Daily Archives: February 22, 2007

Commissars of the Internet: Part I, Installment 4

Today we bring you the fourth installment in the “Commissars of the Internet” series, an original LR translation which exposes how the Kremlin is attempting to take control of the Internet. On Monday, we read the author’s introduction to the subject of “Internet Brigades.” On Tuesday, we learned the details about their organization and activities. On Wednesday, we examined their ideology and strategy. This is the final installment this week, with the second part of this epic Russian investigative work appearing next week.

Here is Part I, Installment 4: The “Brigade” in Action

Commissars of the Internet
The FSB at the Computer

Anna Polyanskaya, Andrei Krivov & Ivan Lomko
Gulag
September 16, 2006

(continued from Wednesday)

The Brigades in Action

The well-informed web-brigade

Before all else, the Brigade has the most remarkable ability to instantly find quotes from old postings of opponents on forums, even postings a year and a half old, sometimes no longer even in the archives of the site. Many brigadniki strive also to know as much as possible about the personal information of their opponents. With this objective they regularly conduct “intelligence interrogations” of critically-inclined opponents, in the course of which they ask a wide range of questions about their family, the college they graduated from, their work, the region in which they live, favorite places and friends. Somehow, one’s casual “conversation partner” from the Brigade is able to quickly identify the country and city from which one is writing, even on those sites where it is not possible to see one’s IP-code.

Teamwork

Yet another characteristic of the uniform Brigade type is their tendency to work as a team. They unwaveringly support each other in discussions, ask each other leading questions, put fine points on each other’s answers, and even pretend not to know each other. If an opponent starts to be hounded, this hounding invariably becomes a team effort, involving all of the three to twenty nicknames that invariably are present on any political forum 24 hours a day. A favorite method of the Brigade is to accuse their opponents of being insane. This accusation always becomes a group effort, with each of the nickname-personalities of the Putin-loving Brigade throwing out one or another short remark: “democratic-schizophrenic” (“demshiz”) paranoid schizophrenic, ‘clinical’, persecution complex, clearly sick, loony bin’s computer, parole day at the psych ward, take your tranquilizer”, etc, etc. [TN: “demzhiz” is an interesting term of abuse, apparently with origins in Soviet “psychology.” It is not, of course, a term recognized by psychologists outside of Russia and, after some discussion, the Russian version of Wikipedia refused to list it. For Russian speakers an excellent, almost clinical — though tellingly sympathetic — summary of its meaning and implications can be found on the Russian Darkus blog.]

For example, a certain “woman from intelligent circles” in the U.S. announces:

“Lord, if they prescribed Nastenka a lobotomy, I’d hand the doctor a scalpel myself – a dull one, like Nastya. But, well, if we’re limited to an electroshock, then let me pull the lever! I won’t pull it long, maybe just twice!… Little Anastasia would fall over red-bellied, maybe just fall in front of a train, herself of course, like in that book.”

Three years later, on a different political forum, a certain anonymous member of the Brigade tells a different woman who was writing about the victims of the Gulags: “Well what a little pile… How would you, little Veronica, like a lobotomy? If you haven’t already received one, of course.” It would appear this “joke” is typical across forums for the Brigade, as are many of their tricks.

A different type of activity for the Brigade is to take a typo and use it to accuse the person of lying, or start the whole tight-knit group writing that this always-careful, kind and cultivated opponent is actually a “malicious boor, squabbler, barbarian and liar”. In this way the Brigade collectively creates a negative image of opponents that are problematic for them.

Appealing to the Administration

After all the above-mentioned methods for dealing with an opponent are exhausted, the Brigade has in its arsenal an extreme measure: appealing to the site administrator. Most often, the brigadniki simply write mass collective complaints about their opponents to the editors, site administrators, or the electronic “complaints book”, demanding that one or another posting or whole discussion thread they don’t like be removed, or calling for the banning of individuals they find problematic. The Brigade’s complaints on various sites coincide word-for-word. For example, complaints from Brigade members to both the administrator of the site MN and the Web Master of civitas.ru, supposedly written by absolutely all kinds of people, all contained the same exact words: “This sweet couple has hounded and driven from the forum all its regular participants.”

