For the Russian media, public at large and ‘Kremlinologists’ this summer’s hottest topic has been whether the 18-year reign of Mayor of Moscow Yury Luzhkov would be brought to an end. One of the gargantuan figures, if only metaphorically, of the Russian political scene since the fall of the USSR, some foreigners might forget he was once serious touted as a rival to Vladimir Putin for the Federal Presidency, back in 2000. Today President Medvedev seemed to ‘dump his stabilizers’ and ride the Presidential bike on his own: he very publicly fired Mayor Luzhkov and, in Russia, this has started a debate about whether Medvedev is his own man now, or whether he is still the tool of Prime Minister Putin. Some people assumed Medvedev didn’t have the realpolitik power to depose the Moscow Mayor-Tsar; even if he has the clear constitutional power (the City of Moscow is a Federal disctrict whose mayor is a Presidential appointee).

 

“No, foreign investors will be fine” is the general tone of today’s publications (see http://www.vedomosti.ru/finance/analytics/18991/kak_povliyaet_otstavka_luzh#ixzz10okl5Vly or http://vremya.ru/2010/175/51/261809.html). It is true that the city’s management system, which has been formed for the last 20 years, will not be changed overnight – it’s not federal managers’ style and they are the ones who are sure to replace Luzhkov’s team. They are also over sensitive not to scare foreign investors specifically and, as we have heard in the Presidential Administration, will be tasked to keep them at bay / warned if some radical changes are planned over time.

 

At the same time it is crystally clear for everyone that Luzhkov’s “localism” in managing Moscow will be replaced by a more federal approach. What are the implications?

 

Moscow is a way richer that St. Petersburg or any other region in the Russian Federation. The most sharp contrast is between overflowing Moscow city’s budget and the dare straight of the Moscow region’s finances (remembering that the 11 million Moscow City is a separate Federal district from the ‘doughnut ring’ Moscow Oblast of some 7 million which surrounds it). It is therefore likely that for the new “federal” team an issue of uniting Moscow city and the Moscow region, or redistribution of financial flows within territories of these subjects of the Russian Federation, will be put back on the agenda fairly soon.

 

It is also noticeable that the United Russia ruling political party keeps banging on about sky-rocketing realty prices under Luzhkov, which will probably mean more populist measures to drive the cost down for public welfare housing and, correspondingly, more pressure on the city’s social expenditures. Given that the Mayor’s wife, Yelena Baturina has become Russia’s richest woman from construction, and largely from the Moscow City budget, has been known for years; but only recently – by Presidential insistence – have Russian state media been highlighting this fact.

Retail companies operating in Moscow is a different story. It may well be they will see a sharp change of the city’s policy which currently seems to focus on letting big chains build hypermarkets close to the centre of the city. Luzhkov’s management system is corrupted at the highest level but is working quite efficiently to get stable income to the city’s budget (“Greed works” as Gordon Gekko would say). It may well be that with the arrival of the new federal team there will be some failures of the system in terms of filling in the Moscow budget. That may be balanced temporarily by federal methods: making some of the big companies register back in Moscow to pay taxes there or redistribution of financial flows between the federal and Moscow budgets. However, in the long term, we are sure to see a global redistribution of the monies “earned” in Moscow for Federal needs. How will these needs evolve and how these will be spent, post-2012 (the next Presidential Election) is a big question.

cross-posted from http://mmdblogs.com/doubletalk/2010/09/should-foreign-investors-fret-over-change-of-leadership-in-moscow/

Both Moscow citizens and investors may sleep peacefully as Team Putin-Medvedev will try not to take hasty decisions to keep the situation in Moscow stable and ensure the medium-term balance between ruling and “leaving” elites.

Anyway replacement of Luzkov may have several consequences that could be divided into 3 groups: political, economic and social.

• Among political consequences we may outline the conflict between ruling and “leaving” elites and redistribution of the spheres of political influence. Team Putin-Medvedev will finally gain total control over the capital meaning not only political control over situation in the city but also economic one.
• Redistribution of the spheres of political influence brings us to the redistribution of power in the business circles and to increasing competition on the fastest growing sectors of the city economy, especially at the construction market. This may lead to temporary problems with city budget that may occur due to possible changes in the list of tax-payers. Although investors won’t be caused inconveniences – no one wants scandals till the parliament and presidential elections in 2011 and 2012.
• The social expenditures that are very high in Moscow compared to other Russian regions will be kept at the same level and even increased before parliament and Presidential elections. This makes the issue of the budget stability not only economic but social as rapid changes in this sphere may lead to social unrests.

