of course, I told him that it was much more beautiful than Moscow.

He told me that he was afraid to go to Moscow; “Bandits,” he said.

We discussed the investment value of the watercolor I was about to purchase, and he assured me that in 100 years it would be worth $1 million. He burst into laughter when I used one of my more recently acquired phrases: “stolka ne zhivoot” or “people don’t live that long.”

I followed the market down a winding, steep street called Andeyevsky Spusk to the lower part of town, another charming place. At this point, I was along side the Dnepr River and looking back up at the bluffs where the rest of the city (in particular, the train station) was located. Ahh, but isn’t Kiev famous for its funicular? It is.

For a pittance, I got on a rickety rail car and glided in ease back to the top of the bluff. The path ends at the foot of yet another monastery – but by this point my legendary stamina for monasteries had completely run dry. Instead, I decided to do something completely profane instead – I bought a beer and sat on a park bench and watched the rest of Kiev go by. Very relaxing.

Back at the hotel I picked up my bags and a cab. The fare was extortionately expensive compared to everything else in Kiev, and I told the driver as much. He didn’t really know what to say. Then I offered him half of what he was asking. All he kept doing was pointing at the meter and sort of whimpering. Fine – I gave him the money. How was I going to dump my last Ukrainian currency, anyway?

By buying a beer and snacks for the train, that’s how. I actually got chicken kiev, too. Not so good, unfortunately, so I’ll have to go back and get some in a proper place some day.

The train matron seemed impressed with my US citizenship when she quizzed my cabin mates and me on what documentation we’d need when we reached the border. I asked her if that was strange. “No,” she said, “I just didn’t expect that you’d be able to understand me.”

I got some more attention for being American later, too. At about 3am, the cabin door flew open. “Who’s the US citizen here?” shouted the Russian border guard. I offered up my documents and stuttered something from my bed.

I was surprised on a lot of counts. Of course, it was the middle of the night and I had been asleep. But the border guard was also a very attractive blonde woman. Perhaps I didn’t have my glasses on, perhaps it was more middle-of-the-night than I thought, but at that moment –backlit by the hallway light – she looked just like an angel.

An angry avenging angel in a fur hat, here to punish my transgression of skipping that last monastery and loafing about on a park bench drinking beer instead.

I thought of all the ways I could be unceremoniously yanked off the train, but she eventually came back and handed over my documents with a smile.

No problems. No retribution – divine or otherwise.

Kiev - Day One

2006-04-02T06:06:00.000-04:00

I took the train to Kiev on Friday night, arriving there early Saturday morning. My knowledge of Kiev and its history is quite extensive. Ask me anything about Yaroslav the wise, or the Rurikite dynasties of early Kievan Rus’. Anything at all. But what I realized was that my knowledge was a bit thin in certain places; like most of the period from the 13th century to the present. So I went to Kiev to address that problem.

The train pulled in at 8am sharp, and after changing a few bucks into hryvnia (the local currency) I noticed a tour bus company near the station. That seemed an excellent way to kill a couple of hours – getting an escorted tour around the city. The bus filled up and took us to most of the highlights of the oldest parts of the city. I left the tour on the main street in downtown and looked for a hotel.

The Dnipro is a decent place, well situated just off the central square – Independence Square. I asked for a room and after a brief wait got the keys to my “standard” room – an unrenovated Soviet nostalgia period piece of hospitality. Actually, the towels were better than a real soviet place, but still, the room was a bit old fashioned. Clean, safe, well lit; fine for just one evening.

The hotel’s location isn’t the only thing going for it. Since half the hotel is renovated to western standards, a lot of the amenities are quite nice. The lobby was nicely done up, and the staff were all friendly and attentive. The Dnipro also has the world’s largest doorman. He’s over 6 feet tall and probably in excess of 500 pounds. Half his double-breasted uniform coat would yield enough material to clothe a small family.

The shoeshine man in the lobby practically salivated over the prospect of polishing my mud spattered boots, and when I came back down from the room I indulged in a little tidiness. He was an African gentleman, and when he took a cell phone call in mid-job, I joked with him that I didn’t understand any Ukrainian at all. He laughed, and told me he was actually speaking in Afrikaans. We compared notes about Kiev and Moscow – he had lived there as a student some years ago. Anyway, my boots were such a mess that he had to use half a lemon to break through some of the grime before he even got to the standard polishing.

From there I took the metro to the WWII memorial park, a huge area right in town. It’s a wonderland of soviet military equipment and epic monuments commemorating the 2 battles for Kiev during the war. Like all good parks, this one also had speakers everywhere playing heroic songs of the period.

The Monastery of the Caves, a massive religious complex on the banks of the Dnepr River, is adjacent to the park. It’s a riot of gold domes and cathedrals and beautiful courtyards under the shade of soaring belltowers. It’s a very serene spot, and officially a state museum. The Lower Monastery next door is a working monastery that is controlled by the Church.

Each monastery has a network of caves running under it that has been a sight of Christian ascetism since the 10th century – as old as Christianity itself in these parts. The caves are dark, eerie, whitewashed passageways lined with glass coffins, each of which contains the body of a monk/priest covered in richly brocaded cloth. They are the object of devout veneration by the believers who come here, who cross themselves at each niche and then pause to kiss the relics.

There are small pains of glass, no larger than a 3x5 card in the walls as well. In front of each is a small hanging lamp and a name or icon. These are where monks had themselves walled into the caves so that they could spend the rest of their lives in prayer and devotion. The holes were big enough to pass food and water in small amounts to keep them alive. But when they died, they simply glassed over the little pass through and lit a candle in their memory.

The lower monastery has much more extensive, and deeper, caves. These are tourist attractions, but deep down in the recesses of these chambers there is a passage way that is labeled “for prayer only.” Past this point, the passage becomes narrower, darker, and the ceiling slopes lower and lower. The halls open into small chapels and at least one full blown church where a robed priest hears confession.

Suddenly, though, you’re back up in the sunlight squinting and wondering what to do with the remainder of the candle that lit the way through the cavern. I couldn’t help wondering, also, about that little other-worldly experience. It almost seemed a dream as soon as it was over.

I couldn’t find the metro and ended up walking back toward the center of town. It was just as well, since I ended up passing through some wonderful parks and seeing sights like the tsar’s palace and the Parliament. It started raining as I walked past my hotel, and that seemed as good a signal as any that my sightseeing for the day was over.

The center of Kiev probably isn’t a good proxy for all of Ukraine. But still, I couldn’t resist taking one picture that struck some sort of note. On a particularly befouled staircase leading from the river shore up to the Mariinsky palace, one could see all the typical urban detritus. Broken bottles, trash, dog waste. But there was one thing I had never seen before in such a tableau: a bottle of expensive French champagne.

Laissez Les Bon Temps Roulez!

So say what you will about the economy in Ukraine, but at least one person is well off enough to hang out on a stairwell in a park and drink Veuve Clicquot.

Putting the Icing on the Cake

2006-04-01T03:29:00.000-05:00

Friday was my last day of work. Nothing much out of the ordinary for most of the day. A portfolio manager also announced that it would be his last day, as well, so that emerging crisis largely overshadowed my departure.

I noticed during the weekly investment meeting that I had a pretty good read on the personalities of a lot of my co-workers. After all, I’ve been in this posting for about 8 months now. But I didn’t really expect to see things so clearly displayed as I zoned out and gazed around the room.

That’s when I noticed that how my colleagues arrange their meeting materials in front of them closely corresponds to how I would characterize their overall work style and personality.

Andrei has all his papers spread out on the table in a mess in front of him. Despite the logical and chronological progression of the meeting, he always seems to be hunting through the pile for the next paper. It closely resembles the state of his disastrous office.

The other Andrei has a somewhat messy stack in front of him, but unlike his similarly named colleague, the overall mess is much more contained in a smaller footprint.

Pavel’s meeting materials are in a neat stack, corners always squared up. He inverts the reports we’ve already covered and places them at the bottom of the pile. You’d probably guess this if you watched him at work at his orderly desk. It really belies his training as an engineer.

The boss has his stack in a generally orderly state, but the materials quickly get mixed in with all the other papers that he usually brings into the meeting with him. Not terribly surprising, given all the topics he has to cover during the course of a day.

Alex is somewhat messy when he gives his part of the presentation, but always very thorough. He squares up the stack when he’s done, and then prefers to just listen while everyone else gives their reports. He looks inattentive, but he’s actually pretty keenly aware of what’s being said.

The new boss has all his papers fanned out in front of him in a neat row. He appears to be reading all of them at once, and some of his questions indicate that he actually is making connections between disparate parts of the presentations.

Anyway, just a quick observation of what 8 months of observation also told me. Still, it was surprising to see it all so clearly.

In the afternoon, I brought some torts to the office and invited everyone to the kitchen to celebrate my last day. Cake is a very effective social tool, it seems. People who hadn’t given me the time of day during my tenure suddenly said very nice things to me about how they would miss me and my cheery attitude. Certainly, I question some of the sincerity. But it’s nice to hear nice things about yourself sometimes – even if the previously frosty secretarial staff's pronouncements about how handsome and smart and funny you are are more surprising than endearing.

I guess I picked the right torts.

The New Ambassador

2006-03-28T06:29:00.000-05:00

On Monday, the Alfa Fellowship Group was invited to meet with the US ambassador to the Russian Federation.

The Embassy is a large compound in central Moscow, right on the Garden ring - a major thouroughfare. Its a collection of all sorts of types of buildings - an older, 1950's style monster, modern townhouses, and a very modern office complex that houses most of the administrative functions.

Security, of course, is pretty tight. First, a visitor has to present his documents to the Russian policeman on the street. Then, entering the security checkpoint, to a man behind bulletproof glass to be admitted into the screening area - where your visit must be pre-logged on the computer system. Leave your passport with the security desk in exchange for a visitors badge, then on through the metal detectors and camera confiscation point, and that includes camera phones, too.

It was all very efficient and polite, but nonetheless strange. All the staff wore baseball hats and short ski jackets emblazoned with US flags and State Department seals. But they were all Russian. In fact, our American escort at the door went over to the security desk and asked a question in russian assuming that everyone there was a local employee. The guy looked up, pressed the microphone button, and said "You're gonna have to speak English."

Once inside the checkpoint, we were technically on US soil. The sun shone a little more brightly, the air smelled just a bit sweeter. Sure, these things were only in my head; but I may very literally have been walking on US soil - a favorite story in the US expat community is how all the grass for the embassy compound was imported from back home.

In the administrative headquarters (where security is run, unobtrusively, by Marines), we met the ambassador in a winter garden porch at the end of a hallway lined with Warhols, at the top of a staircase surrounded by Tihany glass. In all, a nice environment for a chat.

Ambassador Burns is fluent in russian, having been posted here in the 1990s, and a career diplomat at the state department. He was, however, a bit more open and candid than I would have expected for someone with that background. He didn't say anything wildly inflammatory of course, but he was quite honest.

Naturally, the conversation was a little bit of preaching to the choir. He talked about his efforts to convince people in Washington that Russia is still a critically relevant country to the US. We, of course, by virtue of sitting in Moscow apparently already believe that.

I asked about the "country risk premium" that the capital markets attach to Russian securities and asked if he saw a linkage between that and political tensions between the governments. If so, I continued, is it fair to do so and how can it be counteracted? Ambassador Burns talked about being consistent in the application of rules. Investors don't have to agree with all the rules, but they're generally willing to put up with them if they're laid out and clearly detailed.

Good answer, and experience in various markets around the world probably proves him right. It seems to me, however, that there's just a little something more to it. American investors and corporations plow vast sums into unreformed communist regimes (China) where the rules change daily, and yet they freeze up when they hear the word "Russia". Sure, foreign direct investment is surging here, but its still somewhere around the central African nation level. And the American share of that total is pitifully small.

Most of our corporations see the light just shortly before dusk. The real glory of American business is that it has deep pockets and can barge its way into even developed markets by acquiring market share at nearly any cost. Three cheers for foresight.

Anyway, here's a photo of the Alfa Group (and a couple of Alfa administrators) with The Honorable William Burns, United States Ambassador to the Russian Federation.

Alfa Fellows with US Ambassador Burns

Church with Bouncers

2006-03-26T12:32:00.000-05:00

We take no pleasure in permitted joys,
But what's forbidden is more keenly sought.
~Ovid

Over the course of my time in Moscow, I've made a systematic and determined effort to see everything of cultural and historical importance that I possibly could. It has entailed some early weekend mornings, getting lost on several occasions, and an unpleasant amount of wandering around in brutally cold weather. This weekend, I saw my only remaining monastery in Moscow. And, for all the culture, art, history and religion I’ve soaked up all over the map, this was one of my more interesting visits to such a place.

The Danilovsky Monastery is the headquarters of the Russian Orthodox Church. During Soviet times, the church leaders were exiled to the Trinity-Sergiev Monastery in Zagorsk. Certainly, that place is a very historically significant, holy, beautiful spot. But during the entire Soviet period Zagorsk was a closed city – thanks to its defense industries no one was allowed into it without proper permission. You still pass the roadblocks on the main highway into town.

So, being headquartered there wasn’t exactly a prime position for tending to one’s flock. But in 1988, Gorbachev allowed the Patriarchate to move back to Moscow in honor of the 1000th anniversary of the founding of the Russian church. The monastery they were given had been used as a prison, a factory, and a host of other not-so-spiritual things. The bell tower had been torn down and all the bells sold to Harvard University.

After quite a bit of effort, the place has been rehabilitated to a very tidy, pleasing appearance. The bells are back, and so are hordes of faithful and monks and nuns.

As I walked in through the imposing gates, two Cossacks were roughly ejecting a couple of drunks who were trying to wander into the monastery. I briefly glanced at the rules posted on the huge metal doors, noting that a state of “non-soberness” was the first of several prohibited activities. I figured that if sobriety was the first rule on the list, I would probably past muster on all the others.

While I stood in the sun-drenched courtyard surrounded by beautiful chapels and churches, I noticed the Cossacks coming toward me. I was the only person in the courtyard, and there was no doubt that they wanted to see me.

“Do you have permission to take photos here?” they asked politely.
Permission is usually granted by a small ticket that costs about 100 rubles in places like this.
“No, I don’t,” I answered. “Where can I buy one?”
They were a little taken aback. “You have to arrange permission with the excursion office, and I’m not sure they’re working today,” one of them said.
“Well, can I take your picture?” I asked. I’d never spoken to real Cossacks before. They loved that question – they started laughing and joking with me – but unfortunately answered that no pictures meant, well, no pictures.

Not a bad photo - for a scofflaw!

I walked back to the museum entrance with them and tried to find someone to give me permission to photograph the monastery. The museum consists of one little dark room full of small display cases. As I walked in, I flipped on the light switch. An old woman appeared out of nowhere and started screaming at me.

“I beg your pardon,” I pleaded. “The schedule on the door says that the museum is open on Sundays.”
“Well, its break time,” she shouted back at me.
“But the schedule says that break time was an hour ago.” This was, in retrospect, the absolutely wrong thing to say. As I turned and headed for the door, she shouted that the museum was closed and on break at the same time. Or something like that. Russia Rule Number 1: Don’t argue with the babushka.

So I headed back out and continued my tour of the grounds and churches. I didn’t take any more pictures, though. I saw how the Cossacks had handled the two drunk guys at the gate and didn’t want anything like that to happen to me. On holy ground, no less.

Little did the friendly, but tough, Cossack goons know – but I took their picture while they were approaching to tell me that I couldn’t take pictures. Here they are. Nice enough fellows as long as you follow all the rules posted on the gates.

Security - Russian Orthodox style.

The Far Side of the World

2006-03-25T14:56:00.000-05:00

Work and my fellowship program will be wrapping up at the end of this month, so I’ve been thinking about the next step. No, not employment – but a massive amount of travel around this vast country.

Next week, I am popping down to Ukraine for a long weekend in Kiev. As a cradle of the original Russian civilization (Kievan Rus’) it’s always been an ambition of mine to go there. A day after returning to Moscow, I jet off to Novorossisk; a port town on the Black Sea. Those shorter jaunts are all arranged and ready to go.

Today, I took the first step on a much longer journey: I bought an Aeroflot ticket to Vladivostok. So on the 12th of April, I get on a plane in Moscow and fly overnight to the edge of the Pacific Ocean. Imagine – a nine hour flight and the plane lands inside the same country. Point that jet in a different direction and it would land at JFK in the same amount of time.

From there, I’ll hop trains, ferries, and buses all the way back to Moscow. I plan on seeing a number of Siberian soviet cities, some historical centers, some non-russian ethnic areas, Mongolia, Lake Baikal, etc. Vladivostok – Khabarovsk – Chita – Ulan Ude – Ulan Baataar (Mongolia) – Irkutsk – Krasnoyarsk – Omsk – Tyumen – Novosibirsk – Ekaterinburg – Nizhni Novgorod – Kazan.

The schedule is very fluid and designed for the maximum amount of flexibility.

I nearly had a traveling companion for the whole trip. Well, ‘companion’ may be overstating the situation. She’s a journalist, and when she heard about the trip from mutual friends, she was intrigued by the idea enough to invite herself along. “It’s such great material for a book,” she reckoned, “following around an idealistic, adventurous foreigner with minimal Russian language skills.”

Her plan was to remain a few steps behind me and see what sort of jams I could get myself into, and then out of, all on my own. From her perspective, I would make the trip possible, as well – it’s probably not a great idea for a woman to make such a solo journey.

In addition to adding a veneer of security, I told her that I would handle all arrangements for tickets and hotels and every conceivable logistical (not financial) element. In return, I would expect a healthy donation to my “Beer and Vodka” fund. She was a bit taken aback. “Hey, you want interesting stories at my expense,” I said, jabbing my finger in her face, “you’re gonna have to grease the wheels a little bit.”

Actually, I was joking. But we did have more serious discussions about editorial control over content and co-author status of the book.

Really, though, it broke down into much more simple elements when two near-strangers are considering traveling together over 9,000 km for weeks on end. “I have to decide whether you’re an axe murderer or not,” she summarized.

