Daily Archives: June 20, 2008

June 20, 2008 — Contents


(1) EDITORIAL: The Moscow Times and its Dirty Little Secret

(2) The Kremlin Confirms Russians Can’t be Trusted to Vote

(3) Putin Apes Stalin

(4) No Justice for Politikovskaya

EDITORIAL: The Moscow Times and its Dirty Little Secrets


The Moscow Times and its Dirty Little Secrets

The Moscow Times is (or at least it has been) a great newspaper for those with an interest in Russia, but like all of us it has its faults.

And surely its worst is the dirty little secret it tries to keep regarding the support it receives from Russian stock brokers and its quid pro quo. Take this screen shot from the front page of the paper’s website on June 17th (click it to see it full size):

Among the featured articles that day was an op-ed piece called “Russia has emerged at last” by one Stephen Jennings, CEO of “Renaissance Group.” Here’s a screenshot of the web page where that op-ed was found:

The attentive reader will notice that nowhere, either on the front page or on the op-ed page itself, is this article identified as what it is — an opinion piece, arguing for a point of view. A careless reader could easily mistake it for a news report. In its new format, this is a common problem at the MT, one we’ve notified the paper about repeatedly — a notice they’ve obviously ignored.

But we digress, because that’s not the real problem. The real problem is that the MT’s editors didn’t require Mr. Jennings to declare his conflicts of interest.

Robert Amsterdam’s blog recently reported that Russian energy companies have an advantage over European counterparts in that they don’t need to obey any laws regarding the environment or fair competition, because the Russian government couldn’t care less about those rules. Similarly, those who’d like to engage in the pirating of intellectual property love Russia, because copywrite laws aren’t enforced there. Cigarette companies are in a similar situation.

And it’s the same with stock brokers. If you say a phrase like “insider trading” to a Russian, he’ll probably think you are talking about some deviant sexual practice. Russian stock brokers can play as fast and loose with the truth as they like because there’s no Securities and Exchange Commission breathing down their neck. Given the fact that a Russian can easily purchase a story in a newspaper, ordered to their liking, it’s hardly a consideration for a Russian stock broker to declare a conflict of interest when writing himself, as he would be required to do in a Western publication with the slightest shred of ethics.

Which brings us to Mr. Jennings and his two conflicts of interests. First of all his company Renaissance Group, unless we’re very much mistaken, is an advertiser of the Moscow Times (one of a very small universe of such supporters) and for all we know it’s also an investor in the paper. And likely we’ll never know, because the Moscow Times never discloses this sort of thing. We wrote to the paper’s editor and asked him; he ignored our message.

And second of all, Mr. Jennings earns his living convincing hapless fools to invest money in Russia. The more attractively he paints Russia’s economic picture, the more money he makes. It”s just as simple as that. So, in other words, if he says things are going great in Russia, you should trust that about as far as you can throw a proud KGB spy.

Which brings us to his column, the column that doesn’t say a single word about any of that and is headlined, as we’ve already said: “Russia has emerged at last.” News flash:

We live in an age of accelerating economic convergence. The world’s new economies –with Russia among the leaders — will drive global growth and value creation in the early decades of this new century. This tectonic shift is now firmly under way, but few have taken on board the far-reaching implications. For example, the world’s largest businesses will be from new world economies and the world’s most influential businesspeople will be Russian, Chinese, Indian and African. New world investment funds will dwarf their Western counterparts. The dollar will become only one of many reserve currencies. Moscow, Singapore, Shanghai and Dubai, will, alongside London, be where the majority of wealth is managed and traded.

If that sounds to you suspiciously like a brochure you might get handed when you stepped into a stock broker’s office for a consultation, just before you get the hard sell and he puts his hand in your pocket, it should — because that’s exactly what it is. Nothing more, and nothing less than a free sales pitch to the MT readership.