The fact is that to solve all these issues and keep the situation stable both for Moscow citizens and investors Team Putin-Medvedev will try not to take hasty decisions and will cautiously take small steps. Thus they may try to appoint some technical interim figure like Valery Shantsev, (currently governor of Nizny Novgorod region who was Deputy Mayor of Moscow for 6 years) for 1,5 years till the elections. Shantsev is a loyal person (like they have Valentina Matvienko in St Petersburg) that is able to ensure perfect results of Edinaya Rossiya and future President during elections, moreover he has enough experience to manage Moscow and calm down social unrests in Moscow if anything happens.

Of course, the technical figure may be accompanied with some senior person from the presidential or governmental administrations like Sergey Narishkin, Presidential Chief of Staff or Sergey Sobyanin, Government Chief of Staff. This political figure will become the “official face of the city” while the technical interim person will be responsible for social and economic issues thus keeping the medium-term balance between ruling and “leaving” elites.

After elections in 2012 the technical figure may have to leave its post although may stay depending on results and according to further consultations.

cross-posted from http://mmdblogs.com/doubletalk/2010/09/life-after-luzkov-consequences-for-moscow-citizens-and-investors/

On March 11, 2011 The Ukrainian Parliament appointed Mykola Azarov as its new Prime Minister. This followed a hastily assembled coalition, and even more hastily law amendment pushed through this week by Yanukovych to allow a coalition to be formed by individual MPs, as opposed to bloc factions. The new coalition comprises the Party of Regions, Communist Party, the Lytvyn Block and several MP of BYuT and NU-NS factions; a total of 235 MPs representing a shade more than 50%. It is highly possible however, that the new law will be disputed in Ukraine’s Constitutional Court which could yet derail Yanukovych’s best laid plans.
Russian-born Azarov is considered one of the most influential figures in the Party of Regions and a close ally of Yanukovich; serving as finance minister and first deputy prime minister in his premierships from 2002-2005 and 2006-2007. During his time he undertook tax reforms, bringing the variable tax rate on personal income down to a uniform flat rate, and was credited with calming investors’ concerns of a financial meltdown following warnings of a crisis by then President Kuchma.
A trained geologist, Azarov previously held scientific and managerial positions at scientific and research institutions specializing in geology and mining both in Russia and in Ukraine.
He is a strong supporter of tight state control of the economy and is thought to be a safe (and conservative) pair of hands with the country’s purse strings. We can expect his operating style to be characterized by pragmatism and caution. In policy terms, we could expect to see potential increases in protectionist measures in favour of local Ukrainian industry and exports, stricter taxation discipline but with a focus on new technologies and modernization.
His experience of steering Ukraine through choppy economic waters must surely have a positive influence on a country which is still some way from clearing the recession. It is hoped that his pragmatic and conciliatory approach will encourage the IMF to resume the funding promise it suspended in 2009 following a number of breached promises.
At 62 years old and a trusted long-term ally of Yanukovych, Azarov is unlikely to pose any serious competitive challenge to the new President which should mark an end to the in-fighting which ultimately destroyed the previous administration.

This post was written by our Ukrainian colleague Dr. Oleksandr Sakharenko, Government Relations Manager at Grayling Ukraine

See our Ukrainian blog at http://insightukraine.mmdblogs.com or follow @grayling_ua on Twitter.

cross-posted from http://mmdblogs.com/doubletalk/2010/03/ukraine-makes-a-prime-choice-in-its-new-pm/

It is official: Mmd is now Grayling. After the merger of three leading consulting companies: Grayling, Trimedia and Mmd, we have become the world’s second biggest independent communications firm with 900 staff in 70 offices in 40 countries.

You can check out our new website at http://www.grayling.com/ or watch this small funny video that we have produced to celebrate this major change.

from Mmd to Grayling from Grayling_ru on Vimeo.

So don’t worry when next time you call us, someone will answer “Grayling, may I help you?” or if you receive an email from someone you know from Mmd from a @grayling.com address.
But what’s really important is that we are now a truly global company, capable of talking locally to your stakeholders and audiences, while maintaining a global view of your business. We are a different company now, and we will work hard to offer you a different kind of thinking for a different kind of world.

cross-posted from http://mmdblogs.com/doubletalk/2010/01/becoming-grayling/

During the last 18 years Russia has come a long way from iron curtain that finally fell to reveal a strong leader with an iron hand. The long and winding road from Fulton to Munich was even longer.

