Novye Izvestia
Russian hotels weathering the crisis well
Although Russian hotels have lost up to 45% of profits since the beginning of the global financial crisis, they have little to complain about because prices were sky-high before.
Russian business leaders focused on this very question at a meeting of the Russian Union of Industrialists and Entrepreneurs on Tuesday. It was reported that rooms in three-star hotels were let at five-star prices before the crisis, and prices in five-star hotels were overblown. Representatives of the hotel business, both big and small, said the number of guests had slumped, outlays are growing and profits are falling, but there is no panic because they "did very well before the crisis."
Andrei Volkov, director of the InterContinental Hotels Group (ICHG) for Russia and CIS sales, said before the crisis, prices in Moscow hotels and their profitability (25.3%) were the highest in Europe. The figure for Madrid was 0.5%, for Amsterdam 1.6% and for London 7%.
Hotels in Moscow were forced to lower prices by 31% this year, from an average of 228 euros to 157 euros. Prices in Dubai fell by nearly 50% and hotels in many other countries are still keeping their prices very low.
Compared to April 2009, prices in Mexico City fell by 23%, in Bangkok by 17%, in Copenhagen by 15.5%, in Zurich by 12% and in London by 2.7%.
Analysts say hotel prices in Moscow and London remain among the highest in Europe and Russian hotels have no plans to lower their prices. Instead, they are considering ways to involve the government in boosting demand, modernizing infrastructure, training personnel, and visualizing the "Russian hospitality" brand.
Foreigners visiting Russia should have a positive image of their destination, but the hoteliers admit that the key characteristics of Russian hotels are unimpressive and this positive image can only be created with the help of ballet and picture galleries.
The list of problems is long. Hotel businesses have only really developed in Moscow and St. Petersburg, and over 50% of hotels date back to the Soviet era. The business lacks professional personnel because there are no schools training them.
Despite the fact that the number of rooms per 1,000 people is the lowest in Europe and they do not conform to international standards, the Russian hotel market has consistently attracted investment.
Vedomosti
Anti-trust authority cracks down on oil producers
Russia's Federal Antitrust Service (FAS) does not rule out the prosecution of executives at major oil companies, FAS deputy head Anatoly Golomolzin told a parliament meeting on Tuesday.
He said the service has been keeping record of corporate officials involved in violating the country's antitrust laws.
Golomolzin is the FAS official responsible for the collusion and conspiracy cases against LUKoil, Rosneft, TNK-BP and Gazprom Neft. The four producers are accused of setting high prices on the wholesale market for refined petroleum products in 2008 and 2009 and thereby hindering free competition
The "big four" are already facing a 26.1 billion ruble fine for two exposed collusion cases. However, corporate executives were not sued, said Sergei Puzyrevsky, head of the FAS legal department, as both decisions were passed before October 30, 2009, when amendments to the Criminal Code came into effect stipulating a sentence of up to seven years for violating antitrust law.
The previous edition of article 178 stipulated punishment for establishing a cartel, while the new one added "repeated abuse of a dominant position on the market," which is what the oil producers are charged with. Repeated abuse means more than two cases in the course of three years. In practice, the authority will have to compile three protocols against one executive before sending a fourth one to the prosecution authorities, explained Alexei Sushkevich, head of the FAS analytical department.
The amendments have also simplified the procedure for prosecuting mala fide executives. A company's leadership may face up to three years in prison for an illegal income of 5 million rubles, and up to five years for 25 million rubles.
The four oil producers declined to comment.
A spokesman for the Interior Ministry's economic security department said he could not recall the FAS filing a lawsuit against any executive since October 30. So far, there are no corporate officials with a record of three offences on its black list. The FAS register will not be published because it also contains the perpetrators' personal information such as home address.
It is highly probably that an executive with a record of four offences will face legal action, said Viktor Burobin, president of law firm Yustina. The facts will be established in the course of an arbitration process, then the perpetrator's guilt will have to be determined.
However, judges are unlikely to actually send the perpetrators to prison, he added.
Yet, the new edition of the article will help investigate antitrust cases effectively.
Izvestia
The cultural matrix of successful modernization
Vyacheslav Nikonov, president of the Polity Foundation, a non-governmental and non-profit research and political consultancy, discusses the principles of successful economic modernization.
Discussions about modernizing Russia focus on investment in state-of-the-art technology, state regulations, benefits for the Skolkovo hi-tech hub and political reform, Nikonov writes.
Almost nothing is said about behavioral norms and society's cultural makeup, considered by many of the best minds as a key to successful development, he writes.
"The Protestant Ethic and the Spirit of Capitalism," written by Max Weber, a German sociologist, economist, and politician, in 1904-1905, ranks among the most important books in human history, the analyst writes.
Weber proved that the West's rapid development, which enabled it to overtake the rest of the world during the Early Modern and Modern ages, was linked with the Reformation and the spread of Protestant values, including integrity, mutual assistance and thriftiness, the analyst writes.
Weber stressed that such values had transcended the boundaries of family life to become public social norms, dramatically increasing the level of business confidence and labor discipline, the analyst writes.
After World War II, capitalism took over in the overwhelming majority of countries, all of which shared similar political institutions. However, only East Asian countries, united by Confucian ethics, have developed into modern states. Contrary to Weber's opinion, those conceptual bases proved similar to Protestant ethics, prioritizing discipline, diligence, the cult of education and social hierarchy.
