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Corruption

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Who could have expected this?

map-italy-book-readers

Other maps of Italy:

 

 
• Category: Race/Ethnicity • Tags: Books, Corruption, IQ, Italy 
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When finishing up yesterday’s post I realized that Transparency International has finished releasing its final version of the Global Corruption Barometer.

By far the most interesting indicator is the percentageof people who report paying a bribe in the past 12 months (more precisely, the percentage of households who paid a bribe when accessing basic services). It is as close to objective measurement as you can get in a sphere of life as indefinite and necessarily opaque as “corruption.”

You can take a look at a global interactive map here: https://www.transparency.org/news/feature/global_corruption_barometer_citizens_voices_from_around_the_world

Access to the global data here in Excel format: Global_Corruption_Barometer_2017_Global_Results

More regional maps (where available), with a few comments comparing results to the GCB 2013.

gcb-2017-bribery-europe

Europe – Romania, Hungary, and Lithuania are the most notably corrupt EU countries; Greece, in fairness, has improved substantilaly since the last assessment in 2013, when 22% of Greeks paid bribes.

Ukraine didn’t budge relative to 2013; was 37%, now 38%. Both the Ukraine and Russia are much worse than Belarus. This confirms stereotypes, BTW.

gcb-2017-bribery-asia-pacific

East Asia – India has actually deteriorated further, from 54% in 2013. Taiwan’s figure is much more plausible than the anomalous seeming 36% in the last survey.

gcb-2017-bribery-latin-america

Latin America – What is going on in Mexico? It was 33% last time.

It appears that North America will not be covered in this round of the GCB. For comparison with its southern neighbors and Europe, the reported bribery rate in the US was 7% in 2013 (up from 5% in the survey before that, and 2-3% in the oldest surveys).

The bribery rate in Canada in the last GCB was 3%.

gcb-2017-bribery-middle-east

Middle East – This is pretty interesting – Tunisia is basically a European Mediterannean countries in this respect (Greece: 10%; Italy: 7%).

Algeria not bad either at 14%. Perhaps explains why there hasn’t been an Arab/Islamist “spring” there against its ageing rulers.

gcb-2017-bribery-africa

Africa – This concisely explains why Botswanans manage to maintain a pretty nice state despite very low average IQs (they have natural resouce rents from diamonds, ofc, but so does Equatorial Guinea – and far more of them – but that doesn’t translate into normal living standards for its 99%).

 
• Category: Economics • Tags: Corruption, Opinion Poll 
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The World Bank Enterprise Surveys are an invaluable source of information on the business climate across both time and space.

In particular, its section on corruption does for businesses what Transparency International’s Global Corruption Barometer does for individuals – it directly asks them whether they are expected to give bribes to bureaucrats to reach understandings on taxes, get permits, utilities connections, and to “get things done” more generally.

Now in general, people love to complain about corruption. It seems to be universal. Opinion surveys almost always show that perceptions of corruption are getting worse everywhere.

Good news! This isn’t really borne out by the statistics. Things really do seem to be getting better. (I excluded countries with information for just one year).

 

gifts-get-things-done

We have basically seen a halving in corporations reporting they need to grease public officials to “get things done.”

gifts-tax

Ergo for dealing with tax officials.

gifts-contract

Curiously, though, there was minimal change in the number of firms reporting needing bribes to secure government contracts.

Still, I don’t think that invalidates the general picture.

(1) Paying bribes to tax officials and to “get things done” is a more coercive form of corruption. I imagine many of these are “cough up or we shut you down” scenarios. Securing government contracts is nice, but not a life-and-death issue for most businesses.

(2) Perhaps the lack of change in securing government contracts merely reflects the fact that more and more countries have been opening up open bidding systems, whereas before they would have just been automatically channeled off to the Minister’s business buddies (without bribes).

Here’s an observation from commenter Twinkie to flesh out these statistics:

I remember the days when American defense contractors used to complain about the FCPA (Foreign Corrupt Practices Act) constraining them in competition against the Europeans in pursuing contracts in less-developed countries (“The Germans can tax-deduct bribes paid overseas!”).

Those days are long gone. It’s not to say that corruption is a thing of the past, but the absolute scale and public acquiescence (or lack thereof) of it have changed dramatically in many parts of the world.

This is evidence for my assumption in Our Biorealistic Future that in the long-term, we can expect institutions everywhere to get better, as different countries adopt established best practices, despite individual cases of backsliding.

 
• Category: Economics • Tags: Corruption 
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While I was writing an article about Russian IQ for Sputnik and Pogrom the past few days, I noticed this amazing statistic from the 2010 Census.

Percentage of the population with a postgrad degree:

1. Ingushetia: 1.59%
2. Moscow: 1.12%

90. Chechnya: 0.32%

Ingushetia is Chechnya’s quieter, lower T, slyer brother. They are part of the same Ichkerian nation. But instead of going head on against a nation that outnumbered them a hundredfold in the 1990s, they manipulated the situation to extract very generous monetary concessions from the federal center while their kinfolk withered under Russian bombs.

Today, they are the region with Russia’s highest rate of unemployment, the lowest Internet penetration, the lowest patents per capita. They are 85% subsidized by other Russian regions, more so than any other region. Back during the Soviet period, there were only 90 scientists for every 100,000 Ingush, versus 573 for the Russians.

Even so, this region somehow manages to have the the highest rate of people with postgrad degrees in Russia.

Say what you will about ol’ Ramzan, but at least he keeps his peeps in check. Based Chechen men need no diploma mill degrees.

 
• Category: Race/Ethnicity • Tags: Academia, Chechnya, Corruption, Russia 
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france-elections-2017-whos-who-update

I don’t have much to add to my previous posts on this matter:

ipsos-poll-france-elections-2017

An n=8,200 Ipsos poll from May 5 gave Emmanual Macron 63% to Le Pen’s 37%. She needs a miracle.

The betting markets are likewise gloomy. Macron is 87% favorites on PredictIt, which is bad but not hopeless for Le Pen.

However, the picture becomes much worse for the French nationalists when you look at betting markets with a wider breakdown of options. For instance, the probability distribution for the question asking what percentage of the popular vote MLP will get displays a bell curve with a peak around 37%-38%, declining to 1% for the segment 45-46%, and staying at 1% for each consecutive one percentage point segment until we get to 11% predicting 50%+, i.e. a Le Pen victory.

These Le Pen optimists are clearly banking on some kind of miracle – systemic polling problems that massively understate MLP’s support (seemingly disproved in the first round); the spirit of kek; perhaps a few timely leaks.

And it just so happens that kek has delivered through the hacker 4chan.

On May 3, a /pol/ack posted two PDFs with evidence of an offshore bank account owned by Macron in the Cayman Islands.

The first doc is the incorporation of a shell company in Nevis, a country that doesn’t keep ownership records of corporations. The second is proof of a banking relationship with a bank involved in tax evasion in the Cayman Islands.

People have known for a while that Macron underreported his income and assets to the government, but nobody knew where it was stored. Here’s where his money is stored. See what you can do with this, anon. Let’s get grinding. If we can get #MacronCacheCash trending in France for the debates tonight, it might discourage French voters from voting Macron.

Document 1: https://my.mixtape.moe/onviuq.pdf

Document 2: https://my.mixtape.moe/bspenp.pdf

palmer-banking-spy Curiously, in the final debate, Le Pen had implied Macron might be in possession of an offshore account in the Bahamas, in response to which Macron had threatened a defamation lawsuit.

The lawyer who the documents indicate set up Macron’s Cayman LLC appears to have had a career as a top CIA banking spy.

One day later, about 9GB of email, photos, and attachments up to April 24, 2017 were posted on the /pol/ boards.

Are you ready /pol/?

https://pastebin.com/bUJKFpH1

http://archive.is/eQtrm

In this pastebin are links to torrents of emails between Macron, his team and other officials, politicians as well as original documents and photos

The emails were quickly established as credible, though the Macron campaign has taken a cue from the HRC campaign and hinted that there are fakes interspersed amongst the real emails.

Though nobody has comprehensively looked through the entire thing, and of course doing so before the actual elections is unrealistic, some interesting tidbits are cropping up that may involve insider trading, unauthorized access to classified state information, and the purchase of recreational drugs and perhaps harder stuff.

Needless to say, this has created quite the stir on cyberspace. Wikileaks and Jack Posobiec spread the message on Twitter; as I write this, #MacronLeaks is the number one trending hashtag on French Twitter. The French police have taken a formal interest in ascertaining the identity of the leaker.

Problem: The French media has entered its election silence period, so there will be no substantive discussions of the MacronLeaks in the MSM. (I checked the front pages of the major French newspapers and Le Monde is the only one to have prominent coverage of MacronLeaks).

Which begs the question of whodunnit.

The MSM has, of course, rushed to blame the Russian hacker Ivan. However, as more level-headed people have pointed out, what would be the point of doing this at the last moment? Macron is the least Russia friendly of the four major candidates – his campaign has scandalously barred the Russian media outlets RT and Sputnik from his events – and, the logic goes, would now be even less well disposed towards Putin.

On the other hand, a more cynical view might be that the Kremlin views the prospects for cooperation with a Macron-led France as being so dismal anyway that it might as well begin destabilizing him straight away.

Two other possibilities:

(1) Bryan MacDonald: “My bet is other state actors trying to ruin any chance of a future Macron-Putin arrangement or freelance Russians acting the maggot.”

