On Sberbank and Cat Lending

In order to capitalize on the mortgage boom in the country, the Russian Bank Sberbank is offering a cat for free to those who get a mortgage. There’s a catch though: the cat is limited to two hours for new homeowners. The Moscow Times reports:

The bank is offering a choice of 10 cats to mortgage-buyers, who will get the pet brought to their door by a new delivery service. According to a special website, KotoService.ru, the felines on offer include a ginger cat called “Apricot” and a hairless cat known as “Kuzya.”

The gimmick appears to be an attempt to maximize profits from Russia’s mortgage lending boom as people watch their savings lose value amid a sliding ruble and rising interest rates.

Here’s the video from Sberbank:

The whole reason for the gimmick? Capitalizing on the superstition that maintains that it is good luck if a cat is the first to enter a new home.

(via Foreign Policy)

Before Laika: the Soviet Space Dogs

This is a very interesting post on Medium about the dogs the Soviets sent into space in the 1950s:

While the US test rocket programme used monkeys, about two thirds of whom died, dogs were chosen by the Soviets for their ability to withstand long periods of inactivity, and were trained extensively before they flew. Only stray female dogs were used because it was thought they’d be better able to cope with the extreme stress of spaceflight, and the bubble-helmeted spacesuits designed for the programme were equipped with a device to collect feces and urine that only worked with females.

Training included standing still for long periods, wearing the spacesuits, being confined in increasingly small boxes for 15-20 days at a time, riding in centrifuges to simulate the high acceleration of launch, and being placed in machines that simulated the vibrations and loud noises of a rocket.

The first pair of dogs to travel to space were Dezik and Tsygan (“Gypsy”), who made it to 110km on 22 July 1951 and were recovered, unharmed by their ordeal, the next day. Dezik returned to space in September 1951 with a dog named Lisa, but neither survived the journey. After Dezik’s death, Tsygan was adopted by Anatoli Blagronravov, a physician who later worked closely with the United States at the height of the Cold War to promote international cooperation on spaceflight.

They were followed by Smelaya (“Brave”), who defied her name by running away the day before her launch was scheduled. She was found the next morning, however, and made a successful flight with Malyshka (“Babe”). Another runaway was Bolik, who successfully escaped a few days before her flight in September 1951. Her replacement was ignomoniously named ZIB — the Russian acronym for “Substitute for Missing Bolik”, and was a street dog found running around the barracks where the tests were being conducted. Despite being untrained for the mission, he made a successful flight and returned to Earth unharmed.

A good piece of trivia from the piece: Laika wasn’t the original name for the most famous of Russian space dogs; it was named Kudryavka (Russian: Кудрявка, meaning Little Curly) before its name was changed.

Sergey Kolesnikov and Igor Rybakov: Russia’s Roofing Billionaires

Often you hear of the Russian “new rich” who’ve accumulated wealth through corruption or usurping some power. So it was refreshing to read this Bloomberg piece on Sergey Kolesnikov and Igor Rybakov, who built a multi-billion dollar roofing business in Russia. What’s amazing is that they were actually enrolled at the Moscow Institute of Physics and Technology, one of Russia’s top research universities, and worked in roofing as a side business/project.

The roofing degree paid off. Closely held Technonicol, the company they founded while in college, is now the country’s largest roofing-supply company, with a network of 700 distribution outlets across the country, 180 of them wholly-owned. The business had revenue of 59.4 billion rubles ($1.9 billion) in 2012, up 25 percent from the prior year, according to financial statements provided by Kolesnikov.

The company is valued at $2.8 billion, according to data compiled by Bloomberg, making the equal partners two of the youngest billionaires in Russia. Neither has appeared on an international wealth ranking.

“I always liked to solve puzzles, and to me business is a kind of puzzle,” Kolesnikov said. “Neither of us ever thought about earning money of such scale.”

The billionaires, both 41, had a well-timed entry into the market, catching the start of a wave of private homeownership and government upgrades to Soviet-era housing. The number of newly built private homes in Russia almost doubled to 205,000 from 2002 to 2012, according to data from the Federal State Statistics Service, and new apartment units increased more than two times during the past decade to 838,000.

Here’s how they got their business off the ground:

In 1995, four years after the fall of the Soviet Union, Kolesnikov and Rybakov used $40,000 in savings and debt to buy their first plant, a roofing factory complex constructed in 1918 in Vyborg, a city 75 miles northwest of St. Petersburg. They spent $15 million modernizing the facility, and have since built 36 more plants — 30 in Russia, three in Ukraine, and one in Belarus, Lithuania and the Czech Republic.

