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If you ever manage to get a troupe as diverse as Latynina, Mark Adomanis, the Cypriot Communist Party, virtually every financial analyst, Prokhorov, and Putin united in condemning your crass stupidity and cack-handedness, it’s probably time to stop and ponder. But it’s safe to say that’s not what the Troika – the European Commission, European Central Bank, and IMF – tasked with managing the European sovereign debt crisis is going to be doing any time soon. They seem to be living in la la land.

Here is the low-down. Contrary to German/ECB propaganda, Cypriot public finances, while nothing to write home about, are not in a catastrophic state. The debt to GDP ratio, far from ballooning out of control like Greece’s, was actually lower than Germany’s as late as 2011! This was despite Cyprus being steadily hammered by the global financial crisis and the massive explosion at a naval base in 2011 that cost it about 10% of its GDP.

cyprus-debt-dynamics The main problem was in its financial sector. Although it should have been safe on paper, Cypriot banks had the bad fortune to have had many operations in Greece – which hemorrhaged money as Greek debts were restructured under EU guidance. These involved painful austerity, but the principle that bank deposits would be inviolable held across the PIIGS. But for Cyprus, the Eurocrats – egged on by Schäuble in particular – decided to make an exception, demanding a “bail-in” as part of any financial rescue package. For the ultimately trifling sum of $6 billion, they were prepared to erode basic principles such as sanctity of property that the EU is founded on.

According to Edward Scicluna, the Maltese Finance Minister, his Cypriot counterpart Michalis Sarris was for all intents and purposes brow-beaten into accepting the deal – a 6.75% levy on deposits of less than 100,000 Euros, and 9.9% on everything above that – that the country’s parliament would later decisively reject. The Europeans, according to him, were dead-set on “downsizing” Cyprus’ supposedly overgrown financial sector and in particular its status as a tax haven and alleged center of Russian money laundering. After 10 grueling hours of discussions, Sarris finally conceded, and as soon as that happened, “Schäuble demanded that all wire transfers to and from the Cypriot banks would cease forthwith.”

In other words, they wished to destroy Cyprus’ financial system, and it seems certain that they have succeeded in this. As soon as the banks reopen (now delayed until at least May 26th), who exactly will continue to keep their deposits in a Cypriot bank?

This wanton destruction however seems to have been based not so much on any sense of pan-European fairness or social justice as misconceptions about the nature of the Cypriot banking system, or even more mercenary motives such as a desire to help Merkel win the upcoming elections or encourage capital flight from the PIIGS to German banks (the latter possibility was raised, only half in jest, by Craig Willy). As we see above, Cyprus’ sovereign debt situation was manageable. While it is true that it had a huge financial sector relative to its GDP, this is not atypical for a nation of its small size and location (consider Luxembourg, or London were it independent from the UK), and this sector did not experience any critical difficulties until the EU-spearheaded restructurings of Greek debt into which C ypriot banks were heavily invested, as a natural result of their geographic and cultural position.

How Cypriots see the Cyprus crisis.

How many ordinary Cypriots see the Cyprus crisis.

Nor is it even true that the Cypriot banking system mainly serviced dodgy offshore aristocrat types. Of the €68 billion in deposits as of end-January 2013, some 63% were held by Cypriots, and 7% were held by citizens of Eurozone countries, while 30% were held by nationals of other countries *. Although according to honored representatives of the Eurocrat class like Jean Pisani-Ferry, it is the Cypriots’ own fault for banking in their own damn country as opposed to Germany:

And of that 30%, not all was held by Russians, as Cyprus is popular among Chinese and Iranians too (indeed, an acquaintance who was there recently saw far more signs in Chinese than in Cyrrilic). As for the notion that all or even the majority of Russians with money are “oligarchs”, “mafiosi”, and “Chekists” (interchangeable terms, to many of the people who engage in this kind of rhetoric)… well, no way to statistically prove it one way or another, so anecdotes will have to suffice. Ironically enough, the only Russian I know with a bank account in Cyprus is actually a fairly anti-Putin liberal, and as far as I know not an oligarch or a mafiosi – unless you consider journalists to be such. The commentator JLo also reports a liberal acquaintance with money in Cyprus. No doubt those two will be thrilled to hear from former Economist Russia journalist Edward Lucas, whose Russophobia is frankly pathological, that as Russians with money in Cyprus they should be automatically expropriated.

This is not of course to argue that having such a large segment of the Russian economy “offshore” is a good thing. Many Russians really do have accounts in Cyprus because of its perceived benefits such as the local (English-based) legal system, greater financial security, greater ease of capital movement around the world, and yes, tax evasion or “tax optimization” as it is euphemistically called – and productively utilized by entirely respectable Westerners like Mitt Romney. It would undoubtedly be a good thing if there was less of that and ironically the Troika’s ham-fistedness will have only helped Russia in its struggles to de-offshore its economy. But what is entirely mendacious is to start throwing around terms like “money laundering” as if they were synonymous with offshore banking, or “the Russian mob” as if it was synonymous with “oligarchs”, “Russian politicians”, “Russian bureaucrats”, and all Russians in Cyprus in general for that matter. There is of course some overlap between all these categories but to conflate them all as the Lucas types insist on doing is pathologically Russophobic, and frankly driven by the very same Bolshevik spirit that they profess to despise but actually embody.

Many Western papers even went so far as to hint that the reason Russia was so “concerned” about Cyprus was because Putin and other members of his inner circle had money in Cyprus. This was echoed by the (viciously anti-Putin) Russian business newspaper Vedomosti, which alleged that “it is hard to believe, but it appears as if European politicians are ready to risk a lot in order to pressure a certain influential politician secretly hiding money in Cypriot banks.” They did not have the courage of their convictions to say it outright, but the hidden subtext is obvious to all. We call these conspiracy theories. Were this true, in fact, it would be indicative of severe schizophrenia on Putin’s part – that is, if he actually DID have quadrillions parked in Nicosia – considering that previous discussions on Russian loans to Cyprus had been linked to Cyprus becoming more proactive about revealing the identities of Russians with bank accounts there to the Russian tax authorities.

How the Western media/political class see the Cyprus crisis.

How the Western media/political class see the Cyprus crisis.

At this point it hardly bears mentioning that, as an institution that so regularly and pompously lectures Russia about things like rule of law and sanctity of property rights, it is quite hilarious that the Troika would “demonstrate” those concepts by doing things like retroactively abrogating European-wide deposit insurance of 100,000 Euros and freezing and confiscating the savings accounts of the very Russians whom they expect to listen to their pontifications.

But as these recriminations and general debility went gone back and forth, Nicosia burned. The initially proposed “medicine”, it seems, will turn out to be the deadly pill that kills the Cypriot financial system. It is hard to imagine anyone, be they foreigner or even Cypriot, now willingly leaving their money in Cypriot banks; trust has been destroyed, and short of capital controls, massive bank runs and capital outflow seem to be all but inevitable whenever the banks open again. The original $15 billion that could have nipped this problem in the bud is probably no longer sufficient. I don’t pretend to have any precise idea of how things will develop now – Will Cyprus hurtle out of the Eurozone? Will contagion spread to Spain and Portugal? Will Gazprom get exploration rights to the recently discovered oil fields in return for loans? Will China get involved? – but a few things I think we can be pretty sure of: (1) The ECB/Eurocrat class are either utterly, frightfully oblivious, or have altogether darker ulterior motives; (2) The Cypriot banking system is finished; (3) It will be a reality check for Russians who firmly believe their assets are automatically safe abroad and will help the de-offshoring process, though I don’t expect any sudden radical changes because there are still plenty of alternatives like Latvia which I hear is getting pretty hot with Russian money nowadays.

PS. For further reading (and people who influenced my perception of this) consult Mercouris, Dmitry Afanasiev (Russian version at Vedomosti), and Craig Willy’s Twitter.

*UPDATE: The commentator Temesta links to an article by Paul Krugman in which he points out that “Cypriot residents” very likely directly include foreigners:

I’ve done some asking around, and cleared up something that was puzzling me. Officially, only about 40 percent of the deposits in Cypriot banks are from nonresidents, which would imply resident deposits of almost 500 percent of GDP, which is crazy. But the answer is that I do not think that word “resident” means what you think it means. Some of the money is from wealthy expats living in Cyprus; much of it is from rich people who have resident status without, you know, actually living there. So we should think of Cypriot deposits as mainly coming from non-Cypriots, attracted by that business model.

