Archive for February, 2009

The Obama Telenovela

Wednesday, February 18th, 2009

It was on our first morning in Havana that my friend and I discovered how obsessively Cubans have been following recent developments in American politics. Our hostess, a middle-aged bleached blonde with a hardened good cheer, served us our eggs and proceeded to engage us on the subject of the Sasha and Malia Obama dolls. It was only a few days after the inauguration and the world was still tipsy on Obamamania, but it felt odd that someone would know something so infinitesimally peculiar on a blockaded island with a handful of state newspapers and four Party-approved TV channels, all repeating the same agit-prop ad nauseam. Norma went on. “It’s great that Michelle’s mother is going to be living with them,” she said. “It’ll be good for the girls, and it shows what kind of man Obama is.”

Later that day, while walking around Vedado, in Central Havana, we were invited to join three generations dancing to reggae in their living room. One of the neighbors was there and, on hearing we were American, quickly buttonholed us, eager to share his thoughts on Obama’s ban on lobbyists. If we had been surprised by Norma’s mastery of Obama trivia or this man’s wonkishness, we would find still more of it a few blocks away. At the Café Pekin, three rehearsing musicians befriended us gringas over some cans of Bucanero beer; between their soul-straining renditions of the son classics, one of the crooners asked my friend about the Bank of America bailout. She barely had a chance to answer when, one arm cradling his guitar and one arm marking his points, he began to explain why nationalizing banks would make sense for America. (His information, my friend admitted later, was quite accurate.)

We weren’t expecting to find this kind of parrying in Revolutionary Havana. Plenty of countries are well-informed about our political process, though we may know next to nothing about theirs. Cuba, however, is still very much a police state that puts a premium on controlling the information its citizens consume. And yet that was three people unfurling their up-to-date Americana within the span of a few short hours. How, we wondered, were Cubans getting these contraband factoids? And, more importantly, why were they so intent on getting them?

With the aging of its leaders and the growing staleness of the Revolution, the state has gotten a little gummy in its enforcement of the information lockdown and its subjects have grown bored with the fare the state feeds them. Every type of media—from television to women’s magazines—is state-controlled and produced by ideologically vetted cadres, which means little variety and even less nuance. News from America tends to concern American aggression, foolishness or greed. When Obama signed the order to close the detainee prison at Guantánamo, for example, Granma, the Cuban version of Pravda, reported that “Barack Obama fulfilled one of his main election promises by closing the prison located on the illegal base at Guantánamo, Cuba.” When the papers reported on our presidential election, it was to point out the the amounts of money wasted on the process and how the election was actually indirect and therefore unfair.

Most Cubans, however, seem to have developed an immunity to this kind of jingoism. When a revolution has been waged for decades, you tend to stop paying attention—especially when your daily life is spent in the chasm between Revolutionary rhetoric and reality: It’s hard for Cubans to believe that more revolution (the state’s answer to the embargo) will put more food on the table. Or to stomach the fact that, despite the Revolution’s promises of dignity and sovereignty from the Empire, tourists will see more of their homeland than they could ever afford to. Or that the country is scarcely free of the humiliating tourism-related vices of the pre-Castro era. Or that despite promises of egalitarianism, ministers and generals live not in crumbling Havana but in the posh suburb of Miramar where their well-fed, well-coiffed daughters can buy all the groceries they want with currency only available to foreigners.

As the government’s narrative of reality inches more and more toward the absurd, it breeds a palpable sense of boredom and hunger in a population far too educated for the island’s scant opportunities. (Billboards exhorting people to work and work harder—when there are no jobs to be had—look more than a little insulting in a city where thousands of unemployed Habaneros hang out on their stoops on weekday afternoons.) The sense of enclosure on the blockaded island only heightens the appetite for information.

Revolutionary media has proved unwilling to indulge this curiosity. The state shares no real news about itself. Nearly three years after Fidel first disappeared from public view, his subjects still don’t know whether he’s dead or alive, let alone what he’s up to. (His periodic and increasingly nonsensical screeds in Granma offer precious few hints. Not many people watch the state’s version of the news. “Mesa Redonda,” the official nightly news round table, is roundly ridiculed; Granma features real reporting from allies Venezuela and Bolivia, but that too has an ideological point. There are sports and educational programs on TV, but no entertainment news. Telenovelas, a genre Cubans love, have low production values and are also flavored with the blandness of political orthodoxy. It’s all dull, didactic stuff and it does nothing to sate Cubans’ appetite.