Get ready, now. Here comes another one:

Cross-border mergers and acquisitions are another indicator. According to Thomson Reuters, emerging-market mergers and acquisitions this year are up 17 percent, while they are down 43 percent in the rest of the world. Russian companies alone have been involved in cross-border mergers and acquisitions transactions totaling an about $13 billion so far this year, up fourfold over the same time last year.

Mr. Jennings forgets to tell you that (a) $13 billion is pocket change in the M&A field and (b) the only reason Russia even has that puny sum to spend is that the price of oil has spiked. This means that if you invest in Russia, you are doing nothing more than betting on the price of oil weighed against the possibility that the proud KGB spy who rules the country won’t simply steal your investment (and/or throw you in jail if you’re foolish enough to set foot in the country to inspect your invest).

He keeps on firing:

Companies with headquarters in the so-called high-growth countries, or HGCs, are also growing in terms of their global stature. According to a report issued by the U.S.-based Reputation Institute, 35 companies located in the four BRIC countries of Brazil, Russia, India and China are also on the institute’s list of the world’s most respected companies in 2008. Russian companies making the list of the top 200 include LUKoil, Gazprom, Sberbank, Magnitogorsk Iron & Steel Works, Norilsk Nickel, Evraz, Rosneft and TNK-BP.

Gazprom respected? That’s odd, because on the same op-ed page Roman Kupchinsky of AZEast Group states:

On Thursday, during my testimony at a hearing of the U.S. Senate Foreign Relations Committee, I asked a rhetorical question: Did President Dmitry Medvedev, while serving as chairman of Gazprom, know that the company might have been linked to organized crime through the Swiss-based intermediary company RosUkrEnergo? I believe that he knew this but ignored it. As Gazprom’s chairman, he should have known.

TNK-BP respected? Apparently, Mr. Jennings hasn’t heard that BP is being robbed of its Russia assets by the Kremlin even as we speak. And it seems Jennings hasn’t read the freely available annual reports by Transparency International, which routinely classify Russian business and governmental institution as among the very most corrupt on the planet. The alleged study by Reputation Institute is locked up behind a paid database and unavailable for review by anyone else. Isn’t that convenient?

And then comes Jennings’ final blast:

Russia’s political and economic influence will only increase in the future, and the country’s companies will be more important in the global economy. Moscow will grow in stature as a financial capital, becoming one of the world’s top six or seven financial centers in the next decade. The nature of inward investment will also change, with increased capital coming from investors in Asia, the Middle East and otherHGCs. And, without a doubt, the quality of life for Russians — and their economic and social freedoms — will continue to improve. It is becoming ever more clear that the rise of the HGCs, with Russia featuring prominently, is on a scale and at a speed that dwarfs anything that has come before. We are entering a brave new world, where economies, financial institutions and private companies from emerging markets are the dominant force not only behind global growth, but also increasingly behind global business, wealth management and finance.

We challenge you, dear reader, to tell us how that statement would have been worded differently if it had been written by the Kremlin.

At the end, he slips in a coded disclaimer of course, because Westerners still might try to sue him for his ridiculous lies in some country other than Russia where stock brokers actually have to follow rules:

Of course, there are still large risks. One of the biggest risks is a global economic downturn caused by the large-scale structural adjustment being forced on developed countries. HGC economies face a painful transition, to be sure. They cannot rely on developed markets to continue to provide the growth in demand for their exports. The future growth markets will be the Of course, there are still large risks. One of the biggest risks is a global economic downturn caused by the large-scale structural adjustment being forced on developed countries. HGCHGCs themselves. The question is how quickly that transition will take place and whether it is spurred more by increased demand from new economies or a decrease from the developed countries. Another challenge is the stage of development of the HGCs’ financial markets. In the near term, these markets are simply not large enough to facilitate the flood of global and domestic capital headed their way. Clearly this provides an amazing medium-term growth opportunity for the financial services industries of the HGCs. This process will involve the emergence of new localized reserve currencies and much deeper and more sophisticated local capital and banking markets. There will also be an explosion of financial flows and integration among the HGCs themselves — the regions with the greatest savings flows and the highest investment returns in the world.