What set of values distinguishes successful nations from others? Ten years ago, Samuel Huntington, known for his 1996 book "The Clash of Civilizations and the Remaking of World Order," and Lawrence Harrison, a leading authority on Latin America, noted that such values included: an aspired view of the future, an enthusiastic attitude to work, thriftiness, high standards in education, respect for personal achievements, a prioritizing of socialization, strict ethical norms, the indisputable authority of law and order and a decentralized government.
Not a single country has scored top points in all of the above because none is perfect. Obviously, states ranking among the global elite in terms of living standards scored much higher than developing countries. Moreover, Russia does not count as a "progressive culture" country under most of these parameters, the analyst writes.
But this does not mean that Russia is doomed to stagnate and lag behind. Culture has primarily an educative function. The same Protestant work ethics that old Europe lacked early in its history was later successfully instilled in society, the analyst writes.
Russian Old Believers provided a similar education to their children, many of whom became prominent businessmen, philanthropists and prosperous farmers. Of course, it is difficult to instill integrity, diligence, discipline and an aspired view of the future. This is particularly true of a society where lawlessness, sponging and all the stereotypical features of a consumer society are not only widespread but even sometimes actively popularized by the media, the analyst writes in conclusion.
Novye Izvestia
Cheap oil an obstacle to modernization?
The government is determined to cut the budget deficit even if oil prices fall.
On Tuesday, President Dmitry Medvedev delivered a budget message setting financial policy priorities for the next three years. They include economic modernization, a reduced budget deficit, development of human resources, and social security. But to achieve these objectives, the government will need money, which may not be available, especially if oil prices drop.
The presidential message defines five priority goals for the government. The first is macroeconomic stability. It also includes cuts in the budget deficit, which, the president said, must be reduced by 50% in 2013, compared with 2009, or down to 3%.
The other objectives, including strategic budget planning, results-oriented spending, innovation and improved quality of human resources, involve no figures.
Finance Minister Alexei Kudrin, however, warns that energy prices are likely to fall, as was the case at the beginning of the crisis. Within the next three years the oil prices could go down to $60 per barrel and lower. The Russian Urals brand is currently selling at over $75 per barrel.
Experts think Kudrin could be right. "Oil prices are bound to drop," Vladislav Inozemtsev, head of the Center for Post-Industrial Studies, told Novye Izvestia. "There are several reasons for that. There are signs that the Chinese economy is slowing down. Europe and the United States have not overcome the debt crisis yet and there will be no reckless spending as before the crisis. Recently, the United States has passed new banking legislation, which will clamp down on futures rules, including oil futures. Speculative deals will be off and will no longer affect prices. One should expect oil to go down to $50 or $70 rather than rise to $90 or $100."
Inozemtsev believes that the problem with the Russian budget is not that there is too much spending, but that it is not efficient.
"In my opinion, the budget should consist of two parts. The first should deal with social and defense spending and the second with investment. Investments should be made into concrete projects that promise real returns.
Rossiiskaya Gazeta
Immigrants could save Russia from demographic decline
Russia's amended labor-immigration legislation has triggered additional animosity toward foreigners. Few other issues are debated so hotly nowadays. The country is, however already suffering from a demographic crisis predicted by analysts long ago.
Zhanna Zaionchkovskaya, director of the Laboratory for Migration Research at the Russian Academy of Sciences' Institute of Economic Forecasting, said immigrants could save Russia from demographic decline.
She said discussions on whether or not we like immigrants should deal with more practical issues, namely, whether we can or cannot do without them.
The analyst said Russia could not cope without immigrants, and that the demographic crisis was not some kind of a metaphor invented by scientists. She described it as an objective fact of life.
Although there remains room for debate regarding scenarios for the mid-21st century, the 2030 forecast is highly accurate. All infants, due to join the economically active population by then have already been born and can be counted, the analyst said.
Twenty years from now, Russia's population of 90-million economically active people will dwindle by 18 million. In effect, the country will lose 20% of its able-bodied workforce, the analyst said.
This major reduction will inevitably cause an economic slump and declining living standards. Incomes, wages, salaries, social programs and pensions will be reduced. The government will have to implement unpopular measures, including a longer working day, and will also raise the retirement age.
Millions of former compatriots, primarily energetic people with a similar mentality and culture, were ready to move to Russia after the break-up of the Soviet Union in 1991, Zaionchkovskaya said.
However, crisis-ridden Russia was not prepared to accept them. Russia has missed its chance by taking in far fewer immigrants than expected. CIS workers currently arriving in Russia will go to immigrant-friendly countries, unless we learn to respect their work. This country will soon vie with other states for immigrants, the analyst said.
Increasing labor productivity is one drastic measure that would make it possible to do without immigrants. Despite technological progress, it is not always possible to replace humans with machines, Zaionchkovskaya said.
International experience shows that, as long as cheap labor exists, employers are in no hurry to mechanize production. The industrial world's experience indicates that no country has so far managed to facilitate sustained economic growth during a time of workforce contraction, she said.
Although labor productivity across the industrialized world considerably exceeds Russian levels, industrial countries still take in additional immigrant workers. Labor productivity in itself cannot become an alternative to immigration.
In the future, Russia would require about 25 million immigrants in order to compensate for the natural reduction in the economically active population. These statistics highlight the scale of the problem, the analyst said in conclusion.
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MOSCOW, June 30 (RIA Novosti)