I never did hear back after that, so I guess she’s not coming along. That’s fine with me, too - more room for my axe.

Strictly Speaking (Foreigners Sound Funny)

2006-03-23T09:38:00.000-05:00

The accent of one's birthplace remains in the mind and in the heart as in one's speech.
~Francois De La Rochefoucauld

Speaking another language is so much more complex than new words and grammar. Its about learning how people really communicate. And sometimes, learning to speak their language means changing the way you speak your own.

Russian has several strange sounds from the perspective of an English speaker. Letters that are unique to Russian, and a couple of letters that even have no sound of their own; their presence influences the sound of the preceding letter.

Of course, I speak with an American accent. People tell me (not just friends but strangers, even) that it isn’t too bad at all. I’ve been pegged for a Serbian, a Turk, a Ukrainian, and several other nationalities by folks who either don’t hear, or probably didn’t expect, an American accent. Memorably, one friend said “Oh, people think you’re Russian; they just think you’re retarded.”

But its how you use an English word that really causes problems. At Джонни Толстяк, an Italian restaurant charmingly named Fat Johnny’s, they serve a pretty good business lunch. There the forte is pizzas – individual, thin crust served on a wooden pizza board. Most are predictably named by their ingredients, but several are named by theme.

Now, New York is a word that is close enough in Russian to the English pronunciation to not cause problems. But others have enough differences to derail cross-cultural communication – such as it is in a pizza joint in Moscow.
At lunch, I ordered. “Девушка дайте, пожалуйста, пиццу “Chicago”. Which I pronounce the way I’ve always pronounced it; shi-KAH-go.
“Какую?”, she said, cluelessly.
Finally, she gets it.
“Ahhh,” she says. “Чикаго!” which she pronounces with a strong CH sound, hard E, and unvoiced O at the end. That is to say, more like “cheek-AH-ga.”

At my favorite blini stand they have one called the “E-mail”. I don’t know why a Russian blini with mushrooms and cheese is called the E-mail, but it is. Anyway, its written in English on the menu. So I pronounce it in English – which is all wrong. Their pronunciation of the English word is more like “E-mile”.

So in both cases, I’ve given myself away as a foreigner. Not through bad Russian; given away instead by my good English. Oh, the bitter, bitter irony of it.

I’ve come to learn, though, that this kind of restating is a two way street. At work, my colleagues all speak English wonderfully. Of course, they have accents. But not strong enough to be an impediment to understanding. Still, they’ve learned through experience that the proper pronunciation of their names will cause all sorts of problems with others in the English speaking world.

So Aleksandr, on the phone, breaks his name down slowly into Alexander. He’d probably never use his nickname of Sasha; first, its too informal, and secondly, its considered feminine in the west. Andrei becomes a carefully elocuted Andrew. Last names are offered even more slowly, and syllable by syllable. Usually a couple of times.

It reminds me of when I worked with an Australian guy in New York. He would say his name as he always had his whole life. But when he got on the phone, he would have to put on his American accent and over pronounce most of the letters that he habitually left out. "Maht’n" became "maRtin" for the benefit of his audience.

So speaking another language, it turns out, is a lot trickier than I had previously thought.

Oh, How They Laughed

2006-03-20T09:33:00.000-05:00

A bear is walking through the woods when he sees a man fishing at the edge of a river. He decides to ask the fisherman how its going. “If he answers ‘Good’, I’ll eat him” the bear plans; “If he answers ‘Bad’, I’ll eat him all the same.”

The bear walks up to the fisherman and asks him how the fishing is. “Get lost,” the man answers rudely.

“That’s also an answer,” the bear says.

I heard this joke at a party. All the Russians in the room burst into laughter. The foreigners were sort of left standing around looking at each other. But no one who laughed could explain why the joke was funny – they’d start out with “well, you see…the bear…”. Invariably, though, the answer to the question was simply “it just is.”

In any event, it’s a very Russian-style anecdote with its loads of fatalism. For all the modernism sweeping the country, and the new style of working hard to get ahead, there are certain elements of the Russian character that aren’t changing all that fast. In this instance, the simple joke reveals the widespread belief that you are screwed no matter what. Force majeure (played here by the bear) will shift its tactics and responses according to whatever cleverly devised plan you have. And no matter what you do, the bear will get you.

Contrast this to the half-optimistic fatalism of the closest ursine American proverb – “Some days you get the bear, some days the bear gets you.”

A similar situation occurred once before with a joke about a man in a banya looking for a towel but finding a crocodile instead. Again, the Russians laughed heartily while I translated and re-translated the joke in my head. It still remains well beyond my ability to even begin to analyze that one.

Maybe i'm wrong about the bear joke. Until I actually hear why its funny, though, I'll just have to go with my analysis.

You Ess Ay! You Ess Ay! You Ess Ay!

2006-03-16T16:51:00.000-05:00

…I have been a stranger in a strange land.
~Exodus 2:22

The Russians certainly mean no offense by it; in their language, the word is absolutely neutral and has no other connotations. But being repeatedly called “foreigner” begins to grate on one’s ability to empathize, to fit in, to weather the long, cold winter.

So sometimes we rebel. I received an e-mail that invited me to a friend’s house. “Bring beer and patriotism” it instructed. One strength, and weakness, of my character is that I’m rarely without either. I’ll let you decide which is the strength and which the weakness.

We gathered on Friday – 5 Americans, a Frenchman, and an Englishman – to privately stick it to the Russians the best way we knew how. Through the international language of sport.

We watched the first segment of the movie Miracle, and then a DVD transfer of the actual 1980 US-USSR hockey game from the Olympics in Lake Placid. We all knew the outcome of that legendary match when the upstart US squad beat the juggernaut Soviet team to advance to the gold medal round. But still we sat with baited breath as it all transpired once more.

We traded stories of where we were when we saw it. I recalled sitting on the floor close to the TV with my brothers, Dad perched on the edge of the corduroy ottoman, all of us leaping up at each of our goals – Mom on the couch at a safe distance. I remember it much more vividly than many other – arguably more important – moments of my life so far.

Of course, the Frenchman and the Englishman had no such personal connection to the moment, and were quite interested at the level of importance that we attached to it. So too, actually, was one of our American friends who had yet to be born when the game was played. But at least he could understand the mythos and the cultural background – that is to say, the nearly jingoistic nationalism of the “USA” chant.

It was wonderful to sit around and watch and reminisce. Of course, like all good reminiscences, we ascribed greater significance to the events than they actually deserved. Our consensus was that after that game in 1980, finally, everything started to go right again. Naturally, we knew that wasn’t true; but it felt good to gloss over the following 26 years and say that everything was alright, and maybe everything was going to be OK for a bit longer, too.

And if it took the Soviets losing to create all that goodwill– well, then, so be it.

None of us has dared tell our Russian friends how we spent last Friday evening. I just don’t think they’d understand. Perhaps the Russians are getting the last laugh. After all, we watched the glorious triumph of the US team while drinking Russian beer and snacking on Russian treats.

I suppose, when you think about it that way, everyone wins.

Stomping on Eggshells

2006-03-13T09:48:00.000-05:00

Only today have the office staff gotten around to removing all the balloons from our holiday celebration last week. The normal sounds of the office are punctuated with the distant dull popping of half-deflated helium balloons being jabbed with scissors. Closer to the end of the day, once can expect to hear high-pitched squealing from someone who has inhaled the gas and changed his or her voice. In either case, though, neither sound is loud enough to cover my most recent enormous gaffe.

The investment team was chatting around the trading desk the other day. One portfolio manager was giving his opinion on the direction of the market for the rest of the year. He cited the synchronized tightening cycle in major economies around the world. Then, he listed them all as he read from a computer screen – US, Japan, European Central Bank, and Botswana. The inclusion of Botswana got a hearty laugh from everyone on the desk. “Is it standard practice in the US,” one manager jokingly asked me, “to closely monitor Botswana for evidence of major international financial trends?”

“Sure, it is”, I said, laughing. “After all, don’t they hold the chairmanship of the G8 this year?”

Silence.

Of course, Russia is the chair of the G8 this year. In the eyes of my shocked colleagues, the American guy had just equated their glorious homeland with a third-world country they no doubt think is full of cannibals and/or headhunters.

“Ahhh,” Alex said gravely, “I see your humor. But there’s a big difference - we have nuclear weapons.”

I protested strenuously that I was making a joke about Botswana, not a joke at the expense of Russia. Really – you’ve got to believe me, fellas! They all swore they wouldn’t take offense at my comments, but that effectively ended the coffee klatch for that day.

Russians are very proud of their history and culture. Rightly so, in my opinion; there are stunningly beautiful and ancient things here. But Russia is also a country that radically transformed itself and became a modern powerhouse in many ways – and its technological competence and achievements are still a source of pride for every citizen.

All these things searched for relevance in the 1990’s when the country couldn’t afford basic necessities let alone a space program, a nuclear arsenal and a huge military. During that time, every institution in the country had to prove its relevance and contribution to the essence of the nation. They kept the space program, and the nuclear arsenal, and the military, all in an effort to show that this country was still a serious power.

They’ve come a long way from the days of mourning the fallen empire. It was a humiliating experience to gain, maintain, and lose superpower status in only a couple of generations. That loss resulted in a sense of insecurity that’s only now beginning to fade as it is replaced by Russia’s re-emergence on the world scene. In my opinion, recent moves in Iran and the Middle East are really only efforts to bring that internal search for relevance to its broader role in the world.

Official Washington, of course, is in full apoplexy mode over the re-emergence of a power in the east that may well do unpopular things and think for itself. But looking at things from the inside out, I contend that its safer to have a New Russia looking for a new role in the world than a wounded post-Soviet Russia looking to recapture its past glories.

International Women's Day

2006-03-09T14:09:00.000-05:00

I’ve smelled that cologne before; and each time I have, I’ve smelt a rat.
~ James Bond (Sean Connery) in Diamonds are Forever

Wednesday was Women’s Day in Russia, a huge holiday that’s a combination of Valentine’s Day, Mother’s Day, and a little bit of Christmas. I was prepared for the holiday in principle, but I wasn’t expecting the elements of Halloween that crept in.

We marked the occasion at work on Tuesday. I got to the office early and found it filled with balloons – some 800 according to the decorators – covering the ceilings and surrounding the arches of the entrance. Inside, all the men gathered in the lobby to congratulate and greet the women as they arrived. Each received a big bouquet of flowers in addition to our thanks and best wishes.

It was a holiday atmosphere during most of the work day, too. Ladies in the office exchanged gifts with one another, and the boss made the rounds handing out presents. Still, work for most went on, and the 5.7% drop in the main market index was largely ignored everywhere except the trading desk.

Last week, the men had a meeting to discuss our plans for celebrating the holiday. I had a hard time following the gist of the conversation. Normally, I can at least divine the sense of the topic. This time, though, I couldn’t. So just after I congratulated myself on having my Russian get worse while actually still living in Russia, I thought about it a little more. “Nah”, I said to myself as I mulled over some of the vocabulary, “that couldn’t possibly be what they were talking about”

As it turned out, I had understood the conversation all along. This became apparent to me on Tuesday at 6pm as I stood in our conference room with my pants off picking out a kilt. We had rented some 25 sets of Scottish dress and a bagpiper to surprise the ladies, so we had all crowded into the room to change surreptitiously. I was the only guy in boxer shorts. The horror. The horror.

Somehow, manliness and Scottishness were highly correlated in my colleagues’ eyes. So they decided to don kilts for both the humor and – well, mainly for the humor. A man wearing a skirt is a very funny idea to the Russians. Apparently much, much funnier than we give it credit for. It really was a big hit with the women in the office. I found that it got a lot funnier with each glass of Scotch.

Wednesday was a day off from work, and at a friend’s birthday party I had the opportunity to show the photos to a native Scot. She just blinked at the back of my camera, and shook her head. “I’m not quite sure what to say,” she said politely.

Party a la Russe

Neither am I, really.

Carnivale

2006-03-05T18:04:00.000-05:00

This past week marked Maslenitsa, the Russian version of the traditional pre-Lenten bacchanal. Most cultures have something like this festival in principle, but watching how they proceed can tell us a lot about the locals.

All good pre-Lent festivals include a healthy dose of the things that are proscribed during the coming 40 days. Interestingly, the holiday here also retains elements of ancient pagan celebrations. The original celebration was a sun-worship festival, so the traditional food is blini, for their sun-like shape and color. At the end, an effigy of a female figure is burned on the last day to help the flax harvest.

Or something like that. I’m a bit shaky on the historical precedents for all the elements of the holiday. And to be honest, it probably doesn’t even matter to most of the locals either. It’s simply a great excuse to get out of the house and have some fun.

I headed out to Kolomenskoe for the festivities. The enormous park was crowded with people eating, drinking, dancing, attending concerts, sledding, skiing, playing games and just plain enjoying themselves. It’s hard not to get into the spirit of things when surrounded with so much revelry.

I stood on a long line at one of the many blini stands. By the time I reached the front, I had resolved to really indulge in the spirit of maslenitsa; so I ordered a blini stuffed with an entire can of red caviar. Washed down with a large cup of mead, it was a wonderful experience.

Later, we sat at picnic tables and ordered a couple of beers. Drinking beer in 15 degree weather has its advantages and disadvantages. An advantage is that the beer never warms up – it remains frosty down to the very last sip. The disadvantage, however, is that the beer never warms up – you’ve now ingested near freezing liquid into the core of your body.

This didn’t bother any of the Russians, of course, who carried on as though the deep snow and biting cold were simply not even there. This park in the summertime is an absolutely wonderful place for relaxation and celebrating. And it struck me, as I looked around, that it was the exact same scene in the winter. Change the clothing, and the sledding, and it would be indistinguishable.

All of which says something, it seems, about Russians and their culture and their attitude to adversity. Or more to the point: their attitude about having fun. Folks here work hard, and struggle and strain to make their way. But when its time to relax and enjoy time with friends and family, they attack the task with a special zeal. And they’ll ignore everything else – all their tribulations, and suffering, and difficulties – while they’re doing it.

It’s a huge part of what makes living in Russia a true pleasure. After all, our problems will still be there, waiting for us, tomorrow.

Wretched Excess

2006-03-02T15:39:00.000-05:00

Many speak the truth when they say that they despise riches, but they mean the riches possessed by others.
~Charles Caleb Colton

Over the past 2 days, I attended a conference on IPO’s and listing on Russian and London exchanges. I learned a lot about international capital markets, the need for capital in Russia, what international investors are looking for, and other crucial elements for the development of a shareholder society in this rapidly growing economy. But a conversation at a cocktail party on the last day shed some light on an area that routinely blows my mind.

Victor is a Russian who lived for nearly a dozen years in the US. He now heads the communications and finance operations of the largest chain of mobile phone stores in the country. We talked at length about the amount of disposable income in Moscow.

I cited an article that I had read in the international press that examined the global market for ultra-luxury cars. Bentley, Rolls Royce, and Mercedes (Maybach) are creating a buzz with their waiting lists for quarter to half-million dollar cars. But the truth is a little different in a global perspective. The fact is that all those companies are allocating deliveries to Russia because they can get as much as a 50% premium on list price here. So, other consumers wait while wealthy Russians make cash payments for far more than the manufacturers ever could have hoped for.

Victor told me about the Vertu phones that his company retails (www.vertu.com). These are the global standard in luxury communications – a cell phone made entirely out of precious materials like platinum, titanium, gold, etc. The price points are between $5,000 and $50,000 per unit. The technology is somewhat advanced – the phones are programmable to any standard and are backwards compatible with any changes in network – but in essence a Vertu phone is really just a regular phone in nice clothes.

I see this kind of wealth on the streets everyday. But when asked to guess how many they sell in a month, I came up very short. According to Victor, they sell about 200 units a month in Moscow alone. And the split is 80% toward the highest end models. That is, they sell 160 units at $50,000 each every 30 days.

That’s a pretty mind boggling number, but it gets even better. They offered a “Russian Version” of the phone that has a keyboard with Cyrillic text for a premium price of $70,000 per phone. No other differences, mind you, simply a change in the keypad. The entire issue sold out before they had even announced its release.

So when you pull up to the pump in your gas-guzzling SUV, give a little thought to the emergence of capitalist society in Russia as you watch the numbers quickly scroll by. If he only had your number, an obscenely wealthy Russian would use his Vertu to call and say “Thank You”.

Tea with a Billionaire

2006-02-28T15:28:00.000-05:00

Today, my Fellowship group met with Mikhail Fridman. He is the chairman of Alfa Group, a massive financial-industrial group that includes Alfa Bank, TNK-BP, VimpelCom, Perekriostok, and a host of other companies. Business activities span commercial and retail banking, oil and gas, telecommunications, and consumer retail, respectively. As such, he is the grand patron of the Alfa Fellowship Program.

Our meeting took place at his executive offices in central Moscow. We were served tea by an impeccably dressed butler while we waited briefly for his appearance in a very nice conference room.

We had a wide-ranging hour-long conversation that began with his vision of why and how the Fellowship was started. In his experiences with Americans at very high levels, he found that there was no Russian language capability at all. More egregiously, he found his contacts in the US to be woefully misinformed about life in contemporary Russia (as opposed to the Soviet Union). And that was exactly his point – life had changed dramatically in Russia, but the comprehension of it by its most important counterpart had not changed a single bit.

It’s an absolutely dead-on-the-money characterization, yet he’s one of the very few people who are actually doing something about it. I can’t possibly give him enough praise in this respect.

Mikhail Maratovich was very down to earth and open with us. At one point, he popped up out of his chair to turn on an additional set of conference room lights. After all, this is the first generation of Russian billionaires – Mr. Fridman started out washing windows in Ukraine when Gorbachev first legalized individual business activity in the mid 1980’s.

Some 20 years later, he’s one of Russia’s richest men and telling a room full of Americans about his vision for the future. Nice career path.