If you doubt whether he’s a Russia shill, all you really need to know is that the Russia Blog – Russia Today propaganda complex is full of news about him.

There are no words to describe the foolishness of taking advice about the Russian economy from a Russian stock broker. At least, though, if the Moscow Times gave its readers a clear heads up each time it published trash like this, then the maxim caveat emptor might apply. As it is, the paper is quite simply shirking a sacred obligation to its readers by helping this stock broker pass himself off as an objective analyst.

Russian stock brokers and riverboat gamblers are the only ones willing to make such absurdly positive statements about the Russian economy. Similarly, only outcasts from the mainstream world are willing to make such statements about Russia’s political system — as recently happend for instance with Henry Kissinger and Tony Blair.

Shame on you, Moscow Times! People count on you as one of the last vestiges of actual information about Russia, and you are slowly slipping into the miasma of Russian dishonesty and intimidation. We’d hoped for better!

The Kremlin Confirms: Russians Can’t be Trusted to Vote

Reuters reports:

Russia’s government on Tuesday ruled out restoring direct elections of regional governors, scrapped four years ago in a move that critics said undermined democracy. Russian media this week quoted the governor of the Tatarstan region, a major industrial centre on the Volga river, as saying direct elections for the 85 regional chiefs should be re-instated if Russia is to be truly democratic. Dmitry Kozak, the minister for regional development and a close associate of President Dmitry Medvedev, said changing the system for selecting governors again was not on the agenda. “Let’s not dash off in different directions. We have just changed it. We are not going to change it back,” Kozak told Reuters on the sidelines of the Renaissance Capital annual investment conference.

Some observers have predicted Medvedev, a 42-year-old former law professor, could ease the Kremlin’s tight grip on power established during President Vladimir Putin’s presidency . Other analysts are sceptical he can implement real change without the consent of Putin. After stepping down from the presidency last month, Putin stayed on as prime minister and continues to wield huge power. Prompted by Putin, Russia’s parliament in 2004 changed the law to scrap direct gubernatorial elections. They were replaced with a system under which governors are nominated by the president and then confirmed by regional legislatures. The president can dissolve a legislature if it rejects his nominee.


But there was some indication the issue may be on the long-term agenda after Kremlin loyalist and speaker of Russia’s upper house, Sergei Mironov, was quoted by Itar-Tass as saying, the topic should at least be discussed. “At the present stage, it’s possible to think about the return of the election of governors,” Tass quoted Mironov as saying. He added he was not in favour of any quick decision. Opposition parties, rights groups and Western governments cited the change as an example of what they called an excessive concentration of power by the Kremlin. The change was introduced soon after the Beslan siege in which more than 300 people — half of them children — were killed in a stand-off between security forces and Islamist insurgents who had seized a school in southern Russia.

The Kremlin said it needed to tighten its control over regional administrations so the country was better prepared to handle such challenges. The move also responded to fears among many for the unity of a vast country, still shaken by the disintegration of the Soviet Union.

Putin Apes Stalin

La Voz, the newspaper of De Anza College in Cupertino, California, shows students there are right on top of their studies where Russia is concerned with the following editorial:

Putin’s tactics disturbingly reminiscent of Stalin

Although former Russian President Vladmir Putin has supposedly relinquished power to new Russian President Dmitry Medvedev, Putin continues to weild significant influence over the country in his new position as Prime Minister.

Medvedev, who was previously Putin’s chief of staff, was handpicked by the Putin to be his successor. Medvedev won the presidency by a large margin of around 70 percent. Medvedev has been accused of acting as a puppet and it seems Putin is not yet ready to hand over the reins of power.

During his presidency, Putin fostered increasingly acceptance of Joseph Stalin’s political tactics, portraying Stalin as a national hero. Putin told schoolteachers in Russia that their history was “nothing to be ashamed of” and that it was their duty to make students feel “proud of their motherland.” Stalin is described in some history books as “the most successful Soviet leader ever.”

