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My latest for Experts Panel/Voice of Russia:

The Panel states, “On future occasions, Russia might well require Washington to cooperate in similar circumstances; and if such is the case, its handling of the Snowden affair could prove decisive as to how Washington chooses to respond.”

Well, let’s imagine this scenario. One fine day, an FSB contractor named Eduard Snegirev takes a flight out to Dulles International Airport and proceeds to spill the beans – though as with PRISM and Boundless Informant, it’s pretty much an open secret anyway – on SORM-2 and how the Russian state spies on its hapless citizens. Would Immigration and Customs Enforcement turn him away? Would the FBI rush to honor a Russian extradition request on the basis of his violating Article 275 of the Criminal Code “On State Treason”? It is impossible to even ask this question without a smirk on one’s face.

Don’t get me wrong. It is entirely reasonable to agree to and honor extradition treaties covering “universal” crimes such as murder, rape, or – shock horror! – financial fraud (even if official London would beg to differ). But this approach breaks down when we get to “crimes” such as those of the real Snowden or the hypothetical Snegirev because it is not universal, but asymmetric and relational: Asymmetric because a traitor in one country is a hero (or at least a useful asset) in another, and relational because a traitor to some people is a whistle-blower to others.

Sergey Tretyakov, otherwise known as “Comrade J,” betrayed his sources and fellow agents in the SVR when he defected to the US in 2000. Yet on his death, many of the people discussing his life at the blog of Pete Early, his official biographer, called him a “patriot.” Not just an American patriot, mind you, but a Russian one as well – as if he had done his motherland a favor. They are free to think that but it will not change the fact that in his homeland about 98% of the population really would think of him as a traitor through and through. Or take Vasily Mitrokhin. In the West, he is overwhelmingly considered as a heroic whistle-blower, risking his life to chronicle the crimes committed by the KGB abroad. But he neither concealed the identities of Soviet sources and existing agents – unlike Snowden or Assange, nor did he reveal his documents to the entire world – opting instead to give them wholemeal to MI6. Nonetheless, demanding the repatriation of either one would be inherently ridiculous and only make Russia into a laughing stock – which is why it never even thought of doing so. No use crying over spilt (or should that be leaked?) milk.

The US, too, was usually reasonable about such matters, quietly accepting that their espionage laws have no weight outside their own territory and the territory of their closest allies – as has always been the case in all times and for all states since times immemorial. This is why the hysterics this time round are so… strange. While John “I see the letters K-G-B in Putin’s eyes” McCain is a clinical case, it’s considerably more puzzling to see similar fiery rhetoric from the likes of Chuck Schumer or John Kerry (although the latter soon moderated his tone). Such attitudes probably proceed from official America’s tendency to view itself as a global empire, not beholden to the normal laws and conventions of international politics. Now while its closest allies (or clients) might humor it in such delusions, even its “third-class” allies like Germany do not* – not to mention sovereign Great Powers such as China and, yes, Russia.

In any case, as far as the Kremlin concerned, it is now almost politically impossible to extradite Snowden even if it so wishes. Though they have been no official opinion polls on the matter, online surveys indicate that Russians are overwhelmingly against expelling Snowden. 98% of the readers of Vzglyad (a pro-Putin resource), and even 50% of Echo of Moscow’s readers and listeners (one of the shrillest anti-Putin outlets), support giving him political asylum. Apart from that, it would also destroy Russia’s incipient reputation as a sanctuary for Western dissidents – a great propaganda boon against the legions of Western commentators who vilify it every day as a ruthless autocracy.

To his credit, Obama seems to more or less realize this: He knows that he can’t issue orders to Russia or even Ecuador, and that it is not worth threatening sanctions or “scrambling jets” just to “get a 29-year-old hacker.” While the neocons and “American exceptionalists” will get their 15 minutes of blowing hard on TV and the op-ed pages, the episode is – and has been from the get go – likely to end in just one way: A quiet and untrumpeted retirement for Snowden in Quito, Caracas, or Barvikha.

* So what on Earth’s up with that anyway? Here is the most worrying theory I’ve been able to come up with:They actually take George Friedman seriously.

(Republished from Da Russophile by permission of author or representative)
 
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Mark Adomanis thinks Russia should extradite – or at least expel – Edward Snowde n because… get this, it’s current stance (i.e. leaving him in at Sheremetyevo Airport, an international territory) constitutes “trolling” of the US.

This is, to be quite frank, a rather strange argument. Would the US extradite a Russian Snowden? To even ask the question is to mockingly answer it. Said Russian whistleblower would not only be sheltered by any Western country, but awarded with all kinds of freedom medals and lecture tours. It is commonly expected for defectors from not entirely friendly powers to get sanctuary and both Russia and Western countries regularly practice this. If anybody is trolling anybody, it is the UK which gives refuge to Russians who are patent economic criminals so long as they bring some money and claims of political repression with them.

Furthermore, he believes (a faint and vague) promise of improved Russia-US relations is worth sabotaging Russia’s incipient reputation as a sanctuary for Western “dissidents” – a status that is extremely valuable in international PR terms. It is a lot harder to argue with a straight face that West – Russia disagreements are a standoff between democracy and autocracy when for every Russian political exile there is an Assange or a Snowden. But Adomanis would like Russia to forego this advantage and betray the trust of any future exiles or defectors just to please a gaggle of perennially anti-Russian blowhards in D.C.

This is not to mention the fact that many other countries are peeved off by Snowden’s revelations, so if anything it is the US that is internationally isolated in demanding his extradition. Even ordinary Americans are somewhat split on what to do about him, with 49% believing his leaks to be in the public interest and 38% against prosecuting him. The Chuck Schumers not to mention the McCains (does Adomanis seriously think that John “I Saw the Letters K-G-B in Putin’s Eyes” McCain would suddenly become well-disposed to Russia if it were to extradite Snowden?) do not even have the overwhelming support of their own constituents.

Adomanis’ argument ultimately boils down to “might is right”:

But a country like Russia, a country that is less than half as populous as the United States and which is much, much poorer, can’t afford to deal with the US as an equal because it isn’t. You can fulminate against that fact all you want, but in the world as it exists in mid 2013 Russia simply can’t afford to go all-in on confrontation with the United States because that is a confrontation it is guaranteed to lose. The Russians usually do a reasonable enough job of picking their battles, but they’ve suddenly decided to go 100% troll for no obvious reason. As should be clear, Russia doesn’t actually gain anything from helping Snowden,* all it does is expose itself to the full wrath and fury of every part of Washington officialdom. Unless you’re defending a national interest of the first order, exposing yourself to the full wrath and fury of Washington officialdom is a really stupid thing to do.

Here is what La Russophobe wrote in her interview with me, on another matter in which Russian and American interests (in her opinion) diverged:

Now please tell us: Russia has risked infuriating the world’s only superpower and biting the hand (Obama’s) that feeds it. … Are you suggesting that you believe Russian power is such that it can afford to act however it likes regardless of the way in which its actions may provoke the USA and NATO?

When you are starting to sound like La Russophobe, it’s probably a good time to stop and reconsider.

The answer to this objection – apart from the entirely reasonable one that kowtowing to the demands of a foreign power is a contemptible thing to do period – is that the Russia doesn’t need the US any more than the US needs Russia. And clumsily attempts to equate “need” with economic/military beans-counting (Adomanis: “Someone just commented on my blog saying “the West needs Russia as much as Russia needs the West.” Yeah, that’s definitely not true… The West, taken together, is so much more wealthy and powerful than Russia it’s actually kind of a joke… You can dislike the West as much as you want, but if you think Russia and the West are equally powerful then you are simply wrong… And if Russia creates policy based on the assumption that it’s equal to the West in power and influence it will fail catostrophically”) isn’t going to fool many people. Because, you know, the level of a country’s “need” for another isn’t a direct function of how much GDP and tanks it has relative to the other. And yes, while I am a realist, it’s a position tempered by the observation that today’s world is a wee bit more complex than it was in the days when the guy with the biggest club set the rules for everybody.

The US is of course a lot more wealthy and powerful than Russia. Nobody is arguing the reverse; it’s a strawman set up by Adomanis himself. What is however of some relevance is that the US has real need of Russia on some issues (e.g. Iran and nukes; transportation to Afghanistan) while Russian economic dependence on the US is actually very small (trade with the US accounts for something like 5% of its total). Both countries benefit from anti-terrorism cooperation. I think it is ridiculous to believe that US politicians will torpedo all that in a hissy fit over Snowden. I give them more credit than that.

UPDATE: Just recalled that Mark Adomanis works for Booz Allen Hamilton, the same consultancy that employed Snowden – and which happens to get 99% of its business from official DC. So it may well be that Adomanis’ opportunities for saying what he really thinks on the Snowden affair may be… rather limited. While I am not saying this necessarily influenced his articles – as regards this, we can only speculate – it would have probably been appropriate for him to mention this considering the obvious conflict of interest.

UPDATE 2: This article was translated by Inosmi.

(Republished from Da Russophile by permission of author or representative)
 
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Russian blogger Anton Nossik speculates on why Ryan Fogle’s attempts to recruit Russian intelligence officers seemed to be so amateurish.

Why was the American Spy such a Dunce?

In Soviet times, there was the following anecdote:

An American spends 15 years at spying school getting ready to infiltrate the deep Soviet rear. He studies the Black Earth dialects, memorizes local maps, the manner of dress and local folklore…

Finally, he is dropped off at Kostroma oblast. Burying his parachute in the woods, he walks out onto the country road and meets an elderly village woman.

“Mother, please tell me, how far is it to the village council?” the CIA agent earnestly asks her.

“But you, my dear, are an American spy,” she replies.

“What!?”

“We don’t have any Negroes in Kostroma oblast.”

The explanation of this latest spy story given by former GRU operative Viktor Suvorov on TV channel “Dozhd”repeats this anecdote almost word for word.

In Suvorov’s opinion, the CIA had its work cut out of them as far as human intelligence was concerned. That was because first, the lion’s share of intelligence was collected through electronic means – satellite photograph, communications interception, etc. – as opposed to from real people. Second, the most effective American agents were foreigners, spying on their own countries, who don’t need to be taught disguises or wear makeup and wigs, as their biggest disguise was a real biography and official position. As regards this, Suvorov mentioned Colonel Oleg Penkovsky, about whom he had recently written a thriller, but we can also name the fugitive Poteyev (who had uncovered an entire rezident network for the Americans) and Alexander Litvinenko, and also a great many examples from the Soviet past, including – for that matter – Suvorov himself (who says that did not cooperate with foreign intelligence services until he fled to the West, but who knows…)

I don’t know if Suvorov’s explanation is correct, but it is at least consistent with the known facts about the man with the compass and the two wigs who was caught on the outskirts of Vorontsov Park giving a reprint of a Google Translated Nigerian spam letter to a Chekist.

The only alternative suggestion that comes to my mind is that the guy was just feeling fucked over by the Moscow winter, and he found a 100% reliable means of securing himself repatriation at the government’s expense. Maybe had he left the diplomatic service on his own accord he’d have lost any compensations and insurance, whereas the State Department could not fine him for failing the mission.

Reader comments

julie0109: Maybe the guy wasn’t fucked over by Moscow’s winter, but by life in Moscow in general.

johnbmw [replying to above]: The true dunces are the FSB who thought up this clown show.

mezanmam [replying to julie0109]: Or maybe it was you Julie who fucked him? Go on, admit it, where was your room, what did he tell you about the Agency?

izvpadini61 [replying to julie0109]: The guy isn’t a spy, he’s a Kremlin project!

(Republished from Russian Spectrum by permission of author or representative)
 
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Sergei Tretyakov, the Russian traitor / US patriot (whatever you prefer), died June 13, 2010, at the age of 53. The Russian “illegals” were rounded up on June 27. The two week gap is exactly the same as the amount of time President Obama is said to have known of the Russian spy ring. What I suspect is that the order to round up the Russian spy ring was issued immediately after President Medvedev’s visit to Silicon Valley in order to provide a source of leverage in case the autopsy found Tretyakov’s death to have been unnatural. It was only on July 9 that Tretyakov’s death – of natural causes – was announced by his biographer (hagiographer) Pete Earley. The same day, a federal court ruled the Russian spy ring were not guilty of espionage, paving the way for the US-Russia spy swap, the Anna Chapman personality cult and the patriotastic karaoke songs with Putin.

Neither Russia nor the US has any interest in rocking the “reset” boat, so the affair slipped by smoothly. Medvedev wants to modernize Russia and keep the US out of its sphere of influence in Eurasia; Obama wants Russian support – or at least acquiescence – on Afghanistan and Iran. (The “bad cop” of the tandem, Putin, did make some Aesopian comments regarding how “traitors always end badly”. This was a publicity stunt. Tretyakov almost certainly died naturally, as his wife and Earley claim: he had health problems – including alcoholism and smoker’s bronchitis, according to a (self-claimed) retired colonel from Russian intelligence – so the “massive cardiac arrest” story does make sense.)

Finally, while I know this might not be news to many of you, far from all spooks are the professional sleuths of James Bond fantasy. Judging from the fascinating discussion at Pete Earley’s post on Tretyakov’s death, some of them are paranoid, petty, ultranationalist nutjobs (at least the ones that care to comment on blogs). Many of the American commentators there suffered from the risible delusion that Tretyakov somehow did Russia a favor by betraying its secrets to the US (because, of course, what’s good for America must be good for everyone).

Pointing out the obvious – that while Tretyakov may have been a US patriot, he was certainly a Russian traitor – got me labeled as a “useful idiot” (along with the sane “Nicholas Arena“, a “former intelligence officer”) by one Brett Kingstone, an FBI-connected Orlando realty dealer*. One of Tretyakov’s fans, “Victoria Spain”, even references the “Final Phase” conspiracy theory – first expounded by the Soviet traitor Anatoly Golitsyn – that the FSB control Islamist terrorists, the USSR never collapsed and Putin is planning to invade Europe.

Not that Russia’s “intelligence” appears any more acute, judging from the comments of a “Colonel (Ret.)“: through he reveals some interesting anecdotes about Tretyakov (apparently, he was an alcoholic “stooping balloon on skinny legs with scraggy arms” and part of the SVR’s privileged, incompetent “nomenklatura” caste who never did any serious fieldwork), he frequently retreats into a “whataboutist” anti-American rant. Quite crude and Soviet.

* In other spook-related business, I’ve also Facebook Friended Anna Chapman & tried to do same with Anna Fermanova (she rejected my advances).

(Republished from Sublime Oblivion by permission of author or representative)
 
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In the post with A Good Treaty’s interview, the commentator peter recommended this book, ВЛАСТЬ-2010: 60 биографий (Power in 2010: 60 biographies) by Vladimir Pribylovsky, as a “useful primer on who’s who in the Kremlin”. I happen to agree – with many qualifications, which are discussed below – which is why I translated its introductory summary “Phantom Tandem, Real Triumvirate and the Kremlin Clan Wars“.

The Triumvirate and the First Ten

According to the official version, Russia is a democratic country, consensually governed by the “tandem” of lawfully elected President Medvedev and Prime Minister Putin. The semi-official version says that the two halves of the “tandem” are in fact equal: since Putin is older and more experienced, he is also more “equal” and more important than his protégé in the Presidency.