He wanted our input on what we would change about the Fellowship Program. Again, we were presented with the idea that more time in the provinces would instill a deeper understanding of the “real” Russia. After all, he said, Moscow is a fully cosmopolitan city that may be largely indistinguishable from – say – Buenos Aires.

There’s certainly a degree of truth to that line of thinking. But with all due respect to Mikhail Maratovich, that is overstating the case.

On the way to the metro this morning, I passed a small outdoor market place. A vendor had a drunk firmly by the collar and was calling for the police. The drunk, and several of his friends, had just stolen something from the vendor’s table. This particular merchant sells army surplus tools and other implements. I looked in the drunk’s open coat and saw what he had stolen – a hatchet.

Normally, I might hang around a few feet away to see what might transpire. But the raised voices and presence of a hatchet in the hands of a marginal member of society made me practically run for the metro entrance.

This was one block from the Kremlin.

Not far from Mr. Fridman’s office, I saw some workers attending to a downspout. They were banging it with a hammer and loosening up the ice inside. As chunks of ice cascaded out, they freed a thick black electrical wire. Then, they banged on that with hammers, too. Perhaps the electrical cord is there to prevent ice build up, I don’t know. But I do know that several chain smoking men in an icy puddle were on the verge of possibly electrocuting themselves. One fellow, the guy with a large toolbox, stood on the other side of the sidewalk and refused to go anywhere near the menacing black cord.

So as much as I understand the argument that Moscow is not exactly representative of the whole of the country, I must aver that it is awfully damn representative of something. And that something is a unique, crazy, exhilarating, frustrating, exciting reality that’s much closer to Russia than anywhere else in the world.

Live it Up!

2006-02-27T15:40:00.000-05:00

When the money keeps rolling in you don’t ask how
Think of all the people who are guaranteed a good time now.
~And the Money Kept Rolling In (And Out) from Evita

The Russian equity market continues on its long tear. Just as folks are beginning to wonder when it will end, it seems to be accelerating.

The RTS index is up 95% since I arrived on the Russian market last August. More amazingly, it’s up 35% in the first 35 trading days of 2006. Its bonus season, there’s a palpable euphoria in the air. All is right with the world.

Why? Well, oil is a dominant factor in both the economy and the highly concentrated Russian capital markets. And oil - given demand issues in China and India balanced by supply “issues” in Iran and the middle east - is a legal license to print money.

But statistical studies, run shoddily by myself and more professionally by others in the investment community, show that the correlation between changes in oil prices and market returns are weak at best. The consensus has been that the oil effect has trickled through to the rest of the macro-economy. And to a degree, that certainly is true. Data about currency reserves (the government’s cash hoard is the 5th largest in the world) and Paris Club early debt repayments have lead to upgrades of the country’s sovereign debt, the lowering of the risk premium and sustainable higher valuations.

This makes the direct oil effect much trickier to peg. Current spot oil prices are substantially the same since last August, and have done a good deal of traveling both higher and lower since then. So why the massive advances in an equity index supposedly driven by oil?

I believe that it has more to do with the level of prices rather than the actual price movements. Macroeconomic sensitivity analysis to oil prices shows projected GDP, and personal income, levels in the coming couple of years. All these models assume long-term market oil prices much lower than current prices. Everyday that oil moves in the opposite direction, or even just stays put, is another day where the expectations for the future have to be set just a little bit higher.

So, it seems that as long as the prices stay in a range well above the rosiest long-term price objective (somewhere around $45 per barrel), then the rationale for much higher valuations is supported. By the way, our main oil benchmark hasn’t closed below its 50 day moving average in almost a year.

Of course, it’s a two-way strategy. But, in the meantime, enjoy it while it lasts.

To the Front!

2006-02-25T13:21:00.000-05:00

This week marks the celebration of Defenders of the Fatherland Day on the 23rd. Since the elimination of Red Army day from the calendar, this has become one of the premier military holidays. But it’s not just for the armed forces, anymore.

Every able-bodied Russian male is considered a potential defender of the homeland, so the day is actually marked by a celebration for all men. Women extend their congratulations and shower them with fawning attention on what has become, for all purposes, a Men’s Day.

We had a party in the conference room after work to mark the day. All the women made flowery speeches about the “handsome and intelligent” men who they have the pleasure to have as colleagues. Then, each woman presented to each man a gift. We all got a silver, mint proof 3 ruble coin – the kind you get from the bank in a little jewelry box.

It was a very nice gesture, and especially nice to include me in their celebrations. The awkwardness of the situation wasn’t lost on anyone, and we all made jokes about my participation. Receipt of the coin may oblige me to perform military service in Russia, now, one fellow said. Never mind that, another said; but it won’t look good when you run for senator and they find out you’re a paid agent of a foreign government.

Anyway, I even got a card as a Defender of the Fatherland. It begins “Even though you don’t have this holiday in America…” Well, I may be an American but my Russian colleagues are quite intent on making sure that I have an authentic experience.

Gifts for an Honorary Defender of the Fatherland.

So in honor of the holiday, last Thursday and Friday were days off. Lest we get too carried away with prolonged revelry, the government has adjusted the holiday schedule to make it just slightly less thrashing to worker productivity. While Thursday and Friday are days off, Sunday has been converted back into an official work day.

But before you feel too bad for the women of Russia, March 8th marks International Women’s Day – a massive celebration of all that femininity entails – in a combination of Valentine’s Day and Mother’s Day. You can be sure that I’ll write about that one, too, when the time comes.

Making History

2006-02-22T01:45:00.000-05:00

In Russia, people suffer from the stillness of time.
~Tatyana Tolstaya

Tsaritsyno is an estate on the outskirts of Moscow, and my destination for last Sunday’s outing. It’s a former royal preserve, but it has the weird status of becoming a genuine historical recreation of something that never really existed in the first place.

The park is a truly beautiful place on the southwestern edge of the city, with lakes, bridges, woods, paths and charming buildings. The great vistas were made all the more striking by the thick layer of snow on it all.

And like any Moscow park on the weekends, it was absolutely teeming with people. It was a winter sport paradise; every incline was dedicated to sledding, every pond crowded with ice fishermen, and the woods were full of cross country skiers. The one activity that takes place year round, however, is volleyball. There were a dozen courts in a clearing surrounded by snow-covered evergreens.

The estate was constructed in a gothic style for Catherine the Great. She came and inspected progress, but hated the designs and killed the project. So the buildings sat as picturesque shells for a couple of centuries until someone decided that they should finish the job. The government has been completing the construction for the past few years.

While the buildings will be dedicated to cultural pursuits, no doubt improving the value of the park, it still seems a bit strange to me. In a way, historic preservation seems to have run past the goal line and kept going. Preservation, or even its activist cousin Restoration, are charged with maintaining that which we’ve inherited from history. Instead, they’re on a tear to create what historians call a counter-factual, or “what if”, version of reality.

This is by no means a solely Russian phenomenon – witness Boldt Castle in the Thousand Islands. Unfinished by its robber baron owner upon the death of his wife, it long stood as a romantic monument to wealth, privilege, and love. But now, it’s being completed after sitting idle for nearly a century. All the tourists will be able to walk through rooms where the owners never sat, and never talked, and never slept. In fact, through rooms that never were.

Tastes change over time, it seems. In the 19th century, it was fashionable to build monuments that looked much older than they were; parks and estates were filled with newly constructed "ruins" evoking classical civilization. I'm waiting for the day when the ruins undergo work to reverse too much decay and return them to an appropriately ruined state. Or better yet; restore them to 'un-ruined' status by completely renovating them to an intact condition of what the original ruins represent.

But then, I suppose that’s just the reaction of someone who’s seen more than his fare share of authentic cathedrals and palaces so far during his time in Russia. Sometimes, the past is just fine the way it is – thank you very much.

Of course, Russia has a wonderful and ancient cultural legacy that’s vibrantly expressed through architecture and art. In places, it can be really hard to avoid it even if you’re trying. I appreciate it all - really I do.

I especially appreciate it when everything fits my pre-conceived notions of Russia.

Ahh, that's more like it!

Fun and Games in the Raspberry Patch

2006-02-21T03:00:00.000-05:00

On Friday, the company had a group outing for all the staff at a local “attraction hall”. Moscow entertainment space sometimes suffers the same gigantism that afflicts many other aspects of life here. These halls are usually in some converted factory building, and contain several floors of bowling alleys, video game arcades, restaurants, bars, laser tag rooms, karaoke lounges, and billiards halls. Some even have casinos.

Our destination was just outside the center of town, in a ramshackle building and up a decrepit staircase to the entrance. After walking through a metal detector, one of the guards pointed at my bag and asked if I had a knife. He seemed satisfied with my denial and didn’t bother to look in it when I opened the bag. Perhaps I didn’t fit the profile of a knife-carrier – or maybe it was just gun night.

As is often the case in Moscow, the interior was far nicer than the exterior of the building. The massive entertainment complex buzzed, thumped and pulsed with people, music, and activity. We had the private lanes on the lower floor, where I found the rest of my colleagues tucking into a huge buffet. Then, the bowling started.

Bowling in Moscow is a rather pricey affair and is considered new entertainment for gangsters, the emerging middle class, and the elite. All the equipment is the top-of-the-line including fully automated scoring. Still, I began to wonder what sort of neighborhood we were in; our table had a laminated sheet on it listing all the possible fines for noncompliant behavior. For example, $10 for wearing street shoes, $20 for flash photography, and $2460 for breaking the computer monitors.

Bowling, as usual, was a lot of fun. My colleagues were all very enthusiastic and all very bad. But then, that contributes greatly to the enjoyment. Most of the company later went to play laser tag, but I had eaten far too much shashlyk (shish-kebab) to run around playing cops and robbers. I remained on the lanes with some of the girls from the office, and we started up another game.

Unexpectedly finding yourself in a pleasant situation is called “falling into a raspberry patch” in Russian. But that sensation began to dissipate as the game got started. It soon became clear that these beautiful women, despite their very tight jeans, were much better bowlers than I was. Although they rolled the ball slowly, it stayed solidly in the middle of the lane every time.

I’m not a particularly competitive guy. Still, I redoubled my efforts and learned that my competitive spirit is much more related to not feeling like an idiot.

But feeling like an idiot is exactly what I did on Saturday when I went back to the banya for a good heat soak. We played billiards between stints in the sauna, and I re-discovered all the joys and frustrations of playing Russian-style billiards.

Russian billiards is played on a large table, with all white balls and one red cue ball. The red cue ball is used only on the break, and for any shot afterward the player may cue off any ball on the table, and sink any shot. The winner is determined by how many balls a player sinks.

Not having a set cue ball is a bit disorienting at first. It effectively de-anchors your thinking and vision from the traditional method of looking for a shot. But by far the most difficult aspect of this game is that the balls barely fit in the pockets on the table. It’s a tight squeeze, and really hard to sink even a perfectly lined-up shot.

At this level of difficulty, the casual game becomes an endurance test of patience and commitment. Its one of those games that makes you notice that everyone else seems to be having more fun than you.

It’s challenging to play and interesting to try and get the hang of it. I actually managed to win a game, too. I’d have tried my hand again, but my competitive spirit was satisfied with having saved just enough face.

Russian Soul

2006-02-17T08:44:00.000-05:00

It can be discomfiting to hear a bond trader break into song. It’s downright jarring when you’re in Moscow and your Russian colleague suddenly starts belting out a Negro spiritual.

Louis Armstrong’s version of Go Down, Moses is the universal music for callers on hold at Alfa Bank. He was on the line working a trade and heard a few of the refrains just a couple times too many.

“When Israel was in Egypt’s Land”

The use of the song goes back to the early 1990’s when it started appearing in commercials for the then-new retail bank. The ad opens with a man standing in a what seems an interminable line. Then he’s confronted with a beautiful, but nasty, teller who refuses to process any of his transactions and brusquely rejects his paperwork. The teller’s colleagues take him aside and whisper in his ear. When he gets back in front of the teller with newly filled out forms, the teller looks down and discovers that they simply say “Happy Birthday.” The previously harsh demeanor melts away and is replaced with a laugh, a bashful smile, and speedy service.

“Let my people go”

The production quality of the ad was very high. Still, I always thought it was a bit strange to advertise your own bank that way. “Hey”, it shouts, “We’re the bank where you have to go the extra mile to get decent service!”

“Oppressed so hard they could not stand,”

Alfa’s advertising now is very sophisticated and well targeted and, for the most part, indistinguishable from typical western bank ads. But the song lives on. My colleagues speculate that’s because the owner of the bank likes the song.

“Let my people go.”

Still, I think they kept the song because it's very appropriate. Certainly, the whole thing about living in bondage is applicable to the Soviet period. But the fact remains that the Russian retail banking sector is still dominated by the government-owned Sberbank. It leads all banks in deposits and assets, as well as number of locations. And like any government sponsored enterprise, service is legendarily bad.

The rumor is that Sberbank will be floated to the public within the next couple of years. It should make for some interesting analysis in the prospectus; “Our competitive advantage is that most people don’t have any other choice.”

So perhaps the old spiritual song from the American south has a closer relationship to Russia than I originally thought. After all, Faulkner wrote a novel entitled Go Down, Moses. One chapter, about a hunting trip, is considered a masterful short story in its own right. Its title? The Bear. Symbol of Russia? The Bear.

Is that too much of a stretch? Aristophanes.

“Go down, Moses,
Way down in Egypt's Land.
Tell ol' Pharaoh,
Let my people go.”

Of course, imagine all this with a Russian accent. I, for one, will probably be unable to remember it any other way.

On Second Thought ...

2006-02-16T12:50:00.000-05:00

They say the next big thing is here
That the revolution's near
But to me it seems quite clear
That it's all just a little bit of history repeating
~Shirley Bassey

Yesterday, I posted two pictures on the blog. At lunch time today on the street near my office, I saw something that made me think of them all over again. It seemed to be the perfect amalgamation of the two types of symbolism, and reopened the topic for me.

Russia will probably continue to struggle with the appropriate balance between materialism and spirituality like, well, any human society that’s ever existed. But that, it seems to me, isn’t the real point of those two pictures. The real point is that those are examples of images, juxtaposed or not, that didn’t exist in Russia for most of the 20th century.

There is no conceivable theoretical need for “Sale” signs in a shop window in a centrally planned economy. After all, demand for products should always match supply. In practice, of course, there certainly wasn’t any need for such signs since the all the stores were empty.

In an officially atheist society that’s murderously hostile to religion, there’s not such a profusion of churches, either. For each charming, architecturally important church that wasn’t torn down, there are dozens more that were. Here in ‘Holy Moscow’, that means small monuments and plaques that inconspicuously mark where whole cathedrals and monasteries once stood.

It’s interesting to walk around on an early Sunday morning and see this legacy in human terms. In a park near the Garden Ring, a group gathers on the previous site of a church to conduct a small service. A half dozen folks gather around and sing hymns, with icons on artists easels and ornate Gospels on a tell lectern covered with brocaded altar cloth.

Just up the street from my apartment, a group gathers at the outside, eastern wall of a former nobleman’s mansion and conducts a similar service. That part of the wall is where the sanctuary of the family chapel was once located; once holy ground, in their opinion, always holy ground.

And that’s the real story behind the churches in both of those pictures. The one near the Mercedes symbol is the Cathedral of Christ the Savior – destroyed by Stalin in the 30’s and rebuilt again in all its mammoth opulence sixty years later. The church reflected in the shop window is a small chapel that marks the site of a destroyed church complex, now occupied by a massive soviet-era ministry.

So, in all, the fact that Russia can now struggle with the juxtaposition of conflicting symbols of materialism and spirituality is shocking, new, and the result of many generations of violent upheaval and struggle.

It’s really easy to forget about this recent history in Moscow. I routinely do just that as I flip through real estate listings of $1 million apartments and watch Bentleys zip down the boulevards.

That’s the Moscow that got me thinking about the photos once more. I snapped this picture a block or two from my office. I think it’s a suitable replacement for those photos. It’s the LUKoil headquarters, and probably as close to a “cathedral of commerce” that you can get in today’s Russia. No gold dome on top, but it has a $65 billion market cap.

Smells like oil - or money. Whatever. It's all the same these days.

It represents power, the promise of a better life, some measures of aspiration and some of inspiration. In short, it’s everything a good symbol of modern Russia should be.

Sacred + Secular = Profane?

2006-02-15T15:36:00.000-05:00

Reflections on culture and commerce.

The power of symbols.

Culture - No Parental Controls

2006-02-14T15:52:00.000-05:00

History repeats itself, first as tragedy, second as farce.
~Karl Marx

Sometimes, I’m just not sure how much to read into certain things. Taking things too literally is a pitfall of trying to understand another culture, and attempting to exam things more deeply can lead to even more distorted views. I had a cultural experience the other night that, given the strange historical circumstances, might just be a very realistic look at two ugly periods in history.

On Monday, I attended the Bolshoi Theater’s production of Lady Macbeth of Mtsensk. It’s quite a powerful opera by Shostakovich, with moving imagery made all the more potent by a rather spare set. But if there was every any doubt about the dark nature of Russian story-telling, it should be put to rest after an airing of this opera. It includes a poisoning among its several murders. In addition, there are 2 gang rape sequences, one regular rape, adultery, a vicious flogging, 2 drownings, several brutal beatings, beatings with rifle butts, imprisonment and exile, and bribery, drunkenness and lechery among the clergy. And those are just the parts that I understood.

In comparison, Lady Macbeth makes Italian opera - with its star-crossed couples, unrequited love, and occasional suicides - seem positively cheery.

Life in the Russian village is well documented, and indeed the genesis of this opera is a much earlier story from the 19th century. But the part that makes this all so haunting is the nearly as sensational story of how the opera was received when it debuted.

The Leningrad premiere in 1934 was a critical and popular success. Indeed, it was hailed as a masterpiece of Marxist theater. After all, it laid bare the corruption and rot of provincial life under the l’ancien regime.

The Moscow premiere in 1936, however, was a different story entirely. Stalin stormed out of the production halfway through, roundly denouncing the work. In fact, he used the opera as a pre-text for a general attack on the arts and demanded total control of all creative endeavors in the Soviet Union. Shostakovich, not without just worry, was quite convinced that he had bought himself a one-way ticket to a Siberian gulag. He managed to remain “free”, but was routinely subjected to reprisals and condemnation in the press.

Though he outlived Stalin by some 22 years, Shostakovich never wrote another opera. All he could manage to do was edit Lady Macbeth over and over again. Now, there are several versions of the opera, each favored by certain companies in certain countries.

But just imagine the purgatory that Shostakovich endured. He spent nearly 40 years atoning for his sins against Stalin by continuously tinkering with the opera that nearly did him in.

It wasn’t exactly a Valentine’s Day heart warmer. More like something that chills your soul. Still, it was great theater nonetheless.

Bread and Circuses

2006-02-11T06:25:00.000-05:00

Empty vodka bottle on the snow and ice.

Now is the winter of our discontent.
~Richard III (Shakespeare)

There’s a bottle of vodka in the kitchen at the office. Although it’s open, I haven’t seen anyone actually drink it. Still, it sits right there on the table where folks gather with their tea and brown-bag lunches. If the news stories are to be believed, though, that bottle might just disappear soon.

Russia is apparently on the verge of a vodka shortage thanks to inefficient distribution of tax stamps. That’s no small beer, if you’ll pardon the pun. Vodichka (to use the most intimate, familiar term for it) is still an important component of the cultural scene here.

I haven’t noticed any sort of shortage at my local supermarket. There, the vodka section is about 7 feet high, 30 feet long and still, mercifully, several bottles deep. I have a sneaking suspicion, however, that there won’t be any shortages in Moscow itself. The government is well aware of what happens in urban areas when there are shortages. In fact, change the details to “bread” and St. Petersburg” and that’s how the Russian Revolution started in the first place.

It brings to mind the old Russian (Soviet) joke about the breaking point. A man hears on the radio that prices are rising.
“Oh, well,” he says, “We’ll keep buying what we have to buy.”
Then the radio announces that wages are down.
“What can be done?” he says, “I still have to work all the same, no matter what they give me.” Then, there’s a statement about shortages.
Again the same resigned attitude – “We’ll make do.”

Finally, the radio mentions the weather forecast; rain all weekend. The man jumps from his chair. “Those bastards,” he shouts. “Now they’ve gone too far!”

Analysts – granted, the more hyper among them - are actually predicting riots over the vodka situation.

But think of the twisted logic in all this. Instead of problems with mass public drunkenness, people are actually fearful of a sober population. It probably would be a stretch to say that folks would sober up, recognize what’s going on, and demand changes. In fact, it may be more accurate to say that they would demand vodichka in order to return to their normal state of not caring about anything.

That’s not such a wild statement, really. The history of mass involvement in politics in Russia is pegged lockstep to the history of rebellion and revolution. People here are generally even-tempered until they are pushed so far that they just can’t take any more.

So, I disagree that a temporary lack of vodka is just such a potential trigger for regime change. Wide scale disturbance is unlikely given the broad macroeconomic improvements, the rising middle class, and general popularity of the president. Oh, and also the excellent quality and untroubled supply of Russian beer.

Then again, by the end of the day Friday, the vodka bottle was already gone.

Not One of Us, Not One of Them

2006-02-09T17:42:00.000-05:00

You know, we always called each other goodfellas. Like, you'd say to somebody: "You're gonna like this guy; he's all right. He's a goodfella. He's one of us." You understand?
~Henry Hill (Ray Liotta) in Goodfellas

I stepped out of the office at lunch time today. It was, as usual, minus-something Fahrenheit. A beautiful, brilliant sun lured me onto the street, where a stinging wind reminded me that winter is still in full force.

At a stop light, I noticed a man looking at me. He brought his hands halfway toward his face, raised his eyebrows, and quickly nodded his head – international sign language for “May I take your picture?” I shrugged my acceptance, and he took the shot.

It should be a good photo. A highly bundled, fur-hatted Muscovite standing in front of a McDonald’s in the freezing cold. Perfect. Except I’m not Russian.

Of course, neither was he. The embroidered badge on his jacket was the Boston University crest. The rest of him, frankly, was a giveaway, too: No hat, the Harry Potter-ish glasses, the shoes. Everything just screamed foreigner. I stepped toward him, pulled my scarf down, and said, “Great shot. Too bad I’m not Russian.”

The light changed and I left him standing in the crosswalk, speechless and befuddled. I know exactly what was going through his head – it’s happened to me countless times. “How did I get ID’d like that?” “Do I stand out that much?” and all the other questions. It’s not so much the questions, really, but the little conclusions that squeak through the spaces between the questions that cause the angst. “My God, I’m a walking target,” is the most pernicious of all.

But it gets better over time. Last weekend I visited a friend’s place. His (Russian) wife squealed with delight when she opened the door. “Oh,” she shouted, “You look so Russian.”

A big coat and a fur hat sure help when it comes to fooling people. But language is an important, and lagging, component. The old lady at the kiosk where I buy my lunch everyday has stopped screaming “WhatWhatWhat?” after everything I say. The woman at the blini stand I go to every weekend has stopped speaking to me in English as I try to order.

But there is a natural limit to fitting in. At an outdoor sculpture park last week, I walked up and asked the ticket lady for a foreigner’s ticket (they’re extra).
“You’re foreign?” she asked.
“Yes,” I said, “And an honest foreigner.”
“I thought you were one of ours.”

That’s the phrase here - “Nahsh” - the word for “ours”. But it’s so much more loaded with meaning. It means to be one of us, an insider, one who knows what we’re all about. It can be used globally referring to nationality or citizenship. It can also be applied locally to your own office or group of friends. “Nahshi” is even the name of a particularly ominous political party.

But no matter how big a fur hat I might wear, no matter how well I can order delicious treats from street vendors, I can never become one of “ours” in the truest sense of the word.

I’m ok with that. I’ll take whatever proximity to assimilation that I can get. Then, retreat to my own exclusionary definitions of who’s “inside” and “outside”.

Me and My Big Mouth

2006-02-07T17:21:00.000-05:00

Everyone gets everything he wants. I wanted a mission, and for my sins, they gave me one.
~Captain Benjamin Willard (Martin Sheen) in Apocalypse Now

Now I’ve gotten myself into it.

Last week, I sat down with the boss and talked about the company’s compensation policy. The year-end review season is upon us, and he admitted to not really knowing how some of the many bonus decisions may interact and what their eventual financial impact may be. He asked me to put together a model that incorporates all the various compensation schemes by division, function, and pay scale. Ideally, such a tool would be explanatory, predictive, and flexible enough to play with under “Monte Carlo” multivariable scenarios.

“You’re perfect for this”, he said, “because you’re an investment professional who has worked in firms with sophisticated compensation policies.”

“And”, I replied, “I’m not a part of this one.”

Agreed. So he asked, point blank, if this was something that I could do.

That’s always the death knell of critical thought for me. Asked a direct question that may reflect on my intellect, skills, or character, I will always automatically respond that whatever challenge is at hand is completely surmountable. By me. Personally. Alone.

Actually, the way it really came about this time was during the split second in which I mulled over the question. “I’ve never tried to analyze a compensation policy and failed at it”, I thought, “So I see no reason to believe that I would fail now.”

Taken to slightly more distant lengths, the logic gets a bit shaky. “I know where the English Channel is, I know what’s on both sides of it. Hell, I even speak English. I see no reason to believe that I can’t swim the English Channel.”

So I answered that I would absolutely be able to do it. Quickly, I was buried under an avalanche of financial reports, fund mandates, employment agreements, department data, and other inputs. (The information was stripped, by the way, of any identifying marks that would compromise employee privacy.)

Over the course of the next few days, I came up with a complex spreadsheet that incorporated all the data, assumptions, and possible scenarios that would affect company performance. These all fed into the different compensation schemes with their own assumptions. Eventually, all these numbers filtered down into a financial report that showed the net effect of compensating employees certain ways under given scenarios.

It is - I think I’m not being immodest in saying - an elegant solution to the problem.

I presented it to the boss this morning, and he absolutely loved it. Finally, he has a tool that will spit out a number after considering a mind-boggling number of variables. The problem with the compensation scheme, however, is that department bonus pool numbers are easily quantifiable, but most individual employee bonuses remain subjective.

So we talked about the effect that a lack of transparency has on employees, and what sort of incentive an incentive compensation plan provides if a participant can’t judge his or her own contribution to, and share in, overall success.

It was an interesting conversation about the role of individuals in organizations, organizational behavior, responses to stimuli, and psychology. The problem is that by the end of it, I had somehow agreed to design alternative policies for more objective quantification of the incentive compensation program. Of course, I’ve never done anything like that before.

“Well”, I said to myself, “I have no reason to believe that I couldn’t….”

Happy Birthday, Boris Nikolaevitch!

2006-02-02T16:00:00.000-05:00

"No matter how you describe that period, or how you assess the actions of the Russian Federation's first president, one point is undeniable: Boris Nikolaevich Yeltsin's time as the leader of Russia was when the people of our country, the citizens of Russia, gained the most important thing, the reason for all those transformations: freedom."
~Vladimir Putin

Boris Yeltsin celebrated his 75th birthday this week with a big party at the Kremlin and extensive media coverage of his presidency.

Much of my personal involvement with Russia spans the Yeltsin era, and I must admit that I got a little nostalgic when thinking about his presidency. I recall sitting on the couch watching CNN in the middle of the night as Boris Nikolaevitch stared down Soviet tanks during the August 1991 coup. I remember going back to college after one winter break and filing the paperwork to change my major from “Soviet Studies” to “Russian Studies”. I was living here when the first Chechen war broke out; seeing the horrified reactions of my neighbors with relatives in Chechnya, and then seeing the influx of refugees.

Yeltsin is a controversial figure here, blamed by all sorts of people for all sorts of evils that befell Russia during his presidency. A lot of the problems were probably no-win situations, anyway. For example, some believe that economic reform was too hasty while others believed he dragged his feet.

Certainly, though, there were many problems that arose during his presidency that were more or less unmitigated disasters. Yeltsin prevented the disintegration of Russia in to random republics, but only through the brutally prosecuted war in Chechnya. In addition, the rise of the “Oligarchs” was a direct result of the loans-for-shares program that his government initiated in what turned out to be a major blow to the states’ long-term economic viability. Simply put, Russia’s problems in the 1990’s are probably too numerous to mention.

Yeltsin’s birthday was a big media event, but it didn’t extend any further than that. And that, I suppose, is the real point of Putin’s Russia. Much of the chaos of the 1990’s has been left behind, and the Russians seem to prefer it that way. Of course, there are still problems in society, but on the whole, the country is far more orderly than it has been in a long time.

And that, it seems to me, is what is exactly at the heart of the current problems between East and West. When Freedom House changed its opinion on Russia from “Mostly Free” to “Not Free”, they benchmarked “Freedom” as what it was like here in the 1990’s. And while I certainly don’t want to be an apologist for Kremlin backsliding on basic rights, I know the typical Russian’s response to all those criticisms:

“If the 1990s represented ‘freedom’”, they say, “then we don’t want it.”

But if Yeltsin’s legacy is still uncertain, if his chapter has yet to be written, there may be one paragraph near the end that ensures him his place in the long, varied history of this country.

When he resigned in 1999, Boris Yeltsin became the first Russian leader ever to voluntarily leave power.

Heavy Lifting

2006-01-31T16:03:00.000-05:00

Everything is sort of an adventure for me here, and if taken the right way a little bit of a learning opportunity as well. Perhaps being in an alien environment makes me more reflective, since I’m certain I haven’t become more insightful. Regardless, I’ve been having little flashes of cognition that add up to a better understanding of Russia. Sometimes they’re based in conversation or observation. But this weekend I had a physical lesson.

The metro here is relatively accessible. Most of the stations, in the center of town at least, are serviced by banks of escalators. But once inside the actual stations, you often face a few staircases in order to transfer from one line to another. It’s not really something you notice until you try to do it with luggage.

The other day, I was making just such a transfer. Halfway down the staircase from the Kievskaya blue-line station to the circle-line Kievskaya station, I noticed a nice-looking little old lady with a suitcase. People were streaming by her as she struggled with the bag; a rolling upright nylon suitcase with a retractable handle like everyone has nowadays.

As I approached her, I smiled and grabbed hold of the handle. I was quite proud of myself for proactively helping, but even more so for my correct usage of the formal polite-form, or second person plural, of the verb in the imperative. Well, I’m pretty sure I said the appropriate phrase (“Permit me”) and since she didn’t react in horror or shock, let’s just assume that it came out close to the right thing.

Sometimes, in extreme cases, there’s a window of clarity; a brief moment in which all the power of a person’s brain comes to bear on a situation and analyzes and assesses every tiny input in split fractions of a second. I now had the suitcase by the attached handle, not the retractable one for dragging, and I was quite certain that it was the heaviest thing I have ever tried to lift. Something in the luggage clunked gently with the sort of thudding that lead bricks would make. A gentle clunking, since it was apparent that the bag was densely packed with whatever was making it that heavy.

In that brief moment of clarity, I began to assess my odds of making it down the stairs safely. And they didn’t look good.

But it was already too late. The old lady was smiling broadly, a toothy golden smile, and going on about how polite I was and what a gentlemen I was and how rare all of it is in today’s society. Of course, I tried really hard not show how much I was struggling. I tried to chat a little, but the bag was throwing off my balance, and painfully banging against my leg. Unfortunately, I skittered down the crest of the last two steps, landing noisily in the middle of the platform. The only thing that prevented me from falling is that the suitcase landed first and was enough of a counterweight to stop my bodily momentum.

She thanked me again, grabbed the still-extended handle, and disappeared into the crowd. That’s when I realized that she was no ordinary old lady; she was a real Russian babushka.

A babushka (pronounced BAH-boosh-ka) is the stereotypical little old lady in a long coat or housedress with a kerchief around her head. She’s more than happy to give directions or share advice on nearly any topic. She’s pretty friendly and approachable in that way, and very unlikely to be drunk (a real consideration sometimes when looking for help on the street). She might engage you in conversation that may be difficult to end, but it’s not unpleasant.

But don’t let the babushka fool you. After a lifetime in Russia, they are absolutely as tough as nails. They will yell at you loudly for perceived transgressions of order or decorum, order you about like pieces on a chess board, or take on the surliest drunk on the metro. It’s nothing to be elbowed aside easily by one on a tram, and then notice that she has a 50 lb sack of potatoes over her shoulder.

More than that, the babushka is the real foundation of Russian society. They staff all the public places as “duty officers”, keeping watch on lobbies, escalators in the metro, and apartment buildings. They look after the grandkids while the parents are at work. And, in no small sense, they help maintain public order with their outspoken opinion of what’s right and wrong.

So, given all that, I’m glad that I lent a hand to the babushka. But someone please tell that old lady: next time, she’s own her own.

Two Parks, Two Eras, One Russia

2006-01-30T11:00:00.000-05:00

I’ve visited quite a few of the hotspots of Russian and soviet history in my time here. And like most of such tours, it has involved a good number of visits to gravesites; a cosmonaut in Chuvashia, Lenin on Red Square, tsars, princes, writers, and luminaries in both Moscow and St. Petersburg. I’m practically a certified guide for the necropolis at the Novodevichy Convent. But today’s excursion was slightly different; today was the first time I’d been to a cemetery for an ideology.

A huge park stretches along side the Moskva River in the middle of town. One side is the famous Gorky Park (or Park Kulturiy as the Muscovites have always called it) and the other side holds the New Tretyakov Gallery of 20th century art.

The New Tretyakov is surrounded by this beautiful park, and hosts a wonderful sculpture garden. Paths lead through pine trees and nearby church domes and bell towers poke over bushes and tree tops. The snow hushed things a bit, and brought the hum of two adjacent highways down to just a whisper.

In the back of this park is a separate area that costs 100 rubles to enter. There, many of the dismantled communist statues taken down around Moscow have found a last home. Labeled, strewn across the lawns, they are now historical oddities rather than living touchstones of political power. There are Lenin and Marx statues here in a variety of styles – even a rare statue of young Lenin while he still had hair and was years away from power in the USSR.

Here also is Felix Dzerzhinsky, the hated creator of the KGB, toppled by a jubilant crowd in Moscow as the Soviet Union fell. The plinth of his statue is still attacked with paint and slogans even here in this park.

There’s more obvious editorializing of an official sort over by the Stalin statue. His enormous pink granite likeness is surrounded by rough stone walls held together by iron bars and barbed wire. All around him, smaller sculptures of his victims stand vigil in anguished and tormented poses. It’s an eerie, but appropriate, way to remember a murderous tyrant.

You had it coming, comrade Stalin.

The park is also a good display of the unusual character of the Soviet Union. Heroic carvings of marauding tanks and brave soldiers clutching machine guns are juxtaposed with statues imploring peace; a man breaking a rocket in half, another beating his sword into a plowshare. Another is somewhat more confrontational. An Asian, a Slav, and an African all join hands in both metaphorical and literal steely defiance. “We Demand Peace” is the title.

A few feet away, children ride plastic down a slide and skitter along the ice. It’s an especially charming site among the frowning visages and firmly set jaws of granite soldiers and politicians.

I crossed the street over to Park Kulturiy for a more light-hearted stroll. Admission to the park is 50 rubles, with discounts for the usual benefactors: World War II veterans, students, invalids, etc. But for the first time I also saw a discount posted for emergency workers from the Chernobyl disaster.

Most of the miles of walkways and open spaces of the Park are frozen over and open for skating, which people do in great numbers – and at great speed with varying levels of skill. So I had to cut some of my walk short and head into less populated areas of the park.

It was a welcome relief. Most of the park is wired with loudspeakers that blare all sorts of music. Many leisure activities in Russia, I have learned, involve really loud music. At least the area with children’s rides was playing songs from Disney movies, but the main park was awash in Whitney Houston’s “I Will Always Love You” and The Eagles’ “Hotel California”, blasted from every lamp post.