That said, speculation is one thing, concrete numbers are another: “Cyprus Central Bank Gov. Panicos Demetriades, in an interview published Thursday in Russian newspaper Vedomosti, offered more specifics. “The deposits of Russians range from €4.943 billion to €10.225 billion, depending on how you count them,” he said.” Even if the highest estimates of $20 billion are correct, it would still mean that the total value of Russian deposits there account for less than 25% of the total.

(Republished from Da Russophile by permission of author or representative)
 
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Latest contribution to the US-Russia.org Expert Discussion Panel on the question of which US Presidential candidate is best able to meet the challenges ahead:

When predicting election outcomes, I prefer to listen to those who put their money where their mouths are. As of the time of writing, the Intrade predictions market gives a 66% implied probability of an Obama win. The major betting websites are even more optimistic about Obama’s chances, with most of them giving him implied odds of about 80%. He is even considered more likely than not to win the popular vote, though because of the peculiarities of the US electoral system, it is also quite possible for him to lose the popular vote but still win the Presidency (about a 25% chance of this, according to Intrade). I will now most likely lose the symbolic $10 I placed on a Republican candidate win back in May 2010, when a sharp but unsustainable spike in favor of Obama accruing from Osama bin Laden’s assassination created very good odds for the contrarian gambler. Still, I don’t regret the investment. Always bet against your preferred candidate – that way, you will never be wholly disappointed.

We know that Obama is phlegmatic on the ill-thought out Magnitsky Act, and is likewise lukewarm about missile defense in East-Central Europe – to the extent that he pledged “more flexibility” on this issue to Medvedev in an unfortunate open mic moment that the Republicans later spun for all it was worth. (The Poles seem to have come to terms with this, and are now preparing to spend $4 billion of their own money to modernize their AA systems in the next decade). This is probably driven not so much by a desire to enlist Russia as an ally, as to give the US room to deal with the more pressing issues that will dominate Obama’s second term: The withdrawal from Afghanistan; the military pivot to Asia; a sluggish economy plagued by chronically high budget deficits; the accelerating climate crisis. Another alternative is that Obama’s people take seriously the CIA/Stratfor theory, hinted at by Biden in 2009, that Russia’s “shrinking population base” will nullify it as a Great Power in a couple of decades; hence, it is no longer worth aggressively confronting it as natural trends will doom it to eventual irrelevance anyway. But whatever the true motivations, we can reasonably expect the Reset to survive under a new Obama Presidency.

The GOP position is rather less compromising:

… we urge the leaders of their [Russia] to reconsider the path they have been following: suppression of opposition parties, the press, and institutions of civil society; unprovoked invasion of the Republic of Georgia, alignment with tyrants in the Middle East; and bullying their neighbors while protecting the last Stalinist regime in Belarus. The Russian people deserve better, as we look to their full participation in the ranks of modern democracies.

Needless to say, the only part of “the Russian people” who would look on these urgings with sympathy are the small gaggle of pro-Western liberals like Lilia Shevtsova (who brought this to my attention). They slavishly side with America against their own country on every issue they disagree on, so long as it helps undermine Putin. While she is right that such policies would “send a strong signal of support to Russian liberals that America does care about the values and principles it preaches”, it would also likewise alienate not only the Russian government but ordinary Russians too (41% of whom prefer Obama to 8% for Romney in a recent Levada poll). Coupled with his equally confrontational attitudes to China, and the aggressive neocon foreign policy advisers he has surrounded himself with, Romney would appear to be dead-set on provoking into existence that nightmare of Cold War planners – a Russian-Chinese alliance. This would be first and foremost a disaster for America itself.

Then again, as many have already pointed out, Romney is a flip flopper, and his bellicose rhetoric may well dissipate should he somehow find himself in the White House. Though Romney might describe Russia as America’s “number one geopolitical foe”, that did not prevent his son Matt from recently flying to the evil empire to promote his real-estate company and purportedly assure influential Kremlin advisers that his dad does want good relations between their two countries. If money and the practical exigencies of Presidential office trump his campaign rhetoric, there is good reason to hope that the Reset can survive even under a Romney Presidency.