The second account is closer to the real state of affairs, but it’s inaccurate even so. The pinnacle of power isn’t occupied by a “tandem” or duumvirate, but by a triumvirate composed of Putin, Sechin and Medvedev. The President isn’t even the second man in the hierarchy, but only the third. Although some politogists rank Medvedev fourth (after Viktor Ivanov) or even fifth (after Sergey Naryshkin, or Aleksandr Bortnikov, or Vladislav Surkov, or even Roman Abramovich), these are sensationalist exaggerations.

The real hierarchy and functions of Russia’s highest bureaucrats have no relation to their nominal positions. Vladimir Putin is called Prime Minister, but in reality he’s the Sovereign, our Tsar-Batyushka – while not a sole autocrat or absolute monarch, his power is unconstitutional; and though constrained, it is not by the constitution or the laws, but by corporate-clique traditions (not dissimilar from mafia “understandings”), backstage agreements with shadowy lobbies, and family, friend and administrative connections. Furthermore, not only is Putin a Tsar, he is also his own Minister of Foreign Affairs (the nominal minister, Sergey Lavrov, is nothing more than an advisor on foreign policy).

Though Igor Sechin is called the Deputy Prime Minister, it is he who is in fact the “First Minister”. He’s not quite the head of government (as not all Ministers are subject to him – several answer directly to the Sovereign), but he’s a first amongst equals nonetheless. He holds sway over vast swathes of the Russian economy (with the exception of finance) and the security organs answer to him.

On paper, Dmitry Medvedev is the President and head of stat, but in reality he’s sooner a sort of Deputy Prime Minister on a wide range of issues. Though preeminent in his domain, the legislative sector, he is but an advisor to the Sovereign on cadre questions, and not even the most influential – that honor goes to Viktor Ivanov, and maybe even Sergey Sobyanin has more influence on the appointments of governors than the President who signs to confirm them.

The responsibilities of FSB director Aleksandr Bortnikov are similar to his job description. Though he is formally subordinated to President Medvedev, his real managers are Putin and Sechin.

Although Viktor Ivanov is officially the director of the Federal Anti-Narcotics Agency, no matter the name of his official position in the last 15 years, he was and remains Putin’s main advisor on cadre selection. Furthermore, the Federal Anti-Narcotics Agency is really the “second KGB” (the “first KGB” is Bortnikov’s FSB). This “second KGB” became necessary after the Ministry of Internal Affairs (MVD), which had balanced the KGB during the Soviet era, fell under FSB control during Putin’s reign. Control of the MVD is exercised by the Petersburg – Karelia clan of Patrushev and Nurgaliev.

Sergey Naryshkin, the head of the Presidential Administration, should theoretically work to fulfill the President’s will. However, Naryshkin, Putin’s classmate in the KGB Higher School, is actually Medvedev’s “supervisor” on behalf of the Sovereign, Putin.

Vladislav Surkov is officially the First Deputy Chief of Staff of the Presidential Administration, but is also informally responsible for the regime’s ideology. He holds an unofficial position that is impossible in a democratic state – Minister of Parliament and Political Parties.

The Minister of Finance Aleksey Kudrin, Deputy Prime Minister Igor Shuvalov (answers on foreign economic policy) and Deputy Prime Minister Sergey Sobyanin (head of the Administration of the Russian President) also figure in the first ten of the administrative-economic oligarchy that rules Russia.

A Note on Oligarchy

An oligarchy is the collective authoritarianism of the propertied class. The single most propertied class in Russia is the higher bureaucracy, the nomenklatura. Directly (through management of state property) or indirectly (through front men, wives, children, cousins, nephews, etc) the oligarchic nomenklatura controls virtually the entire Russian economy. Their leading members are magnates of global stature – Putin in oil/gas and finance, Medvedev in paper and pulp, Sechin in oil, Sobyanin in natural gas, Shuvalov in finance, Surkov in food products, etc. This pattern is reproduced amidst the wider ranks of the regional oligarchies.

Clans, Clienteles and Coalitions

An oligarchy is never united – it is always fragmented into clans, groupings and clienteles waging civil war, as parts of temporary or more-or-less continuous coalitions. Today the main struggle is between two coalitions of administrative-economic clans, Sechin’s and Medvedev’s. The coalition centered around Sechin wants to remove Medvedev and his supporters from power and supports a third term for Putin after the 2012 elections.

In direct opposition, the Medvedev coalition aims to displace Sechin and his allies, reelect Medvedev in 2012, and transform the triumvirate into a duumvirate with Medvedev playing a more equal role in it. However, they are not much interested in Putin’s dismissal, though it is possible that for some of them it is a distant goal.

The foundation of the Sechin coalition is the union of two groups of St.-Petersburg Chekists: Sechin’s own clan and the group of Viktor Ivanov and Nikolay Patrushev (secretary of the Security Council and former head of the FSB), reinforced by a smattering of smaller clans and clienteles. Prominent figures in the Sechin clan include his protégé in the FSB Aleksandr Bortnikov, the Presidential Envoy to the Southern Federal District Vladimir Ustinov (Sechin’s son-in-law), former Prime Minister Viktor Zubkov (current First Deputy Prime Minister) and Mikhail Fradkov (current head of the Foreign Intelligence Service, the SVR), Minister of Defense Anatoly Serdyukov, the President of Rosneft Sergey Bogdanchikov and the CEO of Vneshtorgbank Andrey Kostin.

The Ivanov – Patrushev group includes Speaker of the State Duma Boris Gryzlov, deputy head of the Federal Anti-Narcotics Agency Oleg Safonov and Minister of Internal Affairs Rashid Nurgaliev. This group splits further into several sub-groups and clienteles, the more noticeable of which include the Petersburg – Karelia Chekists (Patrushev – Nurgaliev) and the Petersburg – Afghan Chekists of Viktor Ivanov (his fellow servicemen on Afghanistan). The Sechin coalition also draws in the clienteles of Sergey Naryshkin and Aleksandr Bastrykin (Chairman of the Investigative Committee of the Prosecutor General and Putin’s classmate from the Law Department of Leningrad State University). Another of Putin’s friends, Sergey Chemezov, is also part of Sechin’s coalition, with his extensive clientele of enterprise directors within the state corporation Russian Technologies, and several governors.

Medvedev’s coalition is composed of the so-called “Petersburg lawyers” (mostly Medvedev’s classmates from the Law Faculty of Leningrad State University), the “Petersburg economists”, the “Petersburg communicationists”, as well as Viktor Cherkesov’s group. The most influential of the “Petersburg lawyers” is Medvedev’s friend and former classmate, head of the Control Department of the Presidential Administration Konstantin Chuychenko. This group also includes the chairman of the Supreme Court of Arbitration and Medvedev’s lifelong friend Anton Ivanov, the Presidential Envoy to the Urals Federal District Nikolai Vinichenko, a few other lower-ranked classmates, Deputy Prime Minister and head of preparations for the Sochi Olympics Dmitry Kozak, Minister of Justice Aleksandr Konovalov, and Prosecutor General Yury Chaika (also a lawyer, though of Siberian origins).

Aleksey Kudrin leads the “Petersburg economists”, which also include Central Bank chairman Sergey Ignatyev, his first deputy Aleksey Ulyukaev, Minister of State Property Elvira Nabiullina, Director General of the state corporation Rosnano Anatoly Chubais, and advisor to the President Arkadiy Dvorkovich.

The “Petersburg communicationists” are led by Presidential advisor Leonid Reiman and his clientele (in contrast to a clan or group, which have some relatively equal personages, a clientele exhibits a more “vertical” nature: a master and his servants, the manager and his subordinates). Cherkesov’s group is also a clientele, though less so than Reiman’s because it includes the head of the President’s personal security service Viktor Zolotov and, perhaps, Deputy Prime Minister Sergey Ivanov.

Deputy Prime Minister Igor Shuvalov (“Igor Ivanovich Not Really” – as opposed to Sechin, who’s “Igor Ivanovich The Real Deal”) and head of Medvedev’s Press Service Natalia Timakova are also part of Medvedev’s coalition. Its other supporters include the moneybags Roman Abramovich and Alisher Usmanov, as well as former Chief of Staff of the Presidential Administration and Chairman of the Board of Directors of Norilsk Nickel Aleksandr Voloshin. It is possible to consider these figures as another grouping in Medvedev’s coalition, “Voloshin’s group”. Of the newly appointed regional leaders, Nikita Belykh and Dmitry Mezentsev are supporters of Medvedev and his modernization initiative.

In addition to the two main coalitions there exist individuals and groups which haven’t chosen sides, support a neutral position, or prefer to deal with Putin directly. These include the group of “Petersburg physicists” (the Kovalchuk family and the brothers Fursenko) and the “Petersburg Orthodox Chekists” (President of Russian Railways Vladimir Yakunin, the Presidential Envoy to the Central Federal District Georgiy Poltavchenko, and the Head of the Presidential Property Management Department Vladimir Kozhin). These groups are historically closely tied both with each other (through the St.-Petersburg Association of Joint Ventures and “Russia” Bank) and with Putin (through the “Ozero” dacha co-op).

Vladislav Surkov and his clientele also orientate themselves directly to Putin, feeding off the management of the Presidential Administration’s internal policy. Most governors – both old hands and new appointees (e.g., the new Governor of Pskov Oblast Andrey Turchak and the new President of Tatarstan Rustam Minnikhanov) – prefer to simultaneously show fealty to Putin, loyalty to Medvedev and boundless respect for Sechin.

Though there undoubtedly exist ideological differences between the Kremlin clans, they are not the building blocks of their coalitions. It is usually considered that Medvedev’s people (especially Kudrin’s group) profess economic liberalism, whereas Sechin’s clan are proponents of dirigisme. However, the disagreement seems more theoretical than anything. In practice, and regardless of their economic views, bureaucrats support “liberalism” towards companies under their thumb, while arguing for “dirigisme” towards enterprises connected to their opponents within the apparatus.

The majority of Medvedev’s clan are relative Westernizers and moderate imperialists. In contrast, Sechin favors an alliance with China against the West, and the majority of his supporters are hawkish imperialists in their attitudes towards the former Soviet republics. That said, the views of Cherkesov, especially in foreign policy, are little different from those of his bitter enemies amongst the Sechin clan (e.g., the news group Rosbalt, which they control, beat the war drum for a march on Tbilisi in August 2008).

Though he is a relative Westernizer and fairly liberal in his internal convictions, Surkov is adamantly opposed to even the minimal modernizing reforms in the sphere of ideology and politics suggested by Medvedev’s liberal advisors from the Institute of Contemporary Development, INSOR, patronized by Timakova and financed by Reiman. Though the “Orthodox Chekists” Yakunin and Poltavchenko might sing the Cross and Russian power to the skies, and advocate a strategic blockade of America in conjunction with the Arabs-Muslims, this does not stop them from maintaining a close alliance with the Kovalchuks (moderate Westernizers, and rather indifferent to both Orthodoxy and the Arabs-Muslims) in the interests of remaining competitive in economic and internal political intrigues.

Putin is Above the Fray

Putin remains above the struggle between the two oligarchic-nomenklatura coalitions (the rivalry between which he partly organized himself) and exploits all the political advantages of this state of affairs. Historically, he is closer to the Sechin clan, especially since one of the leaders of this coalition, Viktor Ivanov, is one of his closest friends. However, on economic questions (and personally) Putin completely trusts in Kudrin, and maintains friendly relations with him; furthermore, the appointment of Medvedev as a successor would have been impossible without a certain degree of trust – greater, in any case, than towards any of his former colleagues in the KGB. No doubt Putin was afraid of bestowing the Presidential mantle onto any of them even for a short time – regardless of all the vaunted “friendship” and “brotherhood” in the intelligence services.

In his cultural and civilizational views, Putin is a Westernizer (like Kudrin or Medvedev), but has only distaste for Western-style democracy (like Sechin, Patrushev, Viktor Ivanov). In matters of foreign policy he usually occupies a middle line between Kremlin Westernizers and anti-Westernizers, hawks and moderates, but it remains unclear whether his middle of the road attitude comes from listening to opposing sides of the foreign policy debate or is a product of his own quirks and oscillations.

The Sacred Cow

There are several reasons preventing the Medvedev clan from moving against Putin (and its anti-Putin minority from speaking out against Putin openly). First, it’s simply dangerous – for the future, for business, even life and limb. Second, many members of Medvedev’s coalition feel themselves quite comfortable with Putin – some of them are even closer to Putin, than they are to Medvedev (e.g. Kudrin): it is Sechin who makes their lives hard, not Putin. Third, they aren’t sure that they would be able to keep the Chekists and other assorted siloviks in check without Putin (as of now the Army is quiet and the generals don’t stick their noses into politics, but this will not necessarily be the case forever). Fourth, they are all either unknown to ordinary Russians (from Chuychenko to Shuvalov), or unpopular (Chubais, to a lesser extent Kudrin), and they fear that without Putin, not only would they be unable to control the Chekists, but also the Russian people.

Fifth, and finally, some of them (e.g., Chubais, Kudrin, Shuvalov) understand, that they have no long-term interests binding them to Medvedev, and rightly fear that if there were neither Sechin nor Putin, nothing would stop Medvedev from scapegoating them should the need arise. Nonetheless, in Medvedev’s circle – and especially in that “circle’s circles” – there does exist a dissatisfaction with Putin and a hidden desire to deprive him of power. This dissatisfaction is more or less evidenced in the writings of Medvedev’s experts in INSOR, the speeches of official human rights activists from the Presidential Council on Developing Civil Society, and in the publications of paper and electronic media under the control of Voloshin and Usmanov.

That said, however, it isn’t clear what Medvedev himself wants: to defeat Sechin and ascend to second place in a duumvirate, or to one day become the first and only Tsar himself. It’s possible that Medvedev himself doesn’t quite know yet; in any case, he is still far from successful in his struggle for second place in the real Kremlin hierarchy.

End of translation.

Comments on “Clan War” Kremlinology

1. A bit of history. Unless I’m mistaken, this clan-based view of Russian politics gained prominence around the time Mark Ames published The Kremlin’s Clan Warfare: The Putin Era Ends in the eXile in October 2007 (at any rate its pattern was widely reproduced). According to his view, the main clans were centered around Putin, Sechin and Cherkesov.

The main differences with Pribylovsky’s (2010) version is that Putin’s guys are now Sechin’s. The “civiliki” clan around Medvedev isn’t even mentioned yet.

Then earlier this year STRATFOR came out with its own interpretation in The Kremlin Wars series.

STRATFOR is more focused around which individual is aligned with the interests of which security agency (GRU vs FSB) clan.

Now one question we need to ask is: how much of the popular commentary on the Kremlin clans is based on Pribylovsky’s work (his site anticompromat.org has painstakingly detailed biographies on Russia’s major political figures)?

2. A few notes about Pribylovsky from Wikipedia. First, his professional work is in Byzantology – very appropriate for transfering to Kremlinology, though, of course, there’s always the possibility of its special stress on conspiracy, on insiderism and byzantism, overspilling. Second, he is a Soviet era dissident: he certainly doesn’t much like the siloviks, supported Vladimir Bukovsky (who doesn’t even live in Russia) for President in 2007, and signed the (somewhat ridiculous) “Putin Must Go” petition. Third, collaborated with Yuri Felshtinsky on the book Operation Successor; the same guy also collaborated with Litvinenko on the infamous conspiracy book Blowing Up Russia, and got funded by Berezovsky (the Family oligarch who lost out to the gebenishki and really hates Putin). Fourth, the book this translation is from, Power in 2010, was “издано при поддержке National Endowment for Democracy”. This democracy/freedom promoting organization openly admits to continuing work once done by the CIA.