Important to note their casual culture:

Kolesnikov adheres to western and Japanese management philosophies and quotes management consultant William Edwards Deming, whose statistical theories are credited with inspiring the economic growth surge in Japan after World War II. When Kolesnikov visits Technonicol’s plants, he hands out copies of “The Toyota Way,” a book about the Tokyo-based carmaker’s principles for continuous improvement and respect for workers.

Rybakov, who declined to be interviewed for this story, uses a YouTube channel to post videos of his family on yachting and skiing excursions.

The company maintains an informal corporate culture. It publishes an annual swimsuit calendar featuring female workers. To celebrate the company’s 20th anniversary last December, the billionaires hired a heavy-metal band to record a rock song and created a music video starring Technonicol employees singing in the studio after a day of answering phones and eyeing the clock before grabbing their coats and dashing from the office…

Great story.

Between Moscow and St. Petersburg, a Disappearing Russia

At the edges of Russia’s two great cities of Moscow and St. Petersburg, another Russia is present. This is the land of the broken road and poor residents. The New York Times, in a piece titled “The Russia Left Behind,” delves deeper, offering a look into this depressing state:

This will not be apparent at next year’s Winter Olympics in Sochi, nor is it visible from the German-engineered high-speed train. It is along the highway between Moscow and St. Petersburg — a narrow 430-mile stretch of road that is a 12-hour trip by car — that one sees the great stretches of Russia so neglected by the state that they seem drawn backward in time.

As the state’s hand recedes from the hinterlands, people are struggling with choices that belong to past centuries: to heat their homes with a wood stove, which must be fed by hand every three hours, or burn diesel fuel, which costs half a month’s salary? When the road has so deteriorated that ambulances cannot reach their home, is it safe to stay? When their home can’t be sold, can they leave?

A sad reality:

There are spots on this highway where it seems time has stopped. A former prison guard is spending his savings building wooden roadside chapels, explaining that “many souls” weigh on his conscience. A rescue worker from the nuclear meltdown at Chernobyl is waiting, 27 years later, for the apartment the Soviets promised him as a reward. Women sit on the shoulder, selling tea to travelers from a row of samovars. Above them, pillars of steam vanish into the sky, just as they did in 1746, the year construction on the road began.

On the state of the M10 Highway, connecting Moscow and St. Petersburg:

The M10 highway looks normal enough at the southern limits of St. Petersburg, but then, with a jolt, it begins to atrophy. For the next 430 miles the surface of the highway, while paved, varies from corduroy to jaw-rattling patchwork. Sometimes it has four lanes, sometimes two, with few medians and frequently no lane markings at all.

Traffic creeps forward behind a procession of 18-wheelers hauling goods from the port of St. Petersburg, passing villages with names like Cockroachville, Teacupville and Chessville. It is the most heavily traveled cargo route in Russia, and yet for truck drivers complying with safety regulations, it takes 24 hours to travel between the two cities, said Viktor Dosenko, vice president of the International Transport Academy. On a good road, he said, the trip should take 10 hours.

From time to time, the dismal condition of the highway has made national news. After a snowstorm in November, about 10,000 vehicles got stuck in a traffic jam that extended more than 70 miles, trapping some drivers for three days in subzero temperatures. Valery Voitko, who heads a trade union of long-haul truck drivers, described his drivers that week as “not even angry any more, but in a state of dumb despair, that year in and year out the same thing happens.”

On Russia’s disappearing villages:

Between the great cities are hundreds of disappearing settlements: towns becoming villages, villages becoming forest. The Soviets cut off support for them during efficiency drives in the 1960s and ’70s, which categorized villages as “promising” or “unpromising.”

But the death of a village is a slow process. A geographer, Tatiana Nefyodova, calls them “black holes,” and estimates that they make up 70 to 80 percent of Russia’s northwest, where Moscow and St. Petersburg act as giant vacuum cleaners, sucking people and capital from the rest of the country.

A really well-done piece that illustrates the plight of the Russian poor.

On the Wealth Disparity in Russia

The Wall Street Journal highlights the incredible wealth disparity in Russia:

In the days of the Soviet Union, the country boasted that all its citizens shared the wealth equally, but a new report has found that a mere 20 years after the end of Communism, wealth disparity has soared with 35% of the country’s entire wealth now in the hands of just 110 people.

This is a wild statistic:

The study discovered that in Russia there is one billionaire for every $11 billion in household wealth. In the rest of the world, there is one for every $170 billion.