So I saw it all today. The isolated, unmourned, stone corpses of the Soviet Union and the vibrant youthfulness of today’s Russia – skittering along a path it’s bound to slip and fall on at least a few times.

Full Steam Ahead

2006-01-28T12:09:00.000-05:00

The longer I’m here, the more I begin to understand the country and the culture. It comes in small dribs and drabs, but my infrequent epiphanies are quite rewarding – shedding light in otherwise dark areas. This weekend, I think I had another small breakthrough.

An acquaintance of mine invited me join a group of folks heading to the banya, or Russian steam bath. He had rented a private one and a good group was attending, so I gladly accepted.

This particular banya complex is far from the metro, what seemed like long miles down snowy, forlorn “Hammer and Sickle” street. I walked past darkened factories and the odd unfinished residential apartment building. In an attempt to find the address, I entered a small courtyard. All the buildings were unmarked and unlit, but suddenly a door opened and a security guard called to me. “The banya is this way”, he said.

The complex was very nice, and done up in faux country style – interior thatched roof, rustic exposed wooden beams, etc. Our private space was on two levels, and had a pool, a lounge, a dining table set for 10, changing rooms, a billiards table, and of course, a small teak banya.

Banya etiquette is quite strict in Russia. Change, put on sandals, and into the sauna. Single sex steam rooms are naked; in mixed company, like our group, one wears a swimsuit or a long sheet.

Inside the banya, hardcore types wear a felted wool hat to keep the tips of their ears from burning. Also, they take turns beating one another with branches of dried birch leaves in order to bring the blood, and the toxins, closer to the surface. Real Russians will not speak in the banya – they prefer to sit silently and concentrate on their sweating. After a dose of superheated air, you pop out of the banya and into the pool for a shocking refresher. Repeat as necessary.

Unfortunately, I cannot help but play the role of the non-russian in these scenarios. I won’t sit in the unrelenting heat long enough to endanger my unprotected extremities. I have been beaten with birch branches before and know that I hate the sensation enough to refuse to ever do it again. I suddenly feel chatty in a banya for some reason, too, and just can’t obey the no talking rule. I’m also not a real fan of jumping in the pool afterwards, either.

But otherwise, I’m an excellent banya guest.

Truth be told, I don’t really like the banya. What I really like is hanging out in between steam doses. Talking, playing billiards, ordering beers over an intercom from our waitress who miraculously appears at the dining table only moments later.

After a couple of weeks of crushingly cold weather, however, I now appreciate the banya more than before. It felt very good to let the heat soak into me and bring so much angst from my frozen core out to the surface, where it could be painlessly perspired away. I felt the subsequent doses of heat recharging my winter battery, hopefully providing me with enough fortitude to weather the rest of the winter.

Or at least until my next steam dose.

But either way, I think I now understand the fanatical devotion to the banya. To balance one extreme condition, the Russians seem to go find the equal and opposite force to countervail it.

Things Begin Warming Up

2006-01-26T15:52:00.000-05:00

I hate to keep harping on the weather. Frankly, it has crowded out all other sorts of things that could be written about in this space by keeping me indoors and cowed. Anyway, several observations from the cold – one example of what it drove some people to do, and two examples of extraordinary efforts to warm back up.

Russian superstition hints that the coldest weather of the year always happens during the feast of the epiphany, a few days after Christmas; literature is full of references to the “Epiphany Frosts”. Yet again this year, the cold snap was right on schedule. Many centuries of vicious winter, made all the more vicious by its regularity and predictability, have left an indelible mark on the Russians. Sure, it has made them impervious to temperatures that frighten others. But more to the point, it has made lots of them genuinely insane.

The Epiphany celebrates the baptism of Jesus in the River Jordan. Part of the Russian celebration is to emulate the ancient immersion in that comparatively tropical river by going to the nearest body of water, sawing a hole in the ice, and jumping in. Three times. At midnight.

This was a widespread event this year, and there was plenty of media coverage of sites all over the country. Most places seemed to have 3 people standing around with an official job. There’s always a priest to administer a blessing before going in. Also, there’s a man with a hook to prevent dunkers from inadvertently going under the ice. And most important of all, there’s someone with a glass of vodka afterwards to warm the swimmers back up.

In my case, the order would probably be a bit different. I’d drink the vodka first for courage. Then, I’d have the guy with the hook push me in. Lastly, I’d ask the priest for a prayer of thanksgiving for deliverance from extremely foolish self-inflicted danger.

The midnight swim has become a favorite event for politicians to attend. I saw Vladimir Zhirinovsky on TV. He was wearing a tight speedo that managed to make him as physically repulsive as some his political platforms. But I did have to agree with him when he stated, post plunge, “This is why Americans don’t understand us.”

Vodka, of course, figures prominently into another example of warming up. As all zookeepers know nowadays, vodka has amazing thermal powers. That’s what the Moscow zoo was thinking when it gave its elephants a few buckets of vodka to shake off the chill. Unfortunately, they were – ahem – overmedicated and one tore out the central heating pipes in the elephant house. On second thought, perhaps the vodka worked after all.

The granddaddy of all national warm-up maneuvers, however, was this week’s revelation that a British spy ring had been uncovered. American spies would have seemed a little too ominous and probably would have provoked a more violent reaction, given the “thermal” remedies that a lot of folks were using (q.v. the elephant). But a British spy ring, with its Bond-like overtones, would be enough to get folks riled up without causing a major fracas. It appears the government has kept this one in its back pocket since November and chose to use it, coincidentally, during the most frigid part of the year.

Now that temperatures are back into the still-cold, but sane, 0 degree Fahrenheit range, it may be safe to venture back out into the wild. I hope that the insanity of the cold weather period doesn’t spill over into more temperate times.

Deep Freeze

2006-01-21T16:54:00.000-05:00

Cold! If the thermometer had been an inch longer we'd all have frozen to death.
~Mark Twain

This week’s string of record-low temperatures is the longest in some 50 years. I’ve had to redefine my ideas about what actually constitutes cold, and how best to deal with it.

The city is enshrouded in an icy fog that makes it look and feel as though the air itself has frozen. While the standard expression to describe the resulting penetrating cold is “bone chilling”, I think that this week’s high temperatures in the –10 degree Fahrenheit range transform that saying in to “bone cracking”. Everything just seems so brittle when it’s covered in frost.

Passing through the front door is to be met with a blast of air that strikes like a sharp slap. It makes you stand straight upright and nearly stop moving with the first attack on your exposed skin and first painful gasp of air. Its shockingly cold.

Within a few feet of my doorstep, I noticed the sharp report of my boots on the pavement. What are normally quiet, soft rubber soles had stiffened in a matter of moments to boots as noisy as hobnails. But that was earlier in the week, because it’s been snowing for the past couple of days. Now, every step brings a noisy squeak from the ice and snow on the sidewalk.

It takes a while to get ready to go outside. Two pairs of thermal socks. Two pairs of thermal underwear. A heavy, double fur-lined coat. A long scarf wrapped around my head from eyes to throat. And a fur hat (ushanka) with the ear flaps down and tucked into the raised fur collar of my coat. It’s as effective as armor, as heavy, and probably takes almost as long to put on.

Thusly girded, I dashed off to the kiosk on the corner for water. The routine is to pay at the kiosk, and then take the beverages from the adjacent refrigerator case when the clerk unlocks it remotely. Only now the cases had been so long exposed to the insane chill that all the bottles inside them were frozen solid.

I suppose the poor refrigerators weren’t able to deal with the role reversal expected of them. Their normal role is to provide cool refreshing drinks, in a word, to refrigerate. But when the outside world inverted and became a freezer, they didn’t know what to do. Were they now expected to keep things warmer than the ambient temperature? To un-refrigerate? It seems that they gave up in the face of the existential dilemma and let everything freeze and explode.

I bought two frozen-solid cylinders of water anyway. But I still wanted something to drink in the short term. I bought Fanta, which apparently only gets a little bit slushy even in weather that will cause a pepsi bottle to explode. I was happy with that purchase until halfway through the bottle when I wondered what naturally occurring ingredients in the context of a bright orange drink could possibly prevent freezing. I believe that the answer is “none”.

Oh well. As I got home and brushed the ice off my eyelashes, I decided that a little anti-freeze might just do me some good.

Flaps Down!

2006-01-18T15:16:00.000-05:00

There are several ways to battle the cold. By far the most preferable is to simply stay inside. But when it gets this cold for this long, the inevitable reality of going outdoors begins to set in. At least, for a visitor like me, you get the novelty of seeing Muscovites in their winter survival gear.

(We all know I'm deluding myself, of course. At minus 30 degrees celsius, it really is necessary to invent a bright side no matter how much of a stretch. Otherwise, your next cab ride might just unexpectedly be to the airport. "I've got a passport," you say to yourself, "and a wallet full of credit cards. This is crazy. I can get out here. I can save myself.")

There are two variants of winter raiment for the female of the species. Some women bundle up in heavy, long furs with imposing matching hats. The others wear down parkas with knit bucket-shaped hats that come down over the ears. The unifying factor is that most women prefer hoods and will wear them up at all times.

On the other hand, there are 4 kinds of hats in Russia for men.

First, and most simple, is the simple black knit ski cap. This is a cheap and functional option, with the ability to pull it down over the ears making it a popular choice. It’s a somewhat ominous fashion accessory when paired with a heavy black leather coat. This is generally worn by young men - the sort of guys who don't wear hats at all when its a bit warmer.

What I’ve always known as the “english driving cap” is very popular. Tweed and heavier fabrics are popular, but wool-lined leather versions are also available. In either case, the local variant comes with ear flaps that swing down from the inside. These caps seem to be worn by men of all ages.

A variety I’ve never seen before is called the “Austrian” cap. It’s a high-crowned, fur-lined cap with external ear flaps. The “Austrian” is very, very popular. In particular, it seems a favorite of middle aged men - the sort of men who don't look like they'd wear something like an english cap. The history is murky, but I suspect its about as "Austrian" as french toast is French.

This is the most traditional and perhaps most popular hat in truly cold weather: the ushanka. The name of this hat has the word for “ear” (usha) right in it. So its heavy duty gear for the whole head. Size and luxuriousness of the fur are indicators of social status. The gaudiest and biggest ushankas ever made are reserved, it seems, for American tourists at the outdoor souvenir market. It’s quite easy to spot them; NorthFace jacket, messenger bag, Merril GoreTex boots, an enormous fur hat, and a ridiculous self-congratulatory grin for “fitting in with the locals”.

Among the Russians etiquette is relatively strict, though. One doesn’t wear the ushanka in mild weather – any where north of the freezing mark, it seems to me. To do so is to invite hostile and perplexed stares from normally inscrutable Russian passersby. And, most importantly, one doesn’t bring down the ear flaps except for during the absolutely most severe weather.

This week qualifies as severe, so there's no social faux pas in not putting the flaps down. Quite to the contrary - you'd be crazy not to.

((Celsius *2) - 10%) + 32

2006-01-17T15:15:00.000-05:00

Moscow is having a bit of a cold spell. I had advance notice thanks to the folks at the office. The other day they smugly told me what the prognosis was for the temperature in the middle of the week. I furrowed my brow, and stared over their heads in concentration. Then, they repeated themselves in English. “Oh,” I said. “I understand. It just doesn’t make any sense to me.”

They laughed heartily, somehow gleeful in their pride about how impossibly cold it could get in their motherland. The nationalist one-upsmanship got a little out of hand when they began drawing lines in the air and discussing latitude. “The southernmost parts of Russia, after all, are further north than the northernmost parts of the US”. Really? Even if that is true, there are a lot of other factors that go into making a climate. I grew up in the northeast, and I know for a fact that it’s not the same type of weather as Sochi – Russia’s Florida.

But if they were trying to get me to confess that their country is more of a frozen wasteland than mine, all they had to do was wait a couple of days.
Muscovites woke up to readings of minus 23 Celsius (minus 9 Fahrenheit) this morning as a cold front blew in from western Siberia, according to the Russian Meteorological Bureau. Temperatures may reach as low as minus 34 Celsius (minus 29 Fahrenheit) in the coming days, which would be the lowest since 1947. [Bloomberg News]
Tuesday morning, all smiles, they asked how I liked Russian winter. But by lunch time, when the temperature had gone down a few more degrees, there wasn’t such patriotic euphoria about the cold. “This isn’t normal,” they began to say to each other.

Before moving over Moscow, the cold front reduced readings in the western Siberian city of Tomsk to minus 50 Celsius, the coldest for a century. [Bloomberg News]
At that point, the numbers on the thermometer become sort of meaningless. Actually, The Celsius and Fahrenheit scales do converge at -40 degrees. Up until now, I just thought that was a theoretical construct of science that wasn’t going to figure into my life; kind of like Physics class when one measures temperatures from the absolute zero on the Kelvin scale where motion at the molecular level ceases to be possible.

I will certainly cease all motion outside my warm apartment if it gets any colder. Zero degrees Kelvin is about minus 273 degrees Celsius. I used to think that was impossible, too – but this week I’ll keep an eye out for it.

If I Ran the Zoo

2006-01-16T15:25:00.000-05:00

I got together with some of my colleagues this weekend. We had one of those conversations that strays into strange territory – so strange that no one can remember how we eventually stumbled onto the weirdest topic of the evening. It had a lot to do with the difference between Moscow girls and their counterparts from the provinces – their differences in attitudes and behaviors.

Hans skipped over our poorly informed and inarticulate generalizations and went straight for an anecdote about sheer insanity. Today, he sent us a follow up email that elaborates more on a seriously crazy story. I’m just going to attach the message in its entirety because a) I’m still stunned and b) I’m not able to do any better than he did.

There are only two Russian words you need to know. Kvartira is apartment, and tvorog is a sort of Russian farmer cheese.

A quick follow up about my colleague, Natasha, from Cheboksari and her pet lion. I got the full details - and they're nearly as shocking as we originally thought. It's a real lion, not a tiger.

They (Natasha, her permanent boyfriend, and the lion) live in a one room kvartira - and the lion basically considers the entire room his den. The cat is one year and 3 months old, at present it weighs in at 120 kilos. Its main (or is it spelled "mane") is just beginning to grow in around its neck - but is not as full and robust as it'll be in another 8 months or so.

As far as what it eats, it's gets a concoction of the following in a bowl: 5 – 7 kilos of extra fatty ground beef, 200 grams tvorog, one egg, and a liter of milk. Every day.

The cute little kitten likes to sleep in the same bed as the couple at night. She prefers sleeping with the cat rather than with her boyfriend because the cat is warmer and doesn't ask "stupid" questions.

Occasionally when the cat is in a good mood, it holds a part time job at the circus down the street... but lately it hasn't been getting along with the ringmaster or its fellow animals... so it hasn't been working much. According to Natasha, he's been moody lately because he is teething. His baby teeth have fallen out and a giant set of (flesh-tearing) fangs are coming in nicely.

I asked Natasha if the lion is noisy, and she said no... that's he's mostly quiet and just grumbles a lot. Although once the neighbor pissed him off and he roared loud enough to set off about a dozen car alarms in the parking lot.

Well, as of now, I think I'm backtracking on my initial impression of Cheboksari girls... wouldn't want to get fed to the lions you know.

Moscow... never a dull moment.

Indeed, Hans, indeed.

Sic Semper Tyrannis

2006-01-15T16:26:00.000-05:00

Russia has a rich history and a long memory. And from time to time, it seems willing to do some unnatural things to preserve its past.

Today’s target for me was Lenin’s Tomb, the low red marble mausoleum alongside the Kremlin. It’s encircled with a low rail, well-patrolled by guards, and open to the public a few days a week from 10am to 1pm. I lined up with a few dozen others at one end of the square and waited to be let in. Admittance is free, but strictly controlled – you have to empty your pockets and go through a metal detector. They are quite serious about the rules – no bags, no cameras, and no camera phones. Passing there, you enter the front door of the mausoleum, walk down a flight of steps and enter the crypt.

Lenin is encased in a glass coffin with an ornate metal top, and the elevated path goes around three sides of the sarcophagus. The edges of the coffin are mirrored, so you manage to get a view of the body much as if it were lying in a three-way mirror like the kind found in a clothing store. The rules down here are quite strict, too; stay quiet, keep your hands out of your pockets, and do not stop for a longer look. There are soldiers every few feet, and they are somewhat aggressive when it comes to enforcement. I wasn’t walking fast enough for their liking and I got yelled at to keep moving along.

It isn’t hard not to grind to a halt when you’re staring one of the most significant men of the 20th century in the face, a man whose intellectual and personal charisma forged a new empire out of the ashes of a corrupt and decayed old order. That, and he’s been dead for about 82 years, too. So the awe of a student of history gets mixed in with a healthy dose of morbid curiosity.

The truth is that Vladimir Ilyich doesn’t look so bad considering that he’s been dead a lot longer than he’s been alive. Or, for that matter, even a lot longer than I’ve been alive. There are some “condition” problems with the fingers of the right hand, notably a discolored thumb, and a slightly bluish tinge to his temples. But on the whole, his condition is somewhat enviable even for some living 82 year olds.

Since the fall of the Soviet Union a debate has intermittently flared up about whether Lenin should be removed from the tomb for more conventional burial. For the first time last fall, though, the issue was broached by a high-ranking member of the government. That lends some credence to the belief that Volodya’s days on Red Square may be numbered.

What remains of the communist party raises a hue and cry and holds protests each time the topic is raised. But most of those folks are dying off and soon there won’t be anyone to protest a transfer.

The rest of society seems to be lining up behind the idea. The church considers it unholy to have an unburied person around. Physical incorruptibility is a criterion for sainthood, so having a preserved body from a competing ideology is a bit of an insult, I imagine. Democrats feel offended by the exalted position of a discredited leader of a discredited regime. Others, less ideological, think it perverse to have a preserved corpse at the center of their capital.

