Monthly Archives: July 2008

July 30, 2008 — Contents


(1) EDITORIAL: Russia, the Eternal Morass

(2) Russia and Stalin, Explaining the Phenomenon

(3) Putin’s “Divide and Conquer” Approach to Human Rights

(4) Some Hope for Russia

(5) Racism out of Control in Moscow

EDITORIAL: Russia, the Eternal Morass


Russia, the Eternal Morass

Last week the New York Times blog The Lede reported on how Russians were being mauled by their national symbol, the brown bear. A wolf pack of 30 bears is running wild in Kamchatka and has already killed and eaten two people. The Lede reported that “people in the region have been forced to cower in their homes waiting for hunters to dispose of the animals, which can stand 10 feet tall and weigh up to 1,500 pounds.” Three others have been killed on Sakhalin Island. The reason? “A sharp decline in salmon, their traditional food, due to poaching has forced them to seek out other food sources, as more and more unfortunate people have come to discover.” In other words, the utter failure of public policy.

The first commenter on the story spoke in the loud, clear terms of the insane Russophile, a perfect encapsulation of what is wrong with Russia as a country:

The New York Times is always so negative about Russia! So what that the bears eat people? They are beautiful, majestic creatures who inspire Russia and Russians. Do bears not eat people in America!? You also couldn’t help but draw a parallel between killer bears and United Russia…again, negative muckraking! I implore you CIA sponsored “journalists” to stop implying that United Russia gobbles up other parties like a hungry beast. Write about something positive, like Putin’s pecs.

That’s right: Russians (and especially Russophile sychopants of Vladimir Putin) want this story ignored. Far from being a cause to criticize the authorities and call for reform to save lives, Russians want the whole thing swept under the carpet. As long as bears eat Americans, it seems, Russians have no problem with being consumed themselves.

And yet, if you were to suggest to a Russian that his nation’s lack of contested elections, opposition parties and major media criticism of the regime comes up far short on the democracy scale when compared to the United States, Russians would then say that Russia is “different country” that can’t be compared to America.

Meanwhile, do you think this commenter, or any member of the psychopathic Russophile set, ever makes such comments about the things written about America by state-controlled Russian media? Do they ever speak unfairly and inaccurately about America? Does Vladimir Putin ever do so? When, dear reader, was the last time you heard Mr. Putin give America a compliment? Aren’t his remarks about America “always so negative,” to quote a Russophile?

This kind of childish, impulsive “reasoning” characterizes Russian society from top to bottom. Rather than admit any fault, they would prefer to have all problems ignored. When convenient, they compare themselves to America. When not, they contend only a Russophobe would do so.

Exactly this kind of “thinking” destroyed the USSR root and branch. The Politburo was incapable of accepting any responsibility for any fault, and instead simply blamed all problems on misfortune and foreign intrigue. No reform was undertaken until the nation was in its final throes, and even then the measures were half-hearted and totally unsuccessful. As a result, the USSR collapsed.

And how did Russians respond, seeing that collapse? They merrily and blithely returned the KGB to power, the very same KGB that had shipped off so many souls to the Gulag archipelago, wiping out Russia’s best and brightest with relish, squashing all dissent and information at gunpoint. Then they merrily and blithely watched their proud KGB spy return the nation at breakneck speed to the same condition of blind willful ignorance that brought down the USSR.

America is full of people, including powerful elected politicians and major international media outlets, who upon hearing foreign criticism are only too ready to accept it and to call for responsive change. Right now, major party candidate Barack Obama is running on just such a platform, and could well be elected. And America stands astride the world like a colossus, the world’s only superpower, with an economy more than ten times larger than Russia’s and a growing population twice Russia’s size.

Russia, by contrast, pokes its head into the sand like a witless ostrich, has a plummeting population and an economy where a person is lucky to earn $4 per hour as a wage and teachers earn less than half that amount.

Will Russians never learn? Will they go on repeating their barbaric behavior until they have utterly destroyed not just their country but their entire civilization, ceding it to the Chinese to be erased forever from human memory?

We are afraid they will.

Last week the White House website posted a message from President Bush in honor of “Captive Nations” week. Bush stated: “In the 20th century, the evils of Soviet communism and Nazi fascism were defeated and freedom spread around the world as new democracies emerged.” (Similarly, Lithuania recently enacted a ban on the display of Soviet and Nazi symbols, treating the two the same.) The Putin regime rushed to defend Soviet communism, attacking Bush for attempting to “feed the efforts of those, who for political and selfish ends are striving to falsify the facts and rewrite history.” In other words, the Russian state is repeating the Soviet propaganda lie that Sovietism wasn’t just as bad for Russia as Nazism was — even though it was Sovietism, not Nazism, that actually destroyed the USSR, and Sovietism that killed far more Russians.

Russia can’t manage to understand how the people of Eastern Europe see the advance of Soviet troops to defeat Hitler, either. They, too, are hard pressed to see any difference between Nazis and Russians. After all, the Russian troops enslaved them for a far longer period of time than the Nazis did. It can’t manage to understand, as Germans have done, the need to confront their dark past and take aggressive measures to make sure it is not repeated. Instead, Russians seek to bury, twist and pervert their past into a mythology of heroism. Russians leave memorials to Stalin’s Gulag to foreigners, and elevate Stalin to cult hero status. They are, it should be remembered, still using the melody of the Soviet national anthem, a tune written to glorify Stalin. It will play when Russians are awarded medals at the Bejing Olympiad.

No country can survive this level of extreme barbarism.

Russia and Stalin: Explaining the Phenomenon

Paul Goble reports:

Many were shocked when the Internet Project “The Name of Russia” showed that Russians saw Joseph Stalin playing that role, with some suggesting that this was equivalent to present-day Germans identifying Hitler in that way for their country or even Israelis deciding to name the German dictator as the symbol of their country.And others were disturbed when the organizers of this project suggested Stalin had come out on top because of a concerted campaign by a small number of web activists and when those carrying out this informal survey said that they had “taken measures” in response that had the effect of elevating Nicholas II, the last Russian tsar, into first place. But now a prominent Moscow analyst suggests that the results of this project show something even more disturbing at least to him than the initial “victory” of Stalin. They indicate, Aleksei Roshchin said in an article posted online recently that Russians are increasingly obsessed with themselves rather than with the role they have played in the world.Arguing that even “without Stalin” in the top spot – and he is still among the leaders – Roshchin, who is an expert at the Moscow Center for Political Technologies, says the results of the project to date should disturb all those concerned about the future of Russia and its integration into the broader world.

The “top ten” candidates in the Name of Russia project are Stalin, Vysotsky, Lenin, Nicholas II, Yesenin, Ivan the Terrible, Sergii of Radonezh, Chekhov, Pushkin, and Aleksandr Nevsky. Of these, half were supreme rulers, one was a writer, three were poets, and one was a religious leader.“Not one (!),” Roshchin notes, “is a scholar and only one (!) is a figure of culture known to every cultured individual in the world. That is Chekhov, and he is in eighth place.” But “what does this mean?” the Moscow writer asks rhetorically. “It means that we ourselves, citizens of Russia, are convinced in the depth of our souls that humanity to a great extent does not need our Russia.” And consequently, “we ourselves select out of our 1,000-year history people who clearly are interesting only to us and to no one else.”No one will have a problem with Aleksandr Nevsky who “saved Rus’ from the crusaders” or even with Ivan the Terrble “who took Kazan,” Roshchin says. They are both in the tradition of the type of state figures Russians and many others admir. But what about the others on the list?Yesenin and Vysotsky were accomplished lyric poets who “beautifully expressed ‘the Russian soul” but who as a result are unknown beyond the borders of Russia.

That then there is Lenin, whose activities “showed to the entire world HOW ONE SHOULD NOT PROCEED. But Roshchin inquires, is that something which Russians should be proud of?Given these others, it is thus perhaps not surprising that Stalin received so many votes as “the name of Russia.” Instead, this poll shows clearly “in what direction one should be working if we would like sometime to return to the civilized world:” Russians should focus less on those who have worked only for Russia and more on those who have made a broader contribution.Russia does not lack such people, Roshchin says, and he points to figures like Mendeleyev, Lomonosov, Cherkhov, Kandinskiy, Tolstoy, Landay, Kapitsa, Basov and Popov. If Russians would only display a little more confidence in themselves, he continues, they would see that they are “indeed a GREAT nation.” But until Russians understand that, he concludes with regret, they will continue to vote for Stalin, who symbolizes as it were the sad reality that Russians view themselves and their nation as “good for nothing” and boastfully by voting for people like the dictator Stalin their “lack of faith in themselves.”

