Daily Archives: July 28, 2008

EDITORIAL: The Clueless, Craven Boston Globe

EDITORIAL

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.

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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.

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