In terms of foreign policy, Russia will continue to promote the concept of a multi-polar world with 20 key countries and 4 key centers of power, Russia being one of them, along with the US, the EU and China. Related to this, it is the Russian mindset that the one polar world proved its instability during the global economic crisis, meaning that a strategic game of chess to positioning and align is now on the agenda for many of the G8 and G20.

Moreover, with President Obama in charge, the much needed ‘restart’ of the Russian-American relationship actually seems to be underway: Russia has finally succeeded in being taken seriously as an equal international partner. Together with the other three international centers of power, Russia’s role in contributing towards global economic stability has been recognized, though crucially, the interests of other global authorities in Russia’s policies will no doubt be balanced against the country’s own key focus on its national and domestic interests. In other words, to rephrase Lord Palmerston: Russia does not have permanent friends and allies, rather permanent national interests.

In terms of national and domestic policy in Russia, in contrast to foreign policy and the fresh start seen in this sphere, Russia is maintaining its long term position. The senior Russian leadership must still answer the age old question as to whether the human being lives for the state, or whether the state is established for the human being. This is of course the struggle between the competing Soviet ideology and that of modernization and the increasing struggle between the Russian political elite to push Russia along one of these divergent roads. Though as this clash of ideology continues, it is important to remember the threats and pitfalls posed by the continuation of a soviet mentality within the Russian state.

The conservative soviet scenario will inevitably pull Russia backwards into the third world by maintaining a number of institutional limitations: an economy based on the raw materials; overbearing corruption; a fundamental lack of trust within society; violation of citizen rights by the political and economic elite; weak and malfunctioning legislative and representative bodies; and a dependant court system that capitulates to weak state bodies, with key decisions being based on informal and non-transparent motives. Furthermore, a monopolized state economy and mass media will result in an overwhelmingly suppressed civil society.

These systematic flaws and issues are based upon the lack of opportunity for citizens, and in turn state institutions, to scrutinize and hold government to account as a means of balancing the interests and rights of the elite against everyday Russian citizens. The lack of an effective checks and balance system has and will lead to instability in long term. Furthermore, a lack of competition both in the economic and political spheres must be readdressed as an urgent necessity.

In the words of Chekhov: each and every citizen must take responsibility for oneself and one’s life and squeeze the slave out of ourselves drop by drop to establish equal partnership relations with the state.
Russia must undergo sweeping institutional reform to achieve its full potential and establish the highly competitive and aggressive state the country is capable of. However, the civil liberties and self-respect of citizens (as cherished by developed Western nations) must be an absolute prerequisite within such the reformed model. Only once this transformation is underway can Russia begin to challenge the long list of issues and threats the country faces in the XXI century.

cross-posted from http://mmdblogs.com/doubletalk/2009/12/zeitgeist-russia-in-the-beginning-of-the-xxi-century/

Until now the map of our regional coverage in CEE looked like this:

There has always been a niggling gap in our regional map, but we have fixed that this week, with the launch of our office in Minsk. It will operate under the new Grayling brand and will be the first office of any global PR network to open in Belarus. We bring Mmd’s wealth of experience of working in CIS and Eastern Europe in  fields like Public Affairs, Government Relations  and PR aboard this new venture. The office in Minsk will enable us to offer our consultancy and services to both international companies willing to enter or develop their presence in Belarus market and local companies seeking foreign investment or expansion.
Belarus has recently been gradually opening up its economy to foreign trade and investment to become an integral part of the European market (and likely an important one with its population of 10 million people), so it is only natural that Grayling is the ‘first in’ international PR consultancy there, just as we (as Mmd) were in many other CEE and CIS countries before.
Grayling Belarus will operate as a 70/30 joint venture between Grayling and BTH Investments (UK), a corporate advisory company working across CEE and CIS. Vladimir Melnikov, Deputy General Director of Grayling in the CIS and Dmitry Marinovsky, the agency’s chief consultant will lead Grayling’s day-to-day operations in Belarus.

cross-posted from http://mmdblogs.com/doubletalk/2009/10/a-new-office-guess-where/

Yesterday the Russian president grasped Russian bloggers’ attention by publicly tasking the Government to look into the proposals of one Maxim Kalashnikov; regarding the development of innovation in Russia. Now, Dmitry Medvedev has already earned a reputation for being web-savvy: he has launched a video blog on his official website, then a blog on Livejournal and has often been praised for being the first Russian president who actually ‘gets it’ (‘it’ being new media). However, the kind of responsiveness to the blogosphere he demonstrated yesterday actually rather plays against the President. IMHO, it makes him look like an obscure, wishful thinker at worst; or as a blind ruler, oblivious to his people’s needs at best (or is it the other way round?).