Putin’s "Divide and Conquer" Approach to Human Rights

The always brilliant Robert Coalson, writing for Radio Free Europe:

The question of the purpose and role of international election monitors, one would think, should be a pretty easy one. They are sent as impartial observers to judge the conduct of elections in terms of democratic values such as transparency, fairness, access, and competitiveness.But at a conference at the Organization for Security and Cooperation in Europe (OSCE) in Vienna this week, the Russian mission offered a competing vision, one that seems part of a larger effort by Moscow to fracture the admittedly weak sense of shared values in international law and politics.

Election monitors, Moscow’s representatives argued, should primarily “respect the laws of the states holding elections and show respect for the national organs of power, including the electoral organs.” This “respect” for the host state, according to the proposal, should take the form of letting it determine the format of the mission, its leader, the number of monitors, the period of monitoring, and “all other questions touching on the sovereignty of the country.”Such a view, it should be noted, has long been the norm at the Moscow-dominated Commonwealth of Independent States (CIS). CIS election monitors have been hard-pressed to find a post-Soviet election anywhere — from Belarus to Russia to Turkmenistan — that wasn’t to their liking. Their effusively congratulatory election postmortems are routinely ridiculed outside the CIS — if they are noticed at all.

The Russian proposal comes in the wake of tense relations between that country and the OSCE’s Office of Democratic Institutions and Human Rights (ODIHR), which organizes OSCE election-monitoring missions. After ODIHR monitors declared the 2003 Duma elections in Russia “free, but unfair,” Moscow imposed such onerous restrictions on future missions that the OSCE declined to send delegations to the 2007 Duma elections or the presidential election in March.It should be noted as well that the OSCE has sometimes shot itself in the foot. Its monitors praised Russia’s elections during the era of Boris Yeltsin, despite massive evidence of their shortcomings. Such reports feed Moscow’s assertions that the organization is politicized in its judgments and operating under double standards.But Moscow’s dissatisfaction runs deeper still.

The Kremlin fumed at what it perceived as the OSCE’s role in fuelling the so-called colored revolutions in Georgia, Ukraine, and Kyrgyzstan, countries where manipulated and falsified elections were exposed and massive protests ensued. In fact, Russia has long taken umbrage at the OSCE’s emphasis on human rights and democratic development. A Moscow-inspired anti-OSCE tirade submitted by six CIS countries in 2004 stated baldly that the OSCE “does not respect such fundamental…principles as noninterference in internal affairs and respect for national sovereignty.”The OSCE bills itself as a 56-member “community of values.”

Its governing 1990 Charter of Paris commits members to “build, consolidate, and strengthen democracy as the only system of government of our nations.” It further defines democracy as “based on the will of the people, expressed regularly through free and fair elections. Democracy has as its foundation respect for the human person and the rule of law. Democracy, with its representative and pluralist character, entails accountability to the electorate, the obligation of the public authorities to comply with the law and justice administered impartially. No one will be above the law.” The document, which heralds “a new era in democracy, peace, and unity,” continues in this vein for many pages, obligating members to help one another make democratic gains “irreversible.”Russia in the era of President Vladimir Putin has increasingly presented a challenge to this “unity” and this “community of values” not only in terms of its actions, but on the plane of ideas as well.

Moscow has repeatedly defended its antidemocratic domestic policies by arguing Russia has its own “path to democracy,” and that all nations must build democracies that are unique to their cultural heritages.While some observers expected this sort of divisiveness to be toned down after Dmitry Medvedev — who rarely misses a chance to point out that he is a lawyer by training — became president, it has in fact been ramped up in recent weeks. Moscow has renewed its calls for phasing out The Hague war crimes tribunal, saying it is fatally “biased.”Perhaps most importantly, the quasi-official Russian Orthodox Church last month adopted its Basic Principles of the Russian Church on Human Dignity, Freedom, and Rights.

The document, which was partially drafted by Kremlin insider and Eurasianist ideologue Aleksandr Dugin, called for a “reexamination” of the 1948 Universal Declaration of Human Rights. It says Western notions of human rights do not apply to Russia and should be replaced by Orthodox principles. It also asserts that civilizations “should not impose their lifestyle patterns on other civilizations.” The document clearly prioritizes the rights of society over the rights of individuals.As the Vienna conference on election monitoring shows, Moscow’s assertiveness in the realm of ideas can have serious consequences. Organizations like the OSCE and the UN are already cumbersome institutions that often have difficulty acting decisively.

The Kremlin’s challenges to the fundamental assumptions and values of international organizations will only magnify those difficulties.Conferences such as the one this week will be reduced to discussions of basic principles — of whether they even exist — and issues of implementation will be crowded off the agenda. And achieving that goal is enough to satisfy those whose domestic policies and institutions fail to stand up to scrutiny from the perspective of values that have been recognized internationally since the end of World War II.

Some Hope for Russia

Russian ZheZhe blogger Introvertoff points to the following results of a recent public opinion poll in Russia (our staff translation, corrections welcome):

  • Only 20% of the population believes the political and econmic situation lic is “stable and prosperous” in Russia.
  • More than half of Russians (51%) believe that the country is on the wrong path, and only 38% of those surveyed said that believe in the correctness of the course.
  • The state of the economy was called “good” 18% of those surveyed while 54% found it difficult but tolerable; 24% stated that “any worsening would be intolerable.”
  • 14% hope to improve their material situation in the future, while 22% believe that it will only worsen.
  • 24% of Russians are ready to participate in mass protest actions. 19% are willing to participate in strikes.
  • 64% of respondents disapproved of the government’s policy actions

Given the fact that the Russian economy is supposedly “booming” and given the fact that the Kremlin is in the midst of a massive campaign of terrorism against civil society, we must be heartened by these results. There remains in Russia as there always has been a nucleaus of clear-thinking people who, if they could only be induced out of their stupors, might save the country from its fate. Dictator Putin dare not imagine what these results might show if the price of oil was a bit lower and the level of social oppression was a bit less intense.

Seen in this light, Vladimir Putin’s support takes on the aspect of a cult, with blinded sycophants marching like zombies rather than informed voters giving voluntary respect. Of course, Russia being a nation of zombies taking orders from those whose policies it knows are wrong, just as in the time of Stalin, hardly bodes much that is good for the nation’s future.

Racism out of Control in Moscow

The Moscow Times reports that racist violence is “exploding” in Russia’s largest and supposedly most sophisticated city, supposedly booming with wealth and happiness, right in Vladimir Putin’s backyard. Do you dare imagine what might be going on in a place like Chelyabinsk — that is, if any dark-skinned people were foolish enough to go there?

The number of hate crimes committed in Moscow has exploded this year, rising sixfold compared to the same period last year, Investigative Committee head Alexander Bastrykin said Friday. The authorities registered 73 hate crimes in Moscow in the first six months of this year, a trend Bastrykin said must be halted with “decisive and systematic efforts.”

“We are worried that while the overall number of crimes registered in Russia has shrunk by 9 percent, crimes of an extremist nature are increasing year after year,” Bastrykin said, Interfax reported.

The Moscow branch of the Investigative Committee announced Friday that it had opened two criminal cases involving hate crimes, one of which involves 12 racially motivated murders. The announcement came after the beginning of two high-profile trials in the Moscow City Court last week, in which several teenagers are accused of murdering multiple dark-skinned victims — as well as an Investigative Committee statement Thursday saying seven ultranationalists are suspected in at least 21 racially motivated murders. Mikhail Ionkin, spokesman for the committee’s Moscow branch, said the spike in hate crimes was not just a reflection of the authorities’ efforts to crack down on such crimes.”It’s no secret that hate crimes are on the rise,” Ionkin said. “We are not registering more because of any change in methods or priorities on our part. We have always worked with equal focus against extremism.”Ionkin declined to say what could be behind the dramatic rise. “It’s complicated,” he said.