Poor Lenin. He never wanted to be preserved or praised. He wanted a simple burial near his family. But politics got in the way; Stalin thought it quite useful to create a cult around his deceased predecessor. Now that he’s increasingly irrelevant, he might just get his way.

But no matter where he ends up, old Vova may end up with the last laugh after all. Just around the corner from his mausoleum, several Lenin look-alikes pose for photos with tourists. For a few rubles, of course.

Expectations are Unexpectedly Better Than Expected

2006-01-11T09:23:00.000-05:00

Markets supposedly represent the contemporaneous collective interpretation of multiple players. That seems to make some intuitive sense in small numbers. But imputing that behavior when the market is large and diverse is a bit more of a philosophical leap. Sometimes it even makes it hard to explain something that’s already happened.

2005 was another banner year in the Russian equity market; The RTS and MICEX indices both finished out the year with an 83% gain. December was a great month (+8.5%) despite our belief that a US Christmas rally would be a necessary pre-condition. And yesterday’s open to the trading year saw the RTS Index leap another 5.8% from that healthy end of year print.

But why? We’ve been struggling to understand the source of that strength and why it has spilled over into the beginning of this year. All sorts of data points and impressions are aired during our investment meetings. Our head of fixed income came up with the best characterization so far, and I’ve used it as the title for this post.

I guess in a way, he’s got the right sentiment in the funniest possible words; in the short-term, sharply positive revisions (and lack of negative revisions) to the outlook for 2006 have improved the investment case in the capital markets. Oil seems stubbornly stuck above most long-term average price per barrel estimates, and the nuclear dilemma in Iran may not make it any worse but it certainly won’t make it any better. The Ukrainian natural gas standoff was resolved and will result in even better profits at bellwether Gazprom. Overall, I suppose its safe to say that the macro situation in Russia is benign to positive.

The really big deal from the perspective of the local markets, though, is that more foreign investors are beginning to notice what’s going on. In the first week of January alone, best estimates are that more than $1 billion have been committed to emerging market funds. And Russia, with its barn-burning 2005 performance, is a major part of the allocation.

As a result of this new found attention, fixed-income spreads (versus the US treasury) have tightened, Russian equities are now at a slight premium to emerging market peers, and overnight rates (a widely watched measure of liquidity) have fallen to between 1% and 2%.

So what does this mean for 2006? I suppose it means most of the “convergence” theme has played out and that the really easy money has already been made. Now, local companies will have to start posting some decent profit numbers to justify the new valuations. In a way, the New Year has brought with it a whole new market with a whole new set of challenges.

Ready to Cast the First Stone

2006-01-09T07:44:00.000-05:00

Another weekend in Moscow, another opportunity to visit some monasteries. What in July had seemed to be an inexhaustible supply of ready-made historical/cultural/architectural/ tourist experiences is beginning to dwindle after 6 months of pilgrimages. Frankly, the prospect of visiting yet another church in the freezing weather wasn’t all that attractive to me. But with a new camera, new thermal underwear, and an open mind, it can be a rewarding experience still.

On my way out, I saw my doorman for the first time since I left in late December. Nikolai Alexandrovitch had shaved off his moustache during that time. I commented on it, and he noted that he shaves it off every New Year’s Day only to let it grow back in during the course of the ensuing year. That sounded like an appropriately passive New Year’s Resolution for my taste; Kind of like resolving to get slightly older day by day, or to breathe only as much as is absolutely necessary.

My early start on the day allowed me to stop at a local coffee shop for a leisurely drink. I had some difficulty ordering what I wanted from the waitress – most of the conversation went well enough, but the actual product specification phase was somewhat disastrous. As I waited for my order to arrive, I had the time to speculate on why that happened. I think its because I was ordering hot chocolate at 9am on a Sunday, and local cultural norms may dictate that that beverage isn’t appropriate for breakfast.

Well, society usually builds fail-safes into its governing code of rules. If its an undesirable outcome, then the possibility of it happening should be restricted to appropriate times. For example, stores can’t sell beer before noon on Sunday and McDonalds won’t make you a Big Mac before 11am. (Don’t ask how I know those). Anyway, they happily provided me with the cocoa, which is much more like a melted chocolate bar in a coffee cup. I had to eat the last bit with a spoon after it cooled down. In retrospect, its no wonder they were surprised when I ordered it.

I got all hopped up from the sugar and caffeine and raced out to the Novospassky Monastery. Its beautiful, and charming and ancient and all that. For me, though, 16th century churches are beginning to blur together. This one was notable mainly because it had 2 Christmas trees on either side of the front door with blinking lights that played carols in that annoying digital beeping noise. I got a pretty full dose while waiting for the cathedral to open up after a break for cleaning.

Nearby is the Krutitskoye Podvorye, a cathedral with an attached residence for the local bishop. Its made entirely of brick produced on site, and an impressive pile from any viewpoint. I followed signs for a little museum and ended up going down steep staircases and through low doorways to the basement of the old palace.

The museum turned out to be about Russian pilgrims to the holy land and, judging from the surprised and excited reaction from the guide when I walked in, not a very high traffic site. He was a charming older man with a bristly white beard, and walked me through the small exhibit, turning the lights on in each display case we came to. He crossed himself hastily each time he mentioned a saint’s name – a rather frequent circumstance when discussing pilgrimages.

We came to one glass case and he flipped on the light. The guide produced a key from his pocket but paused before he opened the glass door. “Have you been christened?” he asked. I answered that I had, and he proceeded. Eventually, he let me handle an antique prayer rope – a sort of rosary – that had been prayed on some countless thousands of times by a community of monks. He claimed that the act of handling it and crossing myself would be enough to remove my sins.

“All my sins?” I asked.
He looked at me a little cockeyed.
“Maybe,” he hedged.

Christmas Comes But Twice a Year

2006-01-07T15:44:00.000-05:00

Merry (Russian) Christmas, celebrated today.

Yuri Dolgoruki - Founder of Moscow - decked out for the holidays.

Red Square - hymns from the Kazan Cathedral were wafting onto the square for a nearly other-worldly experience.

Fellow Travelers

2006-01-07T08:34:00.000-05:00

The Delta direct flight from New York to Moscow is a microcosm of Russian- American relations. Like all flights, it’s possible to get a good look at your fellow passengers and speculate a bit about their circumstances or reasons for travel. New Russians with fancy luggage filled with recent purchases, older Russians visiting family with tattered bags. But more significantly, the flight is just long and boring enough to make a chatty neighbor spill his guts.

The plane usually has at least a couple of groups traveling on it. And more often than not, they’re Christian missionaries. Missionaries are recognizable mainly by their matching oversized polo shirts embroidered with the name of their church and some corny hopeful saying about light or truth or seeds or sometimes all three. Missionaries, in my experience anyway, seem to have a look about them; something approximating peace and fear in equal measures. It can come across as creepy or calming.

I’ve learned to speak differently to these folks. At first, when I would say that I am in Russia on a Fellowship, they would perk up and ask what Church I was affiliated with. It wasn’t a definition of the word that I was familiar with – but to many people “fellowship” has an exclusively Christian organizational connotation. Now I just say that I work in Moscow.

There’s always an upper-middle aged guy on the plane with sort of a stunned look on his face. And he always ends up sharing with seat mates how he found a wonderful woman on the internet that he’s on his way to meet.

I sat next to Roy on the way back to Moscow and heard all about it. As I helped him fill out his “migration card” – which the Russian government in its wisdom decided to issue solely in Russian unlike previous multilingual versions – he gushed forth geyser-like with details of his trip. I have to say that they were pretty sketchy. He had already started taking her advice on financial matters for the trip to Russia.

When we got to the part of the form for writing down the details of the “inviting body” – I skipped over making a pun on that, though it was killing me to let such comedic fruit just rot on the tree – he admitted that he didn’t know his friend’s last name, let alone her address or phone number. I directed him to his visa and hotel information for the appropriate information.

There are always more than a few guys like Roy on that plane. Both in July on my first trip to Russia and on the way back to a couple of weeks ago, I’ve been able to compare similar stories with my traveling companions that we’ve heard from our respective seat mates.

Sometimes they’re success stories. Like the fellow who was going back to visit his new extended family in Russia after some dozen years of happy marriage. But in general, suffice it to say that you’d prefer to hear your seatmate’s story on the first leg of the trip – when’s he’s guaranteed to be hopeful and excited and a little apprehensive. Not the return trip, when there’s a chance that you’ll be listening to a disappointed, venting, jilted suitor.

Roy didn’t seem to have any sort of heavy coat with him on the plane, which was a bit of poor planning given the single-digit temperature in Moscow. He assured me that, as a native of Ohio, he wouldn’t have a problem with the wintry weather. I asked where he lived in Ohio. “Oh,” he said matter-of-factly, “I don’t live there anymore. I’ve lived in Southern California for the past 30 years.”

I love the optimism. He’s traveling to Russia to meet a woman with no address and only a first name. And he’s quite sure that childhood memories alone will sustain him physically regardless of how unprepared he is to weather such numbing cold. If you gave 100 guys like Roy a budget and some time, they might just change the world. Or die of hunger.

I last saw Roy at passport control in the airport in Moscow. He had stumbled his way into the “Russian Citizens Only” line, and it was too late and too far for me to help him out.

I wondered what became of him as I waited for my luggage.

Christmas Plenty

2006-01-06T20:29:00.000-05:00

The Holidays were a whirlwind tour of personal hotspots in the United States. In 13 days I went from Moscow to NYC to Syracuse to NYC to San Jose to Los Angeles to San Jose to San Francisco to San Jose to NYC to Moscow.

I slept in 5 different beds.

I estimate that the main transit parts of the trip covered more than 15,600 miles as the crow – or Boeing 767 – flies. The total cost of this entire peregrination was at least $2000, sort of a bargain when taking the vast distances into account. By far the most expensive, and frequently traversed, mile was the stretch from JFK to Manhattan. I wasn’t in New York for more than 12 hours in any of the three layovers, but it was enough time to afford me an opportunity to eat sushi, a cheeseburger deluxe, and a turkey club sandwich.

For a less rain-man like analysis of my trip, I should consider the qualitative aspects of the journey. Although the travel got a little wearying – at one point I woke up on a plane and wasn’t really sure where I was going - I had the opportunity to see all my family and a good number of my closest friends. I enjoyed every minute of it. Thanks to everyone who made this holiday season such a memorable experience for me.

Traveling Without Moving

2005-12-26T09:53:00.000-05:00

The world is shaping up to be a very strange place. At the end of a very long trip last week, I had a stark reminder of exactly how small it has become.

I flew back to the United States for the holidays on the 22nd, which turned into one of the longer days of my life. A three-day snow shower settled over Moscow, which prompted my colleague Josh and me to head out to the airport earlier than we had intended just to be on the safe side. Once there, we discovered that the flight was already delayed well before its take off time. In airport terms, that’s preparation for even longer delays.

We were right. The delay kept creeping on in small increments. In the hallway near all the perfume shops I bumped into an American friend, and together the three of us headed off to the airport’s Irish bar to kill some time. Sitting at a table across from an impressive array of taps, we all silently assessed the situation. Then I tried to sum up my fears – “I don’t want to miss the holidays with my family because I inadvertently had way too much to drink in an airport bar in Moscow.” We all laughed a little, safe in the collective decision that we didn’t have to drink alcohol simply because of our location.

We were there for a long time, and got kind of rambunctious anyway. We drank strong coffee which we bought each other by the rounds. The tally was somewhere around 5 to 6 cups of coffee before we headed to the plane.

The flight was as uneventful as long stretches of boredom interspersed with sleep can be.

After all that time in the air and a quick glimpse of New York City at night, I felt as though I had slipped out of one reality and entered another – a la Billy Pilgrim. But after I collected my luggage, that illusion all came crashing down.

The strike was still on at that point, so I piled into a cab with some Norwegian tourists to share a ride into Manhattan. Russian-style, I sat in the front seat. In Moscow, the standard behavior is to sit next to the driver when riding in a cab.

As we pulled out, I heard the driver mutter under his breath a little. Something familiar. “Are you Russian?” I asked.

“Ahhhh,” he said, “We are you from?”
“I only just flew in from Moscow to see my family,” I answered.

So we chatted (all in Russian) for a while - and then for a while a longer. Thanks to the strike-induced traffic jam, our trip into the city took over 2 hours. I heard about life in Tashkent, how the taxi stands at JFK work, reminisced a little about Moscow, and generally shot the breeze with “Misha” all the way into the city.

It was fun, informative, and interesting to see a side of the Russian diaspora in New York. I'm quite sure the Norwegians in the back seat thought we were about to rob them, strip them naked, and leave them standing along side the Van Wyck Expressway but in truth we weren't paying them much attention.

After 10 hours at breakneck speed through the stratosphere, I was home again and feeling as if I had never left Moscow at all. Call it the global village, call it the interconnectedness of the world’s major urban centers, call it what you will. But sometimes the whole world feels like it’s shifting under your feet, racing around to catch up with where you’re going.

Sunrise Sunset

2005-12-21T05:58:00.000-05:00

Today is the shortest day of the year. Our progress toward this date wasn’t unnoticed, as I’ve felt a bit like a vampire over the past week or two. And I suspect that I’m coming down with a seasonal affective disorder that tea with honey just won’t cure. I guess the real problem is that, in Moscow, there’s both a front and back end to this situation.

Take a look at today’s stats, for example, with New York as a bench mark:

21 December 2005
Moscow: sunrise was at 8:59 and sunset at 3:56 for 6 hrs 57 minutes of daylight.
New York: sunrise was at 7:16 and sunset at 4:31 for 9 hrs 15 minutes of daylight.

The truth is that its never really that bright to begin with since its snowy and cloudy while the sun makes its low arc across the sky. It is still pitch black well after I’ve already arrived at the office, and pitch black again hours before I go home. My actual outside time is spent in total darkness.

It makes me feel like the only thing I do is work, when in truth my hours aren’t particularly strenuous. And I find it a little disorienting, too. Lack of sunlight has unlinked me from a certain type of rhythm; I find myself inadvertently staying up very late. Surprisingly, I haven’t had trouble getting out of bed in the morning – which is fascinating since darkness and cold and snow are usually a pretty good combination for sleeping in.

But I remember having a similar problem when I first arrived in Moscow. Take a look at the data for that day, too:

4 July 2005
Moscow: sunrise was at 4:53 and sunset at 10:15 for 18 hrs 22 mins.of daylight.
New York: sunrise was at 5:30 and sunset at 8:30 for 15 hrs of daylight.

The near-constant presence of the sun was equally disorienting. I had to rearrange the furniture in the apartment so that I could get some sleep. Again, the whole rhythm was different – it was easy to take the long way home and go sightseeing since the sun would stay up so long. At twilight, I’d start thinking I should stop for dinner when actually I should have been thinking about going home to bed.

What’s really surprising to me is that relatively small changes on the margin can have such a large effect on simple, but deeply held, patterns of life. The length of day isn’t radically different from a latitude like New York, but it is definitely very noticeable in how I actually go about living.

I suppose I’m just grateful that I don’t live in St. Petersburg. Today, they can expect a whopping 5 hours and 53 minutes of sunlight.

California, Here I Come

Evidence

2005-12-20T15:53:00.000-05:00

In my last post, I wrote about how Santa often causes terror in children around the world. Then, I found this picture on the web. It is the perfect piece of evidence on which to rest my case.

The Chicago Tribune encouraged readers to send in pictures of kids freaking out in the presence of St. Nick and then published the hilarious results.

I love this picture since its only a pint-size representation that's causing a full blown freak out. But I especially love it because we have the exact same Santa statue. Mom made it out of ceramics (the caption at the website says this one is plastic, however) many years ago. As far back as I can remember, anyway, that Kris Kringle was a focal point of our Christmas decorations in the house.

The odd thing is that I have always really liked this figurine. The countenance is almost zen-like in its knowing wink and smile. But then again, I suppose I have always liked Santa in all his various forms.

I guess I still really like Santa, even though I now realize that it was Dad who ate all the snacks we left out on Christmas Eve. "No, kids", he'd say looking over our shoulders in the kitchen as we assembled a plate, "Not those cookies; Santa likes the other ones better. And not so many carrots."

Happy Holidays - Call it What You Will

2005-12-19T06:13:00.000-05:00

If Lucy Van Pelt, the lemonade-stand psychiatrist from Peanuts, were to give a diagnosis of Russia she might say that this country has a lot of “baggage”. A rather creaky autocracy gave way to a not-always-so-rational communist totalitarianism. The 20th century has left the country with a lot of challenges that need to be addressed. The Russians have conquered some, struggled with others, and have some more that they have yet to face. In all, I believe that they’re doing a good job. But in one area, at least, history has provided a clear advantage over the annual hand-wringing in the US. And that’s the Holidays.

The communists tried to do away with Christmas, but eliminating a fun holiday is unlikely to be popular or particularly successful. So in the Soviet Union all the non-religious trappings of the Christian holiday migrated to New Year’s. An old man with a flowing white beard still leaves presents under a decorated pine tree. Except here he’s Дед Мороз (Dyed Moroz) - Father Frost - leaving New Year’s presents under the New Year’s tree.

The result of this, after some 70 years of official atheism, is that the two holidays are distinct and separate. Everyone participates in the New Year’s festivities. And a few days later on Jan 6th (the date of Russian Christmas), Christians are now free to celebrate the religious holiday with traditional foods and church services, etc. No messy mingling of the secular and religious.

This year, the US seems to be going through a particularly bitter battle in the culture wars with its arguments over “Merry Christmas” vs. “Happy Holidays” and whether or not that’s symbolic of a nefarious, creeping plan to de-Christianize our end-of-year rituals. It seems to me that Christians have done a pretty good job of de-christianizing it ourselves; some churches are closing this year since Christmas inconveniently falls on a Sunday. Anyway, momentarily reflecting on the true spirit of the holiday before tearing into a pile of gifts that represent the GDP of a small African nation isn’t exactly keeping things kosher, in my opinion.