The Brigade usually accuses its opponents of doing the very same things it most often does itself. Suppose a Brigade has most often abused an opponent by threatening him with physical reprisals, but the opponent has remained cool and collected. Then in their complaint to the administrator the Brigade will write that the “accused” has hounded them all simultaneously, that he is a foul-mouthed boor, and has threatened everyone with reprisals. When such letters come in large volumes (recall that the Brigade always works collectively, with each of its members using several nicknames), then the volume of complaints will influence any administrator, despite the invariable absence of actual quotes in the Brigade members’ complaints.

Simply put, this method amounts to collective slander of the opponent. It is fairly effective even with those forum administrators who are still unwilling to subordinate themselves to the ideological agencies of the Russian Federation. However, such independent administrators are becoming steadily fewer, losing their jobs one after another and being replaced by those more obedient and pliable.

Destruction of inconvenient forums

Sometimes a cleansing is orchestrated of whole sections of a forum in which one of the members of the Brigade has allowed a clear “leak” or exposure of too much (or simply untimely) information related to the intelligence services. Examples of this sort of activity are too widespread to be considered mere accidental coincidences.

The site vesti.ru, which hosted fairly pointed discussions of current Russian issues, was closed down soon after a discussion began in which a number of readers accused the FSB of involvement in explosions in Dagestan. The site has since been turned over to a government television channel. On the site of the magazine “Moskovskiye Novosti”, readers who had presented themselves as critics of Putin and the FSB were suddenly and without any explanation banned from all discussions, despite their having broken none of the site’s rules of conduct. All the postings of this group of readers, going back a year and a half, were erased by the site administrator.

When searching on the word “lustration” [see prior note] the search system Rambler.ru had for some time given a reference to a forum in the online journal Yezhednevniy Zhurnal (ej.ru) devoted to discussing the necessity of lustrating former chekists in Russia. Shortly after that forum’s postings began appearing on another Russian political forum, with a link to a post by a reader of ej.ru, all the archives of discussions on Yezhednevniy Zhurnal, including the postings about lustration, were destroyed, and the forum ej.ru itself underwent a complete change of design. On many forums of the RuNet, a painstaking and well-planned change of administrators is taking place, in which independent specialists are being replaced by individuals who are fully controlled by the government and will faithfully execute any order.

Advancers of the “Party line”?

There are, alas, many people in Russia with anti-liberal views. But since the breakup of the USSR they have not all presented themselves as a unified entity. The above-noted peculiarities of ideology and methods of operation of the “Brigade” simply could not have formed accidentally in multiple groups of people. However, exactly these “brigadniki” now make up about 70% of regular participants on Russian language political forums. They are as identical as two droplets of water, their texts coincide word for word on different forums, and they clearly use one and the same information base of articles and other materials expressing the current points of view of the authorities. These individuals are constantly present on article-comment forums belonging to such well-known liberal publications as “Moskovskiye Novosti”, “Novaya Gazeta”, “Nezavisimaya Gazeta”, the information sites “Lenta.ru”, “RBK.ru”, “Ytro.ru”, “MSK.ru”, “Khartiya.ru”, and so forth. (TN: Again, this article was first written in 2003; some of these publications have since been bought out or otherwise taken over by government-owned companies or pro-Kremlin businessmen, and are no longer distinctly “liberal”.)

The oddest thing about all these personalities of a uniform type is that real people with the sorts of convictions and mannerisms outlined above would hardly participate, regularly, over a period of three years, in forums of liberal publications, among people of an intelligent frame of mind that is absolutely alien to them. It is psychologically somewhat strange that they even read publications of this type, inasmuch as people with such ideologies usually gather around publications like “Zavtra”, “Soviet Russia”, the forum RNE, etc. Try and imagine a person with pro-Western views who crawled day and night around the forums of a communist magazine, or a fiery member of the right-wing SPS Party settling into a site of Trotskyites, or a Zionist who would only communicate with fascists. Since in real life such examples do not exist – since real people prefer to communicate mostly with like-minded people in publications expressing points of view close to their own – we attribute the strange fact of the permanent presence of “brigadniki” on liberal sites to a certain defect in their method of operation.