“The Cuban press is so narrow,” Rafael, a journalism student at the University of Havana, told me. “We have to get our information somehow. We’re hungry for it.” And this, mind you, is coming from someone with political credentials good enough to study journalism in Cuba.

That hunger is fed “por la izquierda,” to the left of the law. Some listen to Radio Martí, the Cuban version of Voice of America, though its impact is debatable. For the most part, however, people get their non-Granma news, their entertainment, and their beloved Brazilian telenovelas from illegal satellite TV, much of it beamed through Rupert Murdoch’s DirectTV.

This is how it works: One guy (and it’s usually a guy) rigs up a contraband satellite with parts smuggled in by visiting émigrés, or even with a receptor attached to a trashcan lid. A tangle of wires then channels the signal to anywhere from several residents to several apartment buildings. Each recipient pays a one-time installation and a monthly subscription fee of about two hundred national pesos, about half a professional’s monthly salary. Because everyone is hooked up to one central dish, subscribers have to watch the same thing as the dish owner, who will usually create a program based on a survey of his customers.

Cops and members of community vigilance organizations often get their subscriptions for free to disincentivize ratting and promote information sharing when, say, the police are about to sweep the town for illegal dishes. (The last major raid was two years ago, after Granma published a story about several men prosecuted for making dishes. It was, the paper claimed, “destabilizing and interventionist and forms part of the Bush administration plan aimed at destroying the revolution and with it the Cuban nation.”) Pirating techniques adapt quickly in response to official intercession. In order to fight the newly trained cable-cutting police that prowl the roofs, smugglers have now taken to hiding the cables underground. Masquerading as official work crews repairing leaks, they tear up the streets and lay the cables under the concrete.

All told, there are up to 30,000 of these illegal satellite dishes hidden in water tanks and air-conditioning units on rooftops all over Cuba, with the majority clustered in Havana. They bring in news, music videos, and, worse, commercials—and then Radio Bemba, the Cuban grapevine, takes over. The news is passed by word of mouth, on video cassettes, or, from the few Cubans who have Web access, on memory sticks. Together, DirectTV and Radio Bemba have become the de facto media empire here, swiftly and efficiently giving Cubans the information the Revolution refuses to provide.

Circumventing the state, however, is not without its dangers. Getting caught could get you or your family members kicked out of work or university, effectively blacklisting you for ideological impurity. Incurring economic punishment in the poverty-stricken country, though, could be far worse: An illegal dish might mean a catastrophic fine of a thousand pesos, more than most people earn in two months. And, though the enforcement is spotty and lurching, the official line has only grown harsher: With the ascent of Raúl, the world hoped for a loosening of the noose, but Cubans knew better. Soon, he proved them right, appointing an old Revolutionary comrade and former head of the secret police to head up the Information Ministry. He, in turn, introduced a law that forbids receiving foreign media from tourists. An infraction carries a three-year jail sentence. The point is clear: no outside media. Period.

But days after a sweep, the satellite dishes sprout right back up. The hunger and the boredom are still there and, now that we’ve elected a young black president, Cubans, half of whom are of mixed race and ruled by a cadre of feckless septuagenarians, want to know even more what we’re up to. Every conversation, we soon realized, followed a template: Once it was established that we were “yanquis,” all talk turned to Obama. How great he was, how he was going to fix Cuba’s problems by lifting the embargo, how noble of him to close down Guantánamo. An old man at one of Havana’s last synagogues proudly showed us a Xeroxed news clipping from a Mexican newspaper that showed Obama’s two Jewish wing men: Axelrod and Emanuel. “Jewish!” he exclaimed happily. Even the official press has taken a cautious, even optimistic tone when describing the new president. It is unclear, however, if this signals a softening of the confrontational Castro line or—less likely—is in response to Cubans’ hunger for change and faith in Obama.

“There is an absence of narrative here,” blogger Yoani Sánchez told me one afternoon in Havana. Few people in Cuba read her blog, Generation Y, but she is famous because she was once shown on TV in Miami and, thanks to Radio Bemba, the entire island now knows who she is. “We don’t know anything about our government—who their wives are, where they live. The Obamas have become our narrative. They are our telenovela.”