One of my favorite writers, David Sedaris, penned an essay where he said that the two surefire ways to understand a foreign culture were to ask about their gun laws and their Christmas myths. Russian Christmas isn’t as scandalous as his story of the “7 to 10 black men” from the Netherlands, but there’s room for gossip.

Father Frost is always accompanied by Снегурочка (Snegurochka) - Snow Maiden. She’s from an ancient Russian fable about a lonely old couple who made a daughter out of snow to keep them company. She came to life, but melts each spring and returns each winter to visit them. It’s a lot like Frosty the Snowman but a little more melancholy. No button eyes or carrot nose here, though; Snegurochka is always portrayed as a very beautiful young woman in traditional peasant costume. No one has been able to sufficiently explain her exact relationship to Ded Moroz, so I’m inclined to believe the worst.

Its all very similar to St. Nick, or Santa, or whatever you call the standard Anglo-American version of the jolly elf. But there’s something rather weird about the persistence of such a mythos when it clearly alienates its primary target audience. Children around the world seem to be terrified of meeting the annual gift man. They cry, they scream, or they simply freeze up. I saw this at GUM this weekend as Ded Moroz and Snegurochka walked through the massive department store.

This was a particularly evil incarnation of visiting Santa at the Mall. No long line, no time to prepare, no warning. Happily shopping with mom and dad until you turn the corner and BANG – face to face with roaming Dyed Moroz AND Snegurochka! It’s like the childhood equivalent of standing before St. Peter at the Pearly Gates answering for all your sins.

Except in the world of children, the stakes may even be higher.

I don’t know if Dyed Moroz and Snegurochka did any good-cop bad-cop interrogation, but it was hilarious to see the reactions of these kids to double-barreled questioning. Most of them simply shut down – saucer eyes and subdued nodding in response to questions. I can empathize. Father Frost carries a huge staff with a rather pointy looking star at the end. And Snegurochka – well, I always freeze up when talking to pretty girls.

Anyway, Russian Christmas looks like ours in a lot of ways – presents, decorations, same underlying messages of family and loved ones. Its just that they’re doing a much better job than we are of keeping different ideas separate and not letting some trivial arguments ruin the whole thing.

He’s Not Crazy; He’s Having Camera Problems.

2005-12-14T03:43:00.000-05:00

Blogs seem to come in all shapes and sizes. Photo-heavy blogs that are more about images. Text-only blogs that are about the power of emotion through words. Or perhaps more common, the text blog that invariably relies on lots of photos when the author runs out of things to write. This one appears to be a text blog – but it may only be by default.

I have taken lots of interesting pictures related to most of the recent entries on my blog. Or tried to, that is; my camera has decided that it can’t go on any longer. I thought at first that it was a power malfunction. Despite a new battery, though, the mechanical glitches keep getting worse. At first, the camera just shut itself off. Then, the zoom lens would move all on its own. Then, the camera would simply power down with the lens still extended. Now when I do manage to actually take a picture, the camera can’t tell if it’s a still or a video and ends up corrupting the file so badly that it can’t be recovered by the computer.

All through my childhood, Mom had a beautiful Argus 35mm camera – a wonder of engineering and probably one of the most finicky things ever designed for a consumer. Whenever we were on vacation, invariably, the camera would act up. Mom, all stressed out from her horrible children, would eventually snap and lash out at the camera, the children, and whoever or whatever else nearby that she thought might be contributing to the problem. It was all very funny in a don’t-you-dare-laugh-or-Mom’s-really-gonna-go-bonkers sort of way. At least, I think we can all look back on it and laugh.

I did, anyway. On Sunday. As I stood in the middle of the Arbat trying to get a photo of snow-covered portrait artists for the fourth attempt in a row. I started loudly cursing at my malfunctioning camera for betraying me when I most wanted it. Passersby were kind of looking at me askance. Suddenly the image of Mom doing the exact same thing entered my mind and I started to laugh. The askance-looking passersby started looking, and moving, in the other direction. Quickly.

It very nearly turned into a scene from a movie. Me as Charlie Sheen at the end of Platoon, on my knees reaching up to the sky with both arms. Or Kirk in Wrath of Khan, screaming upwards into space as the view pulls back.

Both of those would have made great photos. On someone else’s camera, that is.

General Winter

2005-12-13T05:14:00.000-05:00

The Russians have long relied on the ice and snow as a military strategy. Napoleon and Hitler’s problems are only the most recent examples of a heritage that stretches at least as far back as Alexander Nevsky’s battle with the Teutonic Knights – when the heavily armored germans cracked through the ice of a lake and drowned in mid battle. Now, I may come to regret this in short order, but so far this year “General Winter” has turned out to be a paper tiger.

There certainly hasn’t been any lack of snow in Moscow. It seems most days are overcast and likely to provide at least some flurry activity. In fact, 10-day forecasts are usually just a string of clouds and snowflakes in the newspaper. But the variable so far has been the temperature. Snow accumulates at night and then melts off significantly, and messily, during the day.

Of course, I come from the snow belt and I’m no stranger to sudden, massive accumulations of snow. But my frame of reference for city life is Manhattan. And in New York City, a minor squall can cause all sorts of havoc. Mass transit malfunctions, people stay home, garbage collection is suspended since garbage trucks are also the snow plowing trucks. In that context, then, it’s a little bit weird for me to see a massive city continuing to operate at breakneck speed in what would be a crippling snowstorm back home. Maybe this is what life is like in Minneapolis or Chicago?

Now, that being said, there have been a couple of brief, brutal cold snaps here. And that has been the most interesting part of winter so far. Those are the times that Moscow shows you exactly how it deals with the weather. Or that is to say, comes close to completely ignoring it.

The Arbat, Moscow’s main pedestrian street, is lined with souvenir stalls and artists who draw portraits and caricatures. This weekend, they sat in the same places, bundled up, next to samples of their artistic wares. Snow piled on top of them at a furious pace. Patrons getting their portraits drawn sat quietly and patiently as snow piled up on top of them, too. Occasionally, the artist got up and brushed the snow off himself and his subject, and then off his plastic-covered samples.

In good weather, Muscovites sit on the park benches much like they would their own sofas. Friends crowd around, they all have a few beers, and in general the outdoors becomes the preferred social space for a city of apartment dwellers. In the winter, the groups of people congregate in the underground pedestrian passages instead. Cigarette smoke lingers in the low-ceilinged passageway and voices bounce noisily off the tile and cement.

Most wonderfully of all, all the ice cream stands remain open. People stroll leisurely down the street with cold beers in hand. At some point, they'll squint at each other through the snow flakes, take off their gloves to look for change in the pockets of their heavy coats, and say to one another - I could really go for some ice cream right now. Then they'll climb over a little snowbank to get to the kiosk.

So now I’ve probably doomed myself to several months of teeth-cracking cold weather, but in all I thought it was worth saying that winter hasn’t been nearly as bad as I had feared.

Congratulations! What Did you Bring Me?

2005-12-09T10:27:00.000-05:00

Ahhh, the Russians. They aren’t that different from us, are they? Sure, there are small indicators of stylistic differences all around Moscow. For example, people don’t really smile unless they’ve got a good reason. The first answer to a request is usually no, but they don’t really mean it. However, I’ve run up against a behavior so at odds with my background, that its thrown the better part of my world view into disarray. I’m talking about Russian birthday parties.

Its always somebody’s birthday at the office - or at least it seems that way – so I’ve had a healthy amount of opportunity to analyze the differences. To begin with, the person celebrating the birthday does all of the treating. The celebrant brings cakes and invites everyone to partake, while close co-workers might respond with flowers or wine. Thus, our coffee room is constantly full of tortes and chocolates.

Frankly, it’s a miracle that everyone in the office isn’t fat. Quite to the contrary; everyone is thin no matter how undeserving. As I was making tea this morning, two of my more attractive co-workers were chatting and finishing off yesterday’s torte.

Upper-level staff birthdays are celebrated in a more formal fashion. The birthday boy/girl hosts a huge spread of zakuski (hors d’oeuvres) and beverages and desserts in the conference room at the end of the day. The quantity of the spread seems to move along the scale of seniority. The birthday feast for our head of fixed income investments, for instance, was a scene of nearly obscene plenty including red caviar and other local delicacies.

Once everyone is served wine, the most senior executive proposes a toast. A Russian birthday toast is no trifling affair. Its usually really long, very detailed, highly emotional, funny, and floridly extravagant in its praise of all the toastee’s attributes – both personal and professional. The birthday boy/girl then walks through the crowded conference room and clinks glasses with each person.

The next most senior person gives the next toast. The long toasts are dragged out by rowdy interruptions from the rest of the guests. And this cycle keeps going until everyone who wants to gets a say.

Usually, there’s hard alcohol on the table that has been presented as gifts to the birthday boy (women aren’t given gifts of alcohol). I haven’t seen it get opened, however, at any of the parties so far. Wine only.

Birthday parties outside the office are the same. The birthday celebrator treats all the guests, even in a restaurant or bar. The toasts proceed very much the same way, too. The big difference is that the hard alcohol starts to flow at these types of parties. Well, it does when I’m there anyway. (Moskvichi don’t drink nearly as much as you may think, by the way. I feel somewhat confident in saying that Manhattan is a boozier atmosphere among working professionals.)

So that’s the upside-down world of birthday celebrations. Call me cheap, if you like, but I plan on being in America on my birthday.

A post-script: Gifts from colleagues and vendors have been flowing in for one portfolio manager this week. He asked if he could store things in my office since he’s quite convinced that our colleagues will steal them if he leaves them in his own. “They’ll be too afraid and too ashamed to steal from you,” he said. So here I sit surrounded by bottles of wonderful scotch and expensive cognac. Fox. Henhouse.

You’re a Strange One, Lev Nikolaevich.

2005-12-06T11:06:00.000-05:00

I went to Tolstoy’s Moscow house over the weekend. He’s one of the more interesting men of letters in the 19th-20th century, and far more vivid than a dusty pile of “classics” in some library somewhere.

The house is a beautiful, 2-story rambling wooden structure with a very large garden and several outbuildings. In the nearly 100 years since his death, the area seems to have gone from suburban to industrial to successfully post-industrial – two of the city’s hottest night spots are right across the street. The ticket office is in one of the outbuildings across the yard from the gate. I entered a low-ceilinged room and found two babushkas drinking tea at a desk surrounded by display cases of Tolstoy related writings. One of them took out the ticket book and asked if I were a student. “No,” I said, flattered by the question, “I’m already too old to be a student.”

She looked up and scolded me. “You’re never too old to learn, you know.” She also sold me a little pamphlet about Tolstoy and the house, but only after she was sufficiently satisfied that I could actually read Russian. Ticket in hand (for 60 rubles instead of the 30 ruble student price) I promised to learn something that very day.

The house is well preserved and chock full of actual Tolstoy family belongings. After his death in 1909 the family presented it to the city of Moscow for use as a museum. (Actually, it remained closed until 1920 for “political reasons” when Lenin ordered it opened.) So, the old man’s big furry overcoat is still hanging in the hallway, his pens are still on his desk, and his shoes are still in the closet.

Tolstoy was born wealthy, lived a scandalously debauched lifestyle, wrote amazing literature, and then renounced everything in his old age. He corresponded with Mohandas Gandhi – before Mohandas became Mahatma – and helped him develop his philosophy of non-violent passive resistance. His personal philosophy (Tolstoyan) was a blend of pacifism, Christianity, and anarchism – culminating in a tract he entitled “The Kingdom of God is Within Us.” That was certainly considered radical in an autocracy with an official religion. On the strength of his new ideas, he got excommunicated and shunned by the state.

So this is the real intellectual legacy of a man whose major work is now the synonym for “a thick book.” Somewhat controversial, I suppose, but I’ll take it over Ayn Rand any day.

Still, one gets the feeling that Tolstoy could be kind of prickly. For instance, instead of admitting that he needed glasses, he took his desk chair out to the barn and cut the legs down. This brought him a lot closer to the table top, and voila, his vision problem was corrected as far as he was concerned. There it is in his study – leather couches, big desk, and oddly miniature chair.

Come to think of it, that could be Tolstoy’s real legacy – ingenuity and flexibility in defining, reacting to, and trying to change his environment over a long period of time. Maybe I should run that interpretation past the ticket lady - she might just be proud of me.

R-E-S-P-E-C-T

2005-12-01T15:59:00.000-05:00

My colleagues and I get along quite well. I have a tremendous amount of respect for them, and they seek my input on all sorts of different issues – ranging from accounting to interviewing management teams. But this week, I think I made a leap into another realm altogether.

During our Tuesday morning meeting, the CEO doubted – somewhat idly – that the Russian stock market has been driven by oil prices in the past 6 months. “I’d like to see that correlation,” he said, to no one in particular.

If anyone can stake a claim to being no one in particular, it’s me. So I sequestered myself in my office and started working on the problem. I downloaded tons of pricing data from the Bloomberg and started crunching it in every direction I could remember from my Stats class on regression analysis. I compared absolute prices, relative returns, percentage changes in price, etc. As background, I quantified how closely the Urals Crude price correlates with the West Texas Intermediate price. At one point, I tested the efficient market hypothesis by lagging the data by different time periods. Much later in the day I reached a conclusion on the question at hand and zapped it out to my colleagues.

I entitled it “I’d Like to See that Correlation.”

In it, I show – among other things - that returns on the Russian stock market were driven by oil prices in the January to May period, but that the effect has dwindled in the May to November period so much so that its possible to say that it has almost no effect. And, I established that all the results were statistically significant at the 95% confidence level.

I ended it with “The Boss is right and the numbers prove it.”

A less modest person might say that it was a bombshell. Colleagues were streaming into my office and looking at the data, discussing the implications and reasons.

The boss flipped. He introduced me to the marketing staff and told us to get the material into the company’s presentation. He’s going to Switzerland for the parent company board meeting, then to Austria to meet clients, and he wants this stuff in there. Also, he ordered us to make sure that my complete bio with photo is attached to the investment staff section and posted on the website.

The next morning, my colleagues all came streaming in with new ideas on how to run more regressions. Their ideas were all elegant and sophisticated at the same time. Basically, they boiled down to this – “If it isn’t oil prices, then what is it?”

But the real effect is that my colleagues let me into their little club. They all have graduate degrees in engineering and math and one guy even has a doctorate in finance. Russians in general are highly mathematically competent, anyway, and a lot of professionals of this type love complicated, pointless research. And now my contribution to the world of complicated, pointless research makes them feel that they can talk to me on their elevated level.

They’re wrong, of course. But that will be my little secret.

At the end of the day, the boss told me that I was challenging the conventional thinking of the investment staff and that he couldn’t possibly expect a better contribution from me during my time here.

Quite a week – and its only Wednesday. I think I’ll call in sick for the next two days and end it on a high note.

When Appearances are Better Than the Real Thing

2005-11-30T08:48:00.000-05:00

During August and September, when I had my language training, I was at the office only in the afternoons. In part of October, I was completely absent during the fellowship program orientation. As a result, not a lot of people outside of the investment staff were able to figure out who I was or what I did.

On my first day back in the office, I discovered that I had been displaced. The company hired a new portfolio manager and all the investment staff shifted one seat down on the trading desk. Which bumped my part-time spot off the desk completely. So, I had to find a place until my afternoon meeting with the CEO.

The company has been growing like a weed this year so its pretty hard to find open space. I went into a conference room and found that it had been converted into workspace for 2 people. But I was stuck at this point – so I asked if I could sit on their couch. They were a bit surprised at the request at first, but assented. It was a comfortable spot for me, but I could sense that my colleagues weren’t really sure what to make of my presence there.

Then the boss came by – all 6’6” of him – loudly shouting my name in his quest to find me. I nearly jolted my neighbors out of their seats when I shouted back through the closed door. The CEO came in and invited me to have a meeting. I briefly thanked my new friends, who were staring at me agape, and met him in the hall.

He had his overcoat on. “When I say ‘let’s have a meeting’ on a Friday,” he said, “I mean at the bar across the street.”

All meetings with the boss should come with half a liter of beer. He had an additional much smaller beer after the first one. I changed to mineral water – I know my limit. Of course, I can easily drink more than one beer. When I say “limit”, I’m referring to my ability to first, make sense, and second, not talk a bunch of nonsense. Everyone tells me one is my limit for that.

Back at the office, the boss took me to the previous CIO’s office opposite the trading desk and presented it to me. Of course, it comes with the stipulation that he reserves the right to stuff more people in or move me completely. That’s fine with me - I’m pretty happy with it in the meantime. A big flat screen monitor on one side of the desk, a two-screen Bloomberg on the other. An Aeron chair. A big leather armchair and a wardrobe for my coat. And a frosted glass door for privacy. Sweet.

I went back into the office where I camped out part of the day to collect my papers. I thanked my colleagues again – but they just couldn’t take it anymore. Who am I? What do I do? Where did I learn Russian? How did I know the boss? They made me tea and got all the answers out of me.

Reactions the next week were hilarious. People had become accustomed to the door being shut, or at least the lights off, for several weeks since the CIO departed. Everyone did a double take as they walked by and saw that it was occupied. And that turned into a triple-take when they caught sight of me.

Folks were already quite nice to me. But after drinking beer with the boss and getting a private office that far exceeds my actual position, people are even nicer. I think I could get quite used to a life of unearned status.

Uhhh...I Don't Get It.

2005-11-28T14:47:00.000-05:00

I’ve spent the past few months in Moscow exploring areas of culture, history, and literature. It’s been educational, enlightening, and well, fun. This weekend I experienced something that I liked very much, but that was so beyond my poor ability to understand, that it knocked all my intellectual pretensions out of me.

I trundled off to the the Mayakovsky museum, an exhibit about the revolutionary poet and writer. It has a reputation for being inspired by the author’s own works – that is, as a futurist. In the words of the website:

“This new Museum creates a model of age and world of Mayakovsky, transforms the poetical metaphor into poetical compositions, realizes intellect and fantasy of the author, transforms a visitor from an obedient super into a co-author and participant.”

Hmmmm.