(2) Technically competent, disgruntled Leftist/Communist supporter who wants to undermine Macron, but who doesn’t want Le Pen to benefit from it.

 
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Ernst & Young regularly carries out large-scale surveys of corporate employees across a range of countries on issues such as ethics and corruption in the workplace.

In the latest Global Fraud Survey (PDF), which took place at the end of 2016, 88% of Ukrainian employees thought that bribery and corrupt practices are widespread in business in this country.

Incidentally, this figure was 85% in the 2013 survey, the last year of “normalcy” before the Maidan. It was also at 80% in 2015. In short, overthrow of the “kleptocratic” Yanukovych made no difference to these figures. Zilch.

Now to be sure, the E&Y survey is more a measure of corruption perceptions than a measure of corruption itself, and the two are not necessarily the same. Still, there is definitely a correlation – according to Transparency International’s direct surveys of bribery incidence, the Ukraine consistently competes with Moldova for the status of Europe’s most corrupt nation, while the country with the lowest (best) ranking on the E&Y survey, Denmark, had 0% of respondents saying they had to pay a bribe in the past year when they were queried about it.

Overall, this is just one more piece of evidence to the effect that the Maidan has failed to solve the main problem that it set for itself.

In other news, Central Bank head Valeria Gontareva has offered up her resignation (after having disappeared from the limelight several weeks ago). In her three years of office under Poroshenko, she and her relatives appear to have done well for thmselves, like many bureaucrats throughout the post-Soviet world. Still, but many accounts, she has done a pretty good job; some 40% of financial institutions have been closed, including many offshoring funnels and pocket banks, while most of the rest have been forced to clarify their ownership structures. But with mounting uncertainties over the future of IMF credits piling up and an emerging crisis over fraud at Kolomoysky’s Privatbank before its nationalization, I suppose now is as good a time as any to part ways.

***

E&Y: Corruption perception by country

  • Question: Can you indicate whether you think it applies, or does not apply, to your country/industry or whether you don’t know?
  • Answer: Bribery/corrupt practices happen widely in business in this country.
Rank Country %
1 Ukraine 88
2 Cyprus 82
3 Greece 81
4 Slovakia 81
5 Croatia 79
6 Kenya 79
7 South Africa 79
8 Hungary 78
9 India 78
10 Egypt 75
11 Slovenia 74
12 Nigeria 73
13 Italy 71
14 Bulgaria 68
15 Turkey 67
16 Russia 66
17 Spain 64
18 Czech Republic 63
19 Portugal 60
20 Serbia 57
21 Jordan 53
. Average of all participants 51
22 Latvia 51
23 Ireland 47
24 Lithuania 47
25 Germany 43
26 Saudi Arabia 43
27 Poland 38
28 Belgium 36
29 Austria 32
30 Estonia 32
31 Romania 31
32 France 28
33 UAE 27
34 UK 25
35 Netherlands 23
36 Oman 19
37 Sweden 18
38 Switzerland 18
39 Finland 16
40 Norway 10
41 Denmark 6

.

 
• Category: Economics • Tags: Corruption, Ukraine 
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In an infamous 2008 article, Alexander Dugin makes the distinction between “patriotic corruption” and “comprador corruption,” or “Eurasian corruption” and “Atlanticist corruption.”

Here are the main features of “Eurasian” (patriotic) corruption:

  • Doesn’t damage Russia’s national security;
  • Concentrates the proceeds of corruption on Russian territory, or that of allied or strategically important countries;
  • Doesn’t put the corruptioneers in a state of dependency on Russia’s enemies;
  • Do not try to legitimize themselves through political lobbying and establish themselves as social norms.

And the main features of “Atlanticist” (comprador) corruption:

  • Damages Russia’s national interests;
  • Concentrates the proceeds of corruption outside Russia, in offshore havens and in countries hostile to Russia;
  • Makes the corruptioneer susceptible to blackmail from the governments and intelligence agencies of foreign Powers;
  • Attempts to create and empower lobbying structures, such as NGOs and political parties, that could legitimize the positions of Atlanticist corruptioneers in society.

Now okay, this distinction between “patriotic” and “comprador” corruption is trivially fun to make fun of. It is almost self-parodying. It is easy to ridicule whoever is making this argument, regardless of whether or not he benefits from said corruption. Dugin was endlessly ridiculed for it (even though there are no end of other, far more legitimate ways to make fun of him, such as his opposition to Hawking’s physics). No doubt I will be ridiculed for this post.

But for all that, Dugin is not wrong.

If large-scale corruption has to exist – and we know that for most countries outside North/West Europe, it must – it is doubtless better for corruptioneers to invest in their own society, like the American robber barons did in the 19th century and which the Chinese elite mostly do today, than to stash it away abroad, as was typical for Russia in the “roving bandits” era of the 1990s, when Yeltsin’s “family” was ferrying away assets in London and Switzerland like there was no tomorrow.

And the recent revelations about the network of charitable fronts that sustain Medvedev’s property empire prove that at least Russia’s political elites have embraced “patriotic” corruption.

Consider the following:

1. Of Medvedev’s $1.2 billion empire, a good 90% of investments are in Russia itself. And the 10% that is abroad – the Tuscan villa and vineyard – is in Italy, a country that does not have any particular animus towards Russia, unlike the favorite bolthole of corrupt Russian elites, Londongrad. In the 1990s, these ratios would have likely been the inverse.

2. As “stationary bandits” with some degree of interest in preserving the value of their holdings, the Russian ruling clique has a common interest in regulating corruption. Those who overstep the bounds of what is permissible, e.g. by practicing “compador” corruption, such as United Russia MP Vladimir Pekhtin with his Florida waterfront condo; or who end up stealing far too much for their station, such as the former head of Russian Railways Vladimir Yakunin and former Defense Minister Anatoly Serdyukov, are quietly dismissed. The question of whether or not Medvedev overstepped his station is now on the cards, with the systemic opposition in the Duma, such Fair Russia’s Sergey Mironov, calling on Medvedev to answer the questions raised by Navalny’s investigation.

3. The properties in question do not directly belong to Medvedev, not even to his direct relatives, but to an opaque network of charitable foundations credited with interest free loans by Russian state banks. And since what is given can be withdrawn, and – most critically – not on the whims of Western lawmakers (who in practice only target corrupt Russians who do not serve Western geopolitical interests), but on that of the dozen or so security men around Putin who rule Russia. To be sure, those “silovarchs” like to enjoy la dolce vita themselves, but at least they are not compradors themselves, i.e. they are more loyal to Russian national interests than to foreign ones.

4. “Patriotic” corruption, relative to “comprador” corruption, is closer to how political corruption tends to operate even in Western countries such as the United States. It’s an open secret that the Clinton Foundation has very little to do with charity, and a lot more to do with currying favor with one of America’s most powerful political dynasties. One critical difference, of course, is that it is not American state banks (hence, taxpayers) providing the financing, but private actors, companies, and foreign governments that expect to get some return on their investments. Now on the one hand, personally financing the lavish lifestyle of your elites is more directly insulting. On the other hand, having the likes of George Soros and Saudi Arabia do it for you is perhaps not an altogether superior alternative.

5. To end on an especially whimsical note: Although Navalny in his video criticizes Medvedev for owning Russian vineyards while also pushing for lower excise taxes on wine, one cannot judge him too harshly for it, since it would be a great boon for public health in Russia for alcohol consumption to shift from vodka to wine. To be sure, Medvedev – or rather, the charitable funds who finance the properties and vineyards he occasionally stays at – monetarily benefits from that, but then so does the life expectancy of Russians. Perhaps former Finance Minister Alexey Kudrin, one of Putin’s few confidantes who still enjoy respectability in the West, is personally less corrupt than Medvedev, but he has also gone on record calling for Russians to smoke more to benefit the Treasury; his fiscally hard-headed lack of concern for the social good was one of the reasons why he fell out with, and was eventually sacked by, Medvedev. Which of these two would be the better choice as PM for the average Russian? It is not clear that it would be Kudrin.

Well, that’s my strained defense of Russia’s corrupt thieving elites out of the way. They should pay me for the PR, or something.

 
• Category: Economics • Tags: Corruption, Dmitry Medvedev, Russia 
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With a bit less than a year left to Russia’s Presidential elections in 2018, the general contours of this cycle’s protest movement against Putin are already coalescing.

Alexey Navalny has called a march for tomorrow along Tverskaya Street, a central boulevard that leads to the Kremlin. The Moscow mayoralty refused to allow it, and Navalny in turn refused its offer of alternative venues, so the march is going to be unsanctioned. These events tend to come with a high journalist to protester ratio, because Navalny’s office plankton constituency doesn’t like events where there is a non-negligible chance they’ll be roughed up by the police. So I don’t expect much to come out of it. But we’ll see. I’ll probably go myself to observe it first hand.

