Special Extra: An Economic Tsunami for Putin’s Russia

Standard & Poor’s Ratings Services on Monday cut Russia’s foreign-currency sovereign credit ratings for the first time since January 1999, citing capital outflows and the rapid decline of the country’s international reserves.  S&P lowered Russia’s ratings to BBB/A-3 from BBB+/A-2 (just two notches above junk status) and assigned them a negative outlook, indicating the likelihood of another ratings downgrade.   Reserves are down 22% since August and the stock market is down 75% since May.  Russia is projected to run a 3% deficit in 2009.

Ford Motor Company is shutting down its Russian production plant for one month due to lack of demand resulting from Russia’s financial crisis.

The massive Shtokman national gas project is now on hold, for the same reason.

The Kremlin’s response? It is outlawing the use of the term “crisis” in publishing, because in neo-Soviet Russia, no such thing is possible. Oh and, of course, because there is no crisis and it has plenty of extra cash, it is launching a massive new arms race.  Meanwhile, it wants everyone to know that the real cause of any “difficulties” Russia may be having is foreigners, particularly dark-skinned migrant workers, and it’s getting ready to expel them all.

December 10, 2008 — Contents

WEDNESDAY DECEMBER 10 CONTENTS

(1)  EDITORIAL: What are you hiding in Ossetia, Mr. Putin?

(2)  EDITORIAL:  Reading Russia’s Rancid Economic Tea Leaves

(3)  The KGB and Politkovskaya

(4)  Oleg Kozlovsky Asks for Help

(5)  Russia’s Barbaric Denial of Holodomor

NOTE:  We are running a reader poll asking whether Vladimir Putin will return to the “presidency” within 12 months. If you have not yet responded, please cast your vote!

NOTE:  You may have noticed it is snowing on La Russophobe. This is a temporary feature provided by WordPress to reflect the holiday spirit and will end in early January.  If you find it disturbs your ability to peruse our text, feel free to let us know.

EDITORIAL: What are you Hiding in Ossetia, Mr. Putin?

EDITORIAL

What are you hiding in Ossetia, Mr. Putin?

“There is, unfortunately, a silence and darkness with respect to the international monitors that has descended on South Ossetia.  The solution is hardly to keep monitors out of South Ossetia.  Russia has an obligation, since it controls this territory, to let in international observers.”

— U.S. Assistant Secretary of State Daniel Fried to reporters at a security conference in Helsinki, December 5th

Why is Vladimir Putin’s government refusing to allow international observers to view conditions in Ossetia?  Is it afraid that observers would see horrific violation of human rights, pogroms being carried out against innocent ethnic Georgians to drive them from their homes and “cleanse” Ossetia of their presence?

And why, may we ask, is President-Elect Barack Obama silent about this outrage? Where is his professed concern about social justice and international law?  As we reported earlier this week, Obama finally broke his silence on Georgia with an interview on Meet the Press, but his remarks were devoid of commentary on Russia’s current obstruction of inspectors and its attempt to annex Georgian territory.  He merely condemned Russia’s military attack on Georgia proper, labeling the G-8 member a “bully.”

EDITORIAL: Reading Russia’s Rancid Economic Tea Leaves

EDITORIAL

Reading Russia’s Rancid Economic Tea Leaves

“Russia is now facing a perfect storm of falling commodity prices, weaker external demand, tighter credit conditions and slower real incomes growth for which no amount of currency adjustment can compensate.”

— Neil Shearing, an emerging-markets economist at Capital Economics Ltd. in London, in a research note dated December 5th.

Financial analysts are now predicting that the Russian ruble will depreciate 20% next year if oil remains above $30/barrel, 30% if it gets close to the $30 level.  Of course, the hit would be even more intense if Russia were not spending its precious reserves so furiously to artificially inflate the ruble’s value.  The Bank of Russia spent close to $15 billion last week defending the ruble, almost three times as much as it had spent the week before.

The KGB and Politkovskaya

Just days ago, we translated an item from Novaya Gazeta which raised questions about the possible involvement of the KGB (now known as the FSB) in the Beslan atrocity.  Now, NG’s editor has testifed at the murder trial of Anna Politkovskaya’s killers that the KGB’s fingerprints are all over that atrocity as well.  The Moscow Times reports:

A defendant and a key witness in the Anna Politkovskaya murder trial worked on behalf of the Federal Security Service, one of the slain reporter’s editors testified in court Friday.

Sergei Sokolov, deputy editor of Novaya Gazeta, where Politkovskaya wrote critical reports about federal abuses in Chechnya, said the FSB was tailing the journalist before she was killed in October 2006.  “It has become known to me that Dzhabrail Makhmudov was an agent,” he told the packed courtroom.

Oleg Kozlovsky asks for Help

Writing on his blog, Oleg Kozlovsky publishes the text of a speech he recently gave at an OSCE conference in Helsinki, where he asks for the assistance of the West in standing up to dictatorship in Russia. Are you listening, Mr. Obama? Note that, as we’ve previously reported, Kozlovsky is now a Russia columnist for the powerful Huffington Post blog, and his first installment deals with the Politkovskaya trial.  An interview with Kozlovsky by Radio Free Europe follows the text.

I recall what I did at this very day a year ago. It was an election day but for me it was marked by another arbitrary arrest. Just seconds after I commented the elections to an foreign TV channel in the heart of Moscow, I was literally dragged into a police van, threatened and beaten by several anonymous officers. Then they brought me to a police station, held there for a few hours and released without any charges.

I was quite lucky, in fact. A week earlier, an opposition activist Yury Chervochkin was beaten to death, supposedly, by the colleagues of those officers who arrested me. These are just some of the many examples of what Russian “law enforcement” agencies are really busy with.

Russia’s Barbaric Denial on Holodomor

It’s interesting, dear reader, is it not, that Russians claim there was genocide in Ossetia by Georgia in 2008 but not in Ukraine by Russia in the 1930’s.  That one sentence alone epitomizes the barbaric nature of Putin’s Russia. We dare to wonder how Russians would react if Germans started saying the never invaded Russia or laid seige to Leningrad, but only had a few skirmishes at the border and didn’t kill more than a few thousand Russians.  Doubtless, they’d take it badly.  Yet, they are doing exactly the same thing in regard to Ukraine. Classic Russian hypocrisy.  Cathy Young, contributing editor of Reason magazine, writing in the Weekly Standard:

This year marks the 75th anniversary of one of the most horrific chapters in the history of the Soviet Union: the great famine the Ukrainians call Holodomor, “murder by starvation.” This catastrophe, which killed an estimated 6 to 10 million people in 1932-33, was largely the product of deliberate Soviet policies. Inevitably, then, its history is fodder for acrimonious disputes.

Ukraine–which, with Canada and a few other countries, observed Holodomor Remembrance Day on November 23–seeks international recognition for a Ukrainian “genocide.” Russia denounces that demand as political exploitation of a wider tragedy. Some Russian human rights activists are skeptical of both positions.

Special Extra: Obama Speaks on Russia

President Elect Barack Obama spoke to Tom Brokaw on Meet the Press on Sunday. Here is part of their exchange: