MONDAY NOVEMBER 3 CONTENTS
(1) Another Original LR Translation: Milov on the Crisis
(2) EDITORIAL: What about that Economy, Mr. Putin?
(3) Essel on Russian Corruption
(4) Russia’s Self-Contradictory Foreign Policy
(5) Putin’s New Clothes
(6) The Putin Economic Ship, Foundering
NOTE: The evidence of the total failure of the economic policy of Vladimir Putin that we offer today, ranging from an original translation to a column by Dave Essel to our editorial to a host of reporting from a wide variety of third-party sources, is utterly convincing and irrefutable. Will the people of Russia ever rise up from their coma of sloth and cowardice to demand that their country be turned back from the abyss before it is too late?
A word from the translator: Having translated both Milov/Nemtsov white papers, I have developed a respect for Milov’s way of thinking and am always on the look-out for more from him. This exposition of his appeared in Novaya Gazeta last week and is, as always, interesting and self-evidently right. The sad thing, of course, is that what is self-evidently right to LR readers and anyone with an inkling of good sense, is a тёмный лес (dark wood) to most Russians. It seems to me that if we could discover the reason why this is the case, we would be able to “cure” Russia instantly. Dream on.
We Will Be Last In Line
Why Russia will not be able to rise up from its knees
without help from Western capital
by Vladimir Milov
October 31, 2008
Translated from the Russian by Dave Essel
It is quite evident that the growth model followed by Russia in recent years has now collapsed and that there is nothing around that can take its place, at least in the foreseeable future. Because the 7-8% GDP growth of the last four years derived exclusively from the inflow of foreign capital.
Bear in mind that, unlike the three other countries forming the BRIC [Brazil, Russia, India, China], where capital inflow consisted in the main of direct foreign investment, the money that came into Russia was mostly in the form of foreign loans. These were the engine of our development to an even greater extent that oil and gas were. And these loans were not ‘our money’ coming back home, as some assert, but real foreign money. And then, this money was not spent on modernising the country in any way but was instead mostly frittered away: for example, most of the borrowing by the Russian companies which held IPOs in the last few years was spent on buying shares and real estate while only 20-30% went into the implementation of genuine development projects.
What about that Economy, Mr. Putin?
If Vladimir Putin were brave enough to be interviewed by the editors of this blog — he’s certainly not, preferring to hobnob with brown-nosed idiots like Larry King and bought-and-paid for stooges at the Valdai convention — the first question we’d ask him would be:
Why, after nearly ten years of ruling Russia, have you not freed your national budget from dependence on the price of crude oil as established by foreign markets?
Putin’s own deputy finance minister admits that if crude oil prices do not average $60/barrel in 2009 — and they currently stand at $56.80 — then Russia’s budget for 2010 will not be balanced and will have to be “reconsidered.” And there is no “fat” to cut in that budget. Russians live in squalid poverty and don’t rank in the top 100 nations of the world for male adult lifespan. So the Kremlin will either go into massive .
The bad news rolls in like a tsunami. Russia had a shocking $140 billion in capital flight in just August and September of this year (that’s a stunning $1,000 for every man, woman and child in the country, equivalent to a full month’s average wages for each one) and the Kremlin itself now admits it expects consumer price inflation to ring in at a whopping 13% by year’s end, nearly 20% higher than the Kremlin had predicted. Russia’s foreign reserves have plunged below $500 billion, down $31 billion in just the third week of October as the government flushed away the national savings propping up the stock market and the ruble. Large firms are imposing massive layoffs. Russia is even moving to take the draconian step of criminalizing non-payment of debt, a measure civilized nations abandoned centuries ago. And this catastrophe was caused mostly by the fact that the price of crude oil plummeted over the space of a few months by more than half in price, and because the Putin administration has totally failed to build anything remotely like a real economy that could insulate the country from the random choices of world petroleum markets.