The case of Artur Ryno, who went on trial last week in the Moscow City Court with eight other people suspected of committing 20 racist murders, received so much publicity that it could have sparked copycat crimes, said Galina Kozhevnikova, deputy head of the Sova center, which tracks hate crimes. But the authorities’ apparent decision to prosecute neo-Nazi groups more actively could also be contributing to the spike, Kozhevnikova said.”In big cities, we know there are lots of underground Nazi groups,” she said. “When the government began to investigate their activities and arrest them, they reacted violently against ethnic minorities. “Kozhevnikova cited an incident earlier in the year when a racist murder was committed in the same location where a group of neo-Nazis had been arrested by police in Moscow the previous day. A city police spokesman denied Friday, however, that there has been any rise in hate crimes in the city this year. “Such crimes are becoming less frequent,” said the spokesman, who declined to give his name. “In my opinion, certain organizations beef up the statistics on such crimes in order to attract funding. “The Sova center recorded 60 racist murders across the country so far this year, while it recorded a total of 85 such crimes in all of 2007. The actually number of hate crimes is likely three to four times higher than the number registered by authorities, Kozhevnikova said.

July 28, 2008 — Contents


(1) EDITORIAL: The Clueless, Craven Boston Globe

(2) The Russian Economy, Teetering at the Abyss

(3) The Russian Stock Market in Freefall

(4) Russia’s Crony Statism Chokes the Economy

(5) Annals of Kremlin Corruption, Bleeding the Economy Dry

NOTE: Today we offer a devastating series of reports (2-5) showing how Russia’s dramatic turn to a bear market in securities mirrors a wide array of serious ecnomic perils in the economy itself, from Soviet-style anemia of production to outright corruption. This provides still more support, including editorials from the Wall Street Journal and the Times of London, for the pair of editorials we ran last week (LR is always ahead of the curve!) on this subject. Can a nation enjoy market economic success while being governed by a proud KGB spy? Of course not. Only a Russian could imagine otherwise.

NOTE: Kim Zigfeld’s latest installment on Pajamas Media details the latest facts indicating that the Kremlin is engaged in politically-motivated murder campaigns to advance its interests, and pointing out that these murdering thugs are licking their chops in anticipation of an Obama presidency.

EDITORIAL: The Clueless, Craven Boston Globe


The Clueless, Craven Boston Globe

It’s genuinely sad, and downright embarrassing, to see an American newspaper bungle an analysis of Russia as badly as the Boston Globe did with a recent editorial called “Russia’s new (and old) plan.”

The Globe started out by calling Russia a country “that bears little resemblance to either the vanished Soviet Union or the economic basket case of the immediate post-Soviet years.” But in fact, that’s idiotically false. Russia continues to be a country where the vast majority of the population suffers dire poverty, shockingly short lifespans and all manner of vice and pestilence. The average Russian man works for $4 an hour and doesn’t live to see his 60th year. And Russia, by the Globe’s own admission, is “run by a mafia of Kremlin-connected moguls and KGB veterans.” If there’s any dissimilarity from Soviet times, it’s that the KGB has even more influence now.

The Globe then claimed that Russia wants a “strategic partnership” with the United States because it has “has an abiding interest in cooperating with the West.” It sees confirmation of this in the fact that “Dmitry Medvedev released a document outlining Russia’s new foreign policy strategy” that says so. But search the Globe’s text from stem to stern: You will not find one single example of any “interest” that Russia shares with the United States.

Certainly, not a belief system. Russia has obliterated the last vestiges of democracy in a barbaric manner, replete with murders and intimidation. It has crushed the press, wiped out opposition parties, purged the Duma and conducted kangaroo elections that don’t even pass the smell test for legitimacy.

Oil? True, Russia needs the West to buy its oil. But so did the USSR — and it also needed to import lots of basic goods, especially food, that it couldn’t produce itself. And none of that stopped the USSR from seeking to destroy us, just as it hasn’t stopped Vladimir Putin from buzzing us with nuclear bombers and sending weapons to our enemies, like Iran and Venezuela.

Terrorism? Could the Globe possibly be suggesting that if we don’t make nice with Russia, it will foment radical Islamic terrorism against us?

In essence, the Globe is calling upon the United States to abandon the people of Russia and its own core belief system in order to avoid confrontation and secure economic benefits. That’s exactly the same approach Neville Chamberlain adopted towards Adolf Hitler. Chamberlain believed that if only we spoke respectfully to Hitler and treated him like an equal, acknowledging and responding to his “interests,” then he would have no incentive to attack us and would not do so. Chamberlain was prepared to gamble with the lives of millions of people, both outside and inside Germany, betting that dropping our guard wouldn’t leave us exposed and vulnerable.

Chamberlain was wrong, and so is the Boston Globe. The Globe is a failing institution, with a plummeting readership and a sea of red ink.

The Globe stated “Obama and McCain ought to be talking about their plans for the future of US-Russian relations” as if both were equally remiss in offering specifics about Russia. But in fact, that’s simply false. McCain has a clear plan of action in regard to Russia which he has discussed on many occasions, Obama has none. Guess which candidate the Globe will endorse in the general election? Absolutely shameless partisanship.

The Globe contends: “President Bush needlessly provoked Russian paranoia by rushing to recognize Kosovo’s independence without UN authorization or a negotiated deal between Serbia and the Kosovars.” So let’s see if we understand: Russia would have supported independence for Kosovo if only the UN had authorized it . . . which it never would have done because Russia has a veto there. This is what passes for “journalism” at an institution like the Globe? Meanwhile, what these bastards are actually saying is that we should sell out Kosovo just like we sold out Poland and Czechoslovakia in World War II, sacrifice them for our own convenience in the hope of appeasing Russia.

Is that sick or what? The word evil comes to mind.

The Globe asserts: “Bush and Bill Clinton both broke promises made to Russia at the end of the Cold War by expanding NATO toward Russia’s borders. And Bush insists on deploying a missile defense system in Eastern Europe that is crucially flawed but nevertheless frightens the Kremlin.” Is the Globe saying it has a better understanding of the merits of the system than Russia does? Or is it simply saying the Kremlin is insane and/or paranoid, and that we should accommodate that mentality? Whichever is the case, it’s clear the Globe is not finished calling for appeasement! First we should submit to Russia on Kosovo, and now on missile defense! And in return what do we get?

The Globe offers only this: “Bush’s successors should relieve these Russian grievances. In return, the next president should be able to count on firm Russian support in preventing Iran from becoming a nuclear power, combating terrorism, and managing the transition to a global economy bereft of cheap oil and natural gas. That should be America’s game plan.” So it appears the Globe believes that if we allow Serbia to persecute Kosovo and leave Eastern Europe to Russia’s tender mercies, then Russia will deny the nuclear bomb to Iran rather than help it get one. It will also help us “combat terrorism” in some unspecified manner (yet there has not been one single terror attack on American soil since Bush starting tormenting Russia) and help “manage the global economy” whatever that means. What exactly is Russia going to do to help the American economy? What will it do to halt terrorism? The Globe doesn’t seem to have the slightest clue, making it all sound very much like Kremlin propaganda.

Suppose Russia, which incidentally is ruled by a KGB spy as “president for life,” doesn’t come through after we “count on” it and sell out our allies? What will we have to console us then, an mighty apology from the Globe‘s editors? “Oops, sorry, our bad.”

The notion that Russia would be capable of giving nuclear arms to Iran, of sending financial support to Hamas and Hezbollah, of arming Venezuela and Syria, of dispatching nuclear bombers to menace us with overflights, that Russia could hate us enough to do all that and yet give up its malignant intentions if we agree to buy it off is so ridiculously naive that it must be an embarrassment to every American citizen to see it so cravenly displayed in a major American paper.

And what about the people of Russia? Not a word from the Globe about the Kremlin’s obliteration of the the press, opposition parties and elections. Apparently, the Globe would permit Russia any manner of draconian persecution of its own people, just as long as it stops threatening U.S. national security. What about the people of Georgia and Ukraine — or for that matter, the Baltics, Poland and Czech Republic. Are these all to be consigned to Russia’s “sphere of influence” that we mustn’t disturb, lest Russia start sending suitcase nukes to Osama bin Laden?

In other words, instead of standing up for the values of democracy, the editors of the Boston Globe are selling it down the river, and at the same time asking us to drop our guard and allow Russia to become an even bigger threat, just as was done in regard to Nazi Germany.

Thankfully, the Globe (and its New York Times parent) is an utterly failed institution on the verge of bankruptcy. Its circulation and stock price have tanked and it is floating in a sea of debt and cutbacks. Flailing helplessly, it’s actually rather amusing to watch it drowning in its own craven incompetence.