The building has been scooped out below Mayakovsky’s original 4th floor apartment. One starts near the top (a la Guggenheim) and winds down through the vast open space. The impression is almost of a warehouse, with large artistic installations of sculpture. Attached to all these things, in little frames, or under glass panels, or hanging in the background, are the articles and documents that made up this extraordinary writer’s life and times.

It was fascinating. It is, by far, the most modern and radical museum I’ve been in - a true tour de force of artistic interpretation, impression, and expression. Each sight line provided another glimpse of other levels, each a striking new area to explore.

Except that I couldn’t make heads or tails of what it was all about. Unlike a traditional museum, there was no written placard explaining certain areas. One had to somehow glean this from the original material. The Russian, for me, was impenetrable.

A group of military officer cadets was getting a guided tour, so I tried to tag along and eavesdrop. The director of the museum was explaining what one installation symbolized (sort of a dining table lined with personages being consumed by a huge machine topped with a picture of Stalin) but I decided to break off on my own when the description dragged on and the cadets started looking over their shoulders at me. I don’t think they were grasping it, either.

Mayakovsky, of course, was one in a long line of Russian poets who went well before his time. In this case, suicide at age 38 over disappointment at the early development of the Soviet State he supported so strongly. Fittingly, all the photos in the museum are of a dour, frowning, gloomy man with a furrowed, heavy brow.

Perhaps I’ve been to too many other museums that show you someone’s desk and chair and a few yellow copies of early work – but the Mayakovsky museum will probably always stick in my mind as a unique and original place.

It’s just that now, days later, I still can’t really figure out what it was all about.

I tried to assuage my intellectual shortfall with dinner at a Georgian restaurant, and ended up getting seated next to a birthday party. 8 men in suits. They began requesting a song from the singer, and he dutifully sang all about the FSB and Lyubyanka (the post-Soviet KGB and its headquarters building). The birthday party rose and sang along with it; did a shot of vodka, and demanded that the singer do the song one more time. He happily did, and the birthday boy came to my table and encouraged me to stand and sing with him.

I didn’t really know the words except for the chorus – pretty easy to pick up the second time around – and by this point in the evening the birthday boy didn’t seem too sure of the lyrics either. He gave me a big hug in response to my best wishes.

It’s probably best to humor the federal agents on their birthdays.

It's Quiet ... Too Quiet.

2005-11-25T20:22:00.000-05:00

I’ve often stated my belief that Moscow is a lot like New York. And I’ve had to defend that position on multiple occasions. No one really believes it. They begin to understand, however, when I couch my argument in terms of the abstract concepts of life in these two dynamic cities. But I’m more than willing to admit that sometimes Moscow city life is just too radically different to fit into my philosophy.

In the metro the other day, I stood near two drunk guys on the train. Not especially unusual. But as they sat on their large bags from the market, I noticed that they were communicating through sign language. And I wondered to myself – do deaf people slur their words when they’re drunk? Does loss of motor control extend all the way down to the finger tips and affect clarity of communication? I’m quite sure that they talk nonsense just like the rest of us, but I have to admit that the sign-language thing has me stumped.

Regardless, it was an opportunity to reflect on the things that I’ve seen in the metro. Like mass transit anywhere, you come across the occasional person toting something unexpected. A guy with skis, for example, or some sort of machine part. It’s more pronounced a phenomenon in NYC, I think, where it’s common to see people with bikes and street vendors carrying their wares. Here in Moscow, that behavior is a bit dissuaded by a tariff on articles over a certain volume. It seems that it would be difficult to fake your way through in the well-staffed and well-policed metro system here.

But something else stands out compared to New York – if only by its absence. Crazy people. I haven’t seen a single crazy person in the metro since my arrival. I don’t mean the mildly weird person with suspect reading materials. I mean the hysterical, shouting loonies. Is this a medical-social phenomenon that isn’t present in Russia? That seems unlikely given human nature and the appearance of hysterical, shouting loonies in Russian history – sometimes as national leaders.

A local colleague suggested that there genuinely isn’t quite such a problem here – he’s lived in New York before and agrees with me about the different characteristics of the respective riderships. His alternative theory is that craziness is evenly spread across the population of Russia – everyone here is just a little bit nuts and that, he maintains, accounts for a lot of things.

Maybe he’s right. In a place where everyone is a little bit crazy, no one person would stand out. In fact, the word crazy might even cease to exist or have never been invented. But the language puts the lie to that theory – Russian has many eloquent ways to express your doubts about someone else’s mental health.

So, I’m not sure I buy his hypothesis. I just wonder why the truly insane don’t feel compelled to ride the metro as they somehow do in New York.

Anyway, there’s a certain beauty and hopeful nature to the belief that everyone here is a little bit crazy. It makes me believe that I can fit after all.

Everything Old is New Again - for Me

2005-11-22T05:44:00.000-05:00

I’m having a really good time in Russia. It’s still a sufficiently alien environment for me that places I’ve gone multiple times can come across as a completely new experience on a subsequent visit.

Last weekend, I went back out to Izmailovsky Market, the sprawling open-air bazaar. Jim (my fellow, well, fellow) and I were nominally charged with securing yams for thanksgiving dinner and we decided to make a day of it out there.

We started at the tourist entrance, the pristine area where foreigners flock for their souvenirs. Everything in this part of the market takes place in English. We weren’t distracted by the boring souvenirs, like refrigerator magnets, or even the cool ones, like central asian daggers. We made our way purposefully to a little corner where Alexei sells all your favorite CD’s and DVD’s. The movies are completely authentic – well, that is, fully featured. Each has the graphics and additional features one expects on a DVD release. They’re not the absolute newest movies (those come out at the same time as the theater release in the US and are for sale around the corner), but they’re the highest quality you can get on the market here.

Now, I’m not sure if they’re fully licensed and all that. Actually, I’m quite sure that they aren’t. Mainly because each CD or DVD is 100 rubles ($3.60). And Alexei throws in generous discounts for multiple purchases. Anyway, I screwed a few of my favorite artists and we were on our way.

We exited through the side of the tourist market and entered the general bazaar. The contrast couldn’t have been more stark – huge crowds were jamming roughly into narrow corridors, 2 security guards were violently ejecting a struggling woman, vendors with huge carts were shouting for people to make way, and suddenly, in the midst of it all, a black Mercedes appeared – patiently making its way through the throng.

We walked a short distance and turned a hard right. But we may as well have taken a long flight. Suddenly, all the trading rows were labeled in Asian languages, the colors changed, the people looked and sounded different, the goods for sale were practically unrecognizable. Butchers were using axes to chop huge pieces of meat on wooden stumps, then displaying the goods in their open-air stalls.

Jim led me to the second tier of stalls – up a rickety staircase and catwalk – to a Vietnamese restaurant. We walked in and were warmly greeted in, well, Vietnamese. No one spoke even halfway decent Russian – including us – so ordering was a little difficult. But Jim had one recommendation and we communicated it as best we could.

While our lunch was being prepared, I noticed the other patrons at the communal tables. Whole families crowded into some booths. In others, business was being conducted over huge stacks of rubles. The wall was lined with jars of pickled plants and snakes in exotic colors, all helpfully labeled (in Russian) “Display Only. Not for Sale.” Strange-looking Vietnamese farm implements were hung as decoration. On the whole, quite charming.

But not especially clean. Anyway, our lunch consisted of a big bowl of pho, a Vietnamese noodle soup. It was fantastic and ridiculously cheap – and fit our criterion that whatever we eat should be thoroughly boiled.

We went back downstairs into the market frenzy to find yams. Outside one of the shops we found a box labeled in Czech or something that looked like it might have said “sweet potatoes”. The shopkeeper wasn’t a lot of help, since we couldn’t really find a common language as he busily and messily bagged livers. No erring on the side of caution for us, we bought them all.

Regardless of what exactly we had purchased, we declared victory and decided to leave the field. The market was closing at that point. Open air markets tend to close as daylight wanes – and in Moscow right now that means about 3:30pm. Security guards began closing gates at points throughout the market, so it was difficult to find our way out. At one point, the path snaked through the first floor of what appeared to be an elementary school.

In all, it was yet another fascinating experience at Izmailovsky. The beauty of this trip is that the surprise may last right up until Thanksgiving dinner. After all, that’ll be the moment of truth for our Russian-English-Vietnamese shopping skills.

Whoa … Take it Easy, Buddy.

2005-11-16T05:18:00.000-05:00

This weekend, I had a little lesson in culture, commerce and race relations in Moscow. Like a lot of these lessons, I stumbled into it. This time, perhaps a little more literally than usual.

On Saturday, I went to a party that had a "zombie" theme. The inspiration was not the shuffling, moaning undead but the cocktail version of the same. Of course, by the end of the evening it was anybody's guess as to whether the guests were actually getting into character or falling prey to the brain-eating nature of the refreshments. As you may guess, it plays a large role in the second half of the story.

I was a late responder to the email chain setting up the zombie evening and as such I was assigned the task of purchasing apricot brandy. I spent the better part of the day searching liquor and grocery stores in Moscow, and I feel quite confident in saying that Russia is definitely not a cocktail culture. Wine - which region of which country? Whiskey - what style? Vodka - you're kidding, right?

But mixers - forget it. I only saw triple sec once and vermouth only twice. No doubt my difficulty in finding apricot brandy was compounded by my awkward questions -"Do you have brandy with the flavor of apricots?" And a cultural bias not to look in the right places. That is, I never expected to find fruit-flavored drinks on the highest shelf behind the cash register. Nor did I expect it to cost so much - around $30. Back home, the off-brand (DeKuypers, Arrow) strange-flavored booze is on the bottom shelf near the door to the stock room and goes for not more than $12 a bottle.

When I got to the zombie lab, I heard the tail-end of a discussion on how to synthesize 151 Rum. That is, using so many milliliters of grain spirit and so many milliliters of rum should approximate the proof of 151. The math was sound even if the other elements of rationale simply didn't compute. The idea was abandoned, however, to everyone's relief. Just because we have the technology to do something doesn't always mean that we should.

The zombies were potent. Not exactly delicious. Decidedly lukewarm. But potent.

On my way home, I realized that I may not survive the night without a bottle of water. And potato chips. So I stopped by a new kiosk on my corner. As the vendor finished what he was doing and came over to the window, I eyed the rotisserie chickens slowly revolving in an oven behind him. Despite the zombies, I thought better of getting a street chicken at 3am and decided not to order the desiccated, but wonderfully fragrant, little bird.

I did order 2 bottles of water and a bag of chips. I placed 200 rubles through the window of the kiosk, then took 100 of it back. To be honest, that's the real moment that the rotisserie chicken idea died. The merchant took the remaining 100 rubles and started to struggle with how much change to give me. I asked for 25 rubles back. He looked at me and objected.
"No," he said, in a thick Caucasus accent. "How much money did you give me?"
"200, but I took back 100. So give me 25 rubles change."
"Ahhh, listen," he said hesitatingly. "You don't understand Russian very well, do you?"

I may well be loaded on zombies at 3am, and I may well be considering eating that last unsold chicken in your oven, but that's no reason to make fun of my language skills.

"No, I don't understand Russian well - but I understand math very well." This was not exactly the right thing to say.

"What are you trying to say? Why would I want to cheat you?" he exploded.

Whoa. Whoa. No one said cheat or deceive (obmanoot') to the guy from the Caucasus, the region where men wear long daggers as a part of their national dress. Things needed to calm down, and quickly, before I ended up on the spit with the lonely chicken.

"Listen," I said politely, but zombie-fortified firmly. "2 bottles of water is 40 rubles, and chips are 35 rubles. That's seventy five and I gave you 100. Give me back 25 rubles."

The vendor looked at me, looked at the goods in question still on the counter, looked back at me and calmly said, "You're right."

He handed over the 25 rubles ($0.89 US) and wished me a good evening.

So what lessons to take away from this whole thing?

In Moscow, it's easy to find alcohol that you can drink straight. Finding ingredients for mixed drinks is a lot more challenging.

The horrible reputation that the Caucausus peoples have here in Russia rises to the level of unpleasant racial stereotype. Frankly, I've never personally experienced deceptive treatment from a "black", as they are called. Maybe that's because I look more like a "black" than a Russian. But I do know that with all these folks put up with in terms of prejudice and discrimination, their reputation is no joking matter.

Oh, and if someone invites you over for zombies - tell them you can't make it. Trust me on that one.

The Truth is Out There

2005-11-15T04:19:00.000-05:00

Ahhh, the stock market. Wherever you go in the world, its always the same. There’s something comforting in the groupthink of many different players all focusing on one thing. It’s even more enjoyable when everyone firmly believes in the conclusions. But the truth is often a lot more complicated than what market players tell you.

Take, for example, the Russian market for fruit juices. 2 major domestic players are battling for market share dominance. Each is a good company, but with different characteristics. WBD is a highly decentralized manufacturer whose stock is traded on the US exchanges. As such, it has a very diverse shareholder structure. The other, L, is predominantly owned by management – to the tune of about 80% of the outstanding shares. In all respects, it’s a much more centralized model.

Conventional wisdom tells us that L is the better company. Its taking share from others, especially WBD, thanks to aggressive marketing. Its also more attractive because of its highly concentrated ownership – strong management means owner/managers are focused on success, have the power to push through their agendas, and generally are better at getting results. Margins are better at L, too, but that aggressive advertising is constraining margin growth while top line is booming.

Sorting through the numbers, however, provides a very different insight into what’s going on at the company. Advertising expense is increasing at L but at a slower pace than revenue. That is, as a percentage of total cost advertising is actually decreasing. So, that’s not the cause of margins getting pinched.

The financial statements show that the most significant growth in expense is actually found in labor costs. Annual labor costs have averaged a 69% increase from 2002 to 2004 while revenue only went up 46% at the same time.

So, it’s a growth story and subject to high expenses, right? Well, look at headcount over that same time. Just dividing labor expense by headcount implies a 35% increase in annual wage per employee over the 2002 to 2004 period. By the way, accounting bodies stopped considering Russia a hyperinflationary economy on January 1, 2001.

In my view, the truth is sort of an amalgam of several elements of the conventional wisdom. Sure, L is a great company that’s taking market share. And yes, concentrated owner/manager stakes seem to be an advantage in this case. But its pretty clear to me that those owner/managers are bringing home the money in buckets.

One more line item: “other expenses”. It only accounts for 4% of total expenses, but that catchall line item has increased at an 82% compound rate from 2002 to 2004. Wonder how many Mercedes’ that much will buy?

So, for now I’ll go along with the wisdom that L is definitely a good investment and a great operator in its local markets. Let’s just not kid ourselves too much – its fat city at L headquarters and management is taking home what it considers its fair share.

Trouble Ahead, Trouble Behind

2005-11-11T19:04:00.000-05:00

I’m realizing that not a lot goes on during the course of a week outside of work – the office accounts for a majority of the day. In that respect, life here is much like working life in any big city. But the whole point of this experience for me is that getting into a “rut” in Moscow has intellectual stimulations in its own right. Just getting to work in the morning, for example, can be a real eye-opener.

The street I live on, Merzlyakovsky Pereulok, leads down to Novy Arbat and the metro station. By the time I leave in the morning, it’s already clogged with cars; both the street and the sidewalks. In Moscow there’s no controlling legal or moral authority that dictates how to park. If a driver sees enough room, he simply pulls into the spot – in any direction. If it’s not enough room to parallel park, it’s perfectly acceptable to pull in head first onto the sidewalk. The result is that the car blocks both automobile and pedestrian traffic.

It gets a lot worse the closer to the metro, too. On the main streets, there’s no real on-street parking; the only alternative is to pull up on the sidewalk – which is exactly what happens. So drivers pull up on the sidewalk and then drive down the pedestrian path looking for a place to park the car. In short, there’s nowhere that you won’t encounter a car either driving or parking.

And I haven’t even crossed the street yet.

Pedestrians are highly disadvantaged when it comes to crossing the street. Most intersections have an underground walkway to avoid surface traffic. But sometimes it’s just not the most direct path. Pedestrians clump together at intersections until, emboldened by their numbers and as if signaled by a ringleader, they all dart out into traffic together. Moscow drivers, usually totally oblivious to the presence of others, are intimidated by the numerical advantage, and slow down. Slow down, but don’t stop – they continue edging their way through the crowd.

So it’s been a bit of a gauntlet already, and now I’ve only just reached the metro.

The Moscow metro is a well known miracle of city planning and engineering. Every accolade is well deserved. It’s vast, it’s beautiful, it’s clean, it’s efficient – and it handles more people than the metro systems in NYC and London combined on any given day.

You’d probably guess that. There are constant streams of people, all somehow ending up on trains. Cars are large and long, but whole trains are packed within an inch of their capacity. The entire system seems to run close to the intensity level of the downtown 6 train on the Lexington Avenue line.

It is close contact, and it is urban combat. One doesn’t get on or off the train – one jockeys for position and then is swept into the appropriate direction when the doors open.

It takes some getting used to, this anonymous yet highly personal one-on-one violence. One morning, for example, I felt what I thought was a blunt object striking me in the back. I looked over my shoulder at the young woman behind me – pretty and well-dressed on her way to work. A second jolt; I turned around in time to see the third one coming. She was repeatedly using her forearm to bash me in the small of the back – a forearm “shiver” in pro-wrestling terms.

“What’s with you?” I said in my best Kaliningrad sailor-speak.

What came out of this lovely woman’s mouth was a torrent of abuse and invective so violent that I immediately considered myself fortunate to only be getting a few forearm “shivers” from someone so angry. The long and short of it? Her definition of personal space did not match mine – I was not following the people ahead of me closely enough for her taste.

So in a sea of literally hundreds of people queuing for the escalator, I was the proximate cause of her being late for work. And she gave me hell for it.

It was a valuable lesson, though. Now I don’t look over my shoulder at the person pushing me; I’m way too busy shoving the person in front.

Back, then, to my premise that living in Moscow is a lot like life in any big city. Thank God - I find it hard to get homesick for New York in a place as chaotic and confrontational as this!