Corruption: Don’t We All Just Love Greasing the Wheels?
by Dave Essel
In a recent translation of mine published in LR, Russia was referred to as a swamp. The following news item is descriptive of one aspect of this swamp. Corruption is a strange thing, enmiring as it does both the corrupt official and the bribe giver, for both of whom it is a convenience. For the bribe-giver it is also a burden, but by the nature of the transaction a lesser burden than the alternative. I don’t really see how it can be stopped except by radical surgery, like amputation to prevent the spread of gangrene.
Consider this story from Novaya Gazeta sourced from Ekho Moskvy radio:
Slawomir Debski, director of the Polish Institute of International Affairs, writing in the International Herald Tribune:
Russia no longer disguises the fact that it wants to recover its sphere of influence. The paradox is that Russia can only achieve this through the use of force, as the model of development it proposes is unattractive to east European societies. And the more Russia resorts to force, the less the chances that it will achieve its sphere of influence.
It is a pity that the meeting last month between Russian President Dmitri Medvedev and Western political scientists did not get greater notice. Medvedev not only declared Russia’s desire to have its own sphere of influence, but he also defined the term.
“Our neighbors are close to us in many respects, and are a traditional area of interest for the Russian nation,” he said. “We are so close to each other, it would be impossible to tear us apart, to say Russia has to embark on one path, and our neighbors on another.”
Such words are telling – they indicate that Russia claims the right to co-determine the foreign policy of the former Soviet republics and the direction of their internal development.
British Economist Robert Skidelsky, writing in the Financial Times:
The official view is that Russia is an outstandingly successful economy temporarily derailed by a financial shock of foreign origin. Its annual economic growth in real terms averaged 7 per cent in the years during which Vladimir Putin was president (2000-08), annual real wages rose by almost 15 per cent, the federal budget was continually in surplus. Mr Putin, now prime minister, was quick to blame America for the downturn. Before the crisis hit home Dmitry Medvedev, Russia’s president, boasted in June that Russia was not part of the problem but part of the solution. Its cash-rich companies would invest abroad, Moscow would become a world financial centre, the rouble would become a reserve currency and so on.
All this turned out to be fantasy. The Russian stock market has lost 70 per cent of its value this year. The commodity prices that spearheaded its boom are now falling. The easy credit money from the west that fuelled it has now fled. Russia has failed to diversify its economy and its politics have long made investors nervous. A confrontation with reality is long overdue.
The U.S. Dollar, Soaring in Putinic Russia
Standard & Poor’s rating service lowered Russian long-term sovereign credit rating outlook to negative Oct. 23 because of projections that Moscow will need to inject more credit into the faltering Russian banking sector. A credit rating indicates the agency’s estimation of a state’s ability to maintain debt payments, so in this case S&P believes that ongoing efforts to address the financial crisis could overtax the Russian government. The cut in debt rating comes as the yield on Russian government 20-year bonds has increased eight basis points (a 0.08 percent rise in yield) to 10.94 percent, indicating that the foreign appetite for Russian bonds is quickly dropping as credit becomes scarce and investors seek investments they feel are more secure. The bond yield of Russia’s largest company, natural gas behemoth Gazprom — which is also the single greatest source of Russian total external debt — has thus skyrocketed, and it now stands at almost 700 basis points above emerging sovereign debt. Meanwhile, the Russian stock exchange closed below 550 on Oct. 24, wrapping up a precipitous fall that has destroyed 80 percent of its value since May.
A comprehensive flight of investor capital is occurring in Russia for a number of reasons. This situation is placing great pressure on the Kremlin to use its capital reserves — the third largest in the world — to prop up the Russian banking sector and the main engines of the Russian economy: the energy and mineral sectors. In the short run, Moscow’s massive capital reserves will allow it to weather the global liquidity crisis and increase government control over all sectors of the economy. In the long run, however, Russia might face a dearth of capital as it drains its coffers trying to pump cash into the system, putting vital capital expenditure projects (such as improving infrastructure, improving oil and natural gas field development, and military spending) on hold to the detriment of its ability to face off with the West. The result will be an economy that has far more in common with the Soviet Union than with post-Soviet Russia — even post-Soviet Russia under Vladimir Putin. And that will affect Russia’s bid to reassert itself globally.