The Russian Economy, Teetering at the Abyss

Paul Goble reports:

Although Moscow and its boosters in the West continue to speak of a Russian economy “swimming in cash” from the sale of oil and gas abroad, Russian government officials this week released data showing that the broader economy in that country is now in serious trouble.According to an article in “Gazeta” today, “industrial production has already fallen and now investment is slowing as well,” trends that in the opinion of the Moscow paper are an indication that “the golden age of the Russian economy is approaching its end” however much people do not want to acknowledge that fact.

After falling over the last few years, inflation and especially producer inflation are rising again. The growth of investment in industry is much lower than a year ago. And there was an “absolute decline” in industrial production between May and June – something the writers concede may be a one-time result of Russian attention to international soccer matches! (For an explanation of the way in which Russian interest in soccer may have had that effect and also for a selection of the latest Rosstat economic statistics which provide even more support for the dire conclusions offered by “Gazeta,” see here).

Moreover, the paper reports, Russian industry has been losing its competitive advantage in many sectors. Over the 12 months, “Gazeta” says, the producer price index has risen 28.1 percent, compared to a 12.7 percent rise over a similar period in 2007. And this increase is “eating into the incomes of the population,” absolutely and relative to inflation.One of the reasons for these rises, Russian business leaders say, is the way in which high salaries in the oil and gas sector, salaries needed to attract and hold key personnel, are forcing others to raise salaries faster than productivity gains, a pattern that points to more problems ahead and one that suggests the country’s oil and gas wealth may have yet another downside.

But at least some observers say that there are other, more benign reasons for what is happening and thus urge that the Kremlin continue on course. On the one hand, Troika Dialog economist Yevgeniy Gavrilenkov points out that the Russian economy is now much larger and more mature making these changes less disturbing than they would have been earlier. And on the other, he argues, the changes in the economy have been so dramatic that the Russian statistical agencies have changed some of the methods they use to calculate such numbers. In other words, that the figures “Gazeta” and other business people are concerned about are a statistical fluke.As long as Russia’s earnings from the sale of oil and gas remain high, few in Moscow or in the West are likely to be too concerned with these latest statistics showing trouble ahead. But to the extent such figures are ignored now, the problems they point to will be even more difficult to correct in the future.

Russia’s Stock Market in Freefall

The Russian stock market lost nearly 6% of its value last Friday as a rabid, frothing Vladimir Putin launched another one of his crazy Stalin-like diatribes against Russia’s “enemies” — this time Russian steel maker Mechel (whose shares lost nearly half their value).  An editorial in the Times of London:

Russian stocks are in freefall, spooked by threats of anti-trust inquiries by Vladimir Putin, the Prime Minister, falling oil prices and the chicanery over TNK-BP. Foreign investors have been patient optimists, preferring to turn a blind eye to the mounting chaos in Moscow while keeping a steady gaze on commodity price indices. Yesterday, they lost their bottle and began to sell – and the selling may continue. It is a reminder that reputations built over several years can be lost in a day.

Continue reading

Russia’s Crony Statism

An editorial in the Wall Street Journal:

By now, the jilted investor in Russia is a bear-bites-man story. No one who puts serious cash in Vladimir Putin’s realm, not least in its flush gas and oil fields, can be surprised to find himself fleeced, run out of town, jailed in a Siberian gulag or worse.

So let’s not shed many tears for the latest oil major brought low in Russia, BP. The British company got into TNK-BP—a 50-50 $7.6 billion joint venture with four Russian oligarchs—presumably, with eyes wide open. The initial blessing of Mr. Putin—then president, today prime minister—made the obvious risks easier to swallow. For a while, business was gangbusters, with profit in 2006 alone at $6.6 billion. Then the same old thing happened: Someone in Russia wondered, Why share the spoils with foreigners? And BP found itself defenseless in the wild east.

To make a long story short, BP is losing TNK-BP to another Kremlin-backed forced expropriation. The usual tricks were used. The tax and labor authorities, the police and the courts launched no less than 14 probes of BP, forcing out its expatriate staff from the country. The last man left—TNK-BP’s CEO Robert Dudley—had his work visa pulled and on Thursday fled Russia for an undisclosed location, citing “sustained harassment of the company and myself.” He says he’ll run the company from abroad. Sure. BP officials pretty much admit the game is over.

If the past is a guide, BP will be forced to cede control of TNK-BP to a Kremlin-owned energy giant such as Gazprom or Rosneft. Mr. Putin has pushed aside other big players once considered untouchable, in his quest to Kremlinize oil and gas wealth. Mikhail Khodorkovsky’s Yukos—then Russia’s biggest and best-run oil company—was broken and its founder sent to Siberia. BP’s Russian misery has good company abroad, too; Total, Royal Dutch Shell, ExxonMobil and Amoco, before BP’s acquisition of it, all stumbled in Russia.

Mr. Putin coined the phrase, “dictatorship of the law,” and in the early days many investors endorsed his authoritarian policies as a path to stability. It turns out that something other than mere “stability” is emerging in Russia.

Local tax authorities and health inspectors are a power unto themselves, extorting large businesses (as in BP’s case, directed from above) or free-lancing on their own against the medium and small. Their victims are mostly Russians, who won’t be able as easily to conclude their property isn’t safe and pack up and take their businesses, and jobs, elsewhere. No matter how much money there is to be made in Russia these days, it ultimately doesn’t count for much the day a boyar or simple chinovnik decides to take it away.

The steady erosion of the rule of law in Russia is a distressing sign of the times there. Mr. Putin complains of not getting proper respect from the West. Forcing the president of a major Western oil company to literally flee Russia earns respect in no one’s land.

Annals of Kremlin Corruption

The New York Times reports on high-level corruption within the Russian state. Once again they’ve translated the article and posted it on a Russian blog, comments from Russian readers are here. Two examples:

William F. Browder was one of the most prominent foreign investors here, a corporate provocateur who brought the tactics of Wall Street shareholder activists to the free-for-all of post-Soviet capitalism. Until, that is, the Kremlin expelled him in 2005.

Mr. Browder then focused on protecting his billions of dollars of stakes in major Kremlin-controlled companies like Gazprom, and on fighting to return to a land where he had deep and unusual family ties. So when he ran into Dmitri A. Medvedev, the country’s future president, at the World Economic Forum in Davos last year, he saw his chance. In a brief conversation at a dinner at the Swiss resort, he pressed Mr. Medvedev for assistance in regaining his Russian visa. Mr. Medvedev, then a top aide to President Vladimir V. Putin, agreed to pass along his request. A short time later, Mr. Browder’s office received an unexpected phone call from a senior Moscow police official, who said he had learned of Mr. Browder’s new visa application and might be able to help. “My answer will depend on how you behave, what you provide, and so on,” the official said, according to a recording of the call supplied by Mr. Browder. “The sooner we meet and you provide what is necessary, the sooner your problems will disappear.”

Mr. Browder’s problems, in fact, were just beginning.

Continue reading

July 27, 2008 — Contents


(1) The Sunday Photos

(2) The Sunday Sermon

(3) The Sunday Sacrilege

(4) The Sunday Sit-Down Strike

(5) The Sunday “Saint”

(6) The Sunday Funnies

NOTE: Kim Zigfeld’s latest installment on Pajamas Media details the latest horrifying facts indicating that the Kremlin is engaged in politically-motivated murder campaigns to advance its interests, and pointing out that these murdering thugs are licking their chops in anticipation of an Obama presidency. Those who support democracy should be heartened, however, by the fact that the Kremlin understands it is so weak that it can’t win arguments or votes; instead, the only way it can hope to prevail is crude violence, little different from that practiced by the Chechen “bandits” it purports to despise. Comments as to how the West should best respond to this barbaric outrage are welcome.

The Sunday Photos: Russia’s Eternal Shame

“One of the largest state-sponsored monuments to the Gulag, this monument sits atop a hill in Astana, the capital of independent Kazakhstan. It incorporates the names of all the major Gulag camps in Kazakhstan, images of barbed wire and the black raven (symbolic of the prisoner truck bearing its name). Many of the non-Russian republics of the former Soviet Union have more readily dealt with the legacy of the Gulag, as they have built it into a narrative of what they (the Russians) did to us (the non-Russian peoples of whatever state). Of course, this simplifies a very complex history in many cases, but at least allows for the beginning of a conversation.”

Where is the Russian Astana?

