December 24, 2008 — Contents

WEDNESDAY DECEMBER 24 CONTENTS

(1)  Another Original LR Translation: Illarionov on the Crisis

(2)  EDITORIAL:  Oil’s not Well in Putin’s Russia

(3)  EDITORIAL:  Dead Soul

(4)  EDITORIAL:  Road Rage in Putin’s Russia

(5)  Russia Still #1 — in Corrupt Business Practice

NOTE:  Our Christmas present to readers, and Vladimir Putin, is a wealth of original content today, beginning with an original translation by Dave Essel of the latest sensational economic analysis of Putin’s Russia by Andrei Illarionov.

NOTE:  Oleg Kozlovsky blogs about the Kremlin’s efforts to repress the Solidarity movement, including bombarding their opening meeting with sheep carcases, waylaying their transportation and crashing their cell phones.  He also notes that a prominent Western democracy group has endorsed Solidarity.

NOTE:  All of us at La Russophobe wish you and yours a joyous and healthy holiday season.  Merry Christmas! In honor of the holiday, we will not publish again until Sunday December 28th.

Merry Christmas!

Illarionov on the Russian Economic Apocalypse

It’s a Catastrophe

by Andrei Illarionov

A post from the author’s blog

Translated from the Russian by Dave Essel

Russia’s Federal Office of State Statistics and the Russian Government Economy Observation Centre have disclosed data on November’s industrial production trends. If one is only allowed one word to comment these, then that word is “catastrophe”.

Since the Russia’s Federal Office of State Statistic’s site is currently not accessible, I think this is a good time to publish the base statistics with my preliminary analysis.

EDITORIAL: Oil’s Not Well in Putin’s Russia

EDITORIAL

Oil’s Not Well in Putin’s Russia

As oil goes, so goes Russia's currency

After perusing scholar Andrei Illarionov’s devastating report on Russian industrial production which leads our issue today, it’s hard to imagine there could be any more bad news for Russia, but there’s plenty.  The Moscow Times reported last week that

The economy is not expected to grow until the second half of next year, a deputy economic development minister said Thursday, as the government considered cutting oil export duties to zero, in what would be one of its boldest steps yet to promote growth. Deputy Economic Development Minister Andrei Klepach said the economy could contract by as much as 0.5 percent in 2009 under a pessimistic scenario crafted by his ministry, but the base projection foresees growth resuming by mid-2009 and reaching 2.4 percent for the year.

Klepach also said the base line scenario saw capital outflows of $90 billion and a current account deficit of $45 billion next year. The country’s reserves will top $300 billion by year end, down from $435.4 billion on Dec. 12, he said.

This is simply a devastating admission about the centrality of the world market price of crude oil in the Russian economy.  The plummeting price of oil, down two-thirds in half a year, has wiped out Russian economic growth and thrust the economy into a recession.  And the price of oil has fallen for just one reason:  American demand has evaporated.  Thus the lesson is clear:  America has the power to crush the Russian economy simply by ceasing to purchase crude oil.

Is this the great result achieved by Vladimir Putin in his first decade of ruling Russia?

Editorial: Dead Soul

Masha Gessen puts Putin in his place

EDITORIAL

Dead Soul

For quite some time Masha Gessen was one of our favorite Russia pundits, and we often cited her work on this blog.  Then her blog and Moscow Times column went quiet as she took a job editing a Russian paper and dropped off the radar screen, but she came storming back recently with a major piece on Vladimir Putin in the October issue of Vanity Fair after publishing a horrifying  biography over the summer that explained the medical issues that caused her to disappear.

Her piece in Vanity Fair, which the magazine has bizarrely failed to make available online (only the unfortunately poor-quality PDF linked to above is available as yet),  is called “Dead Soul,” a reference to the Gogol novel about Russian corruption.  It is required reading.  Gessen says that Putin has “concentrated power to an extent even greater than in the Soviet Union” and the editors summarize the piece as follows:

Chosen as Russia’s next leader by Boris Yeltsin’s inner circle, in 1999 Vladimir Putin appeared to be a blank slate on which his supporters, his country and the world could write their desires.  Few saw him for what he really was, or the way he brutally erased his footprints on the climb to power.  Fewer still have survived to decode him.  As Russian forces bend Georgia to their will, Masha Gessen tells how one small faceless man, backed by the vast secret police machine that formed him, took control of the world’s largest country.

We here on this blog, of course, were among the “few,” and we are still waiting for the world to fully catch up.  Even many Russians, however, at last are doing so. Writing on Georgian Daily, for instance, Paul Goble points out that even the Russian press is finally getting the message.

EDITORIAL: Road Rage in Putin’s Russia

EDITORIAL

Road Rage in Putin’s Russia

“Mr. Putin, why do you get driven about in a Mercedes? Why not a Volga? Aren’t you a patriot?”

— Question asked by a picket sign December 14th in Vladivostok

Peaceful protesters violently assaulted in Putin's Russia

Things are getting pretty hot in Vladimir Putin’s kitchen.

On December 14th, AFP reports about 6,000 people held protest rallies against Putin’s decision to raise import tariffs on automobiles in order to protect Russia’s domestic industry, which is on life support. On December 20th the protesters attempted to repeat their action, but were quickly suppressed with brutal violence by law enforcement.

Russians don’t want to be forced to buy inferior Russian vehicles, nor do the thousands who work in the foreign sector want to lose their jobs.  The AFP quotes Gennady Sukhanov, an automotive analyst with Troika Dialog:  “This is total nonsense.  I myself am from Vladivostok. People there will not buy Russian brands.”  It quotes Boris Nemtsov:  “What right does he have, who is he to tell people what to eat, wear and drive? Mr Putin should start with himself.”

Less than 50 percent of all new cars sold in Russia this year were produced in Russia, so there are grave doubts as to whether Russia even has sufficient productive capacity to satisfy domestic demand even if Russian followed Putin’s edicts like lemmings.

But the Kremlin doesn’t care. Just as in Soviet times, it’s going to make it impossible to buy foreign goods and force Russians to purchase shoddy Russian products, basically at gunpoint.  This only encourages the quality of Russian production to deteriorate further, and will leave Russia once again languishing in a backwater of the world economy with a third-rate standard of living providing fodder for many jokes.

The Kremlin’s neo-Soviet desperation is palpable.

Russia Still #1 — in Corrupt Business Practice

The New York Times reports that industrial giant Siemens has been caught red-handed in a web of corrupt bribe-paying to various nations for receipt of contracts.  Care to guess which nation leads the list in demanding pay-for-play from Siemens? Click the jump to see if you were right.