This is not an argument for or against. It’s context. All political analysis is colored by one’s own political biases, and in Pribylovsky’s case it is undeniably very slanted in a particular direction. This has to be taken into account when deconstructing his work.

3. Now on to the article itself:

A) There are recognizable clans, though I very much doubt they are as rigid as Pribylovsky makes them out to be. Furthermore, these internal corporate structures are not specific to the Russian state. While corporatism is certainly very overt in Russia, it’s not as if it doesn’t exist (and in a big way) in the Western democracies (e.g. in the US the elites are mostly drawn from one class and greasy palms propel them from politics to business to thinktanks and academia and back). In general, like most Russian “dissidents”, he appears to have a rather warped and rose-tinged view of how politics really works in so-called “real democracies”.

B) I don’t think Putin (let alone Sechin) is more powerful than Medvedev for the very simple reason that Medvedev can fire Putin any day of the week, while Putin can’t do the same to Medvedev.

Now as the author pointed out, it is not really in Medvedev’s interest to do so. It is believable, if not inevitable or even likely, that doing so would be the political equivalent of nuclear war in the MAD era. But even in that case, it’s a balance of terror at the pinnacle of the power vertical, not Putin as Tsar / Godfather.

Furthermore, I think Pribylovsky over-stresses the competitive element of the clan system, and bellites the capacity for cohesion and effective action that is present in all feudal-type vertical systems. What is perhaps more logical is that Putin and Medvedev do trust and respect each other, and – as they say themselves – make their decisions in concert (even though it is sometimes advantageous for them to be at odds in public, especially their whole good cop / bad cop play on foreign observers).

D) Medvedev is just not that interested in personal glory. This is my impression, but his pose and mannerisms are so overly-”Presidential”, so cringingly imperious, that they appear utterly artificial, unbelonging to the alpha male-type that has Napoleonic complexes in politics. IMO, he will not seriously try to emerge as a Tsar figure – of his own volition.

E) One very good service Pribylovsky does is expose the Medvedev the Liberal vs Putin the Bad narrative so beloved of the Western media for the sham it really is. The people you attract reflect on you. Nobody who has the likes of people like Alisher Usmanov (a rapist and maybe worse) or Viktor Cherkesov (a thuggish secret policeman) in their retinue can be an liberal “angel”, nor can someone whom Chubais supports have impeccable respect for transparency. Likewise, no-one who protects Kudrin could be an economic populist and statist, just as no-one who appointed “Medvedev the Liberal” to the Presidency can entirely be an illiberal autocrat. The game is almost never black and white, just multiple shades of gray.

4. Commentator Lazy Glossophiliac gives us his thoughts on Reading up on Russia. I agree with him that Putin is probably better than Medvedev for Russia.

Addendum: In a joint effort with Kevin Rothrock of A Good Treaty, we have summarized Pribylovsky’s networks into three convenient tables. Check it out!

(Republished from Sublime Oblivion by permission of author or representative)
 
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putmarck Kicking off the Watching the Russia Watchers interview series at S/O is the promising new blogger A Good Treaty. He is a DC-based foreign policy analyst who prefers a “good treaty with Russia” to only treating with a good Russia: as a foreign policy realist, he is averse to neocon (and neoliberal / liberal interventionist) tropes alike. A Good Treaty has a graduate degree in Soviet history and has lived in Moscow several times. His blog references Russian newspapers and makes original translations, and constitutes an excellent resource for any Anglophone seriously interested in Russian politics and Russian-American relations. You can follow Putmarck on Twitter.

A Good Treaty: In His Own Words…

Before answering any questions, let me take a second to thank Anatoly Karlin of Sublime Oblivion for taking the time to draft some very challenging questions that were very fun to (try to) answer. I tried to invent responses that were equally thought-provoking, and while I may have failed in that enterprise, I do hope to explain a little bit about the way I approach this work, which occupies a startling amount of my time.

Why did you start blogging about Russia?

I’ve been studying and working on Russia for about nine years now. Russia = bizarre, alluring, etc. I figure anyone reading my blog shares my interest in the Motherland.

I don’t expect this blog to have any impact on public policy or academic debate, but I do personally benefit a great deal from having a forum through which I can better synthesize my own ideas and listen to the responses of others.

The specific angle of AGT (the whole ‘realist’ POV) was a conscious decision I made after working in Washington for about a year. Democracy promotion, I soon discovered, has really supplanted all other approaches to foreign policy. Speaking outside this framework is the easiest way to get oneself painted as un-American and pro-dictatorship. This is largely a sham, since the United States has hardly stopped cooperating with nasty foreign states, but the dialog carried out in DC makes it very difficult for anyone to acknowledge this. Basically, I set out to avoid the old, tired normative analysis.

What were your best and worst blogging experiences so far?

The most fun I’ve had so far is writing direct responses to articles that appear in the press. Doing this, I’ve managed to gain the attention of other bloggers and journalists, which has produced some stimulating private email exchanges and led InoSMI to translate a few of my posts (three, so far) into Russian.

The worst thing about blogging is an inverse of one of its best aspects: I’m regularly reminded how many talented, bright people there are out there with my exact specialty, who are regularly producing fascinating original work, and living abroad in Moscow, which I think of as a sort of bittersweet adventure.

What are the best blogs about Russia and the Eurasian space? What are the worst?

Some of my favorite Russia blogs (in no particular order): Julia Ioffe’s Moscow Diaries, Mark Adomanis’ On Russia, Sean’s Russia Blog, poemless (RIP — just kidding), this blog — Sublime Oblivion, The Russia Monitor, and Scraps of Moscow. I’ve recently started following Democratist, Dividing My Time, The Kremlin Stooge, and Neeka’s Backlog (which posts the loveliest photographs of Eastern Europe). In Russian, Maxim Kononenko at Idiot.fm and Oleg Kashin’s LiveJournal provide regular amusement. Evgeny Gontmakher, Medvedev’s “man on the outside,” has some amusing op-eds on his ‘blog’ at Ekho Moskvy. For military affairs, I regularly turn to the following three blogs: Russian Defense Policy, Russian Military Reform (Dmitry Gorenburg), and Russian Strategic Nuclear Forces (Pavel Podvig).

The Russia blogs with which I torture myself by reading are some of the following: the LJ blogs of Vladimir Milov, Vasily Yakemenko, and Andrey Illarionov. Catherine Fitzpatrick’s Minding Russia reliably produces some of the longest, most rambling posts you’ll find online. Oleg Kozlovsky’s blogs (WordPress for English and LJ for Russian) are both as boring as they are terrible. Since Oleg decided to integrate his Tweets with his LJ account, there has been five times as much garbage. Ilya Yashin’s LJ blog, modestly titled in Spanish “El pueblo unido jamás será vencido” (A People United Will Never Be Defeated), is full of the same D-list self-promotion, but he sometimes includes photography and multimedia that makes reading his PR slightly more fun. (Also, he volunteered sordid details about an alleged threesome sex scandal that never got any corroboration beyond his own ranting. So, it can be entertaining on occasion, without a doubt.) And finally, Vladimir Kara-Murza’s blog, Spotlight on Russia, is another publication I love to hate for its unwavering commitment to recycling the most vapid, useless tropes about the ills of Russia.

I don’t even bother reading La Russophobe, which seems to just scrape the bottom of the Window on Eurasia barrel — another blog I skim but lack the stomach to honestly read. I think LR is too much opinion without enough style. Mark Adomanis (On Russia) and Mark Chapman (The Kremlin Stooge) are also very opionated and often openly insulting, but I’m able to enjoy their stuff mainly because (a) I don’t find their opinions to be so crazy (sorry, what can I say — I love to affirm my biases), and (b) their writing is immensely better.

What is your favorite place in Russia? Is there anywhere you haven’t been yet, but would love to visit?

I haven’t traveled Russia nearly enough. The farthest east I’ve been was a brief visit to Kazan’, which I thought was fascinating and beautiful. The local Kremlin there, which hosts both an Orthodox church and a mosque, has a marvelous statue out front dedicated to the world’s proletariat. Though I’m not a Marxist, the monument is awesome. Imagine Atlas breaking Ghostrider’s fire-chain in slow motion, and perhaps then you’ll understand how cool this thing is. Hell, just look at it here.

I’d love to see just about anywhere else in Russia I haven’t already been, which is most places.

If you could recommend one book about Russia, what would it be?

I wouldn’t trouble anyone with a whole book. To understand Russia’s transitional conundrum, one should begin by reading Yuri Slezkine’s 1994 article “The USSR as a Communal Apartment, or How a Socialist State Promoted Ethnic Particularism“.

Do you think the average Russian lives better today than in 1988? 1980? 2000? Are they richer, freer or happier than before?

My impressions from talking to Russians is that life is better now that it’s been before. It’s still pretty lousy for most people, though. (I don’t think Russia is alone in this.) Whatever the benefits of modern living, Soviet nostalgia (for geopolitical status, for scientific respect, for athletic greatness, etc.) is also a patently real political force. Material realities are important, but it’s public perceptions that ultimately make the world.

How would you classify Russia’s political system? Is it a liberal democracy, an authoritarian regime, or a hybrid crossroads? Which current or historical political economies does it most resemble, if any?

Every polity is at a crossroads all the time. Every society in every nation in history is also a hybrid of various trends and persuasions. Russian politicians tend to have a more statist leaning in their way of conducting affairs, but this isn’t to say Western officials aren’t entangled in comparable webs of intervention, assistance, and power brokering. I honestly find very little to be gained by pursuing any classifications like those you suggest. If we call Russia ‘authoritarian,’ there are a thousand examples of information freedom and public debate to debunk this label. On the other hand, there are countless instances of repression to suggest that the Kremlin is indeed an authoritarian menace. Take your pick, but please leave me out of this errand.

On balance, do you think Putinism was good or bad for Russia? (Try not to sit on the fence here).

First of all, I don’t like the term “Putinism.” I think it gives too much ideological credit to the Putin administration, which has never bothered much with a real intellectual architecture for either the Power Vertical or United Russia. (Sorry, Surkov, but I’m just not seeing the big picture when you tell the Nashi kids to ‘innovate’ the way to tomorrowland.) Putin consolidated power during a time of political and economic anarchy. Was that a good thing? Of course it was. Russians were deeply unhappy with Boris Yeltsin’s second term (which they were scared into granting thanks to the a spectacular PR scheme by the oligarchs), and Putin brought more than just stability to the country — he managed a period of genuine prosperity that, at the very least, benefited enough of the country’s elites that they ceased open, internecine warfare.

The new focus on modernization and innovation under Dmitri Medvedev, whom I believe to be a political ally and proponent of “Putinism,” is just the next phase of a process begun ten years ago. Perhaps it’s thanks to Putin’s flexible non-ideology, but I believe that he’s capable of adapting tactics to the needs of the moment. If his financial team is telling him that foreign investment is a must, it’s no shock that the Kremlin is now pursuing FDI with all its might.

It’s not all roses with the Putin years. In 2001, Russia was 79th in Transparency International’s Corruption Perceptions Index. Last year it was tied for 146th. (Hint: higher is worse.) While we shouldn’t attach apocalyptic significance to the designation of a number by a single NGO, the general consensus is definitely that corruption has been on the rise. This is a serious problem — it’s the serious problem. An optimistic take might be that, as the Kremlin begins to crack down on bribes and dodgy deals, the wrongdoers are trying to exact maximum rents as long-term insurance.

Or maybe Putin’s own web of rent distribution is the backbone of the ‘legal nihilism’ behind Russia’s Africa-level corruption. If that’s the case, then perhaps that way of doing business is no longer optimal. Recent overtures from Medvedev (presumably acting in agreement with Putin) suggest that the authorities are, at the very least, considering new priorities. It’s Russian politics in action.

If you could advise the Russian government to do one thing it isn’t already doing, what would it be?

Harassing the liberal opposition by denying them rally sites with fake counterprotests (for example, blood drives, and so on) seems to me to be a completely pointless exercise. It’s exactly this negative publicity that the opposition needs to survive, and the authorities continue to feed them this sustanance. Putin’s response, delivered to Shevchuk at the infamous luncheon exchange, was that these decisions aren’t up to him, but lie with local officials. Very well, Vladimir Vladimirovich, but why the hell don’t you get off your ass and exercise a little of that characteristic paternalism to steer your ship to calmer shores? I can only guess that the Kremlin is either unconcerned or desperately afraid — either of which seems like a stupid mindset for the leaders of the Russian Federation.

Additionally, I don’t see the point in squashing mayoral elections in cities across Russia. A few opposition victories by the communists or the SRs in buttfucknowhere cities is desirable! When Kondrashov won the Irkutsk spot recently, I thought ‘Wonderful!’ A few more such incidents will not even dent United Russia’s juggernaut, and it both injects some alternative voices into national politics and serves as excellent PR for Moscow to use in the faces of people who moan about attacks on democracy. And then I heard about Kondrashov switching affiliations to register with the ruling party. And then it turned out that the regional duma was seeking to abolish mayoral elections altogether in favor of an opaque ‘city manager’ appointment system. Again, the Kremlin and the authorities demonstrate an entirely unnecessary panic about the threat of opposition parties. If I had Putin’s or Medvedev’s ear, I’d scream into it that they need to display a bit more confidence — even if it’s in their own puppet political theater.

HARD Talk with A Good Treaty

ANATOLY KARLIN: As I understand, you are not the biggest fan of the Russian liberal opposition. You believe their leaders kowtow to the West and couldn’t care less about the everyday concerns of ordinary Russians. But consider the case of a patriotic Russian who detests the corruption and proizvol (arbitrariness) of state institutions and genuinely wants to improve human rights – not just those of Khodorkovsky, but of prison inmates, conscripts, minorities, etc. What can she realistically do about it, apart from ranting about the return of neo-Soviet totalitarianism in front of foreign TV cameras?

A GOOD TREATY: People “do” all kinds of things. Thirty-six parents and teachers in Ulyanovsk went on a week-long group hunger strike to successfully protest the closure of several local schools. On the opposite end of the spectrum, a group of youths in the Far East, fed up with local law enforcement and inspired by a particularly trigger-happy version of nationalism, decided to arm itself and start attacking police officers. Some people make it their profession to work in the line of danger — people like Natalia Estemirova and Sergey Magnitsky. Others lead scholarly human rights organizations like Oleg Orlov of Memorial, dedicated to unearthing a Soviet past they believe is forgotten at Russia’s peril.

All of these people are patriots in their own heads, and who am I to disagree?

I don’t begrudge the liberal opposition for ranting hyperbolisms in front of foreign TV cameras. This is half the business of being in the Russian liberal opposition, after all: (a) they need to provoke/tempt the authorities into cracking down on their rallies, otherwise nobody would ever care, and (b) they need to attract the attention of the West — for financial aid, for international connections, and for status. The liberal literati are frequent visitors to the United States — even the younger, student-”employed’ members like Ilya Yashin (who recently concluded a cross-country tour of the U.S.) and Oleg Kozlovsky (who’s been Stateside for weeks and is currently attending some kind of not-at-all-propagandistic-sounding democracy workshop at Stanford University).