The Method Behind Russia’s Cuba Madness

Thursday, February 12th, 2009

Last week, Cuban President Raúl Castro wrapped up a whirligig tour through Moscow, the first visit by a Cuban leader in a quarter century. For eight days, he was shuttled around the Russian capital in a flurry of museum visiting, wreath laying, and agreement signing. The time for bickering over Soviet-era debt and who abandoned whom, it seemed, was over; the time for a new friendship between old friends had dawned. And so, Castro and Russian president Dmitry Medvedev “expressed their satisfaction with the growing collaboration between the two countries,” wrote Granma, Cuba’s official state paper, at the height of the visit. “It is a testimonial to the historic friendship and mutual respect that exists between the Russian and Cuban peoples.”

All told, the two leaders expressed their historical amity in the form of over 30 agreements, and, though they kept mum on many of the details, Castro reportedly returned to Havana “very happy.” How could he not have? Those deals were worth over $350 million in fresh loans and hurricane aid, and impoverished Cuba needs everything it can get.

But Russia has been careful not to make this visit seem like a Soviet-era Russo-Cuban love-fest. Back then, there would have been a parade for a visiting Castro; this time, the Red Square was procession-free. Another key difference: 30 years ago, the other Castro–who was doubly important as an ideological ally and a persistent nuisance to America–would have left Moscow with grants, not loans, in his pocket. (“The era of gift-giving is over,” a Russian official in Havana said.) There was also a change in tone: As a western official in Havana told me, while the Cubans were busy playing up the renewal of ties, the Russians were keeping them at arm’s length. They wanted to send a clear signal that things are going to be different this time.

Things, however, are pretty much the same. It’s just that, like many other things in contemporary Russia, they just have different names. So instead of “subsidies,” Cuba gets “loans.” And no longer will there be a lopsided pro forma barter system. The new agreement that essentially swaps planes for rum (which Russians don’t even drink)? In 2009 that’s called “trade.”

So why is Russia–the emerging economy hardest hit by the economic crisis–lending a few hundred million dollars it probably won’t get back to a country that can barely pay for its goods and with which it no longer shares an ideology?

The reason, like the tactics, is old: sticking it to Uncle Sam. While the U.S. is distracted by its own melting economy, Russia gets to curry some influence right under America’s nose, perhaps as retribution for the U.S.’s support of Georgia last summer. Indeed, the coffee table in the lobby of the Russian embassy in Havana has a stack of Spanish-language pamphlets called “South Ossetia: Chronicle of a Genocide”–Cuba was one of the few countries to support Russia in August–and the Russian official there spoke to me more about the “anachronisms” of the American system than about Russo-Cuban relations, which was the purpose of my visit. Renewing a historical friendship, it seemed, was more of a ploy to make an old enemy pay attention.

This time, however, Russia is too clever to think that it’s well served by angering a new president who might meet them halfway on, say, the European missile defense shield. In using Cuba for spite, Russia could have reopened Lourdes, a Cold War listening post outside Havana that Putin closed in 2001. It didn’t. Instead, in throwing some pocket change to a country that’s not even in play, says Alexander Kliment of the Eurasia Group, “Russia is simply stacking its bargaining chips ahead of its first meeting with Obama.” How? “By asking, ‘Where are those asymmetrical pressure points?'” Kliment says. “That’s what Russia always looks for.”

One such pressure point was discovered last week when Russia handed the Kyrgyz $2 billion to kick the U.S. off a crucial air base. Another pressure point? Spending $7.5 billion to fund an alliance of former Soviet republics in the Baltics and Central Asia to consolidate its influence in the region. When it meets with Obama in the spring, Russia can then easily back off these none-too-crucial arrangements in return for some concessions from the U.S.

Which nicely explains the logic of returning to the old tactic of a none-too-profitable trade with Cuba: Lopsided trade agreements? $354 million. Pressing a steel thumb into one those pressure points? Priceless.

Google’s Russian Threat

Tuesday, February 10th, 2009

Fortune Magazine) — Arkady Volozh, CEO of Yandex, Russia’s largest online-search company, is playing with a set of nesting dolls (for real!). Instead of the traditional folk decoration, though, these figurines are outfitted with the names of Internet companies doing business in Russia. The first and biggest doll has Yandex emblazoned on its belly in bold red and black letters. A smaller doll bears the Google logo, followed by one representing Rambler, Russia’s other homegrown search engine. “We were charitable with these dolls,” Volozh says. “If we had been honest, we would have left the second doll blank and made Google third. We’re that much bigger than them.”