Russia can never escape the eternal shame it has brought upon itself for attempting to sweep the horror of the gulag under the national carpet. And the new online exhibition “Gulag: Many Days, Many Lives” from which the above photo was taken only serves to memorialize this point. A project not of the Russian government but of the American George Mason University and the Center for History and New Media, it documents the horror of worshiping Stalin, eerily similar to what is now happening with Vladimir Putin. A live exhibit will open in Washington DC later this summer.

And it underscores the single most important fact about Russian history: By far the worst murderer of Russians is other Russians. Russian xenophobia is, quite simply, utterly insane.

The Sunday Sermon: Stay in Prison, Mr. Khodorkovsky


Stay in Prison, Mr. Khodorkovsky

It’s hard to imagine a charade more obscene and absurd than the one that developed last week as jailed oligarch Mikhail Khodorkovsky applied for parole after five years in custody on an eight-year sentence for alleged tax fraud. Should parole be denied, he plans to make a show of appealing directly to “President” Medvedev for justice.

Remember Martin Luther King’s famous “Letter from Birmingham Jail”? We’ve heard no such pronouncements from Khodorkovsky, who has been so uncommunicative that his own lawyers over at Robert Amsterdam’s blog are often reduced to reporting on his activities by relying on mass media reports. We have no idea, in fact, what plans if any he has for reorganizing Russia’s government in a civilized and democratic manner, or indeed what if anything he believes should be Russia’s future course.

If Khodorkovsky were to be released, the only basis upon which it could occur would be his secret undertaking to support the Putin dictatorship in all perpetuity. His release on parole would imply that he recognizes the charges against him were valid, and is acquiescing not only in his conviction but also in the nationalization of his company, Yukos. It would confirm what the Kremlin has said about him all along, that he was never a pro-democracy opposition leader, only a corrupt businessman looking for all the loot he could grab.

And besides all that, nobody seems to have noticed that the Kremlin is in the process of filing new charges against Khodorkovsky, charges that could keep him in prison for many more years. They’re hardly going to release him on parole if they are serious about those charges. So even if Khodorkovsky won parole on the old charges, he’d be kept in prison pending the new ones. As the International Herald Tribune reported: “He is now accused of laundering almost $30 billion and misappropriating 350 million tons of oil.”

The best possible spin that could be put on all this is that Khodorkovsky, knowing he faces many more years behind bars, is tweaking “President” Medvedev’s nose by making the application, calling his bluff on alleged legal reform in Russia and holding him up to the ridicule of the world. It’s also possible that he wants to appeal the denial of parole to the European Court for Human Rights, proving to that tribunal that the alleged infractions he has been charged with while in prison were a fallacious pretext to keep him out of Putin’s hair. He says he can produce the testimony of a former cellmate who was induced to lie about the infractions, and that would certainly be embarrassing to the Kremlin.

But is this really the best Khodorkovsky can manage by way of protest against the Kremlin’s malignant misdeeds? By applying for parole, Khodorkovsky is making it seem to his supporters that he might possibly cut a back-room deal with the Kremlin, and in the wake of his political silence this possibility can only be unsettling. Indeed, if Khodorkovsky were to walk free, then his ongoing challenge to his conviction in the EHCR would lose all meaning, and his entire incarceration would take on the aspect of a cosmic charade.

If Mikhail Khodorkovsky isn’t interested in trying to become Russia’s Martin Luther King or Gandhi, then he’s just one of innumerable Russians who have been victimized by a corrupt justice system and there is no reason to pay him any more attention than any of them. It’s time for Mr. K to fish or cut bait.

Thanks for reading La Russophobe !

The Sunday Sacrilege

Masha Lipman of the Carnegie Center, writing in the Washington Post:

The Russian Orthodox Church called on government authorities this month to condemn the Soviet communist regime. It’s odd that the church should think about this now: It’s been two decades since Mikhail Gorbachev initiated an avalanche of public disclosures about the horrors of the gulag and the masterminds of the bloody communist dictatorship — Lenin, Stalin, their accomplices and their followers.

That national journey into history was followed by the collapse of communism and then the collapse of the Soviet Union. Russia’s first president, Boris Yeltsin, evolved as a passionate anti-communist and banished the rule of fear and repression that had plagued the nation for seven decades. In the following years, the government and public organizations sought to restore the historical record.

But Russia’s next president, Vladimir Putin, distanced himself from his predecessor’s outlook. During his presidency, anti-communism was strongly played down. Some communist symbols, including Stalin’s national anthem, were brought back, and references to Stalin’s crimes all but disappeared from official discourse. Government rhetoric promoting Russia as a strong state and warning of a hostile Western world seeking to harm the country boosted admiration for Stalin, which never quite died out during the post-communist years, and a general nostalgia for Soviet times.

The church’s anti-communist initiative may serve the interests of the Russian leadership, which appears to look for ways to denounce communism while avoiding raising questions about today’s regime and its association with the communist past.

The interest in a denunciation of communism may have to do with appeals by former Soviet states for an international condemnation of the massacres and other crimes committed on their territories by the Soviet regime. Ukraine, for instance, seeks to hold Russia responsible for the mass famine of its peasants during Stalin’s collectivization. Russian officials may be enraged, but they’re not in a position to say the death toll estimate is false, not least since Russian peasants fell victim to the same villainy. So the trick for Russia would be to admit crimes but not to take the blame for them, lest Ukraine or other nations seek compensation.

The church, the state’s traditional ally, is an appropriate candidate for this mission. Because of its notorious collaboration with the Soviet regime, it has its own reason not to go too deep in denouncing communism. In several statements over the past couple of weeks, a church spokesman urged the government, in very general terms, to honor the memory of victims; to change the names of cities and streets associated with prominent communist figures of the past; to remove “statues of bloody leaders from central squares”; and more. This “de-communization lite” made no mention of Stalin or other perpetrators of the Great Terror, or of the monstrous state security forces that tortured and executed millions on the orders of the Communist Party.

The church’s call for de-communization helps the state further marginalize the public effort led by Memorial, the Russian human rights group that, since the late 1980s, has researched and published information on communist crimes. Unlike the Russian Orthodox Church, Memorial wouldn’t keep denunciations of communism within “reasonable limits.” Little wonder that the church’s anti-communist campaign conveys the impression that the church is the only organization concerned with confronting communist horrors.

Putin’s Kremlin consistently sought to sideline organizations that wouldn’t compromise their autonomy and that pursued agendas that did not conform with the official line. Lately, Memorial may have raised more concerns: As Memorial’s board chairman, Arseny Roginsky, told me, public support for his organization has increased. Backing anti-Stalin initiatives, he explains, may be seen as a mild form of opposition by people who regard overt political activity as risky and pointless. For example, construction of a national memorial to gulag victims is again the subject of public discussion. Gorbachev and other prominent public figures are taking an active role. And Novaya Gazeta, a newspaper that Gorbachev co-owns, has published a series this year devoted to the victims of and participants in the Great Terror.

Interest in the dark side of Soviet history is modest now compared with the nationwide yearning in the late 1980s for the truth about the Soviet regime’s crimes. But it may be enough to make the Kremlin want to preempt or control such interest. If its plan is indeed to enlist the church in a mild anti-communist campaign while marginalizing Memorial, the government has abundant power and resources to do so. Of course, even a limited condemnation of Soviet communism is better than nothing, but these political half-measures cannot supersede a national effort to come to terms with Russia’s history.

The Sunday Sit-Down Strike

Reuters reports (hat tip: TakeYourCross):

Carrying bags of stolen groceries, Oleg Vorotnikov takes out the batteries of his mobile phone before entering the secret headquarters of his underground art collective on the outskirts of Moscow.

“This is to prevent the cops from listening in,” said Vorotnikov, a 29-year-old art graduate, who with other politically conscious artists co-founded the Voina, or War, collective in 2007. “Once a drunk artist introduced us to bystanders as ‘Russia’s main radical group’ — that’s when I understood that we have to do something together,” Vorotnikov said.

In a country where traditional opposition to the government has been dulled by public apathy and a diet of pro-Kremlin television news, these artists take a different approach: they poke fun at the establishment, and the more absurd the better. They hunch over laptops in their headquarters — a garage — editing video of their latest piece of guerrilla street theater: an impromptu tea party in a police station. For the lack of chairs they sit on chests of drawers and a TV set. Cameras, camcorders and books of poetry are scattered over the floor.

“We always do things that violate rules. We combine art and politics to achieve something new,” said Kotyonok, a slightly built young woman who teaches physics at a Moscow university and who only gave her nickname, which means kitten. “People watch us and are simply shocked.”