These boys are more than welcome to globetrot wherever they like, but I personally can’t help but see them as a bunch of spoiled brats, partying to their own celebrity and hopelessly out of touch with the needs of ordinary Russians. (I’ve made it a point on AGT to focus on their endless infighting in order to highlight how self-centered and oblivious they really are.)

ANATOLY KARLIN: You noted that Oleg Kozlovsky’s rush to disassociate Solidarnost’ from the gay rights movement, or “radical LGBT activists” as he calls them, is remarkably similar to the Kremlin’s own arguments for dismissing the Russian liberal movement: neither minority enjoys much approval from ordinary Russians (see On “Minor & Non-Critical” Issues: Oleg Kozlovsky vs. Gay Rights). This is an inconsistency at best; a less charitable explanation is that many Russian liberals are themselves hypocrites and homophobes.

But consider this from another perspective – though claiming to be “a fan of free societies”, you insist the current Russian liberal movement is morally bankrupt and should moderate its anti-Kremlin rhetoric to be accepted by ordinary Russians. But if compromise is the key to political breakout, why should Russian liberals embrace the LGBT movement, an act that is sure to “alienate the vast majority of the population”, as Kozlovsky says, but improve neither rights of assembly nor LGBT rights? Are you not guilty of the same double standards as both Kozlovsky and the Kremlin?

A GOOD TREATY: The leaders of the liberal opposition may be a band of egotistical creeps, but I don’t think the principles of the movement itself are necessarily bankrupt. Like with the communists, there’s an unhealthy degree of backward-looking thinking, in their case consumed primarily with nostalgia for and white-washing of the ‘troubled 1990s.’

I don’t think the opposition needs to “moderate its anti-Kremlin rhetoric.” Plenty of Russians are more than responsive to criticisms aimed at the authorities, and liberals from Eduard Limonov to Liudmila Alexeeva could remain prolific dissidents without abandoning their principles. Remember that even at 70% approval ratings, almost one-third of all Russians still disapproves of the political status quo.

What liberals would benefit from is a reappraisal of their goals. Over the last few years, they’ve moved from one fad to another. ‘Other Russia’ to ‘Solidarity.’ ‘Marchy nesoglasnikh’ to ‘Days of Rage.’ The newest campaign, ‘Strategy-31,’ is catchy, but it likely maxed out its publicity potential with the blowup at the end of May. (We’ll see if the next one in three days proves me wrong.) As Vladimir Milov pointed out in a radio debate with Ilya Yashin, Solidarity and its various rally projects have peaked. More people just aren’t coming anymore (in fact, many seem to be leaving, he claims).

This, I think, has more to do with the focus (or lack thereof) of the professional liberal protesters. Everywhere they look for concrete platform ideas, they’re terrified of casting the net too narrowly. Hence, they mustn’t support the gays for fear of alienating the masses. Certain environmental causes are taken up (such as the movement to protect Lake Baikal), but it’s usually in response to local initiatives elsewhere, and it’s after the real hubbub has ended. What Moscow’s protesting “elites” typically trumpet is an unattractive medley of ad hominem attacks on national figures. So it’s “Putin v ostavku” or “Luzhkov v tiur’mu” — the Russian equivalent of Bush-era peacenik demonstrators demanding the president’s impeachment or today’s Tea Party comparing Obama’s healthcare plan to National Socialism.

For the individuals involved in this movement, I’ve no doubt that they think they’re speaking ‘truth to power.’ On a superficial level, it’s certainly a pretty daring person who delights in taunting Russian OMON troops, essentially begging them for a beating and an arrest. But it’s that photogenic rush that seems to fool these folks into believing that they’re soldiers on the 21st century front against totalitarianism. When I met Oleg Kozlovsky earlier this year, he was asked if people feared for their jobs when attending rallies. His answer? Nope. Nobody gets fired for coming to these circuses. Come one, come all, to the political pageant.

If people like Yashin and Kozlovsky (and Milov and, I’m sure, nearly all the high profile lib leadership) want to ignore the gay rights movement for fear of endangering their popular appeal, I wonder why they can’t apply that same political sense to the rest of their activism. Either they are purists proudly pontificating from the periphery, or they’re cutthroat and calculating, and presumably seeking a way to speak to the interests and tastes of society at large. Right now, they seem to be occupying a sort of idiot’s limbo, where just about everyone has a reason to dislike them. And — what a shock — most Russians do.

ANATOLY KARLIN: When the Feds rolled up the “extremely undangerous” Russian spy ring, you argued that they managed to “jeopardize” an important relationship with the world’s second nuclear superpower. But STRATFOR would argue that you missed the point (see Russian Spies and Strategic Intelligence). Though Boris and Natasha failed to steal anything important, that wasn’t their goal to begin with! The traditional modus operandi of Russia’s intelligence services is to recruit young, promising Americans with potential careers in organizations like Lockheed Martin or the CIA (think Robert Hanssen or Aldrich Ames). Unless you want foreign moles infiltrating the Homeland’s national security agencies and military-industrial complex, why would you criticize the FBI for doing its job?

anna_chapman_facebook13.jpg A GOOD TREATY: It’s funny that you mention Robert Hanssen and Aldrich Ames as examples of people at risk of being ‘turned’ but Russian secret agents, as both these men initiated their work as spies by themselves. Hanssen and Ames each lived beyond their means, and apparently approached Russian embassy personnel to sell U.S. state secrets in order to cover their debts and subsidize the high life. No unregistered foreign employees were required to flip these Americans, whose volunteered treachery led in turn to the deaths of Soviet and Russian traitors working for us. If Anna Chapman or anyone from her team of ‘Illegals’ was in a position to ‘flip’ an important American source, it would have marked a departure from the history of U.S. sellouts, who typically defect of their own accord to registered Russian officials.

ANATOLY KARLIN: You describe yourself as a foreign policy realist and admire Otto von Bismarck for his political acumen. But what if American geopolitical imperatives and “a good treaty with Russia” are incompatible? Let me expound. The foundations of geopolitics are Mackinder’s Heartland Theory and Mahan’s Influence of Sea Power upon History. According to this view of the world, the Russian Empire seeks hegemony over the Eurasian Heartland; in direct opposition, the United States tries to prevent its emergence through geopolitical balancing, economic constriction and amphibious interventions (in what Aleksandr Dugin calls the “Anaconda Strategy”). These geopolitical dynamics colored the Cold War and are once again coming into play: even as Russia reasserts its influence over the post-Soviet world, the US is preparing to withdraw from Iraq and is building forward bases in the Balkans and expanding defense ties with Poland.

Two questions follow from the above. First, one of America’s great strengths is the abiding attraction of its purported democratic model. Why then isn’t then the US export its “freedom” to check Russian expansionism, and if possible undermine the Kremlin itself? (After all, if guys like Kasparov or Khodorkovsky come to power, they can be expected to participate in the “international community” / serve Western interests). Second, as a realist, why would you disagree with Mearsheimer’s argument for a Ukrainian nuclear deterrent?

A GOOD TREATY: The U.S. is withdrawing from Iraq … and doubling-down in Afghanistan. Being overstretched and unable to seriously deliver on open-ended defense pacts with Eastern European states, the White House’s rhetoric about missile defense and security investments along Russia’s western periphery is worrying, to say the least. The decision to militarize what could have functioned as a peaceful buffer zone between Russia and Europe seems to me to have been an extremely unwise decision by U.S. decision-makers. Even at the height of the Cold War, American buildup in Western Europe was met by (or in response to) Soviet maneuvers within the Warsaw Pact. It was certainly competition, but spheres of influence were generally agreed upon, and — even during the various uprisings that led to Soviet troops being deployed in 1953, 1956, and 1968 — the U.S. never threatened intervention, and any direct confrontation remained a nonfactor. In the 2008 Ossetian war, however, George W. Bush’s advisers apparently lobbied for an attack on the Roki Tunnel — an act of war that would have engaged American soldiers directly against Russian troops. That the U.S. has reached a stage where it even contemplates initiating military strikes against the Russian army indicates the frightening recklessness behind any worldview built upon a foundation of “America’s great strengths.”

Any conversation about realism is incompatible with a question that opens, “If guys like Kasparov or Khodorkovsky come to power.” That being said, Vladimir Milov compares Kasparov to the early Bolsheviks, indicating that he might not be the friendliest candidate for a job in America’s global utopia. As for Khodorkovsky, installing him in the Kremlin would theoretically only put in his hands yet more power to buy or bump off his enemies and competitors. Even in this scenario, there’s reason to assume the U.S. would not find its ideal Slavic partner.

In living memory, it seems Washington has really only been happy when it’s been free to call all the shots — i.e., under the administration of Boris Yeltsin. If that’s really true, American spooks should look not to the liberal elite (who likely would only use more power to fight amongst themselves), but to institutional fissures in the Russian state. Yeltsin was in large part such a swell pal because he was all too happy to sell off the kitchen sink, as long as it meant the Soviet cooking space was left without running water. “Take all the sovereignty you can swallow” he commanded initially. It was only later, after he consolidated his own authority and raked the USSR’s ashes into the garbage chute, that national determination transformed into an all-out war for territorial integrity.

A weak Russian state will be less assertive on the international level, but destabilizing Russia itself can and would pose devastating risks to the human beings actually living there or nearby. (Luckily for Uncle Sam, I guess, his primary constituents are well across the pond.)

Regarding a nuclear Ukraine: great idea, but they surrendered the last of their bombs in 1996. Moreover: not a great, but a lousy idea. Russia would never have bought the concept that an unaligned Ukrainian state could exist with or without atomic weapons. Aside from the crippled era of Boris Yeltsin, the Kremlin has never been comfortable with the premise that Ukraine exists outside its “privileged sphere.” The attraction of a buffer zone does not apply to Ukraine. If Washington had insisted on maintaining a nuclear Kiev, Moscow would have interpreted it as a direct existential threat. In other words, it would have been extremely destabilizing in an already topsy-turvy decade.

Back to the Future

Many Russia watchers don’t like to put their money where they mouth is. Though I’m sure you’re not the type, feel free to confirm it by making a few falsifiable predictions about Russia’s future. After a few years, we’ll see if you were worth listening to.

Medvedev will be reelected in 2012. Putin will continue on as Prime Minister. There will be some staff reshuffling, but nothing will really change. By 2012, the Russian economy should be doing much better. (I expect the same to be true in the U.S., where Obama will likely ride an ‘It’s the Economy, Stupid’ mantra to a second term.)

The 2014 Sochi Olympic Games will not produce any major international embarrassments for Russia. Investigative reporters will have no trouble turning up horror stories about the waste that went into the project and the poverty it ignored alleviating in the surrounding areas, but I don’t expect any Dagestani terrorist attacks or roof collapses to indict the Kremlin for lousy management. As for Russia’s medal count: better than it was in Canada, but still low enough to trigger another slew of articles about the collapse of Soviet sports training.

Sooner or later, Alexei Kudrin will be ousted from his position in the Ministry of Finance. This guy’s name is attached to too many revenue-saving, unpopular budgetary measures for him not become a political liability eventually. I don’t expect him to go the route of Andrei Illarionov, however. He’ll be honorably discharged and put to use in some less public capacity.

The Solidarity Movement will fizzle out within the next few years, to be replaced by the next ‘it’ conglomeration of the very same individuals. Maybe they’ll call it the ‘March of the Raging 31 Dissidents.”

What are you plans for A Good Treaty?

I intend to simply keep posting 1-2 pieces every week on topics of my choosing. I like to alternate between big-headlines-grabbers (like the Russian spy ring) and stuff that requires me to be a bit more inventive and take time to research (like previous posts on Russian defamation law, the recent FSB law, the ‘Clean Water’ program, and so on). Unfortunately, based on the WordPress statistics to which I have access, it’s these latter posts that generate substantially fewer readers. I can’t blame the interwebs for sending me less traffic when I’m not writing about hot topics, but it is a little disappointing to know that some of the stuff that takes to most work to write is also the least popular.

The biggest thing I’ve started doing in connection with the blog recently is actively using Twitter. I include a snapshot stream of my tweets in the lefthand column on the blog, but I hope users will actually subscribe to my feed on Twitter itself, as this allows me to better track my followers, and allows for opportunities to interact with readers/users — which is something I love about the service.

There is a possible Russia blogging collaboration project in the works with Mark Adomanis, but I really can’t say anymore because I don’t know anything more than that. He contacted me recently about the idea, and we tentatively agreed to make something happen. As I said above, Mark is a very talented writer, and I’m pretty excited about the idea of mooching shamelessly off his celebrity. Thanks, Marco!

And thank you, A Good Treaty, for an excellent interview!

If you wish me to interview you or another Russia watcher, feel free to contact me.

(Republished from Sublime Oblivion by permission of author or representative)
 
Chinese in Russia number in the hundreds of thousands, so the Far East is not in danger of demographic domination by the Chinese.
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One of the staples of alarmist, pessimistic and/or Russophobic (not to mention Sinophobic) commentary on Russian demography * is a reworking of the yellow peril thesis. In their fevered imaginations Chinese supposedly swim across the Amur River in their millions, establish village communes in the taiga and breed prolifically so as to displace ethnic Russians and revert Khabarovsk and Vladivostok back to their rightful Qing-era names, Boli and Haisanwei. To a limited extent they have a point. Since 1989 the population of the Russian Far East declined by 14% to 6.7mn in 2002; shorn of subsidies from the center, it is now dependent on the rest of East Asia for food and consumer imports. It sits next to Chinese Manchuria (the provinces of Heilongjiang, Liaoning and Jilin), an environmentally-strained rust belt of 108mn souls. Thus it is not surprising to see American geopolitical jockeys, Russian xenophobes and anti-Putin “liberals” alike (Golts, Latynina, etc) claiming that a stealth demographic invasion of Russia is under way which will in a few years result in a Chinese Far East.

As regular readers of this blog will know I prefer facts and statistics to rhetoric and hyperbole, and fortunately for us the excellent Russian demographic publication had this subject as its main theme in October 2008 – Life in Russia from Chinese Eyes. I will translate its main findings and conclusions to an English-speaking audience and then muse on the implications for future geopolitics.

The issue of Chinese migration to Russia and its political consequences starts with one main question – how many of them are there? All reputable estimates are in the range of 200,000 to 400,000, with 500.000 as the absolute maximum, most of them shuttle traders or seasonal laborers. The academic Gel’bras first came with these figures in 2001, based on adding up numbers from separate towns and regions. Foreign policy heavyweight and government official Sergei Prikhodko estimated a range of 150,000 to 200,000. According to the Federal Migration Service, in 2006 a total of 202,000 Chinese got registered as temporary workers in Russia, or 20% of all Gastarbeiters; although their numbers increased to 331,000 in 2007, they made up only 17% of all immigrant labor.

The alarmists believe that there is a massive, stealthy infiltration of Chinese into the deserted Far Eastern forests, where they establish communes and breed for the future glory of Greater China. Writing in the respectable “Russian Federation Today” in 2004, the academic Gil’bo spoke of 8mn Chinese living in Russia today and predicted its increase to 21mn in 2010 and a staggering 44mn by 2020. The article was called “perspectives on the Sinoization of Russia” – although that may have been his perspective, to date no-one has confirmed it. No secret Chinese communes have been discovered in the Far East. Although it is true that the figure of 35,000 ethnic Chinese given in the 2002 Census is too low by an order of magnitude, the millions plus numbers are as unrealistic. It is nigh impossible to be self-sufficient in food in the Far East and the idea that so many people will be both willing to endure medieval-like hardships and remain permanently hidden for years belongs to the the realm of fantasy.