As in 2011-2012, when he coined the term “The Party of Thieves and Scoundrels” to describe United Russia, the brunt of Navalny’s attacks are going to be on corruption in the Kremlin. It appears that the centerpiece this time around is going to be a massive investigation carried out by Anti-Corruption Fund on Russian PM Dmitry Medvedev, and released early this March:

In Russia, even amongst liberals, Medvedev has a reputation as a cuddly, affable, and absent-minded sort of fellow, often nodding off at meetings, but endowed with a hip, modernist outlook that will take “Russia forwards” into the clean, prosperous, sponsored content clicking future. This expresses itself in things such as appreciation for Deep Purple, support for the Skolkovo technology hub, and an obsession with hip electronic gadgets – the latter of which earned him his nickname, iPhonchik. Another of his nicknames is his diminutive, “Dimon,” which became very popular after his press secretary told Russia’s bloggers, commenters, and online trolls not to use that name: “He is not Dimon to you.” That worked on the Internet! (Not).

medvedev-scheme-simple

But according to Navalny’s investigation, which builds on earlier work by Russian journalists, the nice, professorial teddy bear is a mere mask for a deeply corrupt swindler; not so much a fan of hi-tech Apple gadgets as of big money and elite properties. Piecing together documents, his team constructed a convoluted web of charitable funds directed by Medvedev’s friends, classmates, and even relatives that don’t seem to do much in the way of genuine charity work, but do maintain a sprawling network of elite real estate for make benefit of the Prime Minister.

This includes an elite estate in Moscow’s Rublevka district and a luxury ski resort in Krasnodar, each of which is valued at about $100 million; a big estate and agro holding compnay in his ancestral homeland of Kursk oblast; two yachts, both named after the Orthodox version of his wife’s name; an elite apartment in Saint-Petersburg; and even a wineyard and villa in Tuscany, Italy, bought in 2012-13 for $120 million. There is strong evidence, including from Medvedev’s Instagram account, that he has stayed at many of these properties, and partaken of his yachts.

These “charitable funds” are sponsored by a bevy of Kremlin-friendly oligarchs and state banks. For instance, one of them was funded by Novatek’s Simanovsky and Mikhelson, who contributed $500 million. The Uzbek oligarch Alisher Usmanov, who spent six years in a Soviet prison in the 1980s for financial fraud, appears to have funded the acquisition of the Rublevka property. Gazprombank is on record giving a loan of $200 million in 2007. Its Deputy Chairman at the time? Ilya Eliseev, a classmate of Medvedev’s from his time at Saint-Petersburg State University, who also happens to be listed as the current chairman of most of these charitable funds. In total, documented “contributions” run to about 70 billion rubles, or more than $1 billion.

Even a small fraction of this would sound the death knell for any politician in a country within the Hajnal Line.

In Russia, however, this is not atypical for the elites. Everybody knows that they are stealing, and if Russians didn’t move to overthrow them in 2011-12, in the aftermath of massively fraudulent elections in Moscow and at a time when Putin was at a trough in his popularity, they are certainly not going to do so now; not when Putin’s approval rating remains north of 80% in the long afterglow of the Crimea euphoria. Moreover, Navalny’s own reputation has since become tarnished, due to his own corruption scandal (which might disqualify from running for the Presidency entirely), and due to his ardent pro-Ukrainian rhetoric, which has driven off most of his former nationalist supporters.

This, at least, is my impression.

Anyhow, March 26 will be an opportunity to more directly gauge his support at the level of the streets.

 
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Why is corruption so bad in Eastern Europe? And what can be done about it?

hbdchick-europe-corruption-2012-hajnal-line

First off, I don’t know to what extent it can be reduced. According to the hbdchick’s theories on the Hajnal Line, ceteris paribus, Southern and Eastern Europe will always be more corrupt than the countries of “core Europe” because they did not undergo its centuries of selection for beyond-kin altruism.

Despite decades of institutional convergence under the aegis of European integration, Italy and Greece remain considerably more corrupt than Germany, Britainn, and Sweden. Poland has improved greatly since the 1990s, but reached an asymptote at around Italy’s level; Romania, at Greece’s. From the outset, this implies that Eastern European countries should keep their ambitions realistic, regardless of the policies that they choose to pursue.

Still, political economic factors do play a large role.

The main concept that I would draw upon is Mancur Olson’s distinction between “roving bandits” and “stationary bandits.”

In unstable polities, the elites can be replaced at any time, often through unpredictable and lawless methods such as coups, or “people power” driven “color revolutions” if the new gang are more pro-Western. The elites know this. As such, they have an interest in maximizing their thievery in the here and now, with corresponding disincentives to large, capital-heavy investments that will only pay in the long-term. Most likely, they will not be around to enjoy the fruits of their labor a decade or two down the line. But a Mayfair apartment and British Virgin Islands cash stash won’t go anywhere.

This describes Ukraine, and Russia in the 1990s.

In polities where the system is more stable, “roving bandits” start to settle down – they become “stationary bandits.” There are relatively greater incentives for long-term investments – if you steal less today, your pie will be greater tomorrow. Although corruption still exists, and may even remain systemic, the more predictable nature of the tariffs levied by “stationary bandits” enables corporations to account for them in their business plans. It’s not even so much the degree of corruption that’s important as its predictability. Furthermore, the bandits at the very top have greater incentives to clamp down on their underlings, since if they get start getting too greedy it will bite into their own profit margins. This in turn can pave the way for the emergence of institutions that can upgrade the war on corruption from manual to semi-autonomous mode.

This describes countries such as Russia, Kazakhstan, and Belarus. (China would also fall into this category).

industrialized-transition These ex-Soviet countries, ruled by “stationary bandits,” have been far more successful at economic recovery (and growth) than Ukraine. For all the “Gabon with snow” jokes, Ukraine is still an industrialized country with a well educated population and a respectable average IQ of perhaps 95, with considerable natural resources, access to the sea, and Russian gas subsidies that have totalled approximately $200 billion since independence.

So the Ukrainian economy should be doing MUCH BETTER, given the huge gap between potential and reality (perhaps the biggest gap of any country in the world). But as of 2015, its inflated-adjusted GDP was a mere 60% of the UkSSR’s in 1990 (Russia: 110%; Belarus: 180%), and is now in a neck-and-neck race with Nigeria in terms of Internet penetration.

Telling example: One of the few genuinely bright spots in the Ukrainian economy has been the IT sector. In particular its presence on the video game scene is rather impressive in relative terms – Cossacks, Stalker, Metro 2033.

Why? Because that is what you get when you combine roving bandits with a high IQ population. Few people are willing to build anything substantial like a multi-billion dollar factory. Hence, so far as heavy industry goes, it just continues to coast on the ever depreciating Soviet legacy.

How much capital do you need to launch a middle-sized video game studio? Can’t imagine it’s much more than $100,000. Most of the value is in the brains, and you get some of the best cognitive bang per dollar in the Ukraine. You can sell your game on Steam, and should instability strike, you can just bugger off to someplace warmer and more civilized, like Cyprus or Malta (like 4A games, the creators of Metro 2033, did in 2014).

Incidentally one can see the same thing (if to a significantly smaller extent) in both Russia and Belarus.

How to solve – or at least mitigate – corruption follows naturally from the above observations.

(1) The roving bandits need to be settled down. (Replacing one gang with another under the cover of a color revolution doesn’t do anything – as Ukraine has already proven, TWICE).

In Ukraine’s case, that means it needs to put an end to its never-ending internecine struggles. Broadly speaking, both Novossiya supporters and Ukrainian nationalists have the right idea, even if they are otherwise diametrically opposed. (Nadia Sevchenko represents a curious convergence of these two streams: A Ukrainian nationalist to the core, she has negotiated with LDNR authorities in contravention of official Kiev policy while suggesting that Ukraine needs a period of dictatorship to get itself sorted out).

(2) East Asia furnishes many several examples of non-Hajnal societies that have successfully solved the corruption problem. One approach is greater criminal penalties for corruption (“kill the chicken to scare the monkey,” as the Chinese proverb goes); another is to richly compensate civil servants, so as to reduce the relatice incentive for additional thievery (Singapore government ministers are paid like the CEOs of big corporations, and in tandem with harsh punishments and wealth, this has helped Singapore become one of the world’s least corrupt societies, despite traditional China’s penchant for corruption).

In practice, neither of these is practical for Eastern Europe. European human rights regulations preclude the killing of chickens; and East Europeans themselves are far too populist and demotic to tolerate elitist-technocratic policies like CEO-scale salaries for bureaucrats (with the result that said bureaucrats will unofficially continue to compensate themselves at CEO levels anyway, but with huge markups).

(3) The removal of roving bandits will enable faster economic growth, and greater tax receipts allow you to pay more to develop institutions, while greater per capita wealth leads to money floating about for the development of an indigenous civil society. It also makes e-government, which makes far less demands on face-to-face interactions between citizens and bureaucrats, with all their associated potential for corruption, far more realizable.

(4) To be sure, it can be very frustrating to live in a country that is visibly and strikingly more corrupt than the fairylands of core Europe. It is understandable that people, especially young people without much life experience, want change, and they want it quick. More often than not, the result is a cargo cult approach to combatting corruption, which results in spectacles such as Anti-Corruption Forums to which the participants show up in Mercedes and Lexuses (a most apt metaphor for Euromaidan).

From this perspective, an understanding of the deep gene-cultural underpinnings of corruption might not lead you to forgive everything, but it will at least imbue you with a sense of realism as to what is and what is not possible. A slow, steady convergence over two or three decades to Italy’s or even France’s level of corruption – entirely possible, even likely. A new Sweden overnight through the power of mass lustrations and Lenin statue topplings? Nope.