And so is this comparison with the United States:

Overall, 93.7% of Russia’s adult population has less than $10,000 in wealth, according to the report; 5.6% has between $10,000 and $100,000; 0.6% has between $100,000 and $1 million; and 0.1% — or about 84,000 people — has over $1 million. In the U.S., according to the report, 30.7% of the adult population has less than $10,000; 33% has between $10,000 and $100,000; 30.7% has between $100,000 and $1 million; and 5.5% — or 1.3 million people — has over $1 million.

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(hat tip: Annie Lowrey)

Advice for Staying in Moscow for Edward Snowden

In Foreign Policy, Edward Snowden receives some amusing but useful advice for staying in Russia on his (at the moment) one year planned stay:

Get used to grumpiness. It’s a decent bet that a smiling Potemkin border guard reserved especially for arriving U.S. dissidents was detailed to stamp you into Russia for the first time, but for the rest of us, friendly officials are like unicorns. They don’t exist. Border guards here almost never say a word, even if you greet them with the chirpiest “zdravstvuite” (“hello”). Forget about that verging-on-annoying friendliness one gets from waiters, shop assistants, or random people in elevators in America. From here on in it will be angry glances and accusatory stares, suspicious neighbors and glum shop workers. The U.S. Justice Department might like to have a few words with you, but there’ll be punishment enough in Moscow. Show up at the grocery store without exact change to pay for your “doctor’s sausage” (don’t ask, Edward, just don’t ask) and you’ll get an earful of barking abuse.

The exception to this will be if you end up living in a building with a “concierge,” which in the Moscow incarnation is not a smartly dressed polite man in a suit and hat, but an inquisitive, squinting babushka who will use a combination of your comings and goings, the identity of any visitors you might have, and ceaseless interrogation to put together a complex psychological portrait of you and the other inhabitants of the building. Think of it as an offline, Soviet version of the PRISM program.

Moscow, of course, has spent the past two decades going through wave after wave of change, and if the angry stares get you down, you can always hire a bike and ride with the hipsters at Gorky Park, or party with the nouveau riche at Gypsy, where your newly acquired fame is sure to get you past the strict face control. Indeed, your lawyer Anatoly Kucherena has said that numerous young Russian damsels have already expressed an interest in providing you with shelter, and perhaps much, much more.

Also, I had no clue Anna Chapman proposed to Snowden. Read the rest here.

Death of Yuri Gagarin Demystified 40 Years Later

For over 20 years Aleksey Leonov, the first man to conduct a spacewalk in 1965, has been struggling to gain permission to disclose details of what happened to the legendary Russian cosmonaut Yuri Gagarin in March 1968. He’s finally had a chance to reveal the details, and he shared his testimony with Russian newspaper RT:

According to a declassified report, there is a human factor behind the tragic incident – an unauthorized SU-15 fighter jet was flying dangerously close to Gagarin’s aircraft. 

Leonov had been in charge of parachute jump training on that day. The weather was extremely bad, with rain, wind and snow making it impossible to carry out exercises. He waited for an official confirmation that the exercises would be cancelled, but then heard a super-sonic noise followed by an explosion only a second apart from each other. That is when he knew something was up. 

“We knew that a Su-15 was scheduled to be tested that day, but it was supposed to be flying at the altitude of 10,000 meters or higher, not 450-500 meters. It was a violation of the flight procedure.”

Leonov that day talked to witnesses that pointed at the model of a Su-15 saying that it appeared out of the clouds with its tail smoking and burning.

“While afterburning the aircraft reduced its echelon at a distance of 10-15 meters in the clouds, passing close to Gagarin, turning his plane and thus sending it into a tailspin – a deep spiral, to be precise – at a speed of 750 kilometers per hour,” Leonov tells. 

According to the report that Seryogin wrote in his own hand, no aerobatic maneuvers or spins were to be performed by the crew of the MiG-15 with RD-45 engine and external fuel tanks, 260 liters each.  Simple turns, pitching and nosedives were conducted after which Yuri reported: “Codename 645, task completed, descending” Leonov explains.

The name of the man responsible for Gagarin’s death is not being disclosed. Keeping him anonymous was a condition under which Leonov was allowed to speak.

Fascinating reveal.

One of the best books I’ve read on this topic is Starman: The Truth Behind the Legend of Yuri Gagarin. Currently available on Amazon for less than $7 — a steal. I would surmise the authors of the text will incorporate Leonov’s testimony as an addendum to the book.