A characteristic peculiarity of all these uniform personalities is that they sharply increase their level of activity during periods of “active measures” by the Putin authorities, or during events important to the authorities, such as elections at the federal level, the Babitskiy affair, the takeover of NTV, the reintroduction of the hymn of the USSR, the Grigoriy Pasko affair, the actions of the authorities in NordOst, the Zakayev affair, the resurrection of the Dzerzhinskiy monument, the sinking of the “Kursk”, the struggle between the Putin administration and certain specific individuals (Gusinskiy, Berezovskiy, Luzhkov), terrorist attacks in the U.S., scandals at the Olympic games, the war in Iraq, etc.

During periods of such “active measures”, there is an unusual increase in the number of authors and postings on the RuNet that support any action of the current authorities and the FSB, and the activity levels of the uniform Brigade-type personalities increase by many times over.

For example: If in 2001 the main emphasis of these personalities was in smearing to the maximum extent possible V. Gusinskiy, then today (2003) his name has practically disappeared from RuNet forums, and all the Brigade personalities are busy only with B. Berezovskiy. If one supposed that Gusinskiy actually was the object of widespread personal dislike by all these nicknamed personalities, it would be hard to believe that this burning hatred was extinguished in a single day, as if on command, after Gusinskiy handed over all his shares to the government and similar “managing entities”. More exactly, the hatred of these Internet personalities was not extinguished, but burned with new strength, only now it was directed at a different wealthy oligarch – Berezovskiy.

A still stranger metamorphosis occurred in the case of Moscow Mayor Yuri Luzhkov, for a time an object of passionate anger, hatred and contempt by these many uniform personalities. The stream of hatred and kompromat directed at him, which over the course of several months inundated all the political forums of the RuNet, suddenly fell off one day in Spring 2001. The Moscow mayor’s detractors suddenly removed him from criticism and reliably forgot about him immediately after the merger of his “Fatherland” (Otechestvo) party with the pro-Putin “United Russia” (Yedinaya Rossiya). From that day on, the Moscow mayor’s name practically never came up in discussions on Russian-language political forums.

Exactly the same story was repeated on 11 September. It is worth reading the archives of Russian forums during the week after that day – at that time, the level of spite and hatred toward the USA was truly phenomenal, along with the gloating, slanders and inhumanity. But after just two weeks, at the end of September 2001, President Putin presented a new policy in Germany formally siding with America in its global war on terror. From the very moment of Putin’s speech and for a long time afterward anti-American hysteria on the RuNet ceased. Limp appearances to the effect that not everything was so great in the USA and not everything was so bad in Russia continued here and there, but postings about “roasted Americans”, “gud-bai, Amerika”, “serves them right those fat gorgers of hamburgers”, or about “Arab heroes who repeated the feat of Gastello” [TN: Nikolai Frantsevich Gastello, a World War II Russian bomber pilot who supposedly crashed his crippled plane, kamizake-style, into a column of German tanks, destroying them all] – all of a sudden everyone stopped writing them, everywhere, simultaneously, on EVERY forum of the RuNet. After this, the wave of anti-American propaganda rose and fell in turns on the RuNet, but until the war in Iraq, when the anti-American wave again crested, it never reached the peak it did on September 11 and for exactly two weeks thereafter.