Going ahead will only set you up for eventual disappointment, but in the meanwhile, you’d have wrecked your own country.

Finally, don’t worry. In the end, corruption just isn’t that important to economic growth! Just compare Chile and China: One by far the cleanest country in South Americat; the other one is far more corrupt, but a standard deviation higher in average IQ. Which of those two is the economic steamroller, and which one has nothing to write home about? Exactly. And corruption tends to diminish with increasing wealth, as the power of institutions and civil society increases. Just don’t smother your economy with regulations and central planning, don’t allow roving bandits to pick the place clean and stymie all long-term development, and the problems should ultimately resolve by itself without any particular further effort on your part.

PS. Daniel Chieh comments: “These days, modern China has moved significantly from executions to pressuring corrupt officials to commit suicide: possibly a return to honor suicides that was the norm in Asia and perhaps part of the entire initiative for Xi’s “return of traditional Chinese virtues.” Honor suicides just doesn’t seem to be a thing in East Europe, that I know of, anyway. Human rights law in Europe in theory wouldn’t stop all methods of “killing the chicken” as there are a number of other “greater criminal punishments” that don’t include capital punishment – which is rarely used these days, to be honest. Mass social shaming, prohibitions on future job-seeking, reduced status opportunities and unfavorable associations that spread even to the family all work just as well.The life of a pariah can be worse than death, imo.

 
• Category: Economics • Tags: Corruption, Russia, Ukraine 
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transparency-cpi-2016

Has been released.

It is basically a composite index of about a dozen subjective corruption ratings given out by various development organizations and more political NGOs (e.g. Freedom House).

Although it generally reflects reality, as in it correlates well with other, more objective measures of corruption, there are two major caveats:

(1) It is not necessarily accurate for any one particular country. You would be better off looking at things like Transparency International’s own Global Corruption Barometer surveys of everyday bribery, the World Bank’s enterprise surveys, and expert assessments (preferably blind) of national legislation such as the Global Integrity Index, the Open Budget Index, and the Revenue Watch Index. (I tried to combine some of them here).

(2) The people actually doing the ratings are employed by outfits such as the World Bank and democracy promotion NGOs. This means their perspectives are going to be ideologically loaded in predictable directions.

For instance, it’s pretty likely that despite the Maidan’s promises, Ukraine is still considerably more corrupt than Russia. Although Ukraine and Russia score an equally bad 29/100 according to the CPI, there are differences in their component scores [XLSX]. The World Economic Forum Executive Opinion Survey, which queries businesspeople who are more concerned with profits than politics, gives Russia 38/100 to Ukraine’s 27/100. The “political” NGOs, however, rate Ukraine higher; Freedom House gives it 33/100 to Russia’s 25/100.

 
• Category: Economics • Tags: Corruption 
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Transparency International has released the Global Corruption Barometer 2016 for Europe:

transparency-international-gcb-2016-bribery-in-europe

The map above shows the answer to the most interesting question in the survey: “Did you or any member of your household make an unofficial payment or gift when using [a public service] over the past 12 months“?

In the last survey from 2013, at the height of the kleptocratic Yanukovych regime, that figure was 37% in Ukraine.

In this survey, it was 38% – the same as in Uganda.

In other words, more than three years after the beginning of the “Revolution of Dignity,” there has been absolutely no appreciable decline in corruption in Ukraine.

This is, incidentally, confirmed by other figures (earlier I posted a poll showing the bribery rate increasing from 37% to 40% between 2014 and 2015).

But what can one expect? What Westerners don’t get is that is that Maidanist Ukraine’s commitment to transparency is one big fat cargo cult. But what else can you expect in a country where “activists” turn up to “anti-corruption forums” in Lexuses and Mercedes? Where the physical symbol of the previous regime’s corruption, a golden loaf, went missing soon after the “revolution”? In a country that overthrew one kleptocrat and replaced him with a post-Soviet oligarch and one of the godfathers of Ukrainian clan politics?

To be sure, Russia with its 34% bribery rate (equivalent to Cote d’Ivoire), the joint-third worst in Europe after Moldova and Ukraine, has nothing to write home about either. It is a disturbing indication that there have been no improvements in everyday corruption during Putin’s time in power.

But at least Russia didn’t wage a war against its own people in the name of Poroshenko’s frescoes, oops, I meant “European values.”

But anyway – commenting on the map in general, the results are very much as expected based on country stereotypes and other subjective rankings like the CPI. That said, it’s worth nothing that Greece has made significant progress – whereas in 2013, 22% of Greeks had paid bribes, this year only 10% did.

 
• Category: Economics • Tags: Corruption, Russia, Ukraine 
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Thomas Theiner, a businessman expat who has lived in Ukraine for the past 5 years, on what “business in Ukraine is really like”:

It was not supposed to be this way. Everyone knew that Ukraine was notoriously corrupt under President Viktor Yanukovych’s regime, which demanded a share of every deal and business. The anger at this kleptocracy drove Ukrainians to the streets in 2013-2014. After the Euromaidan, Ukraine was supposed to be a modern, European country.

That hasn’t happened. By now it is clear that the corrupt and thieving government-mafia clans are still in charge.

Businessmen that had managed to survive Yanukovych’s shakedowns are throwing in the towel.

Nigel, a British citizen I know, came to Ukraine in 2004. He and a Ukrainian partner built up an engineering company with more than a hundred employees. In 2011, he won a major contract from the US government, which meant that Yanukovych’s goons went into overdrive to shake him down. In 2013-2014, Nigel supported the Euromaidan enthusiastically, only to be harassed by the new “clean” officials under Poroshenko for their share. With the currency having fallen by over 70 percent, the new authorities demanded three times the money to offset the aforementioned fall. Nigel didn’t buckle, so the authorities revoked his visa, threatened deportation, and harassed the family of his Ukrainian partner. Today, the company is closed, everyone has been fired, and Nigel works in Britain.

The European Choice:

In another story, Sven, one of Scandinavia’s biggest food traders, attempted to source raw materials and basic food products from Ukraine. He believed that the EU-Ukraine association agreement signed in 2014 would finally make sourcing food from Ukraine a viable business. He gave up on Ukraine within a few months: he could not find a single Ukrainian company that didn’t demand an envelope of cash before telling him the prices and available volumes, and then would only give him a competitive price if he agreed to split the profits.

Another example:

James, who is Australian but has been in Ukraine for sixteen years, worked for an oligarch, and speaks perfect Russian, built one of the premier real estate agencies in Ukraine. This winter, he and his Ukrainian wife went on holiday; when they returned to Kyiv, they discovered that an employee with the backing of some government people had stolen their company. The employee had all the correct documentation and everything signed off by a judge; the only thing missing was the signature of the actual owner. But this is Ukraine, so the employee bribed a judge, the judge ruled in his favor, the employee paid a registrar and a notary, and he now owns the agency.

So who is Theiner anyway?

Who is this damnable wrecker? This separatist? This Kremlin troll smearing the Ukrainian people’s European Choice?

theiner-flatten-belgorod

 

Oh. Guess not.

The government in Kyiv should announce that Ukraine will take these 6 steps within the next 72 hours:

* Destroy all gas pipelines & bomb the Belarusian gas pipeline, thus launching the boycott of Russian energy that the West has refused to undertake until now.
* Flood Ukraine with small arms by arming every patriotic citizen to unleash a massive guerrilla war when Russian forces invade.
* Provide guerrillas with Anti-tank Guided Missiles, Man Portable Air-defense Missiles, mines, explosives and everything else in Ukraine’s arsenal to ensure the guerrillas can resist effectively for years.
* Call on Ukrainians in the West to attack and kill members of the Putin regime, their associates and close relatives.
* Remove uranium from Ukraine’s nuclear reactors and prepare to disperse it in Russia by all means possible—the Budapest Memorandum depriving Ukraine of nuclear power status is clearly moot now.
* Prepare to shell Belgorod with whatever missiles and artillery Ukraine has in its arsenal to flatten that city.

So basically one of the leading paragons of svidomism is acknowledging what has been evident from the very beginning:

* Opinion polls: Ukrainians Paying MORE Bribes After the Maidan

* At best stagnation, or outright retreat, on indices of transparency and budget openness relative to the “kleptocratic” rule of Yanukovych.

* The Panama Papers, where Poroshenko was named in person

* The former Defense Minister Valery Geletey who promised a victory parade in Sevastopol… by way of the acquisiton of a $36mn estate in the UK.

* The Office of the General Prosecutor announces it is searching for whoever it was that stole the American money for its own reform.

* Lexuses and Mercedes at a summit of Ukraine’s Anti-Corruption Forum.

* Poroshenko condemns NY Times article about Ukraine’s corruption as an element of Russia’s “hybrid war” against Ukraine, and the Rada demands its repudiation.

The smarter sorts of svidomy are going back on their support of Euromaidan and even repudiating their old Russophobia.

Not Thomas Theiner, though:

For the true svidomy Bolsheviks, the Revolution has a beginning but no end.

kuczynski-eternal-revolution

 
• Category: Ideology • Tags: Corruption, Ukraine 
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The most well known index of corruption is Transparency International’s Corruption Perceptions Index. However, as I have frequently pointed out, it has a lot of problems. The biggest one lies in its very name – perceptions are not necessarily equal to reality, even – or especially – if they come from a narrow class of self-appointed political and economic “experts” whom Transparency International queries when compiling the CPI.