So what happened exactly?

Act 1: a visionary makes a move
Maxim Kalashnikov (a pseudonym of Vladimir Kucherenko) is a futurologist, columnist, blogger, who identifies his political views as ‘a fascist who respects Stalin’, he is author of numerous books and ‘projects’. Ahem… ‘a visionary’ would perhaps be the most polite way to describe his qualification. On September 15th he has published a kind of open letter to the President on his blog, proposing a project for an “innovation city” outside Moscow, deploying the technologies and implementing innovations, such as the “Yunitsky’s string transport”; “Zheleznov’s digital communications network” (description looks very much like your average triple-play service, but “Russian” and 8x times cheaper than what’s available in the market); “bio-agroecopolis” (mystery); “cement free constructions” (mystery) etc. - all these, says Kalashnikov, are as yet “unmatched in the West” (this is normally a euphemism for “early prototypes of something, not likely to actually work ever, and that nobody really needs in the real world”).

( Read the rest of this entry » )cross-posted from http://mmdblogs.com/doubletalk/2009/09/who-framed-president-medvedev/

Today our parent company Huntsworth has announced its plan to merge Mmd, Trimedia and Grayling consultancies into one global firm. When the merger is complete we will all operate as Grayling and will be part of the World's 3rd biggest independent PR network (i.e. not owned by an advertising group).

This merger is a part of Huntsworth's bigger plan to structure all of its business so that it is more competitive on the global stage. Grayling was picked as the new name due to its existing global presence, and as much as we are sorry to lose the name we are all so accustomed too, we are also very excited with the range of opportunities that this merger opens for us, both on a corporate and on an individual level.

More news is surely to follow as we embark on the rebranding and integration process, that, in due course, will turn Mmd into Grayling (we plan to switch to Grayling name by January 2010).

Today our parent company Huntsworth has announced its plan to merge Mmd, Trimedia and Grayling consultancies into one global firm. When the merger is complete we will all operate as Grayling and will be part of the World’s 3rd biggest independent PR network (i.e. not owned by an advertising group).

This merger is a part of Huntsworth’s bigger plan to structure all of its business so that it is more competitive on the global stage. Grayling was picked as the new name due to its existing global presence, and as much as we are sorry to lose the name we are all so accustomed too, we are also very excited with the range of opportunities that this merger opens for us, both on a corporate and on an individual level.

More news is surely to follow as we embark on the rebranding and integration process, that, in due course, will turn Mmd into Grayling (we plan to switch to Grayling name by January 2010).

cross-posted from http://mmdblogs.com/doubletalk/2009/08/mmd-gets-a-new-name-joins-a-bigger-family/

Mmd  has won the International Stevie Award for ‘Communications Campaign of the Year in Europe’ in the 2009 International Business Awards for the PR campaign it designed and implemented for Skype in Russia!

The International Business Awards are the only global, all-encompassing business awards program honoring great performances in business. Recipients of International Stevie Award trophies were selected from more than 1,700 entries received from organizations and individuals in more than 30 countries in more than 40 different awards categories.

Victory Day, commemorating the Russian victory in World War II, is one of the key holidays celebrated in Russia and former Soviet Union countries. On 9 May, in 7 ‘Hero’ cities, and throughout Russia, open-air celebrations and parades are held in which war veterans participate; the biggest taking place in Moscow on Red Square. However, due to health problems (the average veteran is 85 years old) and often long distances to travel, each year less and less veterans are able to take part.

Via Mmd’s campaign, Skype partnered with Russia’s largest circulation national daily, Komsomolskaya Pravda (circulation 3m+), and the Russian Red Cross to organize Skype video conferences between war veterans in 5 cities: Moscow, St. Petersburg, Volgograd, Kaliningrad and Tiraspol. On 7 May, video conferences were held in Komsomolskaya Pravda offices linking up war comrades across the country.

( Read the rest of this entry » )cross-posted from http://mmdblogs.com/doubletalk/2009/07/mmd-wins-stevie-award-for-skype-pr-campaign/