A new shade of rabid hatred of the U.S. began on the Russian Internet from the first day of the war in Iraq, and quickly reached an incandescence never seen before. Reading the forums, it sometimes seemed that the U.S. was not liberating the Iraqi people from Saddam Hussein, but at a minimum had actually launched an attack on Russia and was marching on the Kremlin. A multitude of brigadniki on dozens of formus so rejoiced each time an American soldier was killed in Iraq, that it seemed the soldier’s death was literally their personal achievement. However, the entire bonfire of passion, hatred and anti-American gloating on the Internet once again fell silent in a single day, as if following a conductor’s baton, immediately after Putin announced that Russia was not opposed to the victory of the coalition forces in Iraq.

Any sociologist can confirm that true public opinion does not undergo such sharp metamorphoses, but always has more inertia, and cannot change altogether, everywhere, in a single day. It is not, however, within the scope of our project to draw global conclusions about radical changes on the Internet which have taken place over the last few years [before 2003]. We have here tried only to summarize a few of the characteristic regularities.

NEXT WEEK: PART II, COMMISSARS OF THE INTERNET


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LR on PP

Check out LR’s latest opus on Publius Pundit, where she takes vaunted New York Times columnist Thomas Friedman to task for a shockingly loose bout of Russophelia based on a brief sojourn in country. Publius would love to receive your thoughts about who among the famus pundits is doing the best and worst job analyzing Russia. Who are the must-reads and the must-not-reads? And how can the NYT have sunk so low so fast? Isn’t it depressing?

Without Oil, Russia has no Economy

The Moscow News reports that in Russia the price of oil, fixed abroad, determines national economic growth in a direct relationship. In other words, the country’s economic growith is hostage to what foreigners are willing to pay for oil. Despite this, Russia crazily continues to attack foreigners at every opportunity, clearly a suicidal policy. Here the details from MN:

Russian Economy Ministry said at its website on Monday, Feb. 19, that Russia will cut its forecast for economic growth this year after lowering its estimate for crude prices. GDP will probably expand 6.05 percent this year, down from 6.2 percent previously forecast, the ministry said.

Russian leaders have warned that growth, which has been bolstered by oil and gas and helped the country pay back billions of dollars in debt, may slow as energy prices fall. President Vladimir Putin has urged the country’s largest companies to do more to lessen Russia’s reliance on raw materials exports, as crude oil prices dropped below $60 a barrel this year.

“The slowing economic growth is an objective reality and we will soon feel its effects,” Anton Struchenevsky, a senior economist at Moscow-based Troika Dialog investment bank, told Bloomberg. “The era of cheap money is over.”

Record global energy prices have been a boon to Russia, whose economy has expanded for the past nine years after it defaulted on domestic debt, causing the ruble and domestic banks to collapse.

Since then, the government’s Stabilization Fund, which holds windfall revenue from oil sales, increased to 2.7 trillion rubles ($99.9 billion) by the end of January. Record oil prices also helped boost Russia’s gold and foreign-currency reserves to $309.5 billion as of Feb. 9.

The Economy Ministry forecasted that oil prices will drop to $55 a barrel in 2007 from $61 a barrel. The government calculates its budget according to the price of Urals, Russia’s benchmark blend of crude.

Urals is currently trading at about $55 a barrel, a 7 percent discount to futures on the New York Mercantile Exchange. Oil prices will drop further to $53 a barrel in 2008, $52 a barrel in 2009 and $50 in 2010, the Economy Ministry said.

Falling oil prices will cut Russia’s trade surplus this year, said Struchenevsky. Still, lower energy prices will also cap inflation and the quality of economic growth will probably improve, he said.

Oil, gas and petrochemicals exports accounted for 68 percent of total exports in 2006, according to Russia’s Federal Customs Service. The surplus ballooned to $164.4 billion from $142.8 billion a year earlier, boosted by an average increase in oil prices of 25 percent, the customs service said.

Bad Debt Theatens to Devour Putin’s Russia

Playfuls.com reports further details on the looming bad debt crisis facing Russia, on which LR has already reported:

Russia’s Central Bank chief Sergei Ignatiev feels a tangible threat: the growing amount of defaulting consumer credit is putting the whole Russian banking system at risk, he warns. Experts now believe that a third of all those in debt cannot pay back their credit in time. The boom in private lending could develop into a curse for Russia’s weak banking industry.

