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The royal birthday reception at the palace is coming to a close.
A group of dignitaries begins gossiping about Karenin. He has just received the Order of Alexander Nevsky, which is a high honor bestowed by the Court.
They laugh at Karenin's ignorance: they can all see that, even though he holds an important post, he has effectively come to the end of his career. There are no promotions awaiting him in his future.
Meanwhile, Karenin is talking some poor man's ear off about some finance project. He feels, quite to the contrary of the opinions of basically everyone he knows, that his role in the office is even more important than it once was, because he now sees so clearly what everyone else is doing wrong. He keeps writing new proposals that don't really go anywhere. After all, his work helps distract him from his marital situation.
Karenin socializes a little with people that he knows are laughing at him, but he's gotten used to that. He looks around for Countess Lydia. The two of them discuss Seryozha's education for a bit, which is Karenin's other project besides his work.
Countess Lydia tells him of Anna's presence in Petersburg. His face takes on a helpless, death-like expression.
Apparently, Countess Lydia finds this attractive. She is more in love with him than ever.