Lies and Deceit at Russia Blog
Russian stock market performance over the past three years (RTS dollar index)
On September 19th of this year that venal and mendacious reptile Yuri Mamchur, publisher of the pro-Kremlin propaganda exercise known as Russia Blog and funded by the corrupt Discovery Institute (put his name into the search engine in our sidebar, or Google him, to read our prior commentary about his activities if you are not already familiar), published a post touting a 20% gain on the RTS index of the Russian stock market, to nearly 1,300. Calling the gains a “historic rebound,” Mamchur quoted Andrei Stoyanov of UK Rosbank stating: “The situation looks very positive and suggests very fast growth of Russian stock. The growth in the next several weeks might be in the range of 70-100%.” He quoted Igor Duel of the Russian Bank of Development stating: “Market players expect the average index growth to go up by nearly a third in the next three months.” Not a word was said by Mamchur about how the Kremlin had shut down the markets and then fueled them with piles of its own cash in order to create the illusion of “rebound.”
As you may already know, these predictions didn’t exactly pan out. Would it surprise you to learn that Mamchur wasn’t all that inclined to tell his readers anything about it when they didn’t?
Russians Gobble American Slop
We remember well a cross-borders interview program hosted back during the days of Cold War I by bosom pals Phil Donohue and Vladimir Posner. Holding a microphone to the mouth of a young Soviet lad in a Russian TV studio, Posner gaped on as the youth proceeded to arrogantly decry all the elements of American popular culture as philistine and ignorant, unworthy of Russian attention and indicative of a failed civilization. He was then struck dumb when Posner incoveniently noticed he was wearing a pair of blue jeans.
Chicken of the Russian sea?
Russian hypocrisy is so vast and relentless in its permutations that it sometimes manages to surprise even those of us who put out this blog and are steeped in it on a daily basis. So we confess that even we were taken aback somewhat when we learned that in the last week of October 2008 the #1 movie at the Russian box office was something called Major Movie Star, featuring airhead blonde Jessica Simpson. The film — so atrocious that its own cast members have referred to it as one of the worst movies ever made — was banned from distribution in the U.S. because of its embarrassing awfulness, but Russian cats are lapping it up like cream.
Next stop for the movie, Bulgaria — once it’s proved itself good enough for the Bulgarians by testing in the land of Putin.
Meanwhile, Parisians got an eyeful of the “high culture” being generated by Russians as an antidote to American pollution. Russian artist Oleg Kulik is representing his nation in the salons of the City of Light with a display of photographs that “show Kulik naked, appearing to simulate sex with animals.” The French attitude towards art appears to differ somewhat markedly from Russian tastes. They’ve decided he’s a bestial pornographer and confiscated the work.
Click the jump to view a gallery of art Russian style. If, that is, you have the stomach for it. You have been warned.
The Moscow Times reports:
Of all the horrifying revelations during the trial of serial killer Alexander Pichushkin, perhaps none was more disturbing than the ordeal of Maria Viricheva, one of three people known to have survived attacks by Pichushkin. It emerged in court that a Moscow police officer had forced Viricheva to sign a statement following the 2002 attack saying she had not been assaulted, even though her boyfriend was an acquaintance of Pichushkin’s and could have led police straight to the killer. Pichushkin, known as the Bittsevsky Maniac, went on to kill dozens before his arrest in 2006 and was sentenced to life in prison a year ago Wednesday for 48 murders.
City Prosecutor Yury Syomin subsequently opened a criminal case against the police officer, Konstantin Kalashnikov, for abuse of his position.Kalashnikov remains at large, and his wife said he had moved to Ukraine. “The things they said on television weren’t true,” Alya Kalashnikova said in a recent telephone interview. “Of course he registered the crime properly. What, you think a person who worked as a policeman for 30 years would do something so stupid?”