In an attempt to remedy this, back in 2011 I compiled the Corruption Realities Index 2010 on the basis of objective measures of corruption such as the percentage of people who said they had paid a bribe in the past year, the results of blind reviews of national laws and regulations on corruption, and measures of budget transparency. Some countries, such as Italy (more corrupt than Saudi Arabia according to the CPI) and Russia (more corrupt than Zimbabwe according to the CPI) considerably improved their standings in the CRI relative to the CPI.

Now along comes a new index of corruption, or more precisely, of “a society’s capacity to control corruption and ensure that public resources are spent without corrupt practices.”

The iPi is based on the following six factors:

  • Judicial Independence
  • Budget Transparency
  • Administrative Burden
  • Trade Openness
  • E-Citizenship
  • Freedom of the Press

The first two factors seem to be the two that have the most to do directly with corruption. The second two are more incidental, though it is true that fewer regulations c eteris paribus results in lower corruption. Although one can see how e-citizenship is an extension of deregulation, in practice the particular measures used for it – such as the number of Facebook users as a percentage of the population (!) – is actually of highly questionable value. What are you going to do, report corruption on Facebook? And what if you use Twitter or Vkontakte instead? Although in principle Freedom of the Press should be a powerful tool in the battle of corruption, ratings are drawn from Freedom House which is just as subjective as the CPI (i.e., completely) and even more politicized, which makes this particular subcomponent totally useless.

The need for a truly objective measure of corruption realities remains.

Here is how this Index of Public Integrity (iPi) tallies up versus the CPI as of 2015 in terms of country percentile rankings:

cpi-ipi-2016

That said, the iPi, unlike the CPI, is based on significantly more objective/data-based measures, and unsurprisingly, both Italy and Russia (as I intuited) are some of the biggest relative improvers. This goes to support my longstanding arguments that in terms of corruption although Russia is an underperformer within Europe it is also not particularly bad at a global level, being around the average for middle-income countries, transition countries, and fellow BRICS countries, and nowhere near the “Zaire with Snow” outlier it is frequently portrayed as in the Western media.

China does considerably worse here on the iPi than the CPI. As an authoritarian country with a lot of economic regulations and telephone justice that stands to reason, though one might think that having the death penalty on the books constitutes a considerably greater “capacity to control corruption” than the absence of Facebook. The incidence of bribery polls indicate that low-level corruption in China is now actually quite rare for a country at its developmental level.

 
• Category: Economics • Tags: Corruption, Russia 
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Today a ceasefire has been agreed upon between Azerbaijan and the Nagorno-Karabakh Republic, which unlike the unilateral ceasefire declared by Azerbaijan three days ago seems to be holding.

This allows us to make some more conclusions observations on what happened.

map-nagorno-karabakh-april-2016

Source: http://caucasus.liveuamap.com/, via Cassad.

Nagorno-Karabakh War 1.5

First, the Azeris have made gains, but their advance was ultimately quite modest – only around a quarter of a kilometer across a narrow stretch of the northern front – and ultimately ground to a halt. A total of eight defense positions were lost, as well as the village of Talish in the north. There are conflicting reports on whether Mataghis was captured – the weight of the evidence suggests that the Azeri assault failed with high casualties – while the main town and operational center for that front was never seriously threatened. It did suffer a bombardment, and was the target of intensive Azeri drone surveillance. Several Azeri drones were shot down around that area. The conflict also saw the first use in anger of the Israeli Harop “kamikaze” drone by the Azeris, which was remotely steered into a bus carrying Armenian volunteers, resulting in seven deaths.

Second, as has become familiar from the War in Donbass, official and unofficial casualty figures differ by an order of magnitude. Oficially, there had been to date 35 Armenian military deaths 37 Azeri deaths, although each side claims 300-400 enemy casualties. I suspect it is closer to around 50-75 for the Armenians (especially once the 28 listed as MIA, most of which usually end up dead in the end, are accounted for) and up to 150 for the Azeris. The photographic evidence appears to show a lot more Azeri than Armenian troops, and in any case it stands to reason since it was the Azeris who were assaulting well-fortified positions.

Furthermore, the NKR’s tally of how many tanks it lost – some fourteen of them – are virtually the same as Azeri claims of how many tanks it destroyed. In contrast, Azerbaijan implausibly acknowledges the loss of only one tank, whereas the Armenians claim they destroyed 29 tanks. Since it is harder to hide hardware losses, this suggests an NKR-Azeri combat loss ratio of 1:2. Apart from this, the Azeris have also lost several APCs, 1-2 Mi-24 helicopters, and tons of Israeli UAV’s (one of them was apparently downed by a hunter with a rifle! Not very good PR for Israel’s defense export industries).

old-armenian-soldier

Armenian volunteer.

deluded-aliyev All in all, it’s safe to say that at least so far, this has been a comprehensive defeat for Azerbaijan, regardless of how earnestly President Ilham Aliyev prevaricates on Twitter and the rather unconvincing assertions of Azeri propaganda.

Their purely military gains were insubstantial, and attained at the cost of much higher losses in personnel and equipment than the worse-armed but far more motivated, skilled, and dug in NKR Army. This was accomplished without any reinforcements from Armenia proper. Any hopes for a blitzkrieg campaign have been dashed. Consequently, if the Azeris also intended to test the limits at which Russia would start moves to intervene, they failed at that as well through their failure to achieve any major military successes against NKR in the first place.

Political Aspects

The Azeris also lost the information war. Although this flareup elicited very little European or American official commentary, it was clear that public opinion outside Turkey and Azerbaijan itself – at least as gauged by social media on Twitter and Reddit – was overwhelmingly on Armenia’s side. This was especially so after evidence of Azeri war crimes began to crop up, including the execution and mutilation of three Armenian civilians in Talish and the ISIS-style parading of the decapitated head of a Yazidi soldier from the NKR ranks (note that both links are probably NSFW). While the provenance of the former is uncertain, the latter appears to have definitely happened, appearing on a pro-Azerbaijan military Vkontakte page. There were also claims from pro-Armenian media sources that many Azeris in the ranks of Islamic State were turning to Azerbaijan. There is reason to be skeptical about this since it is unlikely that the sorts of Azeris who would go off to Raqqa would return to fight for a secular Shi’ite state.

If the intent was to use military assault to catalyze the diplomatic process, that too must be considered a failure. Apart from Erdogan’s boorish but entirely predictable expression of unconditional support for Azerbaijan, nobody else followed suit. Instead, everybody from Russia and Iran to NATO and the US issued formulaic injunctions to observe the ceasefire and resolve the issues through the OSCE Minsk Group (i.e. back to the status quo of doing nothing).

Even the US was noncommital, with a State Department spokesman saying that the final status of Nagorno-Karabakh will be determined on the principles of “non-use of force or threat of force, territorial integrity of states, and the equal rights and self-determination of people.” The second and third points are of course self-contradictory in this case, but the reference to “threat of force” might have been a veiled rebuke against the Azeri Defense Minister for his threats to bomb the NGK capital Stepanakert.

The only countries of note apart from Turkey to assume a decidedly pro-Baku position were Pakistan, Georgia, and Ukraine – but this ghost of the GUAM alliance is not really a diplomatic triumph by any stretch of the imagination.

There was however one Azeri success, though. Or rather an Aliyev success. In Azerbaijan’s current economic circumstances, one might think the ruling dynasty could certainly do without is the media quacking about its offshore network of secret holding companies revealed by the Panama Papers. And unlike with Putin, Aliyev’s family members are directly mentioned as owners. It is worth noting that Mossack Fonseca had informed its clients of the data breach several months in advance, and they would have been aware of the approximate dates of its publication.

Is there a conspiracy theory here? Who knows. It need not have been a decisive factor, since the mainstream media doesn’t have the freedom to talk about such things anyway, while foreign journalists can be fobbed off with the always reliable “[the children] are grown up and have the right to do business” excuse. Even so, it might well have been a significant contributory factor.

After all, it is better to have people rhapsodizing about a “short victorious war,” or failing that at least about “our heroic shahids,” than grumbling about the plummeting currency and the offshore secrets of the elites.

A Final “Optimistic” Note

As I pointed out in my last post, this year represents the likely peak of Azeri military power relative to Armenia for at least the next decade. With Baku getting engulfed by financial crisis in the wake of the collapse of oil prices, it is cutting its military budget by 40% this year, in addition to already substantial cuts in 2015. This means its military modernization efforts will crawl to a stop. Those hi-tech toys its been “testing” these past few days are probably not going to be replaced anytime soon. Meanwhile, while the Armenian economy is hardly booming either, it can at least expect to maintain spending at similar levels or even increase them further considering the rising incidence and fierceness of its clashes with Azerbaijan.

This means that for Azerbaijan, it is a question of now or later… where later might either be decades down the line, or even more likely, never.

On the other hand, though these skirmishes were a far cry from what a real large-scale war would look like between Azerbaijan and Armenia-NKR, they were exceedingly useful from a calibration point of view in that they allowed the Azeris to get a good gauge on the actual combat effectiveness of their rebuilt army. They might well have concluded that the oil-splurge spending of the past decade didn’t automatically translate to much higher proficiency or combat effectiveness, with all that it entails for the prospects of a future large-scale operation to reconquer Nagorno-Karabakh (even putting to the side the issue of Russian intervention).

