Daily Archives: July 10, 2007

Annals of Sochi: Geographical Notes from All Over

Question: Which city is closer to Sochi, host of the 2014 Olympic games: the Russian capital of Moscow or the Chechen capital of Grozny?

Answer: Grozny is 299.85 miles from Sochi, an easy walk through mountains they know only too well, for the Chechen rebels, while Moscow is 844.25 miles from Sochi. Russia couldn’t protect the Dubrovka theater which is actually in Moscow from the Chechens (it also claims it couldn’t protect two Moscow apartment buildings from them). Will it be able to protect remote Sochi, right in the the Chechen’s back yard? Notice, too, Sochi’s proximity to the Georgian border; Sochi is only barely in Russian territory. Even closer than Grozny is the disputed Kodori Gorge area, including Ingushetia, where Russia has already launched attacks on Georgian territory that are under UN investigation, and where Russia regularly faces terrorist outbreaks which could erupt into a shooting war at any time.

Question: Who will get to Sochi first for the Olympics, Chechen terrorists or Vladimir Putin?

Answer: Well, we’ll just have to wait and see, won’t we. Seems like the IOC is willing to gamble many people’s lives on the answer. That doesn’t seem quite consistent with the Olympic spirit. Perhaps they’ve forgotten Munich already . . .

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Writing in the Moscow Times Igor Nikolayev, director of the strategic analysis department for the auditing consultancy FBK, has this to say about Sochi’s financing:

The federal program for the development of Sochi’s resorts from 2006 to 2014 was a strong factor in the city getting the XXII Winter Olympic Games. The government earmarked $12.2 billion for the Sochi Games. This is clearly a colossal amount of money and compares impressively to the spending of other countries. The total cost of the 2006 Games in Turin was 3.4 billion euros ($4.6 billion). Perhaps China’s example was contagious for Russia: Beijing wanted the 2008 Summer Games so badly that it was willing to invest $33 billion to win the contest. While the development plan definitely leaves you with a positive impression, it is easy to get the feeling that some of the cost estimates were not well thought out.

  • The cost to construct the start and finish areas, the stands for spectators and journalists, and the snowmaking equipment for the downhill skiing center has been listed at 468,264,000 rubles ($18.2 million). It’s as if a calculator came up with the number on its own.
  • The construction of a large hockey arena to seat 12,000 is budgeted at $220 million — all of it federal money. The price tag for another arena for figure skating, which should hold 12,000 people, interestingly enough is just $55 million. Thus, the cost of building one arena is four times the cost of building another arena of the very same size.
  • Another example is an 8,000-seat, closed speed skating center that is projected to cost $42 million. Moscow’s Krylatskoye speed skating complex, which holds 10,000, cost exactly twice that amount — $84 million.

There is more than enough nonsense like this in the development plan to allow us to go on for a while, but the government has approved it all. This is a problem not only for the federal planners in Moscow but for Sochi itself. The government made the $12 billion price tag that it was willing to pay for the Games the main argument in its favor. But the least they could have done was take a serious approach to putting together the details of the development and funding program.

So Russia is already planning to spend nearly three times more than Turin, Italy spent to host the last winter games, and apparently its cost figures constitute a wildly low estimate.

In doing so, Russia will fill a region that is already patronized by Russia’s rich and famous with investment, while the rest of the country languishes in poverty.

And then there’s the little problem of the Chechen rebels which, as one can see from the following post, is not quite solved . . .

Annals of "Pacified" Chechnya: The Blood Continues to Flow

Chechnya is awfully bloody for a solved problem, isn’t it? The Moscow Times reports:

A rebel leader and a pro-Moscow security commander died in a dawn shootout Saturday between federal forces and Islamist guerrillas in Chechnya, a Chechen official said. Chechnya’s chief prosecutor, Valery Kuznetsov, identified the dead rebel as Yunus Akhmadov. He had not previously been named as a prominent rebel. “We have information that Akhmadov was the leader of a Grozny terrorist cell,” Kuznetsov said. “This information is being checked.” The rebel Kavkazcenter.com web site confirmed that a rebel called Yunus Akhmadov died in the shootout in Grozny, but did not say he was a commander. Russia has always described the web site as inaccurate. Kuznetsov said Saipudy Larsanov, head of one of Grozny’s security agencies, also died in the raid on a house where Akhmadov was hiding. Also Saturday, unknown attackers opened fire on a team of combat engineers inspecting an area in the Shalinsky district in Chechnya’s mountains, killing one officer and wounding another, Chechnya’s Interior Ministry said. A police officer was injured in a car bombing Sunday in another volatile southern province, Kabardino-Balkaria. In neighboring Ingushetia, rebels used grenade launchers to attack a base used by the 503rd Motorized regiment early Friday. Federal officials said no one was injured, while the rebel web site said the attack had killed 13 soldiers and injured another 25.