(Republished from Da Russophile by permission of author or representative)
 
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My latest contribution to the US-Russia.org Expert Discussion Panel this one focusing on whether the West foregoes “incalculable benefits” by continuing the Cold War. Unlike previous Panels, on which I aimed for balance, here I make no apologies at pointing a finger straight to where I believe the blame belongs:

I recently began reading Martin Malia’s Russia under Western Eyes. One of the key points he makes early on is that the Western view of Russia has rarely corresponded well with its objective strength or the actual threat it posed. To the contrary, it is when “institutions and culture” converge that the West’s “evaluation of Russia tends toward the positive”; when they diverge, the reverse. So by that theory, relations should be pleasant: After all, not only is it no longer a military threat, but in terms of political systems and values, the West and Russia are far closer now than they have even been in history.

This makes it all the more puzzling that half the US foreign policy establishment remains entrenched in Cold War thinking. Romney belongs to them. A man who now has a 39% chance of becoming President, according to Intrade, declared Russia to be a “our number one geopolitical foe.” But unlike the case in the Cold War, it is a divergence that now most afflicts the US and its satellites – namely, the idée fixe that it is globally “exceptional”, and thus called forth to express global “leadership.” This translates into the belief that it can dictate its terms – from support for the Iraq War to the pursuit of Wikileaks – to other powers without negotiation (anything else is appeasement!), and woe unto the VIRUS’s that oppose it (a cute neocon acronym standing for Venezuela, Iran, Russia).

Needless to say, such attitudes make mockeries of any genuine democracy promotion. As long as you pay the requisite cultural tribute, you get off scot free – “Bahrain’s bosses understand modern symbolism about minorities so well that the Arab kingdom’s ambassador to Washington is a Jewish woman.” They might not understand the Hippocratic Oath near so well, imprisoning doctors for treating wounded protesters, but that is of little consequence next to anti-Iranian orientations and the US naval base there. Meanwhile, Venezuela is demonized by the Cold Warriors for daring to elect a socialist to power in Latin America, even though it has some of the structurally freest and fairest elections in the world. Their hatred of Russia ultimately boils down to the same roots: It resists.

There are three ways this impasse can end. The first, and most incredible way, would be for the residual Cold Warriors to stop thinking of the world in Manichean terms, with themselves playing God’s role. The second would be for Russia to become a client state of the US. This is not going to happen short of the likes of Gary Kasparov and Lilia Shevtsova coming to power.

The third possibility is by far the likeliest, as it is already occurring. Back in the 1990’s, Western Diktat politics in relation to Russia typically worked because it was in crisis, and had no other powers to work with. They believe this is still the case, and not only the neocons: In 2009, Biden said Russia had a “shrinking population base… a withering economy”, and a banking system unlikely to “withstand the next 15 years.”). This would presumably give Russia no choice but to fall in line. They are wrong. In real terms, the Chinese economy may have overtaken the US as early as in 2010; a constellation of other sovereign, non-Western powers such as Brazil, Turkey, India, and South Africa are attaining new prominence. With the EU in permaslump, the US and Japan under accumulating mountains of debt, and oil futures now permanently sloped upwards, a new world is arising in which modernization is no longer synonymous with Westernization. Russia is one of its key players, just like the other BRIC’s.

One can’t resist gravity forever. Once the requisite relative political, economic, and cultural mass is no longer there, ideological Cold Wars will become as unsustainable as Western hegemony itself.

(Republished from Da Russophile by permission of author or representative)
 
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One of the main theses of this blog is that in many respects, Russia is far more similar to the the “West” (and vice versa) than various democratists would have you believe.

Case in point (h/t Jon Hellevig):

When GOP presidential candidate Mitt Romney visited an Ohio coal mine this month to promote jobs in the coal industry, workers who appeared with him at the rally lost pay because their mine was shut down. The Pepper Pike company that owns the Century Mine told workers that attending the Aug. 14 Romney event would be both mandatory and unpaid, a top company official said Monday morning in a West Virginia radio interview. … Moore told Blomquist that managers “communicated to our workforce that the attendance at the Romney event was mandatory, but no one was forced to attend.”

“Mandatory” but “no one was forced to attend.” Hmm… how does that work?

This episode of Ohio coal workers pressured to attend a Romney rally does in fact neatly parallel anecdotally numerous cases in the run-up to the Russian elections. I even accept that these cases are far more prevalent in Russia, though the reasons for this are structural. Whereas single industry towns with singular political allegiances – e.g., coal towns, for whom Romney is far preferable to Obama – are the exception rather than the rule in the US, there are hundreds of such “monograds” in Russia. These monograds tend to have authoritarian political cultures at the local level.