Russia’s consumers have discovered a lust for spending: in the gleaming new shopping centres around the country clothes, technology and brand-new cars are enticing them to buy. Private consumption increased by 20 per cent in 2006 alone and, together with the elevated income Russia has been receiving from its oil and gas exports, contributed towards last year’s strong economic growth rate of 6.7 per cent. But when Russians’ salaries don’t quite stretch far enough to make a new purchase, private lenders have offered a fast track to owning the latest thing. In the end, many borrowers find that they do not even have enough money to pay off just the high interest charged on their loans, never mind the core amount they borrowed. “For some time now, many bankers have had visions of the spectre of crisis floating through their ranks,” news magazine Russkij Newsweek wrote recently.

Experts warn that bad credit could endanger the liquidity of the whole banking sector in Russia.

There are already indications that this is happening, while growth rates in the private-lending sector are on first glance breathtaking: in the last five years alone, private credit has increased twenty- fold in Russia. “Life on tick has become an integral part of the Russian economic model in recent years,” Russkij Newsweek writes. The country’s 142 million citizens have notched up 2 trillion rubles (76 billion dollars) in debt, according to figures from the Central Bank. Every third Russian has taken out at least one loan. On average, each borrower takes out 40,000 rubles in credit, compared with an average monthly salary of just 10,000 rubles nationwide. In the past twelve months, the number of credit that has gone into arrears has tripled, with a total of 33 billion rubles of credit now in default. There is no easing of the situation in sight. “The risks were accumulated in the past,” Rustam Batashov of Aton- Broker investment bank told Kommersant daily. The banks have to be much more careful when assessing their customers for credit, Sergei Galkin of MDM Bank said. “But last year, primarily risky credit increased dramatically.”

Murky actual interest rates and the Russian public’s inexperience with borrowing money have exacerbated the problem. Nominal and actual interest rates differ in some cases by four times. The Central Bank plans to put an end to such practices: from July 1, all credit institutions must publish the actual interest rate, taking into account all incidental charges. What seems like a step towards fairer competition has been greeted in the banking sector with criticism. “The aim of some credit institutions is not to minimize the number of defaulted credit, but to maximize their profit in a certain number of the defaults,” analyst Mikhail Matovnikov said in reference to the risky game played by the banks. Even the banking world is now attempting to put the brakes on development with greater checks. The government office that deals with credit affairs has demanded access to data from the passport authorities, Finance Ministry and national pension fund. The government has also offered help to the hopelessly overborrowed. According to Russkij Newsweek, the Economy Ministry is drafting a law that aims to regulate the private insolvency, which should give some of those in debt the chance for a new start.

Bad Debt Theatens to Devour Putin’s Russia

Playfuls.com reports further details on the looming bad debt crisis facing Russia, on which LR has already reported:

Russia’s Central Bank chief Sergei Ignatiev feels a tangible threat: the growing amount of defaulting consumer credit is putting the whole Russian banking system at risk, he warns. Experts now believe that a third of all those in debt cannot pay back their credit in time. The boom in private lending could develop into a curse for Russia’s weak banking industry.

Russia’s consumers have discovered a lust for spending: in the gleaming new shopping centres around the country clothes, technology and brand-new cars are enticing them to buy. Private consumption increased by 20 per cent in 2006 alone and, together with the elevated income Russia has been receiving from its oil and gas exports, contributed towards last year’s strong economic growth rate of 6.7 per cent. But when Russians’ salaries don’t quite stretch far enough to make a new purchase, private lenders have offered a fast track to owning the latest thing. In the end, many borrowers find that they do not even have enough money to pay off just the high interest charged on their loans, never mind the core amount they borrowed. “For some time now, many bankers have had visions of the spectre of crisis floating through their ranks,” news magazine Russkij Newsweek wrote recently.

Experts warn that bad credit could endanger the liquidity of the whole banking sector in Russia.