Let us now look at the portrait of a typical Chinese migrant. Demoscope organized a poll of 700 traders and workers and 200 students, half of them in Moscow and one sixth each in the cities of Khabarovsk, Blagoveschensk and Vladivostok. Of those, 60% were men; most were middle-aged; and a surprisingly high 21% had a higher education (even in recent times tertiary enrollment in China stood at 12% of the young population). Below is a table of where they came from.

Russia Moscow Far East
В том числе
Vladivostok Khabarovsk Blagoveschensk
Beijing 6 10 2 2 3 0
Heilongjiang 45 11 79 66 86 85
Liaoning 7 11 3 4 3 2
Jilin 8 8 9 14 5 9
Hebei 1 1 1 2 0 1
Shandong 2 1 3 6 0 2
Shanghai 2 3 1 1 1 0
Fujian 3 7 0 0 1 0
Zhejiang 5 9 0 1 0 0
Jiangsu 5 9 1 2 0 0
Guangdong 3 5 0 0 1 0
Other 13 25 2 3 0 3
Total 100 100 100 100 100 100

The vast majority in the Far East hail from the neighboring province of Heilongjiang while most of the rest come from nearby Jilin and Liaoning – this illustrates the cross-the-border-and-back nature of the migratory flows there. In Moscow, whose Chinese population is much smaller, there is a much more even distribution of Chinese by region of origin, with substantial numbers coming from the eastern and southern seaboards.

Most migrants come from cities or small towns, and only 20% from villages – although the latter figure is higher in Moscow. Only 5% were employed in agriculture back in China. 38% were “workers” and 11% were “worker-peasants”. Although only 6% admitted they had been unemployed, the real figure is much higher since 70% of workers and 68% of worker peasants said they migrated because they couldn’t find a job in China. This is not surprising. The Chinese northeast is a depressed rust belt whose state-owned factories fired many of their workers years ago, many of whom were classified as “awaiting job” – a nice way of saying unemployed, and nice for official Chinese statistics too. Another 11% of Chinese migrants were government workers, presumably wanting to make some more money on the side. A surprising 35% considered their material situation in China to be “good” or “very good”; 36% evaluated it as “medium”, and 29% believed it to be “bad” or “very bad”.

According to the above graph, most Chinese immigrants are relative newcomers to Russia. In the critical Far East region, only 23% have spent more than five years in the country.

Few Chinese have affluent lifestyles in Russia – the majority, 61%, view their material condition as “medium” or “satisfactory”, 15% as “bad” or “very bad” and 21% are “good” or “very good”. Their earnings are not particularly high, with 83% getting less than 20,000 rubles – roughly the same as in neighboring Heilongjiang, when they had jobs there. Many say they save up on accommodation, medicines and even food in Russia. Leisure activities are plain and inexpensive – TV/Internet (23%), Chinese friends (17%) and family (12%). 22% have no free time. Only a quarter does touristy things, spends time with Russian friends, or do shopping or sport.

Most migrants come with the help of those already based there, who give them a hands up. The Chinese communities in Russia are tightly-knight, insular and highly trust-based, albeit fragmented into regional and ethnic groupings. According to the poll, 4% say they are directors or owners of an enterprise, 15% work for a Chinese firm, 9% work for a Russian firm and 53% are “independent entrepreneurs” – however, in practice the majority of the latter are hired workers and traders in informal relations with a Chinese company. Relations with employers are generally harmonious, with 25% saying they enjoy good relations, 41% evaluating them as “satisfactory” and only 1% complaining that they’re bad. The other 31% don’t work for hire.

They typically learn enough Russian to get by, but no more. Only 9% have a good knowledge of the language and another 5% can read; 33% can explain themselves and 43% are bad at the language. Another 6% are currently studying the language at an institute. Only 4% don’t know any Russian. Life is adaptive rather than planned – only 15% acquaint themselves with Russian laws or regulations. This is presumably because doing so makes little difference, with 82% of Chinese experiencing police requisitions, 49% rackets and 45% bribery amongst tax and customs officials.

Given the above, it is somewhat surprising to see that a majority of Chinese think that conditions for small and medium businesses are good in Russia. I guess all things are relative.

The Chinese have mixed opinions of how they’re viewed in Russia. In the Far East, attitudes towards them are more favorable than in Moscow. Locals are relatively friendlier in the Far East and Muscovites are more hostile. In the Far East, 25% claimed they had things stolen from them, 9% were beaten, 22% were threatened and 53% were insulted; in Moscow 16% said they were beaten.

That said, most Chinese migrants retained a favorable view of Russia and many expressed the desire to continue living there. Impressions generally improved after visiting it and the outcome of most trips were classed as “successful” or “partly successful”.

Most prefer to remain in Russia and open a business or expand it (Far East), get accommodation (Moscow) and improve one’s life in Russia. It appears the Chinese place far more emphasis on Russia’s potential to make them money than minor things like whether they get ripped off or beaten. A majority would prefer to either live in Russia permanently or live in China and keep commuting to Russia for work, even amongst those with negative impressions of the country. There are big regional differences. 67% of Moscow Chinese would like to get some form of permanent residency in Russia, compared to 27% in the Far East – despite the fact that attitudes towards them are significantly better in the Far East. The majority would like to bring a family member to Russia, especially those in Moscow.

59% of Chinese migrants would like their children to retain connections to Russia – 76% in Moscow and 37% in the Far East. Some 85% in Moscow and half in the Far East are not against mixed marriage – 2% are currently in such a marriage. For comparison, 8% of Russians approve of mixed marriages, 40% are neutral and 40% disapprove.

In conclusion, more Chinese migrants in the Far East think that Russia has better conditions for enterprise and consider locals to have better attitudes towards them, than their compatriots in Moscow. However, Moscow’s much smaller and diverse pool of Chinese migrants is much more enthusiastic about integrating themselves and their children and relatives into Russia. Thus what we see is a developing China-town in Moscow and moderate, temporary and mostly seasonal flows of Chinese into and out of the Far East who view Russia in an almost purely commercial light – a way to escape unemployment, make profits and enjoy them in China. The writers end the report by making the obvious (and banal) recommendation that Russia should both regulate migration in accordance with the national interest and treat migrants with respect – both much easier said than done.

Some more articles about Chinese migration:

Chinese migration – facts, objectivity and subjectivity: a Kazakhstani perspective. As in Russia, they massively overstate the Chinese presence, mixed marriages, etc. Ironically twice as many Kazakhstanis visit China every year than vice versa.

What’s happening with Chinese expansion in Russia?: a comprehensive and sarcastic recounting of prior alarmist estimates of the numbers of Chinese in Russia.

The Russian vector in global Chinese migration: notes that the alarmism of the 1990′s and early 2000′s is dwindling away and being replaced by more scientific views of Chinese migration to Russia. Notes that Russian migration as a share of total Chinese global migration is tiny – as of 1990, the total number of Chinese overseas was about 37mn, including 30% of the population in Malaysia, 10% in Thailand, 17% in Brunei and 4% in Indonesia. Lots of other stuff.

I will now go beyond demography into geopolitics. China is not the monolith that it is usually painted as in the West; its strong central government conceals a greater deal of simmer, dynamism and regionalism. The idea that it could organize a successful stealth demographic invasion of the Far East is preposterous. The only way in which something like this could succeed would be if Russia were to collapse again and to a far greater extent than during the 1990′s, e.g. like during the Civil War when Vladivostok was occupied by the Japanese. This is possible, but unlikely.

What you have instead is a reversion to nineteenth-century traditions, in which Korean and Chinese laborers and traders made seasonal migrations to the Far East and built up sizable, but far from demographically dominant, communities in the region (who were later deported to Central Asia in 1937 over fears of Japanese espionage).

Speaking of which, that would be a real concern if China were to ever invade. That said, Chinese expansion has always been primarily aimed at South East Asia – today’s strategic posture emphasizes a limited, hi-tech war against the likes of Taiwan, Japan the US. Historically China aimed to achieve three geopolitical aims in the following order: 1) maintain central authority over the commercial seaboard and the peasant hinterland, 2) surround itself by a buffer of vassal states on land – Tibet, Sinkiang, Mongolia, Manchuria, etc and 3) build a strong navy to repel sea-based foreign predation and to protect its trade. Today and in the future, China is going to have cope with a panoply of threats to those geopolitical goals – rising inequalities, a disconnected bureaucracy, ethnic separatism and American and Japanese sea power. In other words, it’s going to have its hands full and Chinese willingness to pursue reconciliation and friendship with Russia is a reflection of its need for a safe strategic rear.

As I’ve mentioned here before, China is going to run into severe ecological problems within the next few decades. Water tables are plummeting in the northern breadbasket, yields are stagnating and the deserts are spreading. The south has plenty of water but is threatened by inundation due to the melting of the icecaps. The rivers that feed its people and industry are going to run dry as the Himalayan glaciers melt away. This means that as soon as the 2030′s, overpopulated China will be faced with a scenario in which it will either have to acquire new lands or face die-off. Would it invade the Russian Far East? The problem with this is that even if it were to succeed in conquering it, actually building up the infrastructure for human accommodation will take decades; the land is barren, mountainous and will remain very cold even after warming. The actual war will be very costly for the Chinese because the Russians will almost certainly use their huge stockpile of tactical nukes to check the assault. Should they lose, its possible they will unleash their much superior strategic nuclear arsenal on China or even worse – thus destroying their industrial infrastructure and precipitating a die-off in any case.

Hence I believe that if, or more likely when, ecological problems reach a critical point in China they will expand into (by then collapsed) East Africa, using the mighty navy they foresightedly built up to forestall anyone who has a problem with that. It will also guarantee continued energy, food and resource flows into metropolitan China from Australia and Latin America. Eventually it is possible that Russia (and Canada) will fully open up their borders to immigration from the sinking and drying south, in which case the Far East will become Chinese. But this is all futuristic speculation.

The essence of Russian demographic doomerism is that in a few decades the AIDS-ravaged, infertile and alcoholic ethnic Russian component will die out and be replaced by hordes of Islamist fanatics in the west and Chinese in the east.

NOTE: This article was edited by Charles Ganske and myself and reposted on the prestigious Russia Blog as The Myth of the Yellow Peril: Overhyping Chinese Migration into Russia. It’s a better version and I recommend reading it there.

(Republished from Sublime Oblivion by permission of author or representative)
 
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For all the noise being made this month about Georgia, about NATO, about Tibet, etc, possibly the most portentous is that it seems Russia hit its oil peak (strictly speaking, its second – the first happened in 1987), well in line with peakist predictions. Production increases via application of new technology, as seen in the late 90′s and early 2000′s have been mostly exhausted; there are no megaprojects to bridge the gap beyond 2010. (There has been some noise about new oil field discoveries off Brazil’s coast which could contain as many as 33bn barrels, which has our dear Economist rejoicing: “the discoveries do suggest that the gloomiest pundits are wrong to predict that the world will soon run out of oil”. Just two problems. The issue is not about the world running our of oil – it’s about economically damaging declines in production which will, and are, hitting crucial sectors like transport and agriculture. Secondly, and more to the point, even the high estimate of 33bn barrels is enough for less than half a year of today’s demand of 85bn barrels.) Massive expansion in Russia has been the main reason while oil is peaking now, rather than five years ago. This, coupled with stagnant Saudi Arabia ‘refusing’ to increase oil production so as to leave more for future generations and oil prices rising to 120$, looks set to vindicate the Oil Drum predictions below.

The phenomenom of peak oil is starting to become a new conventional wisdom. Krugman penned an excellent article on this, an interesting example of mainstream economists and “doomers” getting wedded:

Nine years ago The Economist ran a big story on oil, which was then selling for $10 a barrel. The magazine warned that this might not last. Instead, it suggested, oil might well fall to $5 a barrel.

In any case, The Economist asserted, the world faced “the prospect of cheap, plentiful oil for the foreseeable future.”

Last week, oil hit $117.

It’s not just oil that has defied the complacency of a few years back. Food prices have also soared, as have the prices of basic metals. And the global surge in commodity prices is reviving a question we haven’t heard much since the 1970s: Will limited supplies of natural resources pose an obstacle to future world economic growth?

How you answer this question depends largely on what you believe is driving the rise in resource prices. Broadly speaking, there are three competing views.

The first is that it’s mainly speculation — that investors, looking for high returns at a time of low interest rates, have piled into commodity futures, driving up prices. On this view, someday soon the bubble will burst and high resource prices will go the way of Pets.com.

The second view is that soaring resource prices do, in fact, have a basis in fundamentals — especially rapidly growing demand from newly meat-eating, car-driving Chinese — but that given time we’ll drill more wells, plant more acres, and increased supply will push prices right back down again.

The third view is that the era of cheap resources is over for good — that we’re running out of oil, running out of land to expand food production and generally running out of planet to exploit. I find myself somewhere between the second and third views.

There are some very smart people — not least, George Soros — who believe that we’re in a commodities bubble (although Mr. Soros says that the bubble is still in its “growth phase”). My problem with this view, however, is this: Where are the inventories?

Normally, speculation drives up commodity prices by promoting hoarding. Yet there’s no sign of resource hoarding in the data: inventories of food and metals are at or near historic lows, while oil inventories are only normal.

The best argument for the second view, that the resource crunch is real but temporary, is the strong resemblance between what we’re seeing now and the resource crisis of the 1970s.

What Americans mostly remember about the 1970s are soaring oil prices and lines at gas stations. But there was also a severe global food crisis, which caused a lot of pain at the supermarket checkout line — I remember 1974 as the year of Hamburger Helper — and, much more important, helped cause devastating famines in poorer countries.

In retrospect, the commodity boom of 1972-75 was probably the result of rapid world economic growth that outpaced supplies, combined with the effects of bad weather and Middle Eastern conflict. Eventually, the bad luck came to an end, new land was placed under cultivation, new sources of oil were found in the Gulf of Mexico and the North Sea, and resources got cheap again.

But this time may be different: concerns about what happens when an ever-growing world economy pushes up against the limits of a finite planet ring truer now than they did in the 1970s.

For one thing, I don’t expect growth in China to slow sharply anytime soon. That’s a big contrast with what happened in the 1970s, when growth in Japan and Europe, the emerging economies of the time, downshifted — and thereby took a lot of pressure off the world’s resources.

Meanwhile, resources are getting harder to find. Big oil discoveries, in particular, have become few and far between, and in the last few years oil production from new sources has been barely enough to offset declining production from established sources.

And the bad weather hitting agricultural production this time is starting to look more fundamental and permanent than El Niño and La Niña, which disrupted crops 35 years ago. Australia, in particular, is now in the 10th year of a drought that looks more and more like a long-term manifestation of climate change.

Suppose that we really are running up against global limits. What does
it mean?

Even if it turns out that we’re really at or near peak world oil production, that doesn’t mean that one day we’ll say, “Oh my God! We just ran out of oil!” and watch civilization collapse into “Mad Max” anarchy.

But rich countries will face steady pressure on their economies from rising resource prices, making it harder to raise their standard of living. And some poor countries will find themselves living dangerously close to the edge — or over it.

Don’t look now, but the good times may have just stopped rolling.

No wonder survivalism is becoming respectable again.