Voina became a household name in the Russian blogger scene with a stunt intended as a wry commentary on the handover of power — decried by opponents as undemocratic — from former President Vladimir Putin to his successor, Dmitry Medvedev. A day before the presidential election that Medvedev won by a landslide, five couples, including one heavily pregnant woman who gave birth four days later, secretly undressed in Moscow’s Biological Museum. With video cameras rolling, they had sex in front of a banner calling for copulation in support of “the bear cub-successor” – a pun on Medvedev’s family name, which is derived from the Russian word for bear.


Blogs carrying photos and videos of the event shot to number one in Russian Internet rankings within 24 hours. Some users called the participants “freaks,” “sh–eaters” or “animals.” One blogger suggested they should be shot. When the mother of the pregnant woman saw her having sex on television, she threw her out of home. Voina said they had to leave their old headquarters under pressure from the authorities but few members have yet to face the full weight of the law for their activities.

The group is most vulnerable to the catch-all “hooliganism” charge that could lead to a short prison term, but only one member is currently facing prosecution for throwing cats during one performance. Voina’s actionist art draws on Moscow Conceptualism, a movement that started in the 1970 with performances subverting socialist ideology. Given the repressive nature of the Soviet state, these happenings had to take place secretly.

Only when state control over the arts receded during Mikhail Gorbachev’s perestroika reforms in the 1980s could artists take their events into the public sphere. In April 1991 members of a group around Anatoly Osmolovsky, a Russian artist, art theorist and curator, lay down on Red Square forming the word “khui,” Russian for cock, with their naked bodies. Voina members describe the happening as inspiring but add that it would be impossible today in an “authoritarian Russia” where, nevertheless, they have earned the respect of some in the mainstream art scene.

“In the ’90s art fell under the influence of a society that was becoming more and more bourgeois: artists happily turned into conformists,” said Andrei Yerofeyev, who until last month was head of modern art procurement at the state-run Tretyakov Gallery. “Only in the last year a strain of protest art reappeared, one that takes a critical line, reflects, takes a step back and sometimes cynically, sometimes comically, describes what is going on in our society.”

Back in the Voina headquarters the activists scramble around a laptop computer trying to improve the sound of their latest video to make it fit for Internet publication. Shaky images, filmed with a hidden camera the day before Medvedev’s inauguration, show the artists dishing out cream cakes and tea in a police station. Watched by a stunned officer, they pin Medvedev’s portrait to a wall. “We invite you to celebrate with us the inauguration of the new president,” one activist can be heard saying. Attempting to remove the intruders, the officer resorts to verbal abuse. “We have to fix the sound, you can’t hear anything,” said Kotyonok, twitching the dials on the video- editing software.


In another piece of performance art, the group rigged up a table in a metro carriage, brought out food and vodka and held a wake for absurdist poet Dmitry Prigov. They also marked international workers’ day by going in to a McDonald’s restaurant and throwing live cats at the counter staff. The idea, they said, was to help snap the workers out of the dull routine of menial labor. Behind the bizarre stunts, the artists who make up Voina have a serious political agenda. “If the authorities say ‘we are building a strong state,’ an artist should show that this is not the case. If they say ‘we are improving the lives of the people,’ an artist should show that this is a lie,” said Vorotnikov over dinner, tearing off a hunk of the chicken he earlier stole from a supermarket. But they say their work is also a journey of self-discovery, to see how far they can push their own boundaries as artists and radicals. “We hate cops but if we just attacked them like that, they would jail us immediately. So we hide our hatred behind art so they can’t get us and we achieve our aim quicker,” said Kotyonok.

The authorities have dealt harshly with overtly political opposition but to date there has been no sign of a crackdown on Voina. Acting under the aegis of art protects them to a large extent, she said. “We’ve had sex in public and are no longer scared of it. We’ve invaded a police station and are no longer scared of it. What else is there to scare us?,” asked Kotyonok. “Death we will deal with in the future. Soon we will be completely fearless.”

The Sunday "Saint"

On the red banner is written: “Glory to Stalin the Great!”

The Telegraph‘s Russia correspondent reports:

A couple of years ago I was in the Battle of Stalingrad Museum in the city now known as Volgograd.

On the wall of museum director Boris Usik’s office hung two paintings, one a delicate watercolour of the late Queen Mother, the other a heroic depiction of Josef Stalin in oils.

Seeing the old tyrant hung so prominently in a state official’s office was unnerving at the time. While the odd statue of Stalin had been restored in a couple of village squares, the man who subjected Russia to 31 years of terror had largely disappeared from public view.

Yet over the past couple of years it has once again become cool to revere Stalin, and so it was not much of a surprise to learn that the dictator responsible for perhaps 20 million deaths was leading early voting in a nationwide poll to decide the country’s greatest historical figure.

Even during his lifetime, Stalin enjoyed more public support in Russia than many in the West realise. After all, those who opposed him were dispatched to the gulags or their deaths. Others were terrified into silence.

But then, as now, a sizeable chunk of the population either swallowed the propaganda or genuinely believed that Stalin had reinvigorated a moribund nation, turning in to a great power while simultaneously saving Europe from Hitler.

For old Communists like Mr Usik, Stalin’s name is synonymous with stability in a country that has not had much of it of late. What has struck me, however, is Stalin’s cross-generational appeal. I’ve even heard bright young students praise his disastrous agricultural collectivization policies. Most Russians, even his supporters, acknowledge that Stalin had an awful lot of blood on his hands.

But they argue that it was a period in history when Russia needed a tough man at the top. And they argue that there is much more on the positive side of Stalin’s ledger, particularly in the Great Patriotic War.

While the Soviet Union’s role is often minimized in the West, many Russians are unaware of the role played by Britain and the United States in defeating Hitler. They believe the Second World War only began in 1941 and maintain that Russia fought alone for three years until Britain and the United States reluctantly joined the war during the D-Day landings of 1944.

Yet the fact that Stalin’s popularity has also grown in recent years – something attested to in opinion polls – is undoubtedly partly to do with an unofficial state campaign to rehabilitate his image.

A series of television documentaries, films and books released in recent years have proved little less than eulogies. Then the Kremlin began to attack the publishing industry for being beholden to Western grants.

Television news programmes, whose content is dictated by the State, regularly reported that the history text books used in schools had been distorted by the West to skew the representation of Russia’s Communist past.

So a new history guidebook for teachers was published last year which glossed over Stalin’s crimes and ultimately declared him Russia’s greatest leader of the 20th century.

Despite earlier denials that anything of the sort was planned, the work was republished as a children’s text book and while it has not become a mandatory set text most schools know they risk trouble if they try to teach from anything else.

Why is the Kremlin so intent on rehabilitating Stalin? Garry Kasparov, the former chess giant and opposition leader, reckons that by hamming up Stalin’s greatness, Russians will be more inclined to forgive the government’s march towards authoritarianism.

After all, as the old dictum states, he who controls the present controls the past and he who controls the past controls the future.

The Sunday Funnies

July 25, 2008 — Contents


(1) EDITORIAL: An Economy Built on Sand

(2) Inflation Continues to Brutalize Putin’s Russia

(3) Economic Storm Clouds over Russia

(4) Latynina on the Arctic Gambit

(5) Nashi in the Wilderness

(6) Annals of Foreign Investors: Another One Bites the Dust

EDITORIAL: An Economy Built on Sand


An Economy Built on Sand

As you can see from the chart above, over the past four weeks the Russian stock market has lost 12.5% of its value.

For anyone with a lick of sense, this news is truly jolting. Since Russia is benefiting from the stratospheric increases in the prices of oil, the stock market’s performance betrays a fundamental weakness in the foundations of the economy itself.

Writing in the Moscow Times James Beadle, a portfolio manager for Pilgrim Asset Management, wrote in column entitled “Russia’s economy is stalling” that the government’s economic growth data for June fell far below the market’s expectations and noted that “initial public offerings have slowed substantially and May industrial production data were also weaker, as they showed manufacturing growth of less than 1 percent over the year. Cooling growth dynamics point to a possible shift in confidence.” He concluded: “June’s economic data caught the market by surprise and serve to remind that the path ahead is less clear. With the benefit of hindsight, the sharp declines in these economic parameters, which constitute some of Russia’s key economic drivers, are not surprising. It has long been recognized that President Dmitry Medvedev faces far greater development challenges than his predecessor ever did. Even if the global backdrop remains benign, the country faces economic constraints that cannot be resolved with easy money.”

