November 30, 2008 — Contents

SUNDAY NOVEMBER 30 CONTENTS

(1)  EDITORIAL:  Analyzing Russia’s Economic Malaise

(2)  Coalson on the Media Crackdown

(3)  Ingushetia, Exploding due to Putin’s Failures

(4)  Russian Hatred of America on the Big Screen

(5)  The Horror of Russian Barbarism, Unbound

NOTE:  A window into life on the mean streets of Vladimir Putin’s KGB-ruled Russia opens here.

EDITORIAL: Diagnosing the Russian Economic Malaise

EDITORIAL

Diagnosing the Russian Economic Malaise

When investors entered this market, there were certain carrots at the end of the stick. All of these carrots either did not materialise at all or came out in some way retarded.”

— Sergei Emdin, the head of EuroSibEnergo, an electricity investment unit of Russia’s richest man, Oleg Deripaska, speaking on investment in Russia’s energy sector at an energy summit on Tuesday in Moscow

Things are getting uglier by the minute on the economic front in Vladimir Putin’s Russia.  The country is in recession, with a 0.4% contraction in GDP last month (industrial production contracted at six times that rate).  Due the Kremlin’s crazed tariff policies, the Moscow Times reports that Russian oil producers, with their costs soaring, lost over $3 billion on oil exports in September and October.  Only now, months too late, has Putin finally cut the export duty, meaning that the Kremlin will finally begin to suffer a massive loss of revenue from the falling market price of oil, placing the state budget at dire risk.

The ripple effects on the oil-dependent Russian economy have been devastating, and angry investors who were stupid enough to trust the Kremlin are demanding answers, and the full brunt of the disaster wrought by Vladimir Putin’s incompetent leadership has yet to be fully felt. Rachel Ziemba, lead analyst for oil-exporting countries for RGE Monitor, has offered an extensive review of Russia economic performance on the organizations’s website.  It highlights several neglected facts that emphasize the increasingly dire economic peril faced by Putin’s Russia.

Ziemba points out that the bleak economic forecast of 3% economic growth for Russia in 2009 put out recently by the World Bank was based on an average oil price of $100/barrel next year.  Even at that price, Russian GDP growth was expected to halve compared to this year, since that price would represent a nearly 50% falloff from the recent record highs.  Thus, if oil prices remain at $50/barrel through 2009, Russia will clearly plunge into a brutal recession and the Kremlin will incur rapidly mounting debt (a deficit of 5% is expected in the 2009 budget if oil prices remain where they are).  Yet, the Kremlin’s recent behavior in repeatedly shutting down the Russian stock markets and invading Georgia hardly make it a prime candidate for lending.  Moreover, Ziemba points out, the Kremlin’s total lack of transparency and trust, combined with Russia’s pandemic corruption, makes it difficult to implement liquidity injections effectively, and may doom such efforts before they begin.

The ruble has lost 17% of its value so far this year, Ziemba says, and the government’s furious attempt to artificially limit the slide is not only costing Russia billions in FOREX reserves, but also “may be exacerbating the outflow from the  banking system (outflows were about 5-7% in October) even as it erodes Russia’s cushion of foreign exchange reserves.  Foreign investment flows have clearly reversed – In 2008, Russia has now had net outflows of investment in contrast to the inflows experienced in recent years.”  The cost to Russia of combatting the economic crisis is truly staggering; some sources are suggesting the price tag will be at least $400 billion, or one-quarter of Russia’s annual GDP and virtually the entire amount of its existing FOREX account.

But that is not the worst of it.

Coalson on the Media Crackdown

Writing on his new blog The Power Vertical over at Radio Free Europe, Robert Coalson gives us the appalling details in Vladimir Putin’s ongoing crackdown on the Russian media as he seeks to sweep his grotesque mismanagement of the Russian economy under the carpet:

Last week the Prosecutor-General’s Office ordered its branches in the regions to keep an eye out for media reports about the financial crisis that could constitute “informational attacks against banks or inflame a mood of panic.” Since then several journalists — Oksana Panova of ura.ru; Yevgeny Gontmakher, for an article in “Vedomosti”; Pavel Verstov in Magnitogorsk — have received unwanted attention from officials for their writings related to the crisis. “Kommersant” reported yesterday that Verstov was expelled from the ruling Unified Russia party for an article asserting that suicide is on the rise in Magnitogorsk.

The Gontmakher case is intriguing as well.

Ingushetia, Exploding

The BBC reports on yet more evidence of Vladimir Putin’s total policy failure in the Caucasus region:

Vitaly Karayev

The mayor of the capital of Russia’s North Ossetia region has been assassinated by unknown gunmen.  Vitaly Karayev died from gunshot wounds in hospital after he was attacked in Vladikavkaz on Wednesday morning.  Police have sealed off the area and say that a murder investigation is now under way.

The scene of the crime

The southern Russian region, like neighbouring Ingushetia and Chechnya, has suffered sporadic violence from militant groups in recent months.  Mr Karayev, aged 46, was shot at about 0900 local time (0600 GMT), as he was leaving his home in a car, officials say. He suffered several bullet wounds and later died in Vladikavkaz’s hospital.  Some reports in the Russian media say the mayor could have been killed by a sniper.

North Ossetian President Taimuraz Mamsurov said he would hold urgent talks with regional security officials to discuss the situation, the Interfax news agency reported.  Meanwhile, Russian President Dmitry Medvedev urged investigators to take “all possible measures” to find the perpetrators, a Kremlin spokesman told the Ria Novosti news agency.

Russian Hatred of America, on Film

The Moscow Times reports on how deep-seeded Russian hatred of America expresses itself on Russian movie screens?

Russian filmmakers are not known for their glowing portraits of American culture. From the 1948 Soviet propaganda film “The Russian Question” about a communist-bashing American newspaper editor to the immensely popular film “Brother 2,” in which a young Russian man rampages through back-stabbing hoodlums in Chicago, there is no shortage of anti-Americanism in the country’s cinema.

Now in 2008, filmmaker Yury Grymov adds his film to the genre. Americans “place themselves higher than all other peoples of the earth,” said Grymov in an online journal written during the shooting of his new feature “Strangers,” which opened in Moscow on Thursday. “They forcibly attempt to inculcate their morality and their modes of behavior. And what is most frightening of all, they sincerely suggest that they are committing a charitable act.”

The Horror of Russian Barbarism, Unbound

Oleg Kozlovsky’s blog tells us that United Russia recently added the following graphic to the their website, then after an outcry in the Russian blogosphere removed it. Check out the parking lot area in the left middle of the large circle in the center, then click the image or the jump to see it larger.  But first, gird your loins, and remember: This is the official party of power in Russia, and this is their official website.

The website of United Russia, party of power