But its not like you never stumble across analogues to them in the West.

(Republished from Da Russophile by permission of author or representative)
 
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Ten months ago I bet a symbolic $10 on a Republican win. According to elections models and the bookies, it’s more likely than not that I’ve lost it.

Not that I’m saddened by this development of course. (That said, if the economy slumps sharply in Q3, then a Romney win becomes entirely possible).

(Republished from AKarlin.com by permission of author or representative)
 
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At least in the context of the US Presidential elections according to this nifty quiz. Here are my detailed results for perusal for anyone interested.

PS. Mitt Romney’s VP pick was a good one. Paulites however are (rightly) not convinced and I for one still favor Obama if with no particular enthusiasm.

PPS. The real Obama-Romney difference is much greater for me than 7 percentage points because of Romney’s extremely hostile attitude to Russia. What can I say? This issue is rather important to me.

(Republished from AKarlin.com by permission of author or representative)
 
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I really can’t figure what this Economist editorial reeks more of: Hypocrisy, mendacity, or pure delusion?

That is as it should be, for since his decision last autumn to return to the Kremlin, Mr Putin has been stridently negative and anti-Western, most recently over Syria (see article)

Being anti-Western is “negative”, even for daring to oppose Western-backed Islamist crazies who will back-stab their handlers as soon as they’re able to.

But the reset was based in part on two misplaced hopes: that Dmitry Medvedev, who had been lent the presidency for one term by Mr Putin in 2008, would genuinely take charge of the country, and that some in his government had sound liberalising, pro-Western instincts.

Note how “liberalizing” and “pro-Western” are conflated, because one can’t possibly liberalize without kowtowing to Western interests too. Furthermore, bear in mind the unspoken assumption that normal relations (“the reset”) are only to be rewarded for said kowtowing to the West. The concept of equality and reciprocity is alien to the minds of Western chauvinists.

Those hopes were dashed by Mr Putin’s swatting aside of Mr Medvedev last September to allow his own return to the Kremlin, the rigging of elections, his crackdown on Moscow’s protesters and his new Nyet posture.

Elections in which Putin still got a certain majority, however hard The Economist tries to misrepresent otherwise, and “crackdowns” that are literally baby play compared to the violence meted out to Occupy protesters throughout the Western world (something like 50 journalists arrested to date and counting; preemptive arrests of republican demonstrators in the UK), and for adopting fines and regulations on protests that are actually fairly mild compared to most advanced democracies. Then again, in Economist world of pandering to Anglo-Saxon elites, the Occupy protesters are subhuman scum (because they are anti-elite, ergo “anti-Western”) whereas the liberal Russian protesters should be immune to all prosecution even when filmed throwing cobblestones at the police.

Really, “his Nyet posture” is the critical thing here. Like the mafia, the West won’t take no for an answer.

And why not dangle in front of the bauble-loving Mr Putin the prospect of Russian membership of the OECD rich-country club?

Well in principle, entrance to the OECD is supposed to happen based on objective criteria, most or all of which Russia now fulfills I believe now that it has joined the WTO. The Economist is essentially urging these organizations to politicize themselves, which in turn reflects their own delusion. It might have worked a generation ago but today pulling such stunts will only discredit these Western-dominated institutions all the faster given the rising influence of the BRIC’s and other non-crazy countries that aren’t self-entitled to absurdity.

Western ambassadors should not hesitate to talk to opposition protesters in Moscow just because the Kremlin objects.

I don’t think “hesitation” has been exactly a problem with McFaul. If Western countries insist on following The Economist’s advice, the correct response would be symmetrical: Have Russian ambassadors meet up with Occupy leaders, pirate groups, Muslim rights activists, etc and channel a few million dollars their way to “improve” democracy and civil rights in the West. What sauce is good for the goose is good for the gander after all.

In foreign policy, too, the West should stand firm. Russia cannot be allowed to veto America’s missile-defence plans in Europe. Nor should Mr Putin’s continued blocking of UN Security Council resolutions authorising intervention in Syria be treated as an insurmountable bar to action, any more than it was in Kosovo in 1999. G20 leaders should do their utmost to embarrass Mr Putin over his backing for Mr Assad.