Beadle makes money by convincing folks to invest in Russia’s markets. When somebody like that is ringing the warning bell, you know things are pretty dire indeed. And below we offer two more devastating nails in Russia’s economic coffin. But the Russian people go blithely on, telling a naked Mr. Putin he’s wearing a cloak of mink, fit for a king, just as in Soviet times.

MT Columnist Boris Kagarlitsky put it bluntly: “We are being told that Russian capitalism is self-sufficient, invincible and unique, not unlike Josef Stalin’s view of his socialist society. It is not entirely clear why our government and business leaders so zealously tried to open Russia’s markets and to pull us into the global economy if we now intend to lead some kind of solitary existence, isolated economically from whatever happens to the rest of the world. The main question is: What will we do when the global economic system collapses?”

Kagarlitsky is right on target, but he’s wrong about the main question, and his own text betrays this. The question isn’t what will Russia do, but why isn’t Russia asking that question. Why isn’t anyone challenging the Putin government given all this disturbing reality? Could it be that they are afraid to do so, just as many were afraid to confront Stalin, leaving the nation on an essentially rudderless course to destruction?

Inflation Continues to Brutalize Putin’s Russia

Interfax reports that inflation continues to brutalize Russia far more dramatically than Europe. And remember, this is just the Kremlin’s data. The true picture is likely far more bleak than even these appalling numbers indicate.

Inflation on food prices in Russia was almost four times higher than in the EU countries in the first half of 2008, the Federal State Statistics Service (Rosstat) said on Tuesday.

Food prices in Russia grew 1.1% in June (and 12.9% in the first half) compared to 0.3% (3.5%) on average in the EU countries.

The biggest jumps in food prices among EU countries in June were seen in the UK at 2.4%, Portugal – 1.6% and Latvia – 1.4%. Food prices dropped in a number of EU countries in June, mainly due to seasonal declines in fruit and vegetable prices. Food prices were down 3.1% in Bulgaria, 2.1% in Greece, 2.0% in Cyprus and 1.2% in Finland.

In the January-June period, the biggest EU food price increases were posted in Latvia (up 9.6%), Lithuania (8.4%), Finland, Hungary, Estonia, Slovakia, and the UK (up 6.3%-6.9%). The smallest increases were in Malta (up 0.7%), Austria (1.1%) and Greece (1.3%).

Oil and fat prices saw the biggest increase in the EU in June, rising 1%, while prices on meat and meat products rose 0.9% and the cost of fish and seafood grew by 0.8%. Baked goods and cereals grew 0.7% in price.

The cost of baked goods and cereals grew the most in Russia in June 2008 (2.4%). The cost of meat and meat products rose 2.1%, while butter and fat prices rose 1.6%. The cost of vegetables, sugar, jam, honey, chocolate and confectionaries rose 1.4% in June, while the cost of dairy products, cheese and eggs fell 2% and fruit prices dropped 0.8%.

In the EU, fruit prices saw the biggest increase in the half, growing 8.4%. The cost of baked goods and cereals rose by an average of 4.6% in the half, while butter and fat prices grew 4.2%.

Vegetables prices soared 53.5% in Russia in the first half of 2008, baked goods and cereals – 18%, butter and fats – 16.1% and fruit – 13.2%.

Economic Stormclouds over Russia

The International Herald Tribune reports:

Fears are growing that Russia’s oil and gas fueled economy is running too hot — and about to boil over in the kind of mess that has scalded smaller East European neighbors.

Some of the most vehement warnings have been coming from the normally bland Finance Minister Alexei Kudrin, who saysgross domestic product is growing too fast and any ill-conceived stimulus measures such proposed tax cuts will lead to intolerable inflation and a sudden stall in growth.

Kudrin startled audience at a recent tax conference when he compared the issue to nuclear war. Cut taxes, Kudrin warned, and Russia won’t maintain its thousands of atomic warheads. “The 33 percent share of the budget spent on defense and security is our guarantee that there won’t be a nuclear war,” the minister said.

His opponents, including Economic Development Minister Elvira Nabiullina, are clamoring for the sharp tax cut to wean Russia off its addiction to imports, which are growing at an annual rate of over 40 percent.

The government is walking a tightrope. With all the government and private sector spending, inflation is reeling out of control — food prices are soaring at an annual rate of 25 percent — and threatens to submerge hundreds of thousands of people below the poverty line.

Dollars are flooding in thanks to record-high oil prices, and the country’s rising middle class is on an unprecedented spending binge thanks to accessible bank loans. The government, in the meantime, is hustling to modernize exhausted infrastructure, pumping up the economy even more.

Kudrin’s sensationalist remark about Russia’s nukes comes at a time when the nation’s economy is bucking recessionary trends around the globe. GDP growth, fueled by the rising price of Russia’s mainstays, natural gas and oil, was 8.1 percent last year and 8.7 percent year-on-year in the first quarter of 2008.

“Russia’s economy is overheated at the moment,” said Eric Berglof, chief economist at the European Bank for Reconstruction and Development. “The growth rate is too high — two to three percentage points above potential.”

An economy overheats when its capacity to produce cannot keep up with rising demand. A World Bank report issued in June lists seven signs — ranging from infrastructure constraints to accelerating property prices.

“The government has failed to address bottlenecks in the economy, to implement necessary infrastructure projects that would improve the power system, railroads, agriculture, or alleviate the traffic jams in Moscow,” Berglof said.

But if the government throws too much money at resolving these problems, the risk is that the cash injection will only further fuel inflation, economists say.

During the waning months of his presidency last year, Vladimir Putin approved a number of big projects as part of a pre-election spending spree. As a result, state spending jumped 37 percent last year, and 70 percent in the fourth quarter alone. Putin’s favored candidate, Dmitry Medvedev, was elected president and Putin is now Prime Minister.

Russia’s consumer price index has climbed 9.1 percent from the start of the year to July 14, according to the state statistics agency — three percentage points higher than in the same period last year and outpacing the Central Bank’s forecast of 10.5 percent for 2008. On an annual basis, prices soared above 15 percent.

As prices rise, workers demand higher pay, creating an inflationary spiral. And as food prices rise, poorer people spend more on necessities. FBK International, a consultancy, has forecast that the number of Russians living in poverty could increase this year for the first time since 2000 — by 1.1 million people to a total 20 million.

“Inflation needs to be cooled down sooner rather than later. If it is not dealt with early, the consequence will be … a greater fall in the growth rate, as we see in Estonia and Latvia right now,” said Anders Aslund, senior fellow at the Peterson Institute for International Economics in Washington, referring to the two Baltic states whose economies overheated and are now seeing a sharp decline in growth.

Tax-cut supporters insist that reducing the value-added tax from 18 to 12 percent will provide manufacturers the necessary respite to rejuvenate output. Also, by jump-starting manufacturing and small and medium businesses, tax-cut advocates also hope to diversify the economy, which is highly dependent on oil and gas.

Not so, countered Kudrin. The VAT accounts for one-third of federal budget revenues. Cutting it will not help economic restructuring, as badly as Russia needs it.

Concerns over Russia’s economy coincide with the approaching 10th anniversary of the 1998 financial crisis, when the country defaulted on domestic debt and devalued the currency, causing a shock wave on international markets. Millions of Russians lost their savings.

Economists stress there is no chance of a repeat crisis. Russia has wisely used the oil windfall to tuck away hundreds of billions of dollars in strategic reserves and sovereign wealth funds — “rainy day” funds that it can use as a buffer against any short-term shock such as a precipitous drop in oil prices.

Latynina on the Arctic Gambit

Writing in the Moscow Times Yulia Latynina decries Russia’s malignant Arctic corruption:

The vast oil deposits located in what the Kremlin believes to be an extension of Russia’s continental shelf in the Arctic will be distributed solely at the government’s discretion, without holding the usual auctions or tenders. In a meeting on Friday with Deputy Prime Minister Igor Sechin, who oversees the energy sector, President Dmitry Medvedev explained the decision, saying, “This was done consciously to ensure rational use of this national wealth.”

Is he saying that only the imperialists allocate the rights to develop oil deposits through competitive auctions, whereas the Kremlin lets Sechin decide who gets what? Is Sechin the sole guarantor of Russia’s “rational use of its national wealth”?