The Investigative Committee said in a faxed statement Tuesday that the case against Kalashnikov, who worked at the Zyuzino district precinct in southwestern Moscow, had been suspended because his whereabouts were unknown. It is unclear why, as prosecutors allege, Kalashnikov chose to ignore Viricheva’s story. But the accusations against him highlight a pervasive police practice in which officers pad their case log with easily solved crimes while refusing to register cases of mugging and assault, which are more difficult to crack.
The practice, known in police jargon as “chopping sticks,” is aimed at improving the percentage of registered crimes solved by an officer in order to earn a bonus or promotion.
Andrei Kortunov, president of the New Eurasia Foundation in Moscow, writing in the Moscow Times:
Look around at your Russian colleagues, business partners, clients, bosses and employees. Remember how self-assured and optimistic they were just this summer. Remember their grandiose business plans and strategies. It was as if Russia had forever lost the need for the thousands of expat managers, analysts and consultants who were working in the country. It seemed that Russia’s business elite had mastered Western management and finance skills so well that they would begin giving their U.S. and European counterparts a run for their money not only in Russia, but throughout the world.
Where did all of that enthusiasm go? Today, the Russian business community is a state of near panic. Judging from interviews with many Russian business leaders, they are expecting the end of the world — mass bankruptcies and layoffs, sharp declines in salaries and benefits, the devaluation of the ruble and stagnation of the real economy. The transition from extreme optimism to extreme pessimism hit the country like a brick.
The week of October 20th, Russia hosted a million-dollar ATP tennis tour event in St. Petersburg.
Showing how attractive Russia is as a venue, not one of the top three players in the world attended the event, and only two of the top 10 did so.
This left Russia with four of the eight seeds in the tournament, including its highest-ranked player Nikolay Davydenko as well as Mikhail Youzhny, Marat Safin and Dimitry Tursunov. Not one of them made it to the third round of the tournament.
Tursunov, world #26, was crushed in straight sets by an unseeded Slovakian in his first-round match. The Russian won only two of 14 games played. The other three (higher-ranked) Russians won their opening-round matches against their unseeded opponents, then were blown off the court in their second matches in easy straight sets. Davydenko didn’t even step on the court and handed his match over by forfeit. Safin won six games and Youzhny took nine in humiliating losses against their unseeded opponents.
Ouch. Only one top-ten non-Russian appeared in Putinland, and that player easily won the event over a non-Russian opponent.
As if things weren’t already bad enough for Russian sportsmen, Indian Vishy Anand raced out to a 6-3 dominating lead in the world chess championship, being contested in Bonn, Germany, over Russian star Vladimir Kramnik. With only four games remaining, that meant Kramnik had to win them all in order to take the title. Think he was able to do so?
And for the icing on this putrid cake, out came the New York Times with a story exposing the Potemkin fraud that is Russian professional ice hockey.
FRIDAY OCTOBER 31 CONTENTS
(1) Another Original LR Translation: Novodvorskaya on the Crisis
(2) Essel on Russia vs. Zimbabwe
(3) EDITORIAL: George Bush, Asleep at the Switch
(4) EDITORIAL: Putin the Pickpocket
(5) EDITORIAL: Spectacular Fraud on the Russian Stock Market
(6) Another Original LR Translation: Latynina on Khodorkovsky
NOTE: It’s all Dave Essel, all the time today. Dave offers readers two separate orginal translations from the Russian press, material from inside Russia that you will find noplace else in the English-speaking world, as well as an essay of his own reacting to still more material he has unearthed in his travels through Russia’s cyberspace. We know we speak for all our readers when we give Dave a bolshoi shout-out of thanks for his yeoman work in opening these windows into Russia. With three of our editorials, this makes for a day of 100% all-original content from La Russophobe, a rare occurrence! You lucky reader, you.