Again, more than anything, it’s delusion that shines through here. (Ample hypocrisy too, however, encapsulated in just one word: Bahrain). But really delusion wins out. The Economist just like various Republican nutjobs like Romney genuinely think that the world works to the following schematic:

Step 1: Aggressively confront Russia.
Step 2: ???
Step 3: Russia comes to support US interests. Profit!

More than anything this really demonstrates far better than I could ever describe myself how The Economist is most definitely NOT a publication you want to read for facts, insights, etc.; instead, it is a barometer of Western elite opinion, or literary soul food for Western chauvinists.

If Western leaders actually insist on going through with The Economist’s recommendations, as opposed to just dreaming about them, their own global influence will dissipate all the faster.

Mr Putin respects toughness, not weakness.

What exactly is wrong with that? It is quite clear that in the past 500 years, being tough (or standing up for oneself) has worked out far better than being weak (which invites bullying and derision in addition to being inherently pitiable). That is because the West itself only ever respects strength, despite its moralistic platitudes to the contrary; something that naive fools like Gorbachev have always ended up finding to their own cost – well, their country’s cost, anyway.

This matters when it comes to his government’s more egregious behaviour, such as the jailing of Mikhail Khodorkovsky, once boss of the Yukos oil company, the killing of Sergei Magnitsky, a lawyer working for William Browder, a foreign investor, or the murder in London of Alexander Litvinenko, a former security official.

Predictably, the standard party line is repeated verbatim, as per the best traditions of Pravda, conveniently leaving out the facts that the ECHR itself disagree s that Khodorkovsky is a political prisoner or the mounting pile of evidence that Lugovoi or the FSB had nothing to do with the Litvinenko hit. Or that there are about 500 Magnitsky-like deaths in custody in the US and likewise in Russia every year, the major difference here being that he is a high-profile case who has been propagandized by William Browder, an oligarch money highly hostile to Putin.

In cases like these it is right to try to identify the individuals involved so as to deny them visas and freeze their assets, as a congressional legislative amendment related to the Magnitsky case proposes.

Their country and their right, but then it is incumbent on Russia as a self-respecting country to reciprocate in kind: Identify Western human rights abusers (e.g. those who run Guantanamo), and deny them entry to Russia and attempt to extend the sanctions abroad. As indeed has happened.

Mr Putin cultivates the image of a popular and admired strongman, but the wave of protests since he announced his return to the Kremlin has exposed his weakness and loss of support. His power base is beginning to erode.

More delusion.

Economic engagement with the West, combined with firm criticism of his democratic and human-rights abuses at home and abroad, are the best response.

Not to mention an inescapable sense of schizophrenia.

(Republished from Da Russophile by permission of author or representative)
 
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I will be jetting off tomorrow to Washington, but before I do – a translation of Edward Lozansky’s interview with Komsomolskaya Pravda (Америка ненавидит Россию, которую сама себе придумала). Lozansky, who used to be a Soviet dissident, is the organizer of the World Russia Forum and has many strong, pertinent views on why it’s a good idea to develop the US – Russian partnership.

An American politologist and a Russian journalist from Komsomolskaya Pravda tried to find out whether it’s possible to change Washington’s attitude to Moscow.

America Hates The Russia That It Invented Itself

Discussion with Edward Lozansky, Alexei Pankin, and KP’s Aleksandr Grishin.

A new period is beginning in US – Russia relations at the start of Vladimir Putin’s new term as Russian President. Washington doesn’t hide its critical attitude to Moscow, despite mutual assurances that the Reset is here to stay. American politologist Edward Lozansky and Russian journalist Alexei Pankin are with us at Komsomolskaya Pravda to discuss what we can expect from these new developments.

For some – a partner, for others – a competitor

Lozansky: I would identify two schools of political thought and public opinion. One of them is more influential than the other. It considers Russia to be not far removed from the Soviet Union, and while there may no longer be ideological differences, geopolitical conflicts remain unresolved. That is why Russia is seen as an unfriendly country. And how do you deal with an unfriendly country? You use hard power – the Pentagon, and soft power, including the media. And you take other opportunities to portray this country in a bad light. The vast majority of the American media holds these positions.