In this sense, the continued bellicose rhetoric of the Azeris – and the Turks – regardless, the chances of a serious war in the future for Nagorno-Karabakh may well have actually diminished in the past few days.

EDIT 2016/04/06: Now that the fog of war has cleared up, it has become clear that the Azeris even failed to retain the village of Talish. What a debacle.

 
• Category: Foreign Policy • Tags: Armenia, Azerbaijan, Corruption, Military 
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The front page of The Guardian on the first day of Panama Leaks:

guardian-front-page-on-panama-leaks

$2 billion!? Very impressive. Though admittedly, a rather disappointing find after more than a decade’s worth of searching for Putin’s $200 billion stash.

But still, a curious choice of whom to focus on, considering the minor detail that Putin’s name doesn’t appear in the Panama Papers even once.

putins-name-doesnt-appear

This isn’t the only curious thing about it.

For instance, there is also the observation that it comes on the heels of the tabloid stories that Putin is dating Wendy Deng, a fantastic claim which has been repeated uncritically because if it’s about Putin, it’s true.

And the Reuters story about a series of women allegedly connected with Putin all buying properties from the same real estate agent.

Not to mention the identity of the two other main “first day” targets: Messi, aka FIFA. which awarded the football 2018 World Cup to Russia, and Icelandic politicians who put banksters in jail.

Then there is also the curious fact that only 149 documents of the 11 million total were actually released in the first batch, which means that our intrepid journalists must have started off by doing selective searches on all the people they could think of who they assumed were associated with Putin from his Saint-Petersburg days in the 1990s, discovered that some of them became very rich during the economic boom of the 2000s, and tallied the total value of their assets to arrive at the not especially impressive figure of $2 billion (considering the numbers of people involved in this grand conspiracy) that they were stashing away for Putin in a tropical tax haven… just like other perfectly respectable members of the global elite, from Xi Jinping, the Saudis, and German corporations to David Cameron, Petro Poroshenko, and Mitt Romney.

None of which is not exactly news.

But it is precisely Putin who has attracted something like 50% of the media fallout from the Panama Leaks. The political class of a basically irrelevant country, albeit the only one in the world which prosecuted its banker class for their financial machinations; as well as the United States’ new bugbear, FIFA, garnered another 25%.

Leaving only 25% of the coverage for everyone else:

panama-leaks-world-map

All in all, a most curious set of coincidences indeed.

There was overwhelming demand to release all the documents and make them available in a searchable database:

wikileaks-should-we-release

Unfortunately, this time, it wasn’t Wikileaks who possessed the treasure trove. Too bad!

wikileaks-too-bad

So naturally what happened was that the range of documents that were released were from the outset tightly constricted and focused against those entities the Western order considers to be its enemies, and filtered through a journalistic establishment that it has become increasingly clear loyally serves that same order.

Even those targets that did not meet the above criteria were in general either already known (the offshore adventures of David Cameron’s father), universally suspected anyway (the Saudis), or who were either irrelevant and/or had undermined and humiliated the Western order in some way (Icelandic politicians, FIFA).

Why this might have been the case becomes a bit clearer when we look at the outfit behind the Panama Leaks. That outfit is the International Consortium of Investigative Journalists, which is funded in its entirety by the US Center for Public Integrity, and which in turn is sponsored by… well, Soros, in short.

And all the other usual regime change/color revolution suspects.

icij-sponsors

Craig Murray explains the real deal:

The Suddeutsche Zeitung, which received the leak, gives a detailed explanation of the methodology the corporate media used to search the files. The main search they have done is for names associated with breaking UN sanctions regimes. The Guardian reports this too and helpfully lists those countries as Zimbabwe, North Korea, Russia and Syria. The filtering of this Mossack Fonseca information by the corporate media follows a direct western governmental agenda. There is no mention at all of use of Mossack Fonseca by massive western corporations or western billionaires – the main customers. And the Guardian is quick to reassure that “much of the leaked material will remain private.”

In effect the main targets of Panama Papers and especially Putin are mere whipping boys, politically convenient decoys to draw attention away from people asking hard questions about the banal realities of a world ruled by the 1% offshore aristocracy.

Regardless, the Guardian’s resident neocon Natalie Nougayrède, riding on the headwinds of a media storm that the media-industrial complex she serves has itself ignited, goes on to proclaim her divine knowledge of not only the most intimate details of Putin’s social ties the secrets of the Dark Lord of the Kremlin’s mind itself:

The fact that Putin’s name does not appear in the Panama Papers will not calm the paranoia and conspiracy theories that his regime thrives upon. Indeed, these revelations will be seen in Moscow’s ruling circles as part of a CIA-led operation involving the manipulation of the “Anglo-Saxon” media.

So Putin leads like 50% of the stories in Western coverage of the Panama Leaks, despite his name not appearing in any of the Panama documents even in passing, and yet thinking there is anything unusual about this makes you a conspiratard or a “useful servant” of the Russian mafia state at best, if not a proxy of Putin himself.

After all, its not like a major former editor of a prominent German outlet has ever claimed that the CIA holds extensive influence over the German media, nor have there ever been any hints whatsoever that there is an organized Western intelligence operation to undermine Putin. We know that this is just not the sort of underhanded tactics that any Western democracy would ever use.

Move along, citizen, nothing to see here.

None of this is to deny that Putin and his associates do not lead lives of luxury, have exploited their political connections to make money, or even that some of them use offshore tax havens to avoid taxes or keep their assets safe from expropriation.

To the contrary, all three of these statements are substantially true.

But possibly the single biggest irony in this entire affair is that someone positively inclined towards the Kremlin could just as easily argue that the Panama Papers prove that Russia’s fight against offshoring was actually improving in recent years, under Putin:

In internal letters contained in Mossack Fonseca files, Malyushin was identified as the “beneficial owner” behind Panama-based Anttrin Services Corp., only in 2013, when the company suddenly shut down. As it appears from letters, Malyushin was in a hurry to get rid of his company.

Most likely, this was related to changes in Russian legislation. In the first half of 2013, a new pack of anti-corruption laws was adopted forbidding Russian officials from having foreign bank accounts or using foreign financial instruments, including holding shares in companies.

This is a datapoint that the 2013 anticorruption law forbidding Russian bureaucrats from holding bank accounts abroad is actually working. Incidentally, to add to the irony, that same law had been condemned at the time of its publication by the purportedly (but actually nothing of the sort) “pro-Putin” Forbes blogger Mark Adomanis, who portrayed it as a “forcible asset repatriation” that would reinforce Russian autocracy and put Putin in a “much, much more powerful and domineering position.”

If you were a journalist with a pro-Kremlin agenda you could certainly argue this point with at least as much legitimacy as if you were to follow the Western MSM party line and focus on what Panama Leaks “prove” about Putin and his entourage.

However, that journalist would almost universally be condemned as a Putin shill and not really a journalist at all, whereas the likes of neocon blowhard Natalie Nougayrède and serial plagiariser Luke Harding are free to roam and dominate Western media op-ed spaces with their own paranoid ramblings. Of late, they have even broken free from the informed scrutiny of their readers, with the Guardian’s Russia journalism apparently having joined that triggering triad of “race, immigration and Islam” on which the Guardian no longer accepts comments from the great unwashed of the “Comment is Free” discussion boards.

Which is perhaps just as well given how thoroughly the Western Narrative has become discredited even amongst The Guardian’s readers, despite the endless purges it has instigated over the years against its critics.

 
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Who would have the temerity to even suggest it? What kind of paid up Kremlin propagandist would even countenance such a possibility?

Leonid Bershidsky is who.

Bershidsky is a Russian journalist who left Moscow for Berlin a year ago on account of his distaste for Russia’s direction under Putin, and where he now agitates for increasing immigration to the EU in Bloomberg’s opinion columns when he isn’t lambasting the World Bank for increasing Russia’s position in its Ease of Business rankings. In short, he is an able and eloquent voice of the Atlanticist-Yuropean Consensus.

That said, Leonid Bershidsky is one of the more objective anti-Putin journalists around, and this level-headedness means that he does have to acknowledge reality on the ground.

Hence his latest article: Ukraine Is in Danger of Becoming a Failed State.

Despite attempts at change by a new generation of bureaucrats, Ukraine’s economy remains unreformed. Taxes are oppressive but widely evaded, the shadow economy is growing and the regulatory climate for business has barely improved. The International Monetary Fund, the country’s biggest source of hard currency after a steep drop in exports, is optimistic about next year’s economic growth prospects, forecasting a 2 percent expansion, but last month it revised this year’s projection to an 11 percent decline…

Equally unreformed is Ukraine’s incredibly corrupt justice system. In September, Christof Heyns, the United Nations special rapporteur on extrajudicial, summary or arbitrary executions, said after visiting Ukraine that the country lived in an “accountability vacuum.” Heyns bemoaned the failure of the Ukrainian authorities to investigate the deaths of more than 100 people on the streets of Kiev in the final days of the revolution and of 48 pro-Russian protesters in a burning building in Odessa in May, 2014. Those investigations are stalled, and attempts by the victims’ lawyers to speed them up have been stonewalled by authorities as some of the suspects in the Kiev shootings are still employed by the Interior Ministry.