An Island of Instability
by Valeriya Novodvorskaya**
Translated from the Russian by Dave Essel
The experts have already expounded on the financial crisis. And although our crisis is linked at one of the chain to the crisis in the West, it has its very own, Soviet, source. That source is rather closer to 1991 (when minister of defence Yazov decided to give the people a treat, opened up the Motherland’s strategic reserves and found that they contained nothing but mice and the equivalent of one dried up MRE each to distribute), than to the Great Depression, which was a crisis of overproduction as a result of which it was e.g. necessary to pour petrol on mountains of oranges and burn them rather than allow them to be sold at dumping prices.
The current crisis in the West is a also a crisis of overproduction. Ours is one of scarcity, a crisis of shortages and arrears.
Russia Still Second, Zimbabwe Still Leads…
by David Essel
Russia is still a runner-up to Zimbabwe in the economic mismanagement stakes but the two countries are competing in the same league of Commie Mentality States.
George Bush, Asleep at the Switch
Two recent developments highlight the disturbing lack of leadership from the U.S. White House that is allowing the neo-Soviet Kremlin to achieve far more of its malignant goals than should be the case. President Bush is a asleep at the switch, and the sooner he vacates the Oval Office, the better.
First, writing for the Jamestown Foundation’s Eurasia Daily Monitor, Vladimir Socor reveals how Gazprom is being permitted to attack the sponsors of the Nabucco pipeline project, which is supposed to allow fossil fuels to flow out of Central Asia without depending on Russia, thus dramatically reducing Russia’s ability to blackmail Europe with threats to its energy supplies. The current target of attack is Romania, and the Bush administration is doing nothing to prevent it.
Then Farkhad Sharip, also writing for EDM (thus proving what an essential resource that publication really is), shows how Russia itself is moving aggressively into the Central Asian region as the result of the “intertia” caused by the Bush administration’s lack of leadership.
Putin the Pickpocket
An item in Monday’s issue of the Moscow Times showed how Vladimir Putin’s polices are quite literally picking the nation’s pocket — more evidence of the same is provided in an item today by columnist Dave Essel.
The MT story stated ominously: “Signs are mounting that a worsening of the financial crisis could dampen businesses’ willingness to accept credit and debit cards.”
It’s a truly breathtaking statement. Six months ago, with the Russian stock market at a historic high, who would have believed the nation could fall so far, so fast? We would have, and we did. We sounded the warning, but the people of Russia chose not to listen. Maybe they will hear the sound of silence made by their national cash machines?
Spectacular Fraud in the Russian Securities Markets
Well, let’s see now.
Last Friday, there was a horrifying bloodbath in in the Russian stock market, leading the market to be shut down not only for the remainder of the day but for the entire day on Monday.
And on Monday, the price of crude oil fell below $62 on world markets, stunningly far below the $75 baseline needed to preserve the Kremin’s budget. World stock markets plunged further.
And when the Russian stock market closed on Tuesday following its reopening that morning, six of the seven indices on the RTS index were in the red, half of them posting losses in excess of 3%.
Yet the RTS index itself was in the black, closing up nearly 5%. How is that possible, you may ask?
Fraud, dear reader, that is how.
What a biography they invented for him!
On the fifth anniversary of Mikhail Khodorkovsky’s arrest
by Yuliya Latynina
Novaya Gazeta 27.10.08
Translated from the Russian by Dave Essel
Do you remember what you were doing on the day they arrested Khodorkovsky? I certainly do. I was sitting and writing a piece about the Tuzla Peninsula when I got a phone call and the poor peninsula immediately and irrevocably ceased to exist.
It’s not that often that we remember precisely what we were doing on some particular day five years ago. In my case I remember it because I went to sleep in one country and woke up in another.
This has happened to us several times since then. We woke up in a different country after the murder of Anna Politkovskaya. After Litvinenko’s poisoning. After Beslan and the abolition of the election of governors. After the Russo-Georgian War. But the first time this happened to us was when Khodorkovsky was arrested.