The second school consists of pragmatists, who consider that Russia has made certain progress in areas such as freedom, human rights, and democracy. They understand that it is not perfect – there are no perfect countries. Nonetheless, Russia is an important geopolitical partner of the US, and has to be treated accordingly. No interference in its internal affairs, but a search for common problems and their solutions.

This is the main difference. The first group assumes that Russia is a competitor and an adversary. The possible future President, Mitt Romney, even claimed that Russia is Enemy Number One, a characterization to which even his fellow party members objected. The second group considers your country a partner. Unfortunately, the second school, to which I attach myself, is less significant. Its voice only occasionally seeps into the mass media, while the first one dominates.

Pankin: As the editor of the Russian version of an international publishing journal, I have a lot of contacts with foreign journalists. And I am surprised that they, who monitor the state of freedoms in Russia and – one might think – would be a highly informed public, live in a world of strange stereotypes. I was recently in Tunis, where UNESCO was marking World Press Freedom Day. I was struck by the attitudes there towards me, as if I was someone who had escaped from Putin’s torture chambers. I was unable to explain to them that I was not some kind of downtrodden person, because they simply refuse to see anything which doesn’t coincide with their stereotypes.

For instance, they tell me: “What bad luck for you, that you guys elected Putin again.” And when you try to grind in the point that Putin got a MAJORITY OF THE VOTES in the country, that he was ELECTED by the people, you can see them becoming flabbergasted as their frames of reference are challenged.

Grishin: Well doesn’t this mean that for the American political majority it doesn’t matter who’s in power in Moscow, democrats or conservatives. Putin comes in, goes out, but Russia remains a geopolitical rival or enemy. It is Russia’s very existence in its current form that the US has a problem with. Is that not so?

Lozansky: It is likely that ultimately a few things will change, if people who are prepared to help the US more come to power. Much depends to what extent your policies support American interests. Take Georgia. They got colossal financial support. The biggest in per capita terms, by the way, of all the other countries that get American aid. For all its debts – and America has huge debts – it is still able to find the funds to support Georgia, because it considered to be a country that performs certain functions that answer to US geopolitical interests.

***

You can also watch a detailed discussion with Lozansky on Prosveshenie TV.AK

[youtube=http://www.youtube.com/watch?v=ZLqsjKQHWxo]

***

Fear and loathing in Washington

Grishin: Anyone in particular in Washington that Russia bothers, and how?

Lozansky: I would identify four groups, whom Russia bothers for one reason or another. First, the neocons. For them, Russia is always wrong. And they believe that it’s necessary to change the situation in Russia, relying on both hard power, and soft. This is a fairly influential group. It was especially dominant under Bush, when Cheney was one of its main leaders. And relations between Russia and America under Bush slipped below the levels of the Cold War.

The second group of the anti-Russian lobby are the ethnic communities of the East European countries, the Baltics. Those, who suffered under the USSR. For them, the new Russia might not quite be the USSR, but it is still a threat to their security. They retain the fear that Russia might at any time occupy them. The third group is the military industrial complex. For them, Russia isn’t only an enemy, but a bogeyman which they can trot out in order to earn orders and attract funding.

There is also a new element – oligarchic capital. Those are billion dollar fortunes, uncompromising hatred towards Russia’s leader. With such capital, it is possible to hire any journalist’s pen, the media. This factor, which previously did not exist, is very significant: This powerful group creates a certain background, applies pressure on the US Congress.

Grishin: Pressure on Congress – isn’t that from the realm of fantasy?

Lozansky: Every week Congress holds hearings in which Russia is subjected to the harshest criticism. Representatives of the Russian opposition take the floor. By the way, about this lack of freedom. They arrive there without ruffle or excitement, the leaders of this very opposition, from Bolotnaya. There they say the most dreadful things. Surprising even to the Americans. This is not accepted among us. You can criticize anyone you want at home, but when you go to another country, it is not acceptable to besmirch your own country… Such demeaning criticism, which Congressmen hear from Russian citizens, doesn’t happen in any other country. And then they come back to Russia.. And nobody arrests them, or throws them into any dungeons.

Pankin: What, in the opinion of Americans, now characterizes Russia? Rollback of democracy, suppression of freedom. They feel that only under Yeltsin was there a true democracy. They have forgotten