Archive for February, 2009

Culture of Crackdown

February 17, 2009

  

There’s been talk in major media outlets – Forbes, The Washington Post , and others – of a growing rift between Medevev and Putin. They’re just partially right – it’s not a rift between Medvedev and Putin; it’s a rift between Medvedev and the bulk of the Russian Federation’s government, which happens to include Putin.  

 

Dmitri Medvedev is the rare Russian official who believes in honest-to-goodness democracy.

“Smooth, broadly liberal, and pro-Western,”  as the Financial Times put it in December 2007, with a further quote from a liberal-leaning Kremlin official that “The liberal wing supports him. He has the right kind of views on democracy, on freedom of the press, on the market.”

 

Medvedev’s freedom-friendly reputation preceded him at the Washington Post as well, whose guest columnist Andreas Ulmand wrote that “Medvedev was a democratic activist and politician even before he met Putin, at a time when the latter was still serving in the KGB.”

Ulmand cited as evidence Medvedev’s 1988 spearheading of law professor Anatoly Subchak campaign to be the first democratically elected mayor of St. Petersburg; and Medvedev’s public statements at the time against Stalinism and for perestroika.

 

Ulmand should be very pleased with Medevev’s peformance in the last few weeks:

  • On Feb. 5, 2009, Medvedev blocked Putin’s order to fire Andrei Nikolayev, head of internal affairs in Primorye. Putin had wanted Nikolayev pink-slipped because Nikolayev wouldn’t dispel mass protests, centered in the Primorye city of Vladivostok, that had arrayed against a federal tariff on imported cars.
  • On January 27, 2009, Medvedev ordered a rewriting of a bill by Putin that would have outlawed many forms of nonviolent criticism of the government.
  • Also on Jan. 27, 2009, Medvedev met with Dmitri Muratov, editor of the newspaper Gazeta, and Mikhail Gorbachev, Gazeta stakeholder, to express his condolances for the murder of Gazeta reporter Anastasia Baburova. Baburova had been gunned down, along with human-rights lawyer Stanislav Markelov, in central Moscow upon leaving a press conference that Markelov had just given.

The last action comes with a silver lining, however – Medvedev refuses to make any public condemnation of the Baburova-Markelov murders, supposedly for fear of “hampering the investigation.” Privately sympathetic but publicly milquetoast?  

 

Don’t be too surprised. Or too hard on Medvedev. He is swimming against a tide. The vast majority of Russian officialdom does not share his appreciation for civil liberties or checks on government power. The antidemocratic mindset runs deep thoughout the machinations of Russian government, at the local and the federal levels both. Events elsewhere in the same last few weeks prove as much:

  • On Feb. 12, 2009, a Nizhny Novgorod elementary school barred teacher Yekaterina Bunicheva from any further teaching duties on account of her arrest and five-day detainment by police. The police had accosted her outside a United Russia Party (Putin’s people) rally that she had planned to enter with a banner that read “Enough of Putin.” The school principal is himself a United Russia member – coincidence? I think nyet.
  • On Feb. 9, 2009, seven people were arrested for laying flowers on the spot where Baburov and Markelov had been gunned down. Authorities called their homage an “unauthorized demonstration.”
  • From Feb. 4-8, 2009, demonstrations by journalists erupted in several cities across Russia in response to the federal postal service’s suspension of delivery of newspaper Tambovsky Meridian on account of the Tambovsky Meridian’s publishing a story that questioned a bill to raise pensions for the Tambov oblast adminsitration and regional duma.
  • On Feb. 3, 2009, Yuri Grachev, editor of Solnechogorsky Forum–the only opposition newspaper in Solnechogorsky–was beaten nearly to death in a Moscow suburb.
  • On Feb. 2, 2009, Valery Gribakin, interior ministry spokesman, took note of the many opposition journalists in Russia who have been killed or almost killed and issued this bizarre statement about them: “Most murders of journalists in recent years are not linked to their work. When murder victims turn out to work for the media, their colleagues rush to the conclusion that their work is the main reason for their death. But, more often, they are sex cases.”                                          

Putin takes a lot of blame for Russia’s drift away from liberal democracy over the past 10 years. But it’s clear that the problem is a lot bigger than Putin. If so, then the antidote will have to be a lot bigger than Medvedev.  