(Not that I think the world is going to become a Mad Max abode; there’s still plenty of discretionary energy consumption that can be cut, and in the longer term future both wind and solar energy have very good prospects. Nonetheless, according to this study, “Exergy services can be equated to exergy inputs multiplied by an overall conversion efficiency. which, of course, corresponds to cumulative technological improvements over time. Based on this hypothesis economic growth from 1900 to 1975 or so is explained almost perfectly, exceptfor wartime perturbations.” Hence I suspect there will be a period of serious economic disruption in the period between 2010-20, when oil and natural gas spiral down and both coal and uranium will be hard pressed to fill the gap (economically viable reserves may well be close to peak, as described here (coal) and here (uranium), and 2030-50, when renewable energy starts to come on-line in a really big way.)

Not surprisingly, two key trends – rising energy prices and climate change – are colluding to produce a scramble for the Arctic and its lucrative hydrocarbons deposits. Russia has foresightedly been marking territory by staking claims in the UN, planting its flag at the North Pole sea floor and carrying out strategic bomber flights over the Arctic. Canada, Denmark and Norway have also been getting on in the action, while the US has been lethargic. Climate models indicate an ice-free summer by 2015, meaning northern Russia will become a major new transportation hub between Europe and East Asia (thus making the old dream of a North-East passage a reality).

While wildlife wilts, agriculture booms – “Greenland is experiencing a farming boom, as once-barren soil now yields broccoli, hay, and potatoes”, and Russia keeps getting warmer. (What with rising world grain prices and the big lands left fallow following the Soviet collapse, it is easy for Russia to cement its status as a leading grain producer (from 81mn tonnes in 2007 to 110-120mn tonnes within a decade) by expanding the agricultural sector, a trend explained in The Medvedev Economy and confirmed by state investment into agriculture.) Not only will Russia remain a major hydrocarbons exporter, but will add cereals to its portfolio (which will, besides, increase in price), thus avoiding the fatal Soviet situation where profits from oil exports were eaten up by having to buy Western grains.

But returning to the FP Arctic Meltdown article and hydrocarbons,

The largest deposits are found in the Arctic off the coast of Russia. The Russian state-controlled oil company Gazprom has approximately 113 trillion cubic feet of gas already under development in the fields it owns in the Barents Sea. The Russian Ministry of Natural Resources calculates that the territory claimed by Moscow could contain as much as 586 billion barrels of oil — although these deposits are unproven. By comparison, all of Saudi Arabia’s current proven oil reserves — which admittedly exclude unexplored and speculative resources — amount to only 260 billion barrels.

Currently, Russia has passed its second oil peak. Could the above make for a third peak? Discovery precedes recovery by around 30 years. 586bn barrels is about twice bigger than oil reserves in Russia proper before extraction ever began. Without ice, the extractive environment in the Arctic will be comparable to that of the North Sea. As such, it is plausible that Russia may even, around 2020-30, experience a third oil peak, at a time when global supply is severely constrained and prices are at 300-400 $ per barrel. What with its current (relatively low) consumption, this means that Russia may be spared from the energy crunch that will hit other energy-dependent economies in this time period.

Perhaps most significant will be the geopolitical impacts (which, btw, we have covered in Towards a New Russian Century?). Russia is going to have to fundamentally rethink its traditional conceptions of itself as a land power, strategically weak and surrounded by predatory peoples who periodically exhaust the carrying capacity of their lands and launch invasions. It is going to become surrounded by ice-free water on two sides, along whose coasts will accumulate a rapidly expanding population (especially if environmental collapse causes mass immigration from South Asia, the Middle East and the Far East). This, along with a much greater stake in coastal transportation and off-shore hydrocarbons deposits, will require a much more powerful navy. No wonder Russia has tentative plans to create the world’s second largest surface navy within the next two decades, to which purpose a 410x100x14m drydock is currently under construction at Severodvinsk.

The IMF has released its prognosis for the world economy. A slowdown is inevitable, driven by a US correction due to a housing crisis and its contagion of the world financial system.

Global growth will decelerate in 2008, led by a sharp slowdown in the United States, amid a housing correction and a financial crisis that has quickly spread from the U.S. subprime sector to core parts of the financial system, the IMF says in its latest World Economic Outlook.

Citing the unfolding financial market turmoil as the biggest downside risk to the global economy, the April 2008 report said the IMF expects world growth to slow to 3.7 percent in 2008—0.5 percentage point lower than what was forecast in the January 2008 World Economic Outlook Update.

Further, world growth would achieve little pickup in 2009, and there is a 25 percent chance that the global economy will record 3 percent or less growth in 2008 and 2009, equivalent to a global recession.

The main emerging market economies will diverge rather than decouple, with growth in China, India, Russia and CEE slowing but not catastrophically so, remaining close to their long-term trend rates.

However, the government is even more optimistic, projecting 7.6% growth for 2008. Considering that Q1 GDP growth was 8.0%, driven as in the year before by consumption and investment, they have grounds for their optimism. On the other hand, CPI (inflation) is rising worrying fast, reaching an annualized rate of 13.3% this March, although it should be noted this is a worldwide phenomenom experienced by China (8.3%), India (8.6%), Czech Republic (7.1%) and Latvia (16.8%).

The Ukraine (26%+) has been hit not only by high food and energy prices, but populist government largesse. (To take their minds off these matters, perhaps that’s why Hitler action dolls have gone on sale there, more proof if any is needed of the proclivities to fascism of certain sections of Ukrainian society. Gazprom will probably end 2008 as the company with the world’s second highest revenue (around 41.5bn $), similar to the budget of an economic basket case, say, Ukraine (43bn $). (Can’t help making these cheap shots, just ignore them if they irritate you).

The IMF has also released new estimates for GDP growth through to 2013. By the end of that period, Russia’s PPP GDP should overtake Latvia’s and be level-pegging with Poland’s. The rise in nominal GDP is projected to be more dramatic (graph lifted off this thread):

The Economist has an interesting graph breaking down GDP increase for major regions in the world by capital, labor and total factor productivity (GDP itself can be expressed as a Cobb-Douglas function of the above 3 components) from a WB report, Unleashing Prosperity.

It is a splendid vindication of the ideas I expressed in Education as the Elixir of Growth. There, I made the argument that the education/’Human Capital Index’ (HCI) of each country is matched to a ‘potential GDP level’; where there is a large gap between potential and actual GDP, economic growth is highest. This above all explains the impressive economic growth we’re seeing in well-educated but relatively poor countries like Russia (once it abandoned its socialist shackles), and explains well the unimpressive growth of countries like Brazil, an badly-educated country with a correspondingly unimpressive economy.

However, the linkages between HCI and productivity are even higher than between HCI and GDP (as GDP also depends on labor and capital inputs, which themselves depend on other demographic and social factors). From the chart, we can see that middle-income CIS countries (of whom Russia is, by far, the largest and most significant) had the largest increases in TFP, thus reflecting the huge gaps in its potential and actual productivity. While China’s absolute growth was much larger, almost half of it was down due to increases in labor and capital. However, considering China’s recent labor shortages and its unsustainably high investment rates, it is very unlikely that double-digit growth will continue in the near-to-medium future, particularly further taking into account that a) exports will be hit by US recession and b) from 2009 onwards the oil peak will start biting ever harder (as covered above). Latin American countries were the worst performers, seeing no improvement in TFP – in other words, they are about as productive as their levels of human capital allow them to be (withouta resource windfall or two).In a snapshot of other economic and related news, the housing bust has spread to the UK. Haiti’s government collapses after food riots – an ominous foreboding of things to come elsewhere? Between 2000 and 2007, median family incomes stagnated in the US, in stark contrast to the period between every other recession (the fact that the 2000′s saw a broad consumer boom becomes all the more worrying). The falling dollar has made US assets attractive, and Russia has accumulated around 10% of US steelmaking capacity – although it has not limited itself to the US, but also went on a shopping spree around Germany. Russia may allow the ruble to appreciate to rein in inflation. Moscow’s budget is now as big as New York’s. Confidence in the economy is increasing. According to the FT, Moscow could become Europe’s second financial center (after London) in ten to fifteen years. The Russian ‘brain drain’ has to a large extent ceased as funding and salaries increase in academia.


On 21st April, Georgia accused Russia of an “unprovoked act of aggression” after a Russian jet allegedly shot down an unmanned Georgian reconnaissance plane over Abkhazia. This came in the wake of Russia stepping up its political representation in the region, while Georgia implicitly compared Western policy towards Russia with Nazi appeasement. Meanwhile Putin urged the West not to ‘demonise’ Russia. (The IHT has a piece that criticizes US aloofness in its relations with Russia in The Missing Debate.)

Watch the cool video below, it’s now every day that you get to see a MiG-29 fire an R-60 missile at CBDR, within visual range and head on.
Presumably Russia wishes to make a statement that it is ready and willing to defend Russian citizens (i.e. the vast majority of Abkhazians, and South Ossetians). It is also Russia’s traditional foreign policy level over Georgia – it’s separatist enclaves – being exploited. When Georgia pursued a relatively neutralist line towards Russia (under Shevardnadze), Russia kept at arms length from the separatists, but established a military presence in the region. Now that Georgia has received a promise of eventual membership from NATO, however, the levers have been pulled. If Georgia received MAP at the next summit, expect formal recognition of Abkhazia and South Ossetia.
A German man is on trial in Germany for allegedly selling military technology to Russian intelligence. The Russian Army apparently has some serious problems with obesity. Greece agrees to host a section of Gazprom’s planned South Stream pipeline. Berlusconi held his first foreign meeting with Putin on 17th April, and Robert Amsterdam penned an acerbic yet poignant portrait of the less wholesome similarities between the two countries.
The most recent data on Russian and American strategic nuclear armaments, as declared for the START Treaty, is available here. In contrast to the late Soviet period, it is now the US that has a preponderance of platforms. The breakdowns in deployed systems, Russian and US respectively, go as follows: ICBM’s (481 to 550); SLBM’s (288 to 432); heavy bombers (79 to 243); total (848 to 1225). The breakdown by numbers of deployed warheads is: ICBM’s (2027 to 1600), SLBM’s (1488 to 3216); heavy bombers (632 to 1098); total (4147 to 5914). The breakdown by throw-weight for ICBM’s and SLBM’s is 2370MT to 1830MT. In other words, while Russia has a slightly larger overall megatonnage, it has fewer strategic platforms and its missiles are less accurate. This is not yet a critical situation, what with the current international relations paradigm; nonetheless, further investments are necessary, particularly into the submarine and bomber part of the triad as well as ABM, in anticipation of the end of MAD due to the development of effective and comprehensive missile shields – which are closer to fruition, at least in the US, than most people realize. Perhaps I’ll write more on this in the future.
An interesting article from the Times on WMD developments in Syria and North Korea.
Foreign Affairs has The Age of Nonpolarity as its kindpin article for May/June.
Summary: The United States’ unipolar moment is over. International relations in the twenty-first century will be defined by nonpolarity. Power will be diffuse rather than concentrated, and the influence of nation-states will decline as that of nonstate actors increases. But this is not all bad news for the United States; Washington can still manage the transition and make the world a safer place.
Indeed, one of the cardinal features of the contemporary international system is that nation-states have lost their monopoly on power and in some domains their preeminence as well. States are being challenged from above, by regional and global organizations; from below, by militias; and from the side, by a variety of nongovernmental organizations (NGOs) and corporations. Power is now found in many hands and in many places…Today’s world is increasingly one of distributed, rather than concentrated, power.
Getting everyone to agree on everything will be increasingly difficult; instead, the United States should consider signing accords with fewer parties and narrower goals. Trade is something of a model here, in that bilateral and regional accords are filling the vacuum created by a failure to conclude a global trade round. The same approach could work for climate change, where agreement on aspects of the problem (say, deforestation) or arrangements involving only some countries (the major carbon emitters, for example) may prove feasible, whereas an accord that involves every country and tries to resolve every issue may not. Multilateralism à la carte is likely to be the order of the day.
I agree that the US is in relative decline and about the rise of multilateral pragmatism in diplomacy. Nonetheless, I question the thesis that state power is eroding. The state remains as strong as ever, and far stronger than their equivalents a hundred years ago. Several European nations take in more than 50% of their GDP in taxes. This rate in the distant past was only reached during times of total war, e.g. WW2. States are most certainly not “challenged” by either global organizations (which are simply assemblies of states where they can seek concensus), militias (which have always existed) or NGO’s (which operate under statal jurisdictions).
Putin has become leader of United Russia, in addition to being the Prime Minister. Sean’s Russia Blog already has an excellent analysis in Gensek Putin (which also features a nice little demographics discussion in which my posts on the matter were mentioned).
That of course raises the issue of whether a nothing party like United Russia will actually give Putin something. As Konstantin Sonin noted in the Moscow Times, leading United Russia wouldn’t necessarily give Putin any guarantee over controlling the government. “The party has nothing to offer Putin in his struggle for power,” says Sonin…
The chairman position gives Putin virtually unlimited power within UR. Putin will have the power to appoint party leaders and suspend their powers, and override any party decision expect for those adopted at congresses. His removal is only possible with a 2/3 congressional vote.
If Putin can be taken at his word, he has plans for United Russia. In his address to the Congress he stated that the party of Power needed to “reform itself become more open for discussion and for taking into account the opinion of the electorate, it must be de-bureaucratized completely, cleared of casual people pursuing exclusively their own material gains.” Look out, there’s a new sheriff in town.
Plans have already been set in motion for the recognition of internal factions. Three “clubs” have been created within United Russia to represent its right, center, and left. There is the Center of Social Conservative Policy, headed by Andrei Isaev, the liberal-conservative “November 4th” club led by Vladimir Pligin, and the State-patriotic club led by Irina Yarovaya. Whether these clubs will actually mean anything in terms of inter-party dialog remains to be seen.
Putin’s chief task, if he chooses to take it, will be to rid the party of what he calls “corrupt people.” A task easier said than done. Historically, attempts to clean up party corruption have horribly failed. Often the anti-bureaucratic campaigns, purges, and even arrests within the Communist Party created more corruption. And like the Communist Party of the past, United Russia seems allergic to any real cracking down on its corrupt members. Last week, the United Russia dominated Duma rejected a bill which would require deputies to declare the incomes and property of their relatives up to three years after leaving office. Hiding wealth and property in the names of family members is a common, albeit crude way, of hiding corruption.
Basically, if Putin actually decides to lead United Russia, he’s going to have his hands full. Just because he is the almighty Putin doesn’t mean he will be successful.
Michael Averko has an excellent article in American Chronicle, Ukraine and “Russophobia” Uncensored, which covers more on the Annals of Western Hypocrisy (which goes on and on, World and Time without End). I’ve quoted the first three paragraphs:
Since the Soviet breakup, Ukraine has been geo-politically spun in two ways. When Ukraine’s less Russia friendly side appears to have enhanced its stature, there is an increased yearning to drive Ukraine away from Russia as much as possible. When Ukraine’s more Russia friendly grouping seems strengthened, there is greater talk of mutual respect for the two Ukrainian ways of viewing Russia. Another Ukrainian perspective falls somewhere in between the two.
On NATO expansion, “the will of the people”, takes a back seat for the Russia unfriendly crowd. The Orange Ukrainian government’s desire to have Ukraine in NATO has consistently run contrary to the majority of its citizenry. The explanations for this unpopularity include a not so well informed Ukrainian public, caught in a Cold War time warp.
In comparison, there is little second guessing of polls showing that most Ukrainian citizens have a positive attitude on their country joining the European Union (EU). For some, Ukrainians are ignorant when stating apprehension about NATO and knowledgeable upon agreeing with the anti-Russian consensus; albeit for not always the same reason.
Sean’s Russia Blog has comprehensive coverage of the Putin / Kabaeva rumors. Also a story about the hobbies of Russia’s nanotechnologists, e.g. building marchhead-sized chess sets.
Demographic stats from Rosstat have come out for Jan/Feb 2008. While the birth rate increased by 11.3%, so did the death rate by 2.6%, reaching 15.8 / 1000 from 15.4 / 1000 in 2007. Seems that January was not an anomaly – the rapid improvements seen since 2005 have petered out, at least temporarily. But this is not totally unexpected, however. As I noted in my demographics posts, there is a very close correlation between mortality and the alcohol/food price ratio. Overall inflation in Jan-Feb was 3.5%, food price inflation was 3.6%; but the price of alcohol increased by 1.9%. The alcohol/food price ratio has fallen further, perhaps to its lowest ever historical level. In other demographic news, in 2006 there were 1.6mn abortions in Russia, hugely down from the 1990′s but still 2 to 3 times higher per capita than in the West.
Finally a few public opinion polls. In February 2008, PEW released figures that showed 6 3% of Russians preferred a strong leader over democracy, down from 70% and 21% respectively in 2002, but a lot higher than in 1991, when a majority (51%) favored a democracy over a strong leader (39%). 74% would rather have a strong economy, while only 15% would like a good democracy. Ukraine, Bulgaria and even Poland show similar figures. In another rather interesting result, half of Russians agreed with the statement that ‘most people in society are trustworthy’, which is higher than the average for Eastern Europe and about average for Western Europe.
59% of Russians (almost certainly correctly) say there is no life on Mars, while 26% disagree. 49% of them believe that there’ll be a human on Mars and 59% think there’ll be a lunar base within the next 50 years. (Russia, like the US and China, has tentative plans for both enterprises). A new ‘Space Competitiveness Index‘ (whatever that means) has been compiled, in which Russia takes third place behind the US and Europe. China is fourth.
(Republished from Sublime Oblivion by permission of author or representative)
 