Having conquered search in Russia, Yandex is setting its sights on the U.S. The Moscow-based company is opening Yandex Labs not far from Google (GOOG, Fortune 500) headquarters in Mountain View, Calif. Volozh says he’ll staff the office with 20 or so engineers to index Web pages for a Russian audience and keep abreast of technology developments that bubble up in Silicon Valley. Volozh certainly will be going after some of the same tech superstars Google recruits, but some wonder whether Yandex has grander ambitions, including a play for some of Google’s U.S. market share. One possibility: grabbing part of the growing market for image searches.

Volozh denies that he’s chasing Google. In fact, Yandex, which got its start in the late 1980s, long before Google founders Sergey Brin and Larry Page had even met, arguably has the superior search technology. Yandex’s search algorithm is rooted in the highly inflected and very peculiar Russian language. Words can take on some 20 different endings to indicate their relationship to one another, and “while this makes the language precise,” says MIT linguistics professor David Pesetsky, “it makes search extremely difficult.” Google fetches the exact word combination you enter into the search bar, leaving out the slightly different forms that mean similar things. Yandex has found a way to catch them all.

As a result, Yandex controls 56% of the search market in Russia (compared with Google’s 23%), boasts an impressive two-thirds of all revenue from so-called search ads, and draws more than three billion hits a month. Last month Firefox dropped Google as its default search engine in Russia in favor of Yandex, putting Yandex on track to conquer still more of the market.

And Yandex (short for “yet another indexer”) continues to innovate. While some of its services are similar to offerings available in the U.S. (blog rankings, online banking), it also has developed some applications that only Russians can enjoy, such as an image search engine that eliminates repeated images, a portrait filter that ferrets out faces in an image search, and a real-time traffic report that taps into users’ roving cellphone signals to monitor how quickly people are moving through crowded roads in more than a dozen Russian cities. Says noted venture capitalist and Yandex board member Esther Dyson: “What I love about Volozh is that he’s never been complacent.”

Volozh has aspired to run a transparent operation from the beginning, stocking his board with reputable folks like Dyson and forgoing the favor-seeking that is common in Moscow. Indeed, the fact that the SEC gave Yandex the green light to list on Nasdaq says a lot, according Nasdaq managing director Paulina McGroarty. “It shows that the management was ready to show the world that they have that stamp of approval,” she says.

Changing plans
The financial crisis derailed Yandex’s IPO plans, but it has helped the company stay clear of some of the Kremlin-connected oligarchs who had wanted to buy in: Industrialist Alisher Usmanov was set to take a 10% stake in Yandex, but the meltdown of the Russian market has forced the controversial businessman to rethink his investments.

Volozh says his company is cash-flow positive, and as a result it doesn’t need to raise more money right now. Yandex’s growth certainly has been impressive: Revenue has doubled every year since 2000, and last year reported sales topped $300 million. According to Volozh, Yandex has turned down repeated buyout offers from Yahoo (YHOO, Fortune 500), Microsoft (MSFT, Fortune 500) and Google. (The companies declined to comment.) Analysts value the business at about $6 billion.

While Yandex may not be interested in serving American customers, Google is definitely eager to increase market share in Russia, which boasts the fastest-growing Internet population in Europe. Google struggled when it first began making Russian-language search available in 2001, largely because its technology failed to take into account the complexities of Russian grammar. Its market share for much of the decade hovered at a tepid 6%. Then, in 2006, Google hired a few dozen Russian engineers to address the language issues, and its market share jumped instantly. With its huge potential for growth, says Alla Zabrovskaya, who heads public relations for Google in Moscow, “Russia is a pivotal country for Google.”

As the market leader, Yandex has momentum on its side, but Volozh believes the company’s real edge in Russia is its local roots. “We can joke in Russian, which Google can’t do,” Volozh told Fortune during a meeting at Yandex’s California offices. Two years ago, for example, Yandex hosted a televised live chat with then-President Vladimir Putin. The company insisted that the President answer users’ most popular questions and forgo the Kremlin’s usual scripted format. “When did you have sex for the first time?” was one of the most popular, and Putin had to respond. “I don’t remember, but I certainly remember the last,” he quipped. “I can pinpoint it down to the minute.”

The home-team advantage should help Yandex maintain its market share in Russia, but it also puts a lot of pressure on the company. If Yandex were to stumble, that would be a disappointment to Russia, which, despite its highly educated population, has few successful homegrown tech companies to root for. And Volozh might even have to order a new set of nesting dolls.