The Maidan has had zero compunctions about purging the old elites, so the allegation that the investigations into the Kiev and Odessa massacres aren’t moving forwards on account of ancien regime protection networks is tendentious in the extreme. People are getting protected alright, but they are the nationalist radicals who set up the Snipergate false flag in the first place. (The evidence for it is so overwhelming – here is a 79 page summary by Canadian academic Ivan Katchanovski, not to mention the fact that even big Western media organs such as the BBC have been forced to point out inconsistencies in the official narrative – that it cannot be treated as a mere conspiracy theory).

Heyns also said Ukraine’s Security Service “seems to be above the law.” Apart from raiding a number of tech companies in an apparent scare campaign in recent weeks, last weekend the service arrested Gennady Korban, a top lieutenant of oligarch Igor Kolomoisky, who has been resisting the consolidation of power by Poroshenko. The arrest gave rise to accusations of selective justice in the Ukrainian press. Other oligarchs, after all, face no reprisals — perhaps because they’ve accepted Poroshenko’s dominance.

Out with the new boss, in with the new.

Elite corruption, though virtually impossible to measure, appears to remain as high as ever going by the anecdotal evidence. We also know from the latest opinion poll surveys that everyday corruption hasn’t decreased either.

Two years after the corrupt team of President Viktor Yanukovych fled Ukraine corruption is still rife and the country’s intrepid investigative journalists have been especially busy again. Setting the tone is Poroshenko — the only of the country’s 10 richest people to see his net worth increase in the past year — who seems to have forgotten his promise to sell off his businesses; his bank has only expanded as many others lost their licenses. Poroshenko’s and Yatsenyuk’s close allies are routinely named in connection with corrupt schemes involving Ukraine’s customs service and state energy companies.

A year ago there were many people seriously arguing that electing someone like Poroshenko is a good thing because he is so rich he wouldn’t feel any need to steal further. And then people wonder why plutocrats find it so easy to hoodwinkle the sheeple.

Americans are highly visible in the Ukrainian political process. The U.S. embassy in Kiev is a center of power, and Ukrainian politicians openly talk of appointments and dismissals being vetted by U.S. Ambassador Geoffrey Pyatt and even U.S. Vice President Joe Biden. “Pyatt and the U.S. administration have more influence than ever in the history of independent Ukraine,” Leschenko wrote.

Surprised to see him go thus far and so candidly admit that the Maidan regime is run from Washington D.C.

Europe’s requirements for the visa-free regime center on Ukraine’s seriousness in fighting corruption. The European Union recently refused a request for more funding for the anti-corruption prosecutor’s office, because of “concerns raised with regard to some people who participate in the selection” of prosecutors for the office. This is a clear reference to the team of Prosecutor General Viktor Shokin, a Poroshenko appointee and long-time associate, who has been accused of undermining the anti-corruption efforts.

But evidently they are just about sovereign and independent enough when it comes to their personal financial interests.

Ukrainian civil society is stunted by these powerful vested interests. I doubt it can push the country to a more civilized direction with the usual tools of electoral democracy: The local elections have proven that post-Soviet practices of fraud, bribery and intimidation have not been overcome. There’s little will for further upheavals so soon after the revolution and the war in the east. But unless the current political elite finds it in itself to clean up — a highly unlikely turn of events –Ukraine’s history of violent regime change is probably not over yet.

Here I have to put in a more “upbeat” note.

Although Bershidsky is correct to be pessimistic about Ukraine’s reform prospects, ultimately, the threat of revolt in a place like Kharkov or Odessa that could unravel the rest of the country has been contained. The economy is steadily stabilizing and, although the implementation of the DCFTA from January 2016 may produce a second derailment, frankly the country is already at such rock-bottom – even Moldova is now ahead – that I really don’t see how it could fall much further before resuming growth. The chances of a new Maidan are very small regardless of how unpopular Poroshenko gets or how much corruption increases even further (this is because the Maidans have always been primarily driven by deep ideological and ethnic factors, not the we’re-tired-of-corruption tropes presented to slack-jawed Westerners). Meanwhile, due to the exit of Crimea and the LDNR, not to mention the emigration of the more pro-Russian orientated elements of society, demographics has completely extinguished any change of an electoral challenge to the Maidanist course.

 
• Category: Foreign Policy • Tags: Corruption, Economics, Ukraine 
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corruption-ukraine-after-maidan

They were promised Europe, they have arrived at… Gabon?

As shown by a recent KIIS/IFER poll, the incidence of corruption – far from going down, as a loyal consumer of the Western media might expect – has if anything gone up. 40% of Ukrainians in September 2015 admitted they had paid a bribe in the past 12 months, up from 37% in April 2014.

Surprising at it might be, but it seems that having bands of Neo-Nazi loons running about shaking down businesses and shoving hapless doctors and professors into garbage bins is not, in fact, an effective recipe for promoting civility and transparency in everyday life.

While it is hardly anything to write home about, it must be pointed out that similar surveys asking people if they had paid bribes in the past 12 months in the Russian “mafia state” have tended to be around 20%. After 2012, these surveys fell off, possibly because Transparency International – which had previosly carried out most of them – found that the incidence of bribery had started declining sharply and as such the data no longer fit the official narrative.

This must also explain the disillusion rapidly settling down on Ukraine, which is confirmed by other segments of the KIIS/IFER survey. 56% of Ukrainians think the country is going in the wrong direction, up from a low of 42% in September 2014. In most areas – limiting oligarchic influence, police and judicial reform, democracy and rights, and the fight against corruption – the vast majority of Ukrainians have found no improvements since the Maidan. The only sphere in which some substantial fraction of Ukrainians – a quarter, to be precise – have found “some” or “significant” improvements is in the “protection of Ukraine’s national culture.” Presumably, they have in mind great peremogi like ahistorically asserting ownership of the medieval Russian state, celebrating the 100th anniversary of an Austrian-Hungarian victory over the Russian Empire, and forcing local authorities to rename streets named after Communist criminals like Valentina Tereshkova (the first woman in space) – at the expense of the people who happen to be living on said streets.

Likewise, superceeding even the speed of the dissilusionment after the Orange Revolution, the new bosses have been quick to plummet in the approval ratings, as living standards cratered and neoliberal “reforms” proceeded apace. Poroshenko himself went from an approval rating of 69% last September to 32% today. PM Yatsenyuk’s drop from 60% to 20% was even steeper. The only major political figure who remained in steady place – albeit at a consistently low base – was Yulia Tymoshenko, the famously corrupt “gas princess” who at 25% is once again a credible potential challenger to Poroshenko. This disillusionment was what resulted in the lackluster results of the Presidential forces in the October 25 local elections, in which entrenched local elites swept to power across the industrial heartlands of east and south Ukraine. The old east/west divisions of Ukraine, temporarily dampened during the “crisis” period of the Euroaidan’s first year in power, are resurfacing with a vengeance.

These local elites are not pro-Russian. They are opportunistic and pro-themselves, even if they have had to pay lip service to the Maidan. This means that any real reform – that is, the sort of reform that helps ordinary people, as opposed to privatizing assets to the regime’s cronies, while keeping svidomy ideologues happy with the occasional lustration – becomes all that much more difficult, in the unlikely scenario that the oligarch Poroshenko is even interested in it.

Now to be sure, this survey doesn’t paint a particularly sweet picture for Russia either. From broadly equal with the EU in 2010-13 in terms of its attractiveness towards Ukrainians, its reputation plummeted after April 2014 and remains in the doldrums to this day. Just because Ukrainians are growing tired with the Maidanist regime isn’t translating into them reassessing their opinions of Putin/Khuylo. Nor is this going to change any time soon. But that is essentially the gamble Putin took in April 2014, when he refused to restore Yanukovych by force: That eventually, the revolution would come to hate its children more than himself.

On that score at least it is not clear that he is losing.

 
• Category: Foreign Policy • Tags: Corruption, Ukraine 
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Someone stole $1 billion from Moldova.

In a series of murky deals last November, the top three banks in Moldova – one of them state-owned – loaned out vast sums of cash to unknown recipients.

As the article points out, it is one eighth of Moldova’s GDP. It is also:

  • About $350 per citizen.
  • Four months worth of wages for every working Moldovan.
  • Almost a third of total annual government expenditure.

Sure, one billion, five billion, etc. every so often vanish from Pentagon accounts. But the US economy is incomparably bigger. Adjusted for scale, this would like if some unknown guys were to steal $2 trillion dollars.

Here is an 84 page pdf report on this from US investigative firm Kroll.

To add insult to injury, this news is only doing the rounds in the Anglo media one month after it blew up in the Russian and Romanian language media. All in all it is hard to imagine a more succinct anecdote of Moldova’s irrelevance and ineptitude.

This single operation might have even contributed to the depreciation of the Moldovan leu. This is in the context of an economy that is Europe’s poorest and still 30% below per capita output in 1990.

moldovan-leu-dollar

But the point isn’t to laugh or cry over Moldova, that’s easy (much easier than with Kazakhstan at any rate). Instead, I wish to point to a few salient facts about Moldova:

It had a color revolution – called the Twitter Revolution – in 2009, in response to allegedly falsified parliamentary elections. Here is my writeup on it from back then.