There are already indications that this is happening, while growth rates in the private-lending sector are on first glance breathtaking: in the last five years alone, private credit has increased twenty- fold in Russia. “Life on tick has become an integral part of the Russian economic model in recent years,” Russkij Newsweek writes. The country’s 142 million citizens have notched up 2 trillion rubles (76 billion dollars) in debt, according to figures from the Central Bank. Every third Russian has taken out at least one loan. On average, each borrower takes out 40,000 rubles in credit, compared with an average monthly salary of just 10,000 rubles nationwide. In the past twelve months, the number of credit that has gone into arrears has tripled, with a total of 33 billion rubles of credit now in default. There is no easing of the situation in sight. “The risks were accumulated in the past,” Rustam Batashov of Aton- Broker investment bank told Kommersant daily. The banks have to be much more careful when assessing their customers for credit, Sergei Galkin of MDM Bank said. “But last year, primarily risky credit increased dramatically.”

Murky actual interest rates and the Russian public’s inexperience with borrowing money have exacerbated the problem. Nominal and actual interest rates differ in some cases by four times. The Central Bank plans to put an end to such practices: from July 1, all credit institutions must publish the actual interest rate, taking into account all incidental charges. What seems like a step towards fairer competition has been greeted in the banking sector with criticism. “The aim of some credit institutions is not to minimize the number of defaulted credit, but to maximize their profit in a certain number of the defaults,” analyst Mikhail Matovnikov said in reference to the risky game played by the banks. Even the banking world is now attempting to put the brakes on development with greater checks. The government office that deals with credit affairs has demanded access to data from the passport authorities, Finance Ministry and national pension fund. The government has also offered help to the hopelessly overborrowed. According to Russkij Newsweek, the Economy Ministry is drafting a law that aims to regulate the private insolvency, which should give some of those in debt the chance for a new start.

Bad Debt Theatens to Devour Putin’s Russia

Playfuls.com reports further details on the looming bad debt crisis facing Russia, on which LR has already reported:

Russia’s Central Bank chief Sergei Ignatiev feels a tangible threat: the growing amount of defaulting consumer credit is putting the whole Russian banking system at risk, he warns. Experts now believe that a third of all those in debt cannot pay back their credit in time. The boom in private lending could develop into a curse for Russia’s weak banking industry.

Russia’s consumers have discovered a lust for spending: in the gleaming new shopping centres around the country clothes, technology and brand-new cars are enticing them to buy. Private consumption increased by 20 per cent in 2006 alone and, together with the elevated income Russia has been receiving from its oil and gas exports, contributed towards last year’s strong economic growth rate of 6.7 per cent. But when Russians’ salaries don’t quite stretch far enough to make a new purchase, private lenders have offered a fast track to owning the latest thing. In the end, many borrowers find that they do not even have enough money to pay off just the high interest charged on their loans, never mind the core amount they borrowed. “For some time now, many bankers have had visions of the spectre of crisis floating through their ranks,” news magazine Russkij Newsweek wrote recently.

Experts warn that bad credit could endanger the liquidity of the whole banking sector in Russia.

There are already indications that this is happening, while growth rates in the private-lending sector are on first glance breathtaking: in the last five years alone, private credit has increased twenty- fold in Russia. “Life on tick has become an integral part of the Russian economic model in recent years,” Russkij Newsweek writes. The country’s 142 million citizens have notched up 2 trillion rubles (76 billion dollars) in debt, according to figures from the Central Bank. Every third Russian has taken out at least one loan. On average, each borrower takes out 40,000 rubles in credit, compared with an average monthly salary of just 10,000 rubles nationwide. In the past twelve months, the number of credit that has gone into arrears has tripled, with a total of 33 billion rubles of credit now in default. There is no easing of the situation in sight. “The risks were accumulated in the past,” Rustam Batashov of Aton- Broker investment bank told Kommersant daily. The banks have to be much more careful when assessing their customers for credit, Sergei Galkin of MDM Bank said. “But last year, primarily risky credit increased dramatically.”