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1. The Myth of Russian Corruption

In this blog, I have documented how a) corruption in Russia is similar to the average for middle-income countries and b) it has improved slightly under Putin. This is backed by data from the World Bank’s Governance Indicators, Transparency International’s Global Corruption Barometer and World Bank statistics on problems with corruption and bureaucracy.

Nonetheless, the Western media has other ideas. Take their coverage of the Indem report in 2005 by the BBC, for instance, which claims that “Its annual report on corruption says that bribes paid to officials by businessmen may have grown as much as 10 times over the last four years alone” and “the shadow economy at least twice as large as the state budget“. And I can’t say Beebie is the worst. More propagandistically inclined outlets implied that corruption per se increased by an order of magnitude.

Now for the facts. The shadow economy fell from 45% to 37% of GDP from 1998 to 2002. The state’s share of expenditures was 34.1% in 2002 – in other words, it was very similar to the size of the shadow economy. And even assuming there have been no improvements since then (according to ivanivanov333, a contributor, the figure is now 28%, as opposed to gov’t spending of 34.2% in 2007), this is not that different even from Latvia (40%) or even Italy (27%) in 2004. Yet nonetheless it’s supposedly worse than in the late 1990′s, when the media was coming up with books like Sale of the Century and articles like What Russia Teaches Us Now (which described its social contract as an “exchange of unaccountable power for untaxable wealth”).

But let’s look at the report itself – here’s an English language summary.

Firstly, it shows that everyday corruption has declined substantially. (Most Western media outlets concentrated on business corruption, which we’ll come to in a second).

Everyday all-Russian corruption market characteristics
Corruption characteristics 2001 2005
Corruption coverage (%) 50,4 54,9
Corruption risk (%) 25,7 35,0
Corruption demand (readiness to bribe, %) 74,7 53,2
Corruption intensity (average number of bribes per annum for bribers) 1,19 0,882
Average bribe amount for bribers (rubles) 1817 2780
Annual volume of the everyday corruption market (US$ billion) 2,825 3,014

While the share of people who got involved, voluntarily or not, into a corruption situation has remained steady, the number of those who proceded to produce a bribe fell by a third due to a rise in risk. The increase in the average bribe size is actually a positive sign – since risk has increased, fewer bribe-takers will want to take bribes and will thus inflate prices. Growth in the everyday “corruption market” was just 1.6% annually (from 2.8bn $ to 3.0bn$), compared with yearly nominal GDP growth in the period of 25.7% (from 307bn $ to 765bn $). While comparing corruption to GDP is not a rigorous exercise (bribes are transfers, not output), from these figures it can be concluded that relative to economic output everyday corruption has halved from 0.9% to 0.4%.

Furthermore, corruption risk has risen and demand fallen significantly in practically every sector (the one major exception was conscription, where demand rose, but was more than cancelled by rise in risk – the average bribe has risen fivefold and cut conscription services’ share of the corruption market by number of cases by a factor of three). Of those who avoided bribery, the share of those who managed to solve their problems anyway increased from 50% to 68%, while those who neither bribed nor solved their problem fell by a third – an encouraging dynamic, since it means opportunities for working around bribes have increased. Finally, in an increasing amount of cases where bribes do happen is on the initiative of officials.

Now let us turn to business corruption.

Characteristics of the all-Russian business corruption market
Corruption characteristics 2001 2005
Corruption intensity 2,248 1,795
Average bribe amount (US$ thousand) 10,2 135,8
Market volume (US$ billion) 33,5 316
Ratio of the business corruption market volume to federal budget revenues 0,66 2,66

As with everyday corruption, corruption intensity in business fell by around 20%. On the other hand, the increase in average bribe amounts, and as such in absolute market volume, have been stratospherically higher – by a factor of 10, which is the most quoted figure. (Fewer quote that that as a percentage of federal budget revenue and nominal GDP, the increase is reduced to a factor of 4). But whatever. Still quite a damning picture, however you look at it. Right?

Well, maybe not.

(1) The figure for the annual volume of business corruption market (USD 316 bln.) appears to us to have been obtained by multiplying the number of active business entities in Russia (approx. 1.3 mln.) by the average annual bribe contribution (USD 243,750). Given the fact that the vast majority of these entities are small businesses which are not likely to generate even annual sales of such magnitude, correctness of the above USD 316 bln. annual volume is questionable. For instance, in 2004 there were approx. 151,000 business entities in the Russian manufacturing industry that sold goods totalling 11.209 trillion RUR (approx. USD 389.07 billion), which on a per manufacturing entity basis works out to average sales of approx. USD 2.6 mln. Thus, such average manufacturing entity should have paid approx. 9.4% of its total SALES (i.e., USD 243,750 / USD 2.6 mln.) in bribes. Of course, unfortunately, there is tax evasion, underreporting of income, shifting of sales to trade companies, etc. Even so, it is much more difficult to understate sales (than it is, for example, to manipulate the expense side), and at large enterprises this practice is less prevalent – therefore, if we were to agree with the average annual bribe contribution amount (USD 243,750), then it would be rather safe to assume that this amount would represent at least 5% of total sales of a relatively large industrial entity which simply would eat up at least 50% of its profit margin. Obviously, for smaller entities USD 243,750 in bribes would simply be unbearable. I would also like to point out that in a 2005 WB survey, only 15% of Russian managers claimed corruption was a major business problem, compared to Poland (15%), Czech Republic (20%), Ukraine (21%) and China (27%). (Source: see Corruption (% of managers…)).

(2) There are a little over 1 mln. government officials in Russia. Thus, on average one public servant should have received in excess of USD 300,000 annually in bribes, which in our estimation is quite unlikely.

(3) Russian official GDP in 2004 was USD 580 bln. Thus, the suggested business corruption market represents 55% (!) of official GDP. We are afraid that this 55% figure is a little high even for Zaire during the rule of infamous Mobutu. Of course, without a doubt there is a significant unreported portion of the Russian economy. However, even if we increase the official GDP figure by 50% (which is what various international and domestic organizations estimate the understated percentage to be) to USD 870 bln. to take into account the shadow economy, business bribes would still represent a staggering 36% of total GDP. One should also keep in mind that the gross profit portion of GDP (which theoretically should form the source for bribes) was officially only USD 210 bln., i.e. much less than the USD 316 bil. annual volume of business corruption market. Even after increasing this gross profit to take the shadow economy into account, it seems that entrepreneurs would be giving away all of their profit as bribes. Of course, one could argue that there can be a double (or even triple) count in the bribe market (see Mr. Satarov’s comment below) or that earlier accumulated wealth might be used as a source, but even so the aggregate USD 316 bln. figure still seems too high. From an economic standpoint a bribe can be considered a sort of informal “tax”, and at a certain point if the levy is too heavy entrepreneurs would prefer just to wind up business than to pay too much. This does not seem to be what is happening with businesses in Russia.

(4) Finally, if annual volume of the consumer corruption market with its tens of millions of participants is estimated at USD 3.014 bln., in our estimation it is questionable that the business corruption market with much less participants can be USD 316 bln., i.e., a staggering 105x (!) difference. And I would also add that it is also rather unlikely for everyday corruption to halve as a share of GDP while business corruption explodes by a factor of four.

In other words, the question of the real extent of business corruption is still open.

2. The Myth of Sham Elections

The Kremlin has barred the opposition from participating in elections, silenced dissent and showered unrelenting praise upon Putin’s puppet, Medvedev, via the slavish state-controlled media. It plans to rig the elections by banning foreign observers, forcing public voters to vote and stuffing ballots. According to straight-talking Kasyanov, the “country has stepped onto the slippery slope towards thievish totalitarianism”. And how can I, a vile Russophile propagandist, argue with such a paragon of integrity as dear old Misha?

Well, I could look at what Russians themselves said about the elections.

2008 Presidential Elections: Reality and Poll
Electoral Comission Levada Poll
Turnout

69.7

70.4

Medvedev, Dmitri

70.3

69.6

Zyuganov, Gennady

17.7

19.9

Zhirinovsky, Vladimir

9.4

7.1

Bogdanov, Andrei

1.3

1.4

Non voters were 29%. “Couldn’t remember was 2%, so assume 1.4% of those voted. Therefore, turnout = 70.4%.
Divide each candidates poll numbers by 70.4 to get Poll percentage.
As you can, the figures almost exactly match. Considering that Levada’s margin of error is 3%, it can be concluded that the elections were not falsified.
They also asked two rather interesting questions about fairness.
1. Did central TV and radio give every candidate an equal opportunity to explain their platforms to the electorate?
While 27% chose Medvedev, another 6% voted for the other candidates and a majority (52%) said everyone received equal access. As has been pointed out here before, however, Medvedev did receive unequal coverage – but this was because he was, unlike the others, a Deputy Prime Minister. Formally, election coverage was equally distributed.
2. Did you encounter any irregularities in the elections?
The vast majority – 86% – didn’t. Even of those who did, only a small portion of those encountered were truly serious violations (2% couldn’t find themselves in the electoral register, 1% observed ballot-stuffing).
I have already covered other aspects of the elections here, here and here.

