July 29, 2011 — Contents

FRIDAY JULY 29 CONTENTS

(1)  EDITORIAL: Russia for Sale

(2)  EDITORIAL:  Russia, Drunk and Suicidal

(3)  EDITORIAL:  Russia’s Retirement Paradox

(4)  Russia, Buried by Shale

(5)  Russia cannot Innovate, Doomed to Fail

(6)  Documenting Russia’s Arms Export Fraud 

(7)  Annals of Shamapova 

(8)  CARTOON:  Putin’s Quadriga Problem

NOTE:  LR publisher and founder Kim Zigfeld’s latest installment on the influential American Thinker blog details the shocking attempt to divert vast areas of governmental power outside the Russian Constitution as the neo-Sovietization of Russia is completed by dictator Vladimir Putin.

NOTE:  LR publisher and founder Kim Zigfeld’s latest installment on the mighty Pajamas Media mega blog details two shocking breaking news stories, first the secret attempt by Barack Obama to derail the US law on Magnitsky and then the revelation that Russian forces bombed the US Embassy in Georgia.  Required reading!

NOTE:  They say Boris Berezovsky has married supermodel.

NOTE:  Check out Putin and Medvedev as gay lovers

5 responses to “July 29, 2011 — Contents

  1. Russians are behind many bombing in Georgia, directed at government offices and public places alike. They’re a small group of GRU officers based in Abkhazia.

    There were only a few fatalities from these bombings, but many people were killed by firing from “South Ossetia” since the “end of hostilities”. Already in January 2009 the number of Georgian policemen murdered by snipers reached 11: http://www.civil.ge/eng/article.php?id=20294

  2. It’s August!

    Russians have a saying, “winter has come as a surprise”. It is the standard expression used when the country’s cities gridlock each November because few motorists had changed to winter tyres. No such expression is used in August if, for example, a major accident occurs. It’s August – it’s fate.

    August phobia has added poignancy this year because it is the 20th anniversary of the 1991 coup against Gorbachev. That (failed) event set in train a series of events that directly contributed to the end of the Soviet Union only a few months later. And that sums up the main point about August – it is not so much the frequency of accidents that occur (the rest of the year is littered with a fair share of those), but August is a month when events that leave a legacy of change occur.

    Last year’s drought and fires, for example, have added a greater urgency to the long-talked about reforms in agriculture and the need to rebuild Russia’s food producing industries. The explosion at one of the country’s main hydroelectric plants in August 2009 led to a national debate about the country’s infrastructure and that, in turn, led to a clear consensus that infrastructure spending needs to be accelerated before more such accidents and breakdowns occur. President Medvedev’s modernization programme also received a strong boost from that debate. August 1999 was the month when Vladimir Putin made his debut into national politics.

    Forced change is not just a Russian trait; it is human nature to put off for as long as possible any difficult or unpleasant actions. In Russia, August is the month, more than any other, in which the excuses usually run out.

    August: events and consequences since 1998.

    1998

    Russia defaulted on its domestic debt. That led to a complete collapse in the equity market with the RTS Index eventually reaching a low of 38.5 on October 5th. Foreign investors exited Russia in 1998 and, apart from trading funds, did not return until 2004. $10,000 invested into the RTS at the low in that period would today be worth approximately $525,000.

    The stock market fell 56% in August, having fallen 85% for the previous seven months. It fell an additional 10% through September to year-end.

    1999

    Vladimir Putin was appointed Russia’s Prime Minister in August ‘99. The legacy of that event, has completely dominated Russia and the investment market since.

    The stock market fell 12% in August ‘99, following a gain of 197% for the previous seven months. The market rallied 70% after August until year-end.

    2000

    August 2000 was marked with a series of accidents that included the sinking of submarine Kursk and a major fire in one of the country’s landmark structures, Moscow’s Ostankino TV Tower.

    The stock market rallied 19% in August despite the series of accidents. That was a reversal of the 18% decline over the previous seven months and ahead of the 40% decline that followed from September until year-end.

    2001

    A relatively quiet August with the only memorable event being the bizarre visit of North Korea’s leader, Kim Jong Il. He only travels by train so his month long visit caused huge disruption to the rail network. His train was filmed arriving at a Moscow station with very visible bullet holes on the side. That was put down to angry commuters in Russia’s regions expressing their frustration at the delays caused. A bit more effective than writing a letter of complaint.

    The equity market was as dull as the news flow in August ‘01. It gained 5% for the month while, over the previous seven months, it added 82% and from September to year end the equity market climbed 27%.

    2002

    August was a month when major forest and bog fires raged in the Moscow region. Just as was the case in 2010, the smoke and heat caused economic disruption. Impossible to draw any numerical comparisons as, in 2002, the economy was quite different to today’s economy.

    The disruption also led to reduced activity in the stock market. The RTS Index only moved by 0.2% for the month. That followed a 38% gain for the previous seven months and preceded an 8% rise from September to year-end.

    2003

    The only notable event in a quite August was the formation of BP-TNK in which BP and its local partners held 50% each. That event is widely credited as leading to the government’s review of the country’s so-called strategic industries and setting out new rules for foreign investment in these industries.

    The stock market gained 19% in August, following a gain of 58% in the previous seven months and ahead of a modest 5% gain from September to year end.