Russia’s Vaporous Case Against the Bank of New York

Lawyers are saying that Russia’s case against the Bank of New York is trumped-up, amounting to governmental extortion. Attorney Robert Amsterdam points to the following analysis from the Financial Post of Canada:

Earlier this year, you may remember, a Washington man named Roy Pearson sued his local dry cleaners for $67-million, alleging that they lost his trousers (all figures in U.S. dollars). The suit, which was dismissed two weeks ago, was publicized around the world as an egregious example of how the American justice system can serve spite and rapacity. One of the more bizarre aspects of the already bizarre case was that Mr. Pearson was a judge.

Now imagine the litigation-crazed U.S. system being put together with what passes for the rule of law around the Kremlin, and you get some idea of the $22.5-billion lawsuit brought by the Russian Federation against the Bank of New York (which just merged with Mellon Bank to form Bank of New York Mellon).

The suit originates in a money-laundering scheme during the 1990s that involved two Russian emigres, Lucy Edwards, a former vice-president of the bank, and her husband, Peter Berlin. The two helped Russian exporters avoid taxes and duties on some $7-billion in laundered funds. The case was broken by U.S. authorities, with whom the guilty pair co-operated. After further investigations, the bank agreed to pay some $40-million in fines and reparations, while Ms. Edwards and Mr. Berlin got off with six months of house arrest and a payment of $685,000.

Case closed? Not quite. It seems enterprising U.S. lawyers may have approached the Russian Federation and suggested applying U.S. triple damage laws to the laundered $7-billion, resulting in that whopping $22.5-billion suit.

Mr. Berlin and Ms. Edwards are reportedly helping the Russian Federation with its case. Still, it’s difficult to see how they can do any more singing, given that they have presumably told U.S. prosecutors everything even vaguely potentially damaging that they knew about the bank (which was never subject to any criminal charges).

Wielding lawsuits like blunt objects is in no way strange to the Kremlin, where bullets and polonium lattes are other judicial options. This case is being heard in the Moscow Arbitration Court, which has hardly ever been the domain of Blind Justice (unless the blindness came from having acid thrown in her face). It was here that the former head of giant oil company Yukos, Mikhail Khodorkovsky, an oligarch who made the mistake of trying to go straight and challenge Mr. Putin, lost both his company and his freedom in a put-up case. Yukos was crushed by claims for tens of billions in back taxes, but Mr. Putin hasn’t finished with Mr. Khodorkovsky yet. Yukos’ former auditor, PricewaterhouseCoopers, is also now being sued by the Russian government for allegedly being party to tax evasion. The accounting firm recently withdrew its Yukos audits for the past 10 years.

Former world chess champion Gary Kasparov said in Toronto last month that “Russia today is a police state masquerading as a democracy.” Russia recently refused to extradite Andrei Lugavoi, the former KGB agent who is the prime suspect in the poisoning in Britain of Alexander Litvinenko. Mr. Putin meanwhile wants to have Russia’s most distinguished human-rights lawyer, Karinna Moskalenko, disbarred. The state has used various forms of harassment against her Moscow-based International Protection Center. Among its more boldfaced charges is that Ms. Moskalenko failed to present one of her clients properly. The client was Mikhail Khodorkovsky!

Ms. Moskalenko has emphasized the reign of terror that Mr. Putin is attempting to install by legal harassment, and worse. She has said that “it isn’t necessary to put all the businessmen in jail. It is necessary to jail the richest, the most independent, the most well-connected. It isn’t necessary to kill all the journalists. Just kill the most outstanding, the bravest, and the others will get the message.”

Not only is the Kremlin above the law, it is not above attempting to use the law, even U.S. law. Russian prosecutors have suggested that if they win, damages against the Bank of New York Mellon will be collectible via the U.S. legal system. Good luck with that one.

Trying to shake down Western banks or other big companies is not quite as easy as terrorizing Russians. Moreover, it will undoubtedly prove counterproductive in further destroying Russia’s reputation as a desirable place to invest (about which Mr. Putin doesn’t care very much as long as high oil prices continue to bolster his “petrotyranny.”)

When assessing the credibility of the case, it is perhaps worth noting that the Bank of New York Mellon has pointed out that lawyers purporting to represent the Russian government offered to take care of the suit for “a fraction” of the billions claimed. As with so many rec ent Russian cases, this looks like a shakedown. However, unlike Mr. Khodorkovsky, the Bank of America Mellon has very few assets in Russia and all the time and money in the world to spend on defending against frivolous litigation. Even if the Kremlin “wins,” it is unlikely to finish up with any more money than Judge Roy Pearson.

The Nexus Between Intolerance and Failure

Moscow Times columnist Alexei Bayer exposes the bleak neo-Soviet future based on its barbaric attitude towards diversity:

Earlier this year, I attended a breakfast hosted by the Lord Mayor of London John Stuttard, at which he kept quoting statistics on the number of foreigners working in London’s financial district and the variety of countries they represent. I doubt that the discovery last month of car bombs on London streets will diminish his delight at the multicultural character of the British capital.