One of the more frightening aspects of Putin’s Stalin-like tendencies has been his intolerance of critics in the media. During his presidency, Putin brought important media outlets, including some television and radio stations, under state control. In some cases he shut them down entirely

In addition, a slew of important journalists who were openly critical of the president were murdered during Putin’s time in office, most notably Anna Politkovskaya, a Russian journalist who was killed while walking out of her apartment. Though her murder was never directly linked to the Kremlin or to Putin, the timeliness of her murder and the execution-like style of the killing raised many eyebrows in the international community.

During his tenure as president, Putin also tightened his authoritarian grip on parliament. He changed the rules, no longer allowing governors to be elected. Instead they were appointed directly by Putin.

Mikhail Khodorkovsky, an independent oligarch openly critical of ‘democracy’ in Russia, has been quoted as saying: “It is the Singapore model – it is a term that people understand in Russia these days. It means that theoretically you have a free press, but in practice there is self-censorship. Theoretically you have courts; in practice the courts adopt decisions dictated from above. Theoretically there are civil rights enshrined in the constitution; in practice you are not able to exercise some of these rights.”

No Justice For Politkovskaya

The Washington Post reports that, just as predicted, the Kremlin has closed the Politkovskaya investigation without apprehending the shooter or identifying the party who ordered the hit, instead attempting to claim by innuendo that it was Boris Berezovsky.

Three men were charged Wednesday with involvement in the October 2006 killing of investigative reporter Anna Politkovskaya, but investigators said nothing about who ordered the assassination or why. A man formally identified by authorities last month as the shooter remains at large, as does the unknown person who organized the murder.

Politkovskaya, a critic of the Kremlin known for crusading reports on human rights abuses in Chechnya, was shot in the lobby of her apartment building in central Moscow as she was returning home with groceries. Police immediately described it as a contract killing. The murder weapon was dropped beside the body.

The killing chilled public opinion in the West where Politkovskaya, 48, was lauded for her work. But it made little impression in Russia, drawing some derisory comments from then-president Vladimir Putin about the lack of impact the journalist had with her work in her home country.

Officials suggested that the killing was ordered by an exiled enemy of the Kremlin — longstanding code for Boris Berezovsky, the London-based tycoon. Berezovsky denied any involvement, and Politkovskaya’s colleagues said the person behind the killing was almost certainly in Russia.

Prosecutors charged Sergei Khadzhikurbanov, a former police officer, and two brothers from Chechnya, Dzhabrail Makhmudov and Ibragim Makhmudov, with involvement in the crime, but gave no details as to their alleged roles. The men have been in custody since their arrest last August. A fourth man, Pavel Ryaguzov, an officer in the FSB, the domestic security agency, was charged with extortion and abuse of office. Prosecutors said the charges against Ryaguzov relate to “separate crime,” but officials previously said that he provided Politkovskaya’s address to the killers.

Investigators said in May that they believe that Politkovskaya was shot by Rustam Makhmudov, the eldest of the Makhmudov brothers. He had been identified in news reports as early as March. Makhmudov remains at large and prosecutors said their investigation of him continues.

Eleven people were initially detained in connection with the killing, but since then all but those charged Wednesday have been released. A fourth Makhmudov brother was released last month, but ordered not to leave Russia.

The editor of Novaya Gazeta, the newspaper where Politkovskaya worked, welcomed Wednesday’s announcement, but said the probe was far from complete. “The case has not been solved . . . this announcement does not satisfy the newsroom or members of Anna Politkovskaya’s family,” said Dmitry Muratov, according to Gazeta.ru daily. “We insist that this case is followed through.”

Muratov also said Wednesday that leaks during the investigation had allowed Rustam Makhmudov to evade capture.

Since 2000, 14 journalists have been murdered in Russia because of their work, making the country the third deadliest in the world for journalists, according to the Committee to Protect Journalists. There has been only one conviction in those cases and none of a person accused of ordering a killing, according to the New York-based advocacy group