The Sweet Little Ways of Neo-Soviet Disinformation
The following item caught my eye in the Sunday Komsomolka (Komsomolskaya Pravda). Now we all know this publication is a great source of nasty trash but I would like to nominate this item in particular for a Golden Pooty:
Under the headline (I kid you not!):
Is Tbilisi Preparing an Act of Financial Terrorism in Moscow?
According to Georgian news agencies, Georgia, aided by the CIA, may flood the North Caucasus with Counterfeit Roubles
A fine fantasy, but if you can believe this, you can believe anything.
One can then read the following under the byline of Aleksander Kots:
Trying to Hide Russian Failure in Ossetia
Russia has imposed a Soviet-style crackdown on reporters in Ossetia, largely preventing any foreign journalists from seeing what is going on under Russian rule in the region. What does Russia have to hide?
Nicholas Eberstadt, a resident scholar at the American Enterprise Institute and a senior adviser to the National Bureau of Asian Research, writing in the New York Times:
RUSSIA is a rising power today, and will be doing a lot more rising in the decades ahead. At least this is what we hear nowadays from pundits, Western intelligence services, presidential candidates and, of course, Russian officials themselves. The Kremlin’s own supreme confidence in this vision of the Russian future was captured nicely by its announcement last year that it expects to be the world’s fifth largest economy in 2020, along with China, India, Japan and the United States. Despite the current global economic crisis, Russian officials are still predicting continuing rapid growth for their nation; Prime Minister Vladimir Putin is even talking of a robust 5.5 percent growth rate for Russia for the coming year.
To international audiences transfixed by Moscow’s military swaggering in Georgia or dazzled by the newfound oil wealth of the Russian petro-state and its billionaires, this notion of an unstoppable Russian ascent may seem plausible, even compelling. To anyone who pays attention to population trends, however, it is absurd.
Russia is in the midst of a genuine demographic disaster from which its rulers have no obvious exit strategy. Although the Russia’s fortunes (and the Kremlin’s ambitions) have waxed on a decade of windfall profits from oil and gas, the human foundations of the Russian nation — the ultimate sources of the country’s wealth and power — are in increasingly parlous straits.
Two recent items in the American and British press delve into the topic of collaboration between Western left-wing political groups and Vladimir Putin’s Kremlin. It because of just such concerns that we have endorsed John McCain to become the next president of the United States. For some reason, certain so-called “liberals” blithely abandon their principles when dealing with certain dicatators.
First, we bring you Reason magazine’s contributing editor Cathy Young, author of Growing Up in Moscow: Memories of a Soviet Girlhood, writing in on the magazine’s website:
Last Friday, Salon.com columnist and blogger Glenn Greenwald, one of the Bush presidency’s harshest critics, blasted both major party presidential candidates for perpetuating the “blatant falsehood” that Russia launched an “unprovoked attack” on Georgia last August. This, he asserted, was a clear-cut instance of the suppression of legitimate and vital debate in America’s political discourse. It so happens that Greenwald’s charge is blatantly false—and reveals much more about the mindset of the left than about the state of American democracy.
In Greenwald’s view, McCain has championed the false notion of the Russia-Georgia war to further his own neocon agenda, while Obama has “adopted the lie” out of political expediency:
Since all of the major candidates accept the deceitful premise about what happened—that Russia’s “aggression” against Georgia was “unprovoked”—nobody refutes it… The propaganda is just asserted to be true by the political establishment and thus accepted by most of the citizenry, and then becomes the unchallenged foundation of all sorts of dangerous, militaristic policy orthodoxies…
Yet, curiously enough, neither of the presidential debates to which Greenwald links to back up his argument contains the word “unprovoked.” In the first debate, on September 26, Obama called Russia’s actions “unacceptable” and “unwarranted”; McCain spoke of “serious aggression” and criticized Obama for his initial statement urging mutual “restraint,” while Obama denied that his statement was soft on Russia and noted that he had warned back in April about the risks of Russian “peacekeepers” in Georgia’s disputed regions. In the second debate, on October 7, it was much the same (though McCain came closest to Greenwald’s description when he condemned Russia’s “naked aggression”).