Once Again, Russia Snubbed by World

The Financial Times reports that Russia’s bid to corner the steel industry has met with spectacular and predictable failure, with Russians once again blaming their own shortcomings on the “russophobia” of the West, just as they did when their pairs skaters met disaster at the Salt Lake City Olympics and just as they do any time failure rears its head, in lieu of introspection and reform:

The heads of Arcelor and Mittal on Monday put five months of acrimony behind them as they shook hands on a €26.9bn (£18.5bn) deal that will establish the world’s largest steelmaker and provide a fee bonanza for their advisers.

Goldman Sachs, Citigroup, Credit Suisse, Société Générale and HSBC will share more than $100m (£55m, €80m) in fees.

A €10.8bn loan to finance Mittal’s cash element of the deal – one of the biggest raised in Europe in recent years – could provide as much a fifth of the total M&A fees generated so far this year, according to Thomson Financial Freeman.

But the outbreak of peace between the two warring companies produced aggrieved noises from Russian politicians over the perceived slight to a white knight offer for Arcelor from Severstal.
The agreed alliancewas unveiled in Arcelor’s sumptuous Luxembourg headquarters after its board backed an improved Mittal offer for the steelmaker. Mittal’s bid was 44 per cent higher than its initial hostile offer in January, although the effective value slipped yesterday as Mittal shares fell by 4 per cent.

The combined entity – Arcelor Mittal – will be based in Luxembourg and produce three times as much steel as its top competitor.

But the tie-up is not a fait accompli. Arcelor investors will vote on Friday on a planned alliance with Severstal of Russia, originally engineered in an effort to thwart the Mittal bid. Russian politicians reacted angrily to the Arcelor board’s rejection of a merger with Severstal, Russia’s leading steel producer, suggesting it was politically motivated and showed a bias against Russian companies.

Victor Khristenko, minister for energy and industry, called Arcelor’s rejection of Severstal an example of “double standards” and “Russophobia”.

Mr Khristenko added: “I am completely dissatisfied with this decision and regard it as a bad sign. As soon as the Russian economy strengthened and became open, we began to encounter certain attitudes.”

Another difficulty is Dofasco, the Canadian steel group bought by Arcelor last year. Arcelor says Dofasco should be kept, but Mittal has pledged to sell it to ThyssenKrupp of Germany for $4.6bn.

Guy Dollé, the combative Arcelor chief executive who led the campaign against Mittal, was offered an executive role but will not remain in the long term.Aditya Mittal, chief financial officer of Mittal, said: “We have agreed to disagree. It is now up to the Arcelor board of directors to decide on the future of Dofasco.”Guy Dollé, the combative Arcelor chief executive who spearheaded the campaign against Mittal, was offered an executive role in the new-look company, but will not remain in his role long-term. Aditya Mittal has ruled himself out as Mr Dollé’s successor.The combined company will be based in Luxembourg. Mr Kinsch will remain as non-executive chairman, to be succeded by Lakshmi Mittal when the Arcelor boss’s contract expires

Thanks for reading La Russophobe !

Moscow: The World’s Most Oppressive City

The blogosphere is buzzing with news about Moscow becoming the world’s most expensive city, followed by Seoul, Tokyo, Hong Kong and London. As the Associated Press reports: “The survey by Mercer Human Resource Consulting ranked 144 cities around the world, measuring the comparative cost of more than 200 items such as housing, transportation and food. The survey is aimed at helping multinational employers determine compensation for their expatriate workers.”

But what most everyone seems to be ignoring, including the linked post on Sean Guillory’s blog and save for such acute analysis as that provided by the Guardian, is that while Moscow is the world’s most expensive city the average income and productivity of Russia’s citizens lags far behind that of the other most-expensive cities on the list, making Moscow’s expenses horrifically oppressive for the local population.

The Mercer study, because it is only interested in the incomes of foreigners, takes no notice of the average income of the people living in the countries studied, but merely reports the absolute cost of various items. In second-place Seoul, for example, the population has a per capita GDP of $20,400 while that of Russia is a mere $11,100 (a figure which is inflated by being adjusted for “purchasing power parity”). What this means is that if the prices in Seoul and Moscow were the same, they would be twice as difficult for the average Russian to pay compared to the average Korean. And, in fact, Moscow’s prices are actually higher than those of Seoul, while Russia’s GDP is distributed far less equally than Korea’s, leaving huge numbers of Russians desperately poor. So in fact, Moscow is even more oppressive than it superficially appears, by far the most oppressive city in the world in terms of prices. That doesn’t even begin to consider, of course, the oppression factor presented by racism, Gestapo like police, corruption and lack of information.

Thanks for reading La Russophobe !

Moscow: The World’s Most Oppressive City

The blogosphere is buzzing with news about Moscow becoming the world’s most expensive city, followed by Seoul, Tokyo, Hong Kong and London. As the Associated Press reports: “The survey by Mercer Human Resource Consulting ranked 144 cities around the world, measuring the comparative cost of more than 200 items such as housing, transportation and food. The survey is aimed at helping multinational employers determine compensation for their expatriate workers.”