Throughout history, the hallmark of any dominant society has been its international centers. Rome was probably the first global city during its heyday. Victorian London and 19th-century Paris were magnets for immigrants. New York was a famous melting pot in the first half of the 20th century, and today, when it is once again thriving, half of its population is foreign-born. Similarly, London’s current revival, after years of post-WWII blight, has gone hand in hand with its internationalization.

This is because immigrants represent the most energetic and ambitious part of society, and advanced civilizations prosper when they utilize their energies and ambitions. Conversely, insular societies that ban foreigners or hamper their advancement and integration tend to lag behind.

This holds true for entire historical epochs. In the Middle Ages, geographical movement was restricted while local affiliation became paramount. Not surprisingly, technological and commercial stagnation endured for centuries.

Since the early modern period and until the middle of last century, attitude toward Jews has served as a litmus test. It seems that whenever a nation began persecuting its Jewish population, it inevitably lost its global standing and was either defeated in war or simply collapsed. Examples include: imperial Spain, tsarist Russia, Hitler’s Germany and, most recently, the Soviet Union. Meanwhile, extending a welcome to the Jews coincided with the rise of the Netherlands, Britain and many German city-states.

In medieval Europe, Jews were early promoters of international commerce and nascent globalization. Being a widely scattered diaspora, they could establish business ties among their co-religionists everywhere. Tolerating Jews meant opening up to the outside world, while persecuting them signified the closing of the national mind, which led to eventual decline and defeat.

The litmus test endures, but in addition to Jews, it now covers attitudes toward immigrants from less-developed countries and the gay community.

In a global world, the willingness to welcome foreigners and the ability to assimilate them is particularly important. The success of the U.S. economy since 1980 closely parallels the renewed inflow of immigrants. My favorite statistic is the percentage of the foreign-born population in the U.S. After declining to an all-time low of 5 percent in 1970, it has now risen above 12 percent — the highest in 80 years. Americans born in India, China, Russia and elsewhere are the reason the U.S. economy benefits so much from globalization.

Attitude toward gays, meanwhile, is a measure of tolerance in society. Modern societies succeed when they allow different groups to coexist peacefully. Many decayed American cities now try to attract gay communities because their presence often sparks revitalization. Moral relativism — defined as refusal to set standards for truth, morality and behavior — is the engine of capitalist progress.

Current anti-immigrant legislation and attempts at gay-bashing in the U.S. may undermine its ability to lead in the modern world. This is also why homogeneous, xenophobic and homophobic China is unlikely to emerge as a global leader — and why Japan never did so in the 1980s.

The same goes for Russia. Since the 1998 financial crisis and the rise in oil prices, Russia not only has taken a step away from democracy, but it has abandoned all attempts to become an advanced society. The rise of “Russia for Russians” xenophobia and the widening backlash against its gay community clearly signal where Russia is going.

Annals of Russian Crybabies

After being brutally whipped by American Venus Williams at Wimbledon last week, suddenly Maria Sharapova and Svetlana Kuznetsova don’t want to play their Fed Cup tie against Williams and the American team this week, claiming they are suddenly “injured.” Now THAT is Russian patriotism for you. Sharapova was in a real nightmare scenario; she’d have to play against the country she lives in, where she learned her game, on its own soil. That would make everyone in America hate her guts. Then, she’d probably get blown off the court again by a Williams sister, and humiliate Russia, causing Russians to despise her equally. Her answer? Run away. It’s a common Russian solution. Fox News reports:

WORLD No.2 Maria Sharapova has withdrawn from the Russia team to face the US in the Fed Cup semi-finals this weekend. “She said she is injured so she will not play,” Russia Fed Cup captain Shamil Tarpishchev said. LR: Note the coach does not say she IS injured, only that she SAYS she is. Sharapova, who was soundly beaten by eventual champion Venus Williams in the fourth round at Wimbledon last week, has been suffering from a persistent shoulder injury since April. The US Open champion will be replaced in the Russia team by World No.58 Elena Vesnina. Russia, the defending champion, may also lose world No.4 Svetlana Kuznetsova. The 2004 US Open champion also has a nagging shoulder injury. “Kuznetsova is a long shot,” Tarpishchev said. “If her shoulder improves in the next couple of days then she’ll play.” World No.66 Alla Kudryavtseva has been put on standby to replace Kuznetsova. Kudryavtseva, 19, took Venus Williams to three sets in the first round at Wimbledon before losing 2-6 6-3 7-5. Nadia Petrova and Anna Chakvetadze, both ranked in the world top 10, make up the rest of the Russia team. The Williams sisters, Venus and Serena, will lead the host nation, teaming with Lisa Raymond and Vania King.