October 13, 2008 — Contents

MONDAY OCTOBER 13 CONTENTS

(1)  EDITORIAL: Stripping Putin Bare

(2)  EDITORIAL:  Blogging Dima

(3)  The Russian Stock Market & the Common Man

(4)  The Great Kremlin Stock Market Coverup

(5)  Bayer’s Historical Perspective on the Market Collapse

EDITORIAL: Stripping Putin Bare

EDITORIAL

Stripping Putin Bare

It can’t possibly have come as a surprise to any intelligent person that a Russian scientist had been nabbed trying to help Iran build nuclear weapons, or that Russian dictator Vladimir Putin’s Russia did not keep its word— its written promise — to remove Russian forces from Georgia by the end of last Friday. Nor can it surprise anyone — and it should hearten many — to hear Russia wailing and moaning about “secret” UN-NATO meetings designed to respond to Russian duplicity as Russia awakens from its drunken bender to realize it is despised by the entire planet.

But it may come as a surprise to some to realize how many personal errors by Putin are hidden behind the recent collapse of the Russian stock markets, which spent the lion’s share of last week either shut down entirely or in freefall.

EDITORIAL: Blogging Dima

EDITORIAL

Blogging Dima

A recent news item in the Moscow Times cites a VTsIOM poll (Russian language link) released a few days ago in connection with “National Internet Day” which reveals the following information about Russian Internet use:

69% of Russians never use the Internet
11% use it daily
9% use it several times per week
3% use it a few times per year

VTsIOM is controlled by the Kremlin, yet even it admits that the Internet is a non-factor in Russian political life.  70% of the country makes no use of the Internet for any purpose, and 90% lacks daily contact with the only conceivable source of news which might give them real information, as opposed to merely repeating Kremlin propaganda. Less than half of those who do access the web do so in order to get news about national and international events.  Even in Moscow and St. Petersburg, 60% of residents do not use the Internet.  In the main part of the country, the Internet may as well not even exist.  For this reason, as we report below, the Kremlin has been able to effectively hide the recent stock market collapse from the vast majority of the population simply by not mentioning it on TV and in the nation’s major newspapers.

But despite all this, the Kremlin is still obsessed with controlling the web, because it is the only flickering source of real information left in Russia.  Bloggers have faced criminal prosecutions and whole websites, especially those involving Chechnya, have been shut down (the eXile magazine faced a similar fate).  And now, the MT reports, “president” Dima Medvedev wants to be a blogger.

The Russian Market and the Russian Common Man

As we reported last week, the Russophile propaganda line that the country’s stock market collapse doesn’t affect the common man is laughably false, though to be sure the disaster has had devasting consequences for Russia’s wealthy class.  If the market really doesn’t matter, then Russians should be outraged to see their government burning rapidly through the national savings in order to salavage the market’s reputation and the fortunes of a few oligarchs.  But, of course, it does matter. We’ve already reported on the Washington Post story showing the massive falloff that has already occurred in construction contracts in Moscow, which will lead to layoffs in the industry and ever-worsening shortages of housing.  Russia’s commodity-based economy is being victimized across the board as demand for products like oil and steel disappear.  These events are major boons, of course, for manufacturing economies like those in Europe and the United States.

Indeed, the mere fact that those on the Kremlin’s side believe it might be possible that their stock market could collapse without affecting life on the street is a pretty good explanation of why the stock market has collapsed.  And now the Times of India adds more detail to this horror story:

No longer quite so flush from vast oil and gas wealth, Russia’s economy is feeling the pinch from the global crisis and problems at home, putting investors and small businesspeople on edge. While economic growth has surged upwards at rates of over seven percent in recent months, plunging stockmarkets and massive central bank intervention have told a different story, denting a feeling of immunity from wider trends.

“To be honest I think the American crisis, which seemed so far away, could affect Russia,” said Yury, a computer programmer employed by a large mobile phone company, complaining that he had lost “all confidence in stock market instruments and the financial market.”

“As a result of this crisis I’ve lost 300,000 rubles (8,400 euros/$11,600) – 40 percent of what I had managed to save in recent years,” said the 37-year-old Muscovite, who asked that his surname be withheld.

The Great Kremlin Stock Market Coverup

The Kremlin is attempting to hide the stock market crash from the people of Russia, exactly the way the USSR would have done.  The Moscow Times reports:

As a wave of grim news swept in from global markets Monday, the MICEX halted trading a record three times, while the RTS shut down twice. The day still ended in a bloodbath, with both indexes plummeting about 19 percent.

But you wouldn’t know that from watching the evening news.

Instead of reports about the markets’ losses, the three main television channels — state-controlled Channel One, Rossia and NTV — showed billionaire Mikhail Fridman telling President Dmitry Medvedev that the global financial meltdown offered new opportunities for Russian companies abroad. “I am convinced that the Russian financial system is protected from such a fundamental shock to a greater degree than many other countries,” Fridman told Medvedev at the Gorky presidential residence outside Moscow.

Bayer on the Economic Meltdown

Alexei Bayer, writing in the Moscow Times:

The current Kremlin team exemplifies an American saying: They were born on third base but believe they hit a triple. After a decade of record oil prices, Russian leaders became convinced that their enlightened policies turned Russia into a robust economic power on par with the Group of Seven. They came to believe that oil and gas give Russia enormous political and economic leverage.

Having touted Russia as a safe haven in the global financial crisis, they were caught off guard when the crisis hit home. As they frantically search for a solution, they may exacerbate the damage and, in a worst-case scenario, destroy Russia’s private sector.

Annals of the Politkovskaya Scandal

Rest in peace, fallen hero!

Jonas Bernstein of the Jamestown Foundation’s Eurasia Daily Monitor gives us the latest update on the Kremlin’s Politkovskaya murder coverup:

October 7 marked the second anniversary of the murder of Novaya Gazeta journalist Anna Politkovskaya. According to The Moscow Times, several hundred people, including Politkovskaya’s colleagues and children, human rights activists, and political opposition leaders, gathered on central Moscow’s Pushkin Square to remember her. In a speech to the gathering, Novaya Gazeta Editor-in-Chief Dmitry Muratov criticized the decision to try the men accused of her slaying in the Moscow District Military Court, which in 2004 acquitted several men of the 1994 murder of Moskovsky Komsomolets reporter Dmitry Kholodov. “This very court heard the murder case of journalist Dmitry Kholodov and let his killers walk free,” Muratov said. The Moscow District Military Court announced on October 7 that preliminary hearings in the case would begin on October 15 (Itar-Tass, October 7). Petros Garibyan, who is in charge of the investigation into Politkovskaya’s murder, told Novaya Gazeta that the case would be heard by a military court rather than a civil court because classified material and an FSB officer were involved.