But what most everyone seems to be ignoring, including the linked post on Sean Guillory’s blog and save for such acute analysis as that provided by the Guardian, is that while Moscow is the world’s most expensive city the average income and productivity of Russia’s citizens lags far behind that of the other most-expensive cities on the list, making Moscow’s expenses horrifically oppressive for the local population.

The Mercer study, because it is only interested in the incomes of foreigners, takes no notice of the average income of the people living in the countries studied, but merely reports the absolute cost of various items. In second-place Seoul, for example, the population has a per capita GDP of $20,400 while that of Russia is a mere $11,100 (a figure which is inflated by being adjusted for “purchasing power parity”). What this means is that if the prices in Seoul and Moscow were the same, they would be twice as difficult for the average Russian to pay compared to the average Korean. And, in fact, Moscow’s prices are actually higher than those of Seoul, while Russia’s GDP is distributed far less equally than Korea’s, leaving huge numbers of Russians desperately poor. So in fact, Moscow is even more oppressive than it superficially appears, by far the most oppressive city in the world in terms of prices. That doesn’t even begin to consider, of course, the oppression factor presented by racism, Gestapo like police, corruption and lack of information.

Thanks for reading La Russophobe !

Times of London Rips Putin with Kasyanov’s Help

The Times of London reports:

TONY BLAIR, George Bush and other Western leaders should publicly criticise Russian democratic failings when they attend the G8 summit in St Petersburg next month, the Kremlin’s main opponent said yesterday.

Mikhail Kasyanov, the former Prime Minister and a candidate for the Russian presidency in 2008, said that he feared for the country’s democratic future unless the leaders of the world’s richest countries spoke out.

“Russia should be treated and judged as a normal democratic country,” Mr Kasyanov told The Times. “The implementation of our constitution is unacceptable, dangerous, wrong. For politicians of other countries no more polite language should be found to express this idea.”

Dick Cheney, the US Vice-President, caused an uproar last month in Russia when he gave a speech in Lithuania castigating the Kremlin for backsliding on democracy and restricting the rights of its people.

Mr Kasyanov said: “What Cheney said was absolutely right. It was absolutely the wrong place and used the wrong format. It would be ideal (for G8 leaders to deliver the same message), not said as a lesson or in preaching manner, but to express disappointment.”

His remarks were in sharp contrast to those of Mikhail Gorbachev, the last Soviet leader, who told The Times at the weekend that it would be counter-productive for the West to meddle in Russian internal affairs during the summit.

In Western capitals there is alarm at the growing power of the Kremlin, the weakness of the Opposition and the diminishing rights of the individual, However, Russia’s democratic shortcomings have often taken a back seat to the importance of the country as a source of energy supplies to Western economies and as an ally in the fight against extremist Islam.

Mr Kasyanov, who traced Mr Putin’s “backsliding” on democracy to the aftermath of the Beslan school siege in September 2004, said that the real test would be the presidential elections in 2008.

Mr Putin is barred from standing for a third term, but Mr Kasyanov said that Kremlin insiders were putting pressure on him to stand anyway. “Certain circles in the new elite are eager for Putin to stand,” Mr Kasyanov said. “I do not think this is the main scenario. The President understands that this would be the beginning of another Cold War.”

Instead he predicted that a Kremlin candidate would be put forward with the full support of the State, including a monopoly of coverage in the state-controlled media, manipulation at the ballot box and intimidation of rivals.

Mr Kasyanov said that he already had very little access to television or newspapers. Even meetings at universities with students had been disrupted by bomb scares and threats to academic staff. He intends to get his message out on the internet and through campaigning across Russia but said that the key to a fair election would be the deployment of thousands of independent Russian and foreign election monitors.

Mr Kasyanov said that when he resigned from office two years ago he had intended to go into the private sector but that he had returned to public life because he feared that Russia’s future as a European, democratic state was under threat.

“I fear that if Russia stifles real democracy the country could be headed towards a revolution,” he said. “We had two of those in the last century. That was enough.”

In an editorial, the Times develops the theme further:

The jockeying now under way between armies of “sherpas” in preparation for next month’s G8 summit in St Petersburg will surely become a case study for aspiring diplomats. How do you fashion “agreement” at a meeting of the world’s eight leading industrialised democracies, when the host is scarcely a democracy and its relations with the other seven are at their lowest ebb for fifteen years? The answer: lower expecations by agreeing to disagree on every stubborn source of friction, from energy policy and Iran’s nuclear programme to the state of Russian civil society, then make a virtue of straight talk. The alternative of papering over the cracks in a damaged relationship with elegant but empty communiqués is simply too dangerous.

Shortly after the tragic deaths of 186 schoolchildren in the Beslan siege of September 2004, President Putin decisively tightened the Kremlin’s grip on Russian political life. He ended the free election of regional governors and raised the number of signatories required to found a new party from 10,000 to 50,000, in a system in which opposition voices were already effectively barred from national television. In the same period, Mr Putin has comprehensively blurred the distinction between state and private control of key economic assets by installing close aides on the governing boards of industrial behemoths such as Gazprom, Rosneft and TVEL, a nuclear fuel company whose new chairman is the President’s chief of staff.