It failed to topple the Communist President Vladimir Voronin outright. (Incidentally, just as with Yanukovych, Voronin was never even pro-Russian in the first place despite the nationalist pro-European opposition’s fervent claims to the contrary: “Although seen as pro-Moscow upon first being elected, he opposed Moscow’s settlement plans for the breakaway region of Transnistria in 2003 and shifted West, declining to attend the 60th anniversary to the victory over Nazism in Moscow in 2005, dropping support for the Common Economic Space (a proposed free trade zone in some countries of the former USSR) and focusing more on Euro-Atlantic integration.“)

Failing to appoint a new President – Voronin had served his full two terms, and the three pro-Western parties were in no mood to cooperate – new parliamentary elections were called in June 2009. This time, pro-Western parties managed to get a majority, and have ruled the country in coalitions ever since.

So essentially, what you had was:

  • A glorious color revolution.
  • Six years and counting of rule by pro-Western, pro-EU integration governments.
  • Uninterrupted EU cajoling forreform.”
  • No Communists or socialists in government through this period.
  • An Association Agreement with the EU from 2013.

And yet they still managed to carry out what is perhaps the most impressive heist per unit of GDP of the 21st century.

Maybe their critical defect was that they were insufficiently anti-Russian? /s I am sure some pundit or other in the respectable mainstream media would make that argument… if anyone there knew Moldova even existed to begin with.

The real lessons would appear to be:

1) Eastern Europeans gonna Eastern European. You can’t do much about that. The corruption there is engrained socially and maybe even biologically.

2) Democracy doesn’t appear to do much good, and revolutions and what the high priests of Atlanticism call “reform” – if anything, the reverse.

3) Countries cursed with excess numbers of liberals and “svidomy” will insist on repeating the experiment only to be disillusioned over and over again. Ukrainians already had one color revolution, they decided they needed another. As anybody with even a smidgeon of common sense or realistic cynicism could have predicted, nothing has changed. Well, apart from one less Crimea, Neo-Nazis running loose, and an average wage that is now almost twice smaller than… Moldova’s.

 
• Category: Foreign Policy • Tags: Corruption, Moldova 
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It became symbolic of the absurdity of Yanukovych’s kleptocracy when it was seized by the February Revolutionaries at his Mezhigorye residence.

golden-loaf

But now, it is nowhere to be found.

“In effect, it was stolen. But by whom? I have a list of objects that weren’t even confiscated. They were shown only on TV. Two months I spent sending requests [to the General Prosecutor], asking whether these objects were registered, and so forth, and we were given answers. Who is going to answer for this?” commented Dmitry Dobrodomov, an MP who took it upon himself to find out the fate of the golden loaf and the other icons, rare coins, automobiles, and other expensive goods found – and since vanished – from Mezhigorye.

And so the golden loaf continues to be symbolic – now, of the utter inability of the Poroshenko regime to stymie corruption, and in a more general sense of the bankruptcy of the Ukrainian nationalist rhetoric that ascribes its – their – corruption to being under Soviet/Russian influence.

That did not, however, stop the Maidan activists from displaying the golden loaf on the commercial excursion trips to Mezhigorye that sprung up after the coup.

“We have long had a clay duplicate of the “golden loaf”… we made many souvenir copies for 200 grivna each. You can buy them,” they told a Russian newspaper.

This, too, is pretty symbolic.

 
• Category: Foreign Policy • Tags: Corruption, Ukraine 
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After a long break, a new contribution to the Experts Panel:

Shredding Sochi… in a Good Way

Western journalists have been in the business of dismissing Russian achievements and magnifying Russian failures ever since Putin drove them into a collective derangement syndrome – he even haunts their dreams, as recently revealed by the Guardian’s Shaun Walker – so the preemptive besmirching of the Sochi Olympics can’t have surprised anyone.

What is startling, though, is the unusually low competence of the effort, even by the standards of these people that are sarcastically referred to as “democratic journalists” in Russia.

The first and foremost attack revolved around the supposed corruption surrounding the Sochi Olympics. In 2010, the Russian magazine Esquire estimated that 48km of roads around Sochi consumed a cool $8 billion of taxpayer money, a sum that implied the asphalt might as well have been made of elite beluga caviar. Julia Ioffe cheerily transmitted these sophomoric calculations to the Anglosphere. The only problem with these actuarial wisecracks? Said road also included a railway, 50 bridges, and 27km worth of tunnels over mountainous terrain… which presumably made it something more than just a road. What was intended as a metaphor for Sochi corruption turned out to be, ironically, a metaphor for unfounded attacks against it.

There are incessant comparisons to the $8 billion spent during the 2010 Olympics in Canada. But this sidesteps the fact that Whistler was already a world-class ski resort, whereas Sochi’s infrastructure had to be built from scratch and at relatively short notice. The actual event-related costs of the Sochi Olympics are $7 billion, of which only half was directly drawn from the state budget. This is not to say that there was no stealing – of course there was, as corruption is a real problem in Russia, and is especially endemic in the construction industry. Navalny has created an entire website about it, and coordinated a campaign against Sochi with Buzzfeed and The New York Times. But what’s striking is that far from the pharaonic levels of misappropriation we might expected from the tone of the coverage, in most cases the markup was in the order of 50%-100% relative to “comparable” Western projects (and that’s after selecting the most egregious cases). This isn’t “good,” needless to say, but it’s hardly unprecedented in Western experience. In any case, a number of criminal cases have been opened up, so impunity is not guaranteed. (The most prominent “victim,” Akhmed Bilalov, has fled the country and claimed he was poisoned – all true to the form of emigre oligarch thieves from the ex-Sovie Union).

The lion’s share of the $50 billion investment in Sochi – some 80% of it or so – consists of infrastructure projects to make Sochi into a world-class ski resort that will provide employment in the restive North Caucasus, kickstart the development of a Russian snowsports culture, and draw at least some of the more patriotic elites away from Courcheval.

The second major angle of attack is Russia’s “persecution” of gays. This, presumably, refers to Russia’s new laws against the propaganda of homosexuality to children – no matter that very similar laws, in the form of Section 28, existed in the UK until 2003, and that sodomy remained illegal in some American states up until the same year. I bring these up not so much to engage in “whataboutism” as to point out that the moral standards that the West proselytizes so zealously have only been adopted (or dropped?) within the past decade. Furthermore, much of the rest of the world rejects those standards to a significantly greater extent than does Russia itself. As such, this campaign strikes such an absurd and nauseatingly self-righteous note that one cannot but suspect a cynical motive behind it. Snowden and Syria, in particular, come to mind.

The third, and by far the most repulsive, category of Western concern trolling about Sochi revolves around terrorism. After every successful terrorist attack in Russia, “experts” rush in to proclaim that it is an example of “Putin’s autocracy not working for ordinary Russians” (Kathryn Stoner-Weiss), that they “cannot rely on the protection of their government” (David Satter), etc. By extension, the IOC is wildly irresponsible for “jeopardizing the safety of fans and athletes” by awarding the games to Russia (Sally Jenkins). In reality, according to the world’s most comprehensive database on terrorism, the number of casualties in terrorist attacks in Russia has plummeted in the past decade, even as the jihadist movement has been reduced to a shadow of its former self; suffice to say that suicide bombing a bus in a second-tier city like Volgograd is now considered a great success among their ranks. I do not wish to tempt fate by ruling it out entirely, but with the “ring of steel,” pervasive telecommunications monitoring, and cooperation with foreign intelligence agencies that characterize Sochi security, the likelihood of a successful terrorist attack is surely low.

Consequent criticisms become increasingly deranged and unhinged from reality, much like the murderous HAL supercomputer fading away into childish gibberishness after it gets turned off. Thousands of people got evicted, their land stolen from them… except that the average compensation per person was $100,000. Sochi is apparently built on the bones of Circassians… well, if it’s a graveyard, I wonder what that makes the North American continent – a death world? The assertion that Sochi is an “unsuitable subtropical resort” with no snow… an assessment that would surely surprise the denizens of California’s Bay Area, who go skiing in Tahoe up until late April, and where average February temperatures are significantly higher than around Sochi. If anything, conditions are looking downright steezy. The metaphorical rock-bottom was attained by the BBC’s Steve Rosenberg, who made a photograph of a pair of side-by-side toilets that were then splashed around the media – up to and including The New York Times – as evidence of the graft and imbecility that characterized the Sochi preparations. The only problem being that the photograph was taken in the middle of a renovation. But, hey, we wouldn’t want to deny the Brits their toilet humor, now would we…

All this is not to say that the Sochi Olympics are some kind of pure monument to virtuous sportsmanship and international friendship. Of course not. From their origins in ancient Greece, they were always about money, competition, and prestige. Putin himself openly states that one of its goals is to showcase a new Russia. There are no rules preventing Western states from waging a media campaign against Sochi, and refusing to send their top leaders to the opening ceremonies – petty and unseemly, such actions only reflect badly on their authors. So be it… gapers won’t be missed.

(Republished from Da Russophile by permission of author or representative)
 
Anatoly Karlin
About Anatoly Karlin

I am a blogger, thinker, and businessman in the SF Bay Area. I’m originally from Russia, spent many years in Britain, and studied at U.C. Berkeley.

One of my tenets is that ideologies tend to suck. As such, I hesitate about attaching labels to myself. That said, if it’s really necessary, I suppose “liberal-conservative neoreactionary” would be close enough.

Though I consider myself part of the Orthodox Church, my philosophy and spiritual views are more influenced by digital physics, Gnosticism, and Russian cosmism than anything specifically Judeo-Christian.