Murky actual interest rates and the Russian public’s inexperience with borrowing money have exacerbated the problem. Nominal and actual interest rates differ in some cases by four times. The Central Bank plans to put an end to such practices: from July 1, all credit institutions must publish the actual interest rate, taking into account all incidental charges. What seems like a step towards fairer competition has been greeted in the banking sector with criticism. “The aim of some credit institutions is not to minimize the number of defaulted credit, but to maximize their profit in a certain number of the defaults,” analyst Mikhail Matovnikov said in reference to the risky game played by the banks. Even the banking world is now attempting to put the brakes on development with greater checks. The government office that deals with credit affairs has demanded access to data from the passport authorities, Finance Ministry and national pension fund. The government has also offered help to the hopelessly overborrowed. According to Russkij Newsweek, the Economy Ministry is drafting a law that aims to regulate the private insolvency, which should give some of those in debt the chance for a new start.

Bad Debt Theatens to Devour Putin’s Russia

Playfuls.com reports further details on the looming bad debt crisis facing Russia, on which LR has already reported:

Russia’s Central Bank chief Sergei Ignatiev feels a tangible threat: the growing amount of defaulting consumer credit is putting the whole Russian banking system at risk, he warns. Experts now believe that a third of all those in debt cannot pay back their credit in time. The boom in private lending could develop into a curse for Russia’s weak banking industry.

Russia’s consumers have discovered a lust for spending: in the gleaming new shopping centres around the country clothes, technology and brand-new cars are enticing them to buy. Private consumption increased by 20 per cent in 2006 alone and, together with the elevated income Russia has been receiving from its oil and gas exports, contributed towards last year’s strong economic growth rate of 6.7 per cent. But when Russians’ salaries don’t quite stretch far enough to make a new purchase, private lenders have offered a fast track to owning the latest thing. In the end, many borrowers find that they do not even have enough money to pay off just the high interest charged on their loans, never mind the core amount they borrowed. “For some time now, many bankers have had visions of the spectre of crisis floating through their ranks,” news magazine Russkij Newsweek wrote recently.

Experts warn that bad credit could endanger the liquidity of the whole banking sector in Russia.

There are already indications that this is happening, while growth rates in the private-lending sector are on first glance breathtaking: in the last five years alone, private credit has increased twenty- fold in Russia. “Life on tick has become an integral part of the Russian economic model in recent years,” Russkij Newsweek writes. The country’s 142 million citizens have notched up 2 trillion rubles (76 billion dollars) in debt, according to figures from the Central Bank. Every third Russian has taken out at least one loan. On average, each borrower takes out 40,000 rubles in credit, compared with an average monthly salary of just 10,000 rubles nationwide. In the past twelve months, the number of credit that has gone into arrears has tripled, with a total of 33 billion rubles of credit now in default. There is no easing of the situation in sight. “The risks were accumulated in the past,” Rustam Batashov of Aton- Broker investment bank told Kommersant daily. The banks have to be much more careful when assessing their customers for credit, Sergei Galkin of MDM Bank said. “But last year, primarily risky credit increased dramatically.”

Murky actual interest rates and the Russian public’s inexperience with borrowing money have exacerbated the problem. Nominal and actual interest rates differ in some cases by four times. The Central Bank plans to put an end to such practices: from July 1, all credit institutions must publish the actual interest rate, taking into account all incidental charges. What seems like a step towards fairer competition has been greeted in the banking sector with criticism. “The aim of some credit institutions is not to minimize the number of defaulted credit, but to maximize their profit in a certain number of the defaults,” analyst Mikhail Matovnikov said in reference to the risky game played by the banks. Even the banking world is now attempting to put the brakes on development with greater checks. The government office that deals with credit affairs has demanded access to data from the passport authorities, Finance Ministry and national pension fund. The government has also offered help to the hopelessly overborrowed. According to Russkij Newsweek, the Economy Ministry is drafting a law that aims to regulate the private insolvency, which should give some of those in debt the chance for a new start.