May 22, 2009 — Contents

FRIDAY MAY 22 CONTENTS

(1)  EDITORIAL:  The Putin Economy is Collapsing

(2)  EDITORIAL:  Putin Scams the Elderly

(3)  Putin is Destroying Gazprom

(4)  Russia is a Psychotic Nation

(5)  Russia’s Potemkin Middle Class

NOTE:  Don’t forget to vote in our latest reader poll, asking whether or not Russia will invade Georgia this year.

NOTE: If you are in need of a laugh, the Twitter feed of a guy pretending to be Vladimir Putin is rather amusing.

EDITORIAL: The Putin Economy is Collapsing

EDITORIAL

The Putin Economy is Collapsing

Less than a month ago, the Kremlin predicted that Russia would return to economic growth in 2010 after seeing what it had originally predicted would be a minor recession of 2% this year.  But then last week, after being forced to admit that this year’s recession would be massive (Russia’s economy shrank a breathtaking 9.5% in the first quarter of 2009, a ghastly 23% quarter-on-quarter from a year ago), the Kremlin revised its projection for 2010 from 3.8% growth to just 0.5% (the 3.8 figure was itself the result of slashing the original pie-eyed projection by nearly half).  Russia’s industrial output collapsed even more horrifyingly, by a truly stunning 16.9%.  Automobile production was down an amazing 55.9%.  Foreign trade with Russia’s major partners fell a jolting one-third or more.  Meanwhile Gazprom, Russia’s mightiest commercial institution,  has announced it will cut this year’s dividend from 2.66 rubles per share last year down to a mere 37 kopecks this year. That’s a drop of 87% for investors, in just one year.

The Putin economy, as any fool can see, is collapsing.

EDITORIAL: Putin Scams the Elderly

EDITORIAL

Putin Scams the Elderly

An recent article in the Sydney Morning Herald headlined “Russia a better place to grown old” complains that elderly Australians are being victimized by their government, being treated more roughly in terms of pensions than their counterparts in Russia. In fact, nothing could be farther from the truth, and the article turns out to be one of the shoddiest excuses for journalism I’ve seen from mainstream media in quite some time.

The author, one Tom Reilly, claims the value of an average Russian pension is $75 per month. To start with, that’s simply false.  In 2008, an average pension was almost twice that, $140 per month.  And even though the article understated the value of Russian pension by half, its conclusion that Russians were somehow better off is still hopelessly bogus. 

In his lifetime, an average Australian will collect pension benefits worth more than six times than what the Russian government will pay to an average Russian, even taking so-called “purchasing power parity” currency adjustments into account. In straight nominal terms, Aussies are paid ten times more than Russians in their lifetimes where pensions are concerned.

Let’s look at the details.

Putin is Destroying Gazprom

The New York Times reports:

As energy markets shrink, the same tactics that the Kremlin used to build Gazprom, the giant energy company, into a fearsome economic and political power that could restore Russian influence in the world are now backfiring, slashing both its profits and its influence.

Russia is a Psychotic Nation

Paul Goble reports:

The May 9th Victory Day celebration, a Russian Orthodox priest says, shows that Russia over the course of the last century and thanks to the imposition of Soviet values which continue to define the thinking and behavior of people there a sociopathic country, a state which “cannot live with others” because it is “indifferent to their rights.”

In a disturbing essay posted on the Grani.ru portal, Father Yakov Krotov says that “Russia was not always a sociopath.” While it was far from the most attractive of European countries in the 19th century, “it was a normal underdeveloped country, “capable of “concluding alliances” and “remaining true to them.

Russia’s Potemkin Middle Class

Veteran Russia correspondent Brian Whitmore, blogging at the Power Vertical:

We pretend to work — and they actually pay us!

For the past decade, Russia’s emerging “middle class” got a pretty good deal. The Kremlin was determined to create a stable and sizable cohort of happy, well-fed, and status-conscious consumers who would provide the regime with bedrock political support — or at least tacit acquiescence. They drove cool cars, sported the latest fashions, played with trendy gadgets, and ate in fancy restaurants. All the things that were reserved for the oligarchic class and their hangers on throughout the 1990s were suddenly available to an emerging bourgeois.  Russia’s magical new middle class had arrived.

And how did this new class earn the income to support their lifestyle? Well, there’s the rub. The whole thing was a mirage, subsidized by the state and Kremlin-connected corporations with the help of a seemingly endless flow of petrodollars.

And now that is all at risk.