3. The Myth of Russia’s Hunt against Traitors

A reader on this blog, Giuseppe Flavio, has kindly given a link to an excellent NY Sun article, The Specter That Haunts the Death of Litvinenko, that questions the claims made by the Western media regarding Litvinenko. Here’s a summary:
  • Following Litvinenko’s death and investigations, Britain kicked up a major international row with Russia, demanding the extradition of their suspect Lugovoi. The media fell in line (e.g., a Washington Post editorial could assert that the poison “dose was almost certainly carried by one or both of the former Russian security operatives — one of them also a KGB alumnus — whom Mr. Litvinenko met at a London hotel Nov. 1.”), while dissent and a calls to refrain rushing to judgement were few and far between. Taking a hint, the author decides to meet up with Russian prosecutors to hear their side of the story.
  • Berezovsky, kicked out of Russia in 1999, set about undermining Putin’s government, in which he was soon joined by his former protégé, who helped out by writing books like Blowing Up Russia and consulting for two shady security companies housed at Berezovsky’s.
  • On 1 Nov 2006, Litvinenko had lunch with his acquaintance Mario Scaramella at the Itsu sushi bar, who had flown in from Naples the night before. Scaramella handed him some documents. Then he proceded to a meeting with Lugovoi and Kovtun in the Pine Bar in the Millenium Hotel to discuss a business proposal involving Erinys International, one of the security companies in Mr. Berezovsky’s building, following up on a similar meeting two weeks prior. After leaving the Pine Bar, Litvinenko went to Mr. Berezovsky’s office. On that same day he fell ill, and was hospitalized two days later.
  • The main, if not only, source for the revenge-murder scenario were people funded by Mr. Berezovsky. A Web site in France, which had received financing from Mr. Berezovsky’s foundation, circulated a report that there was a Russian “hit list” that had Litvinenko’s name on it. Even though the “hit list” itself never materialized, it helped link the death of Litvinenko in the public mind with that of Anna Politkovskaya, the crusading journalist who had been murdered a month earlier, in October 2006, and whose name was also on the putative hit list. Meanwhile, a Chechen website, also supported by Mr. Berezovsky’s foundation, ran stories such as “FSB Attempted to Murder Russian Defector in London.”
  • The polonium was discovered two hours before Litvinenko died. His famous, eloquent death-bed statement was released by Goldfarb (Berezovsky’s employee), accusing Putin of the deed. (Never mind Litvinenko was paralysed and that his English was quite rudimentary). British authorities switched the crime scene from the Itsu to the Pine Bar.
  • Polonium-210 is a crucial component in early-stage nuclear bombs. Its smuggling into Britain should have rung proliferation alarm bells about dirty bombs, yet officials publicly assumed its only purpose was “nuclear terrorism perpetrated against an individual“.
  • The idea that world Polonium-210 production is concentrated in Russia is a myth, since any nuclear state is able to do it and these are all closely guarded secrets. Nonetheless, consent was successfully manufactured in the Western media that it came from Russia.
  • The minute amount found in London — possibly no more than one-millionth of an ounce — could have come from many sources, ranging from the American industrial supply and stockpiles in Russia to the remnants of the A.Q. Khan network in Pakistan and the North Korean surplus. So news reports, such as the one in the Washington Post that “Polonium is produced and held almost exclusively in Russia,” are at best speculation.
  • In July the Brits issued an extradition request to Russia for Lugovoi. Lugovoi admitted to meeting Litvinenko at the Pine Bar, but rejected involvement in his death. He was contaminated, but so was practically everyone Litvinenko had come into contact with around that time.
  • Not only was there no extradition treaty between Britain and Russia, but Article 61 of the Russian Constitution prohibited the extradition from Russia of any of its citizens. Further inflaming matters, Sir Tony Brenton, the British Ambassador to Moscow, suggested that the Putin government should disregard the Russian constitution and “work with us creatively to find a way around this impediment,” since British authorities had “cooperated closely and at length with the Russian Prosecutor General’s Office.” After Russia rejected the extradition request, Ambassador Brenton objected that its decision was not made “on the basis of the evidence,” which implied that Britain had furnished Russia with compelling evidence to back up its request. Then Britain expelled four members of the Russian embassy in London, effectively holding the Russian government responsible for Litvinenko’s death, and began an international imbroglio.
  • The author travelled to Russia to meet with the Russian investigators. After surmounting some bureaucratic hurdles, he managed to get access to the secret British documents about the case.
  • What immediately caught my attention was that it did not include the basic documents in any murder case, such as the postmortem autopsy report, which would help establish how — and why — Litvinenko died. In lieu of it, Detective Inspector Robert Lock of the Metropolitan Police Service at the New Scotland Yard wrote that he was “familiar with the autopsy results” and that Litvinenko had died of “Acute Radiation Syndrome.”
  • Like Sherlock Holmes’s clue of the dog that didn’t bark, this omission was illuminating in itself. After all, Britain and Russia had embarked on a joint investigation of the Litvinenko case, which, as far the Russians were concerned, involved the Polonium-210 contamination of the Russian citizens who had contact with Litvinenko. They needed to determine when, how, and under what circumstances Litvinenko had been exposed to the radioactive nuclear component. The “when” question required access to the toxicology analysis, which usually is part of the autopsy report. There had already been a leak to a British newspaper that toxicologists had found two separate “spikes” of Polonium-210 in Litvinenko’s body, which would indicate that he had been exposed at two different times to Polonium-210. Such a multiple exposure could mean that Litvinenko was in contact with the Polonium-210 days, or even weeks, before he fatally ingested it. To answer the “how” question, they wanted to see the postmortem slides of Litvinenko’s lungs, digestive track, and body, which also are part of the autopsy report. These photos could show if Litvinenko had inhaled, swallowed, or gotten the Polonium-210 into the blood stream through an open cut.
  • The Russian investigators also wanted to know why Litvinenko was not given the correct antidote in the hospital and why the radiation had not been correctly diagnosed for more than three weeks. They said that their repeated requests to speak to the doctors and see their notes were “denied” and that none of the material they received in the “joint investigation” even “touched upon the issue of the change in Litvinenko’s diagnosis from Thallium poisoning to Polonium poisoning.” They added, “We have no trustworthy data on the cause of death of Litvinenko since the British authorities have refused to provide the necessary documents.” The only document provided in the British file indicating that a crime had been committed is an affidavit by Rosemary Fernandez, a Crown Prosecutor, stating that the extradition request is “in accordance with the criminal law of England and Wales, as well as with the European Convention on Extradition 1957.”
  • The British case is almost entirely based on a “polonium trail” discovered several weeks after they had been in contact with the Polonium-210. While a number of sites correspond to Litvinenko’s movements in October and November, the trail seems to have began in London and then went to Moscow. In London itself, the trail was inexplicably erratic, with traces that were found, as they noted, “in a place where a person stayed for a few minutes, but were absent in the place where he was staying for several hours, although these events follow one after another.” Russian requests for a comprehensive list of all the sites tested were stonewalled, suggesting that the British might be truncating the trail to “fit their case.”
  • While the Pine Bar was contaminated, there was zero evidence that that was where the poisoning actually occured. Litvinenko himself initially said that he had been poisoned at the Itsu when he was lunching with Scaramella, nor did he ever mention his meeting at the Pine Bar.
  • Not only did the Itsu have traces of Polonium-210, but Mr. Scaramella was contaminated. Since Mr. Scaramella had just arrived from Italy and had not met with either Mr. Lugovoi or Mr. Kovtun, Litvinenko was the only one among those people known to be exposed to Polonium-210 who could have contaminated him. Which means that Litvinenko had been tainted by the Polonium-210 before he met Mr. Lugovoi as the Pine Bar.Litvinenko certainly could have been contaminated well before his meeting with Mr. Scaramella. Several nights earlier, he had gone to the Hey Joey club in Mayfair. According to its manager, Litvinenko was seated in the VIP lap-dancing cubicle that later tested positive for Polonium-210.
  • The most impressive evidence is the very high level of Polonium-210 at Lugovoi’s room in the Millennium Hotel – presumably in comparison with other hotspots like Litvinenko’s home or airplane seats. However…
  • Such evidence would only be meaningful if the different sites had been pristine when the measurements were taken. However, all the sites, including the Millennium hotel rooms, had been compromised by weeks of usage and cleaning. So the differences in the radiation levels could have resulted from extraneous factors, such as vacuuming, or heating conditions. Furthermore, the Russian investigators also found these levels had little evidentiary value because the British had provided “no reliable information regarding who else visited the hotel room in the interval between when Lugovoi departed and when the traces of polonium 210 were discovered.” As a result of this nearly month-long gap, they could not “rule out the possibility that the discovered traces could have originated through cross-contamination by outside parties.”
  • Hospital tests confirmed that Messrs. Lugovoi, Kovtun, and Scaramella and Litvinenko’s widow, Marina, all had some contact with Polonium-210. But it is less clear who contaminated whom. The Russian investigators concluded that the all the radiation traces provided in the British report, including the “high level” cited by “Scientist A,” could have emanated from a single event, such as a leak — by design or accident — at the October 16 meeting at the security company in Berezovsky’s building. But they could not find “a single piece of evidence which would confirm the charge brought against A.K. Lugovoi.”
  • Britain may have had more incriminating evidence against Mr. Lugovoi than it chose to provide to Russia. It may not have wanted to share data that would reveal intelligence sources. But why would it refuse to share such basic evidence as the autopsy report, the medical findings, and radiation data? And if Britain wanted to extradite Mr. Lugovoi, why would it send such embarrassingly thin substantiation?
  • In conclusion…

Before the extradition dispute, Russian investigators, in theory, could have questioned relevant witnesses in London. Their proposed roster of witnesses suggested that Russian interest extended to the Russian expatriate community in Britain, or “Londongrad,” as it is now called. The Litvinenko case provided the Russians with the opportunity for a fishing expedition, since Litvinenko had at the time of his death worked with many of Russia’s enemies, including Mr. Berezovsky; his foundation head, Mr. Goldfarb, who dispensed money to a web of anti-Putin websites; his Chechen ally Akhmed Zakayev, who headed a commission investigating Russian war crimes in Chechnya (for which Litvinenko acted as an investigator), and former owners of the expropriated oil giant Yukos, who were battling in the courts to regain control of billions of dollars in its off-shore bank accounts.

The Russian investigation could also have veered into Litvinenko’s activities in the shadowy world of security consultants, including his dealings with the two security companies in Mr. Berezovsky’s building, Erinys International and Titon International, and his involvement with Mr. Scaramella in an attempt to plant incriminating evidence on a suspected nuclear-component smuggler — a plot for which Mr. Scaramella was jailed after his phone conversations with Litvinenko were intercepted by the Italian national police.

The Russians had asked for more information about radiation traces at the offices of these companies, and Mr. Lugovoi had said that at one of these companies, Erinys, he had been offered large sums of money to provide compromising information about Russian officials. Mr. Kovtun, who also attended that meeting, backs up Mr. Lugovoi’s story. Such charges had the potential for embarrassing not only the security companies that had employed Litvinenko and employed former Scotland Yard and British intelligence officers, but the British government, since it had provided Litvinenko with a passport under the alias “Edwin Redwald Carter” to travel to parts of the former Soviet Union.

The British extradition gambit ended the Russian investigation in Londongrad. It also discredited Mr. Lugovoi’s account by naming him as a murder suspect. In terms of a public relations tactic, it resulted in a brilliant success by putting the blame on Russian stonewalling for the failure to solve the mystery. What it obscured is the elephant-in-the-room that haunts the case: the fact that a crucial component for building an early-stage nuke was smuggled into London in 2006. Was it brought in merely as a murder weapon or as part of a transaction on the international arms market?

There is little, if any, possibility, that this question will be answered in the present stalemate. The Russian prosecutor-general has declared that the British case is baseless; Mr. Lugovoi, elected to the Russian Parliament in December 2007, now has immunity from prosecution, and Mr. Scaramella, under house arrest in Naples, has been silenced. The press, for its part, remains largely fixated on a revenge murder
theory that corresponds more closely to the SMERSH villain in James Bond movies
than to the reality of the case of the smuggled Polonium-210.

After considering all the evidence, my hypothesis is that Litvinenko came in contact with a Polonium-210 smuggling operation and was, either wittingly or unwittingly, exposed to it. Litvinenko had been a person of interest to the intelligence services of many countries, including Britain’s MI-6, Russia’s FSB, America’s CIA (which rejected his offer to defect in 2000), and Italy’s SISMI, which was monitoring his phone conversations.

His murky operations, whatever their purpose, involved his seeking contacts in one of the most lawless areas in the former Soviet Union, the Pankisi Gorge, which had become a center for arms smuggling. He had also dealt with people accused of everything from money laundering to trafficking in nuclear components. These activities may have brought him, or his associates, in contact with a sample of Polonium-210, which then, either by accident or by design, contaminated and killed him.

To unlock the mystery, Britain must make available its secret evidence, including the autopsy report, the comprehensive list of places in which radiation was detected, and the surveillance reports of Litvinenko and his associates. If Britain considers it too sensitive for public release, it should be turned over to an international commission of inquiry. The stakes are too high here to leave unresolved the mystery of the smuggled Polonium-210.

(Republished from Sublime Oblivion by permission of author or representative)
 
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Bertelsmann Stiftung has released Who Rules the World?, a very interesting survey where people from different countries are asked: what are the Great Powers today?, what makes a country a Great Power? and which countries will be Great Powers in 2020?

Now the title of Great Power is something that is given to a country, although of course for it to be meaningful the country must possess certain pre-requisites, including but not limited to: a large population, a large, technologically-advanced economy, advanced and comprehensive armed forces and military-industrial complex, energy and mineral resources, strategic nuclear forces, geo-political position and soft power (international influence and cultural appeal). That people recognize a country to be a Great Power is both an accreditation, if you will, and a form of soft power in itself.

Thus it is encouraging that 39% of the people in the survey regard Russia as a World Power – in third place after the United States (81%) and China (50%). Furthermore, this is an increase of 12% points from their 2005 survey – the highest rate of increase amongst all other world powers. For comparison, much-hyped China and India increased by 5% and 3% respectively, while the US remained stagnant. 37% of respondents think that Russia will remain, or become, a World Power in 2020, compared with the US (61%), China (57%), EU and Japan (33%) and India (29%). Again, Russia has had the most significant increase (11%), compared with China (2%), India (5%) and the US (4%).

It seems that the voice of the people confirms our previous geo-political prediction in Towards a New Russian Century? that by the 2020-2040 timeframe the world will become tri-polar, with the US, China and Russia as its poles.

On the missile defence front, Poland is still determined to host interceptor missiles on its territory. Overtures to Russia were a case of pressuring the Americans to deliver more, i.e. a NATO base. While talk of any reorientation of Polish foreign policy alignments is pointless, it is nonetheless a welcome change from the hystrionics of the Kaczynski administration. In particular, Poland has lifted its veto on Russia joining the OECD club of (mostly) developed countries and has agreed to renewed Russia-EU talks in exchange for Russian removal of a ban on Polish meat imports.

There is a ridiculous piece in the Times – it starts off by writing “today Ukraine will be approved as a new member of the World Trade Organisation, the reward both for reforming its economy and for tilting towards the West rather than Russia”. There is little point in reading further. The fact of the matter is Russia is holding out hard for a better bargain when it does join. Foreign policy orientation or democratization have little to do with it, as implied by the presence of countries such as Saudi Arabia, Myanmar and, well, China. Finally, it is a fallacy to think Ukraine’s economy is any freer or more reformed than Russia’s – quite to the contrary, in fact, if investment ratings are anything to go by.

This rag newspaper also published a piece by rabid Russophobe Lucas on Why kowtow to brutal, cynical Russia?. He finished with:

Our biggest weakness is money. During the old Cold War, doing business with the Soviet Union was a rare and highly suspicious activity. Now bankers, lawyers, consultants and spin-doctors (and even, it is whispered, politicians) flock to
take 30 silver roubles for services rendered, even when they are privately disgusted by the source.”

Well, every Cold War needs its McCarthy, and I’m glad to see Loco Lucas has volunteered. On the subject of the detestable Lucas, he has been especially productive this week, also coming up with Katyn, in which he elegantly proves Godwin’s Law with his first sentence.

In economics, I have found a detailed breakdown of Russian growth for 2007 – here’s a summary. Market exchange-rate GDP in 2007 was 1,286bn $ (making it the world’s eighth-largest economy by this measure), up 8.1% from 2006 in PPP terms (in which Russia, as we’ve previously mentioned, is the world’s seventh-largest economy at 2,076bn $). Growth was driven by construction (16.4% to 65bn $), retail (12% to 227bn $), financial sector (11.4% to 52bn $) and various housing operations (10.4% to 114bn $). Manufacturing increased healthily (7.9% to 211bn $), as did transport/communications (7.6% to 104bn $) – however, agriculture (3.1% to 50bn $), extractive industries (0.3%) and production/distribution of water, gas and electricity (-0.3%) stagnated relatively. The Finance Minister, Kudrin, also considers that growth in 2008-2010 will be in the 6.5%-7% range (in PPP terms, of course), notwithstanding possible recessions in the US. In other news, Russia to build eight technoparks by 2012, Russia to deliver first Sukhoi SuperJet-100s to Armenia (it already has 73 confirmed contracts) and Russia, Venezuela may sign $1.4 bln contract for three subs in April.

Peter Lavelle turned out to be rightOSCE will boycott the Russian presidential elections, despite generous Russian concessions. In other Annals of Western Hypocrisy, Britain may refuse to extradite a fraudster charged with swindling 250mn $ from Sovcomflot, Russia’s national shipping fleet. It seems every last Russian crook can expect British protection if they claim political persecution.

An interesting, but not unexpected, revelation that China and Russia aren’t as cosy with each other as they pretend, or US elements watching out for a hegemonic Eurasian alignment, fear. Thirty Russian aircraft take part in exercises over two oceans. This article criticizes Russia’s procurement policies – nonetheless, it should be noted that majority of spending on military modernization in Russia today is, like in the US, focused on modernizing old models – upgrading older tank models like the T-72, pro-longing the service life of older ICBM’s, etc. The newer things the article mentions, like the Bulava SLBM, is done for the purpose of staying at the front of the arms race, while the ‘yet another combat tank’ mentioned (presumably the T-95) is Russia’s first truly 5th generation tank.

The western media rejoices over pro-Western Tadic’s win in Serbia, somehow construing it as a defeat for Russia despite the fact that a) Russia has invested zero financial/moral resources into either candidate, b) Nikolic has wide support (47% to Tadic’s 50%) due more to his populist economic rhetoric than to loud pro-Russian statements, c) both are categorically against Kosovo being recognized (as are we – it is an unwise precedent that may come back to bite its backers in the ass, i.e. with Muslims in Europe or Latinos in the southern US) and d) whatever the administration, Serbia is likely to continue a pro-Russian course, should it remain alone, join the EU or even merge into NATO. In both the latter cases, it will remain a pro-Russian voice in either organization, and in the case of NATO might even turn out to be a useful mole, like Bulgaria, to a lesser extent Greece, and now possibly Hungary.

The Times redeems itself somewhat by an inspirational story about Valentin Dikul, a paralysed man who, defying doctors’ predictions, devised a regimen of intensive physical therapy, learned to walk again and set world weight-lifting records.

(Republished from Sublime Oblivion by permission of author or representative)
 
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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.