Prior to this announcement, Russia had been trying for a year to prove that the Lomonosov ridge, on the bottom of the Arctic, is a logical extension of the Siberian plain. General Vladimir Shamanov even said in a June 24 interview in Krasnaya Zvezda, the country’s military newspaper, that the military is prepared to fight any country that disputes Russia’s rights to the continental shelf.

So we won’t hold a tender, but we are willing to go to war. Naval warships will repel the forces of any country that contests Sechin’s right to exploit the oil deposits on the continental shelf.

In January, when Prime Minister Viktor Zubkov told the then-prosecutor general to find out what is going on with country’s drilling activities in the Arctic, it was discovered that the country’s only functioning Arctic drilling rigs, the Murmansk and the Valentin Shashin, had been rented out to a Norwegian drilling company at one-fourth of the market price. What a great example of the country’s “rational use of its national wealth”!

Things are no better with the military. During Soviet times, the country’s nuclear submarines patrolled the Arctic region. Strategically, it was the most favorable location from which Moscow could launch a possible nuclear strike against the United States; a missile launch from the Arctic would have the shortest possible flight time to U.S. territory.

Maintaining a military presence in the Arctic, however, requires a complex and very expensive infrastructure, including a sophisticated communications system that can function reliably despite severe magnetic interference, and the ability to accurately predict bad weather conditions.

But the Soviet Union had all that. My colleague and specialist on the Russian military, Alexander Golts, once pointed out to me that, “If anybody thinks we were on [the Arctic island of] Spitsbergen solely to mine coal, they should take a look at the weather station and landing strip there.” But since it was impossible to rent out our Spitsbergen assets for one-fourth of their market value to maximize “the rational use of its national wealth,” the whole installation fell into disrepair.

It is, therefore, unclear what military resources Shamanov will have at his disposal to defend Sechin’s claims to the rich Arctic natural resources.

The most interesting part of this story is that, although there might really be large oil and gas reserves under the Arctic, Russia, unfortunately, is unable to mine those deposits without the help of foreign expertise and equipment. We can’t even tap the huge Shtokman gas field in the Barents Sea by ourselves.

But it is hard to imagine Russia entering joint Arctic exploration and development projects with foreign companies when our leaders are constantly shaking our fists at them and sending the country’s nuclear submarines to patrol the Arctic waters.

Or perhaps the Kremlin is planning to pour a couple billion dollars into the creation of an exotic new Russian hybrid — half-nuclear sub and half-underwater drilling platform. Not a bad idea at all! And I have got a perfect name for this one-of-a-kind vessel — “The Igor Sechin.” On its side we could write: “For the optimal use of Russia’s natural resources.”

Nashi, in the Wilderness

The Times of London reports:

It should have been a celebration of their success in defending Vladimir Putin’s Russia from a democratic revolution. Instead, the annual summer camp of the youth movement Nashi (Ours) seems a listless affair. The ideologues behind it admit that Nashi has run out of steam now that Dmitri Medvedev is in the Kremlin as Mr Putin’s handpicked successor. The face of Mr Putin, now Prime Minister, still hangs from banners spread across the campsite, on the shores of Lake Seliger, 300 miles (480km) north of Moscow. Mr Medvedev is virtually invisible.

Even the anti-Western propaganda seems half-hearted compared with previous outpourings of hate against opposition leaders such as Mikhail Kasyanov, a former Prime Minister, and Garry Kasparov, the former chess champion. Nashi’s principal “enemy” this time is a pig named after Toomas Hendrik Ilves, the President of Estonia. An Estonian tricolour flies over his sty in protest at the removal of a Red Army monument in the capital, Tallinn.

Fewer than 5,000 activists are at the two-week camp, half the number last time, as organisers struggle to find a purpose now that the presidential election is over. Street protest has given way to support for Russian economic development under the “Putin plan” to 2020.

Patriotism remains a constant theme, particularly the need to produce children for the Motherland. Igor Shuvalov, the First Deputy Prime Minister, toured the camp in a T-shirt with the slogan “Home, wife, children. I love my family”. Yuliya and Vitali Shuvayev were among 15 Nashi couples who demonstrated their devotion to the cause in a mass wedding. They spent their honeymoon in a group of tents formed in a heart shape under a banner proclaiming: “This is the miracle of Seliger.”

“Nashi means patriotism for us. That’s why we wanted to get married here,” Yuliya, 22, said. “We want three children because the first two are for the parents and the third is for growth of the country.”

Nashi has now splintered into different branches that support causes ranging from the Orthodox Church to business innovation. Some of its more muscular traditions remain. One section, Stal, organises street protests, while another trains young men to form street patrols with the police. The movement revives a Soviet-era tradition of volunteer druzhniki to maintain order. “A lot of young people have nothing to do and just watch TV, so we tell them that if they want to help the country then here’s their chance,” Roman Verbitsky, the Stal leader, said. Mr Shuvalov laughed as he passed a derelict shed symbolising Mr Kasparov’s movement, The Other Russia, which was hounded by riot police during anti-Putin demonstrations before the elections.

Nashi was founded in 2005 as a response to the pro-democracy Orange Revolution that had swept Ukraine and the Rose Revolution in Georgia. Sergei Markov, a United Russia MP and a key Nashi ideologist, admitted that the movement had “lost its mission”. He told The Times: “The mission was to prevent an Orange Revolution.” Asked whether Nashi had any place when the Kremlin under President Medvedev was attempting to present a more liberal face to the West, Dr Markov replied: “Nashi is part of pop culture now and they are fans of Putin. Medvedev for them is a bureaucrat, while Putin is a hero.”

The AFP has more:

Military training, satirical shows and US-style business seminars were among the strange mix of activities on offer at this year’s summer camp for Nashi — the Kremlin’s youth movement. With political power in Russia now firmly in the hands of President Dmitry Medvedev and his mentor, Prime Minister Vladimir Putin, it seems that the massive group set up to counter any popular dissent has lost its focus. As the movement searches for a new purpose in Medvedev’s Russia, its activists say one solution could be to concentrate on beating the West at its own game by making the most of the country’s oil-fueled economic boom.

“Medvedev unfortunately doesn’t have the same attitude towards Nashi as Putin,” a senior member of the movement told AFP during a visit this month to the camp near Lake Seliger, 400 kilometres (250 miles) northeast of Moscow. “But it would be dangerous to let these young people go now. They could join the opposition,” said the Nashi member, who spoke on condition of anonymity, noting that there were three times fewer activists this year than last year. “The authorities have lost their interest in Nashi,” read a report on the news website. Nashi leader Nikita Borovikov was quoted in the report as saying: “The movement changes in line with the country’s agenda.”

Reflecting Kremlin thinking, events at the camp included a wedding of 20 couples who were then told to go and procreate to solve Russia’s demographic crisis, and the founding of an Orthodox group against Kosovo’s independence. Nashi, which translates as “Our People” [LR: No, it doesn’t. It translates as “us Slavic Russians”], was set up by Kremlin officials under Putin in 2005 immediately after Ukraine’s Orange Revolution, where youth activism proved decisive in toppling the country’s pro-Moscow government. They have held large-scale demonstrations as a show of force against Russia’s beleaguered opposition and have launched stinging campaigns against Kremlin critics, as well as trying to spread a Putin personality cult.

But this year, Nashi members said they wanted to focus on career prospects. “We have selected 340 students from 25 regions. Experts work with them to help them join the elites,” said Yelena Berezhnikova, head of one of the movement’s subgroups called “Personnel for Modernisation of the Country”. The library at the camp contained economic manuals, a biography of former US president Bill Clinton and a book by US management guru Tom Peters. One of the lectures on offer was entitled: “How to overcome US hegemony.”

But while some Nashi activists charted out stellar careers to serve Russia’s national interests, others were busy mocking Russia critics or undergoing military training to fight against the anti-Kremlin opposition. Activists organised a show at the camp in which a character covered in dollars representing the United States walked around with a pig on a leash. The pig was named after Estonian President Toomas Hendrik Ilves.

Relations between Estonia and Russia are testy as Kremlin officials say the Baltic country discriminates against its large ethnic-Russian minority. One of the Nashi slogans for the show read: “If you lose control, you get fucked!” For more direct action, the movement even showed off a military wing that trains reformed alcoholics and drug addicts and turns them into street fighters who patrol cities alongside Russian police to clamp down on “disorder.” The peaceful transition of power from Putin to his ally Medvedev is paraded by the Nashi as a victory. But Matvei Matyushin, one of the group’s leaders, said: “It seems that everything’s okay but we have to remain vigilant.”