    2004

    August 2004 will be remembered as a month of several major acts of terrorism in Russia. The list included a car bomb outside a Moscow metro station, two aircraft crashes caused by terrorism and, on September 1st, the Beslan School attack. The events, especially the school attack, led to a change of stance by the Kremlin in Chechnya and eventually to the inauguration of Ramzan Kadyrov regime in April 2007.

    The stock market saw a lot of volatility in August as news items hit headlines. But, over the month, the RTS Index added 8.0%. That was a similar move to the p[performance of the previous seven months and not far off the 5% gain from September to year end.

    2005

    The first recorded case of bird (avian) flu in Russia was recognised in August. As elsewhere, it caused considerable travel disruption for a few weeks. Then it was forgotten.

    The stock market took a breather in August, gaining 14% for the month following a gain of 83% for the first seven months and ahead of the 26% to come from September to year end.

    2006

    Absolutely nothing of significance happened in Russia, or concerning Russia, during August 2006.

    The stock market was just as boring and gained only 5%. That followed a gain of 71% from January through July and preceded a gain of 19% from the start of September.

    2007

    The only distraction in August was the planting of a Russian flag on the floor of the Arctic by a Russian mini-sub. The event kick started the debate about ownership of a large portion of the Arctic and the rights to mineral exploration/production. That debate is still on going but Russia is expected to submit its claim to greater sovereignty to the UN in early 2012. That story is only just starting.

    The equity market fell 1.0% in a quiet month. The market gained 19% in the seven months ahead of August and also 19% in the following four months.

    2008

    Russia-Georgia war. The war broke out as the world was hurtling towards recession and the price of oil was in sharp decline. Therefore, it is impossible to know what was the individual effect on investor sentiment of the war and how much of the market weakness was caused by it. But, the longer-term effect of the war has been more positive. The international criticism and capital outflow (again, mainly caused by the global economy and the sliding oil price) highlighted the difficulty facing the government with its efforts to attract major new foreign investment. That was at least a contributory factor to the new foreign policy strategy in Russia.

    The stock market fell 14% in August 2008, albeit the MSCI EM Index fell by 9%. The higher-beta effect in Russia resulted from the sharp oil price slide. The August drop followed a big collapse from May to end July and preceded a 63% drop from September to year-end.

    2009

    One of RusHydro’s power stations suffered a catastrophic explosion. 75 people died and a big portion of the regional power supply was lost. Beyond the short-term effects of the accident, the episode provoked a big debate in Russia over the state of the country’s infrastructure and an acceptance that the “basics” need to be fixed before any progress towards creating a diversified economy can be achieved.

    August ‘09 was another year when the market took a breather after a strong run over the preceding seven months. The RTS gained 129% in that period before settling to a more modest 6% in August. The gain over the last 4 months was 35%.

    2010

    The major event was the drought that destroyed a large part of Russia’s annual grain harvest and led to an almost year-long ban on exports. There were also widespread forest fires and a flare up of the peat-bog fires around Moscow. Those events directly contributed to a loss of approximately 1.0% off GDP growth last year and higher inflation. The longer term legacy was caused by almost the surprise realization of just how dependent Russia had become on imported food (and medicines) and how little investment has been made in the agriculture and food sectors since the end of the Soviet Union. Those events in August, as much as anything else, accelerate the agriculture, food and pharmaceutical industries to the top of the priority development list and will dominate investment to a (likely) n much greater extent than technology after 2012.

    The stock market shrugged off the August events and followed the trend in global emerging markets and the oil price to a far greater extent. The RTS gained only 2% in the January-July period (same as MSCI EM) and fell only 4% in a very difficult August (MSCI EM fell 2%). Both indices then accelerated by over 20% in the September to December period, driven by global macro factors than any short-term legacy of August

    Other notable August events;

    1530 Birth of Tsar Ivan the Terrible

    1914 Russia entered the 1st World War

    1939 Molotov-Ribbentrop Pact

    1945 Russia declared war on Japan (still not revoked)

    1961 Start of the construction of the Berlin Wall

    1968 Soviet troops arrive in Prague

    1991 Coup against Gorbachev (failed after 3 days)

    1996 1st Chechnya war ends.

    http://justicefornorthcaucasus.info/

  3. Apparently, Medvedev has his an army too. Take that, putin!! lmao!!!

  4. Rights Groups Say Russian Secret Services Hiding Estemirova’s Killer

    http://www.rferl.org/content/rights_groups_russia_estemirova_murder/24265390.html

    The Russian rights group Memorial — Estemirova’s employer at the time of her death — has collaborated with the independent “Novaya gazeta” newspaper and the Paris-based International Federation for Human Rights to conduct its own investigation into the killing of the 50-year-old activist.

    Their findings — presented to Russian President Dmitry Medvedev last week and leaked to the media on July 14 — suggest that the government investigation is on the wrong track and that the secret services were used to concoct a false version of events to steer attention away from the true killers.

    • In semi-related news:

      The European Court Has Applied Rule 39 (interim measures) for the First Time in an Abduction Case in the North Caucasus

      On 29 July 2011 the European Court of Human Rights applied Rule 39 of the Rules of Court for the first time against the North Caucasus, in a case concerning the abduction of Grozny resident Tamirlan Suleymanov by unknown armed persons.

      http://www.memo.ru/eng/news/2011/08/01/0108111.html

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