There is a strong argument against the gratuitous needling of Russia’s fragile self-esteem. As Mikhail Gorbachev, the last Soviet leader, said in an interview in The Times yesterday, too much hectoring of the Kremlin only plays into the hands of nationalists.

There is also a case to be made for limited state ownership of certain “strategic” industries, if only because the free-for-all of Russia’s early privatisations so discredited the concept of market-led reform among ordinary citizens. But Mr Putin cannot use the principle of non-interference in other countries’ affairs to mask the freezing of all progress towards democracy. Nor can his promotion of “national champions” in the oil and gas industries be taken at face value if their real purpose is the enrichment of a new cadre of oligarchs.

Any residual faith in Mr Putin’s good intentions will hardly be boosted by the blunt analysis of Mikhail Kasyanov, his former Prime Minister, on which we report today. Russia is probably more corrupt today than in the nadir of the Yeltsin era, and the 2008 presidential election will be a mere formality for Mr Putin’s annointed successor, Mr Kasyanov argues. As a scapegoat for failed reforms that briefly dented the President’s popularity, Mr Kasyanov may have an axe to grind. But his pessimism is plausible.

If Russian oil giants want to raise money on the world’s financial markets, they should expect relentless scrutiny of their balance sheets. And if Mr Putin wants his successor to inherit his place at the G8, he should expect healthy criticism of his flawed policies.

La Russophobe can’t but be amazed by the statement: “There is a strong argument against the gratuitous needling of Russia’s fragile self-esteem.” Are Russians really such crybabies that they might engage in conduct dangerous to world security and risk their own destruction just because they don’t get the right tender words of encouragement from the West? If so, how can such a nation possibly ever be considerd anything other than an enemy, excluded from any genuine participation in the world economy and ultimately consigned to the dustbin of history?

Thanks for reading La Russophobe !

Putin Uses Neo-Soviet Sham Arrests to Dupe G-8 on Race

Did somebody say “Village of Potemkin”? Reporting on the recent arrest in St. Petersburg of an alleged skinhead gang, Britain’s Guardian lays bare the naked manipulation inherent in the proceedings:

“No doubt there are some real villains among them, but finding this gang was responsible for every racist crime of the last few years is remarkably convenient just before the G8 summit,” said Nikolai Donskov, editor of the St Petersburg office of the liberal weekly, Novaya Gazeta.

Ali Nassor, a co-founder of the advocacy group, African Union, agreed. “It’s just too much of a happy ending,” he said. “When you look at the kind of stuff that gets printed here every day, at the kind of extremists whom the law never touches, then you realise what a fantasy it is that racism is solved in this city.”

A recent cultural awareness campaign launched by African Union in local schools drew this response from local newspaper, Novy Peterburg: “It’s obvious that these black-skinned Africans are coming into our country from stagnant places that are teeming with infections. Bacteria and microbes living in Africa represent a serious danger to the health of white people.”

Several racist groups continue to operate with impunity. St Petersburg has a branch of the ultra-right Slavyansky Soyuz (Slavic Union, or SS) organisation, which promotes Hitler’s Mein Kampf on its website.

Another group based in the city is the Party of Freedom, run by former policeman Yuri Belyaev.

“The first thing these immigrants ought to think when they are leaving home in the morning is: will I die today or not?” Mr Belyaev told Guardian Unlimited. “They should move around like scared animals – creeping along besides the walls.”

Asked if he was a racist, Mr Belyaev said: “Yes. This is a question of taste. Some people don’t like apples. I don’t like negroes. They are biological parasites.”

Mr Nassor said that while such bigots are allowed to thrive there can be no talk of racism being defeated. “What I’d like to see is some real leadership from President Putin,” he said. “Right now, it’s too easy to conclude that he’s keeping quiet for political gain. He knows there’s a big nationalist contingent that votes for him.”

Thanks for reading La Russophobe !

European Liberals Condemn the Kremlin

RIA Novosti reports that the liberal wing of the Council of Europe has condemned Putin’s Russia for its profligate attack on human rights:

STRASBOURG, June 26 (RIA Novosti) – Russia is not fulfilling its obligations to the Council of Europe, the leader of a liberal group of delegates to the council’s Parliamentary Assembly said Monday.

Matyas Eörsi said he was dissatisfied with the situation in Russia’s troubled North Caucasus region of Chechnya, the refugee problem in neighboring Ingushetia, cases of army hazing, and above all Russia’s failure to fully abolish the death penalty.

Eörsi refused to go into detail, but mentioned the breaking-up of a gay pride parade in Moscow May 27.

One hundred and twenty people were detained when police broke up a Gay Pride parade in the Russian capital, sparking critical comments from the West.

He said he did not intend to compare attitudes to sexual minorities in Russia and countries like the Netherlands, but highlighted the importance of freedom of assembly and urged Moscow to fulfill its obligations.

Thanks for reading La Russophobe !