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Waiting For The Sun

February 9, 2009

     The Russian economy could actually weather the current recession better than most economies of the West, according to Chloe Arnold of Radio Free Europe.

     Arnold’s argument is that the assets at risk in these economic times – investments, mortgages, savings – are ones that most Russians don’t have: Only 20% of Russian families have savings accounts, and mortgages are no more than 1.5% of GDP. This means that most Russians have the ironically good fortune of having little to lose. “It’s a more simple economy, in a sense, and it’s an advantage in the current situation. It means we can recover more easily, and faster,” says Yevgeny Gavrilenkov, chief economist with Moscow’s Troika Dialog investment group, as quoted by Arnold in the story.

Oleg Deripaska, Russia‘s richest man, sees a third asset: Russians’ minimal reliance on credit. Few Russians own cars or homes. Of those that do, only about 26% of their automobiles and 18% of their homes were bought on credit. This means that mass credit defaults, which have been dragging the U.S. economy down since last fall, have not been seen in Russia, nor will be. That’s why with Russians can be confident that through “hard work,” they will forge a way to better times.

 

 

 

deripaskaolegcloseup1

            Russian entrepreneur Oleg Deripaska thumbs his nose at the current economic situation.

 

By his estimates, those better times might be no more than three years away – the point, he says, when oil will be selling at $180 per barrel (it’s now $41) and aluminum selling at $4,000 per metric ton (it’s now $1,500):

 

“Will the urbanization end in China and India? The only thing that can prevent this is if the nature of demand of the middle and upper working class will change globally. If they decide, for example, that they will not drive a car, but will ride a bicycle instead, even at the far North.”

 

Until that demand picks up again, he said, Russia should just keep doing what it’s doing. That, so far, has been to donwgrade consumption and make do with the less that the bear market is providing:

·         Building new plants with lower costs

·         cutting industrial production in accordance with reduced demand

·         placing moratoriums in some cities on new housing projects until buyers have purchased all current housing; andconsolidating banks 

 

“We have to get rid of all excess, cut losses … We will not live poorly, but modestly,” said Deripaska. 

 

The response by Russia’s Central Bank to the ruble, whose value has slipped over the last three months due to falling oil prices, exemplifies this. The currency – now standing at 36 to every one U.S. dollar – had been edging downwards the past three months to 41 per dollar, a point that the bank had said would require major emergency intervention. The bank held off on major interventions until then, opting only to reduce the amount of rubles it lent to banking systems, hike up interest-rate increases, and exercise patience until the ruble stabilizes and banks regain some confidence in their nation’s currency.

     “They have to adjust the balance of payments to the oil price,” said Yevgeny Gavrilenkov, chief economist for Troika Dialog.

     This approach runs counter to those of the United States and other nations around the world, who are trying to jumpstart productivity by pumping stimulus packages into their economies. Economies tend to prosper, after all, when there is more buying and selling and not when there is less. Think American productivity before World War Two and after for a case study in this point.  

 

     Deripaska and his fellow Russians, by contrast, are cutting buying and selling. Theirs is a more fatalistic approach of weathering the storm until the sunshine, i.e., resumed demand around the world for Russia’s fossil fuels and precious metals, comes back in full force. This isn’t totally illogical on their part. They are right; oil, aluminum, and other goods will surely go back into demand at some point.

 

     But when will the resumption occur? The answer: when commerce resumes at full speed. And when will commerce resume at full speed? The answer: after a first push sets the economic motor running again. That push can come from within the Russian economy, or from outside it.

 

     U.S. and European leaders clearly are busying themselves with doing their own pushing to get their countries’ motors going. Russian leaders are hopeful that they will catch a ride sooner or later, if they are patient enough.

 

     Patience is a virtue, after all. I only hope, for their sakes and ours, that their abiding virtue gets its reward.

 

When Bear and Eagle Agree

February 8, 2009

     A significant warming trend is underway in Russia-U.S. relations, to judge by U.S. vice-president Joe Biden’s speech at last weekend’s Munich security conference and some encouraging developments that prededed it. There’s good reason to hope that a new era of rapport and dialogue has started, and that Biden’s hope that the two nations can “set the reset button and revisit the many areas where (they) can and should be working together” will prove to be more than wishful thinking.

     It was only six months ago that Russia and the United States were gearing up for a new Cold War, if not in the midst of it already. U.S. Secretary of State Condoleeza Rice ordered the scrapping of an already-signed joint treaty for promoting civilian nuclear energy on grounds that “the time is not right” and U.S. ambassador Zalmay Khalilzad chalked up Russia’s intervention in Georgia to its being “nostalgic…about the loss of empire they had.” Putin, in turn, blamed Bush for the war in Georgia while his deputy general Anatoly Nogovitsyn said that U.S. missile-defense policy made it “one hundred percent” certain that Russia would nuke Poland.

 

     But a series of events this week suggest the start of a much more grown-up tone all around. Russian deputy prime minister Sergei Ivanov signed off on the missile defense shieldgoing so far as to invite the shield’s developers to use Russian radar installations in their final plans. As a good-faith measure, Russian officials further agreed not to follow through on plans for new missile launchers in Kaliningrad, a site whose proximity to Poland would have made Nogovitsyn’s nuclear-strike threat only too easy to carry out. Russian foreign minister Sergey Lavrov stated his openness to reducing Russia’s nuclear arsenal via a new Russia-U.S. arms-reduction treaty that would succeed START, which expires at the end of this year. And the Kremlin made motions toward cooperation, or at least non-obstruction, of the continuing U.S. operations in Afghanistan: For the first time ever, U.S. military forces will be able to ship nonmilitary supplies through Russian territory.

 

     The U.S. administration and its Russian counterparts do not see eye-to-eye on everything. Biden favors Georgia’s admission into NATO, even though Russia fiercely opposes it. In the long run, though, Russian and U.S. officials are likely to do a lot more agreeing than disagreeing. Consider what’s on the horizon: 

 

1) Climate change: Russia has been a Kyoto member since since 2004. So its leadership is probably very pleased with the new Obama administration’s vocal concerns about climate change, which include a promise that the United States will undertake major carbon-emissions reductions by way of a “new international global-warming partnership.” This partnership would, of course, need to improve upon Kyoto’s shortcomings, and ensure that both Russian and U.S. industries comply with their government’s goals – all tall orders, but the prospect for mutual progress is very much there.

2) Iraq: A source of tension during the Bush era, but now a moot point seeing as Obama-Biden are set to withdraw U.S. forces from Iraq by the end of 2010. This clears a major sore spot of Bush-era Russia-U.S. relations, and makes possible new Russia-U.S. cooperation against the Islamic-extremist movements whose activities gravely worry Russian and U.S. officials alike.  

3) Israel and Palestine. The Medvedev administration officially recognizes Hamas, which makes the former a probably very ready audience to President Obama’s promises to speak to the militant Palestinian group “without preconditions.” The ingredients of an active and continuous tripartite dialogue are firmly in place.      

4) Iran. Russia is, according to Ivanov, willing to mediate future talks between Iran and the United States. Good to know, because is Biden is willing to have them. There’s no telling just what these talks may – or, just as likely, may not – produce. Whatever it is, it can hardly be worse than the status quo.

 

     Conversation doesn’t solve all the world’s problems. But the world’s leading powers can afford to do much more of it. It’s realistic to think that Russian and U.S. officials will be doing a lot more conversing in the next eight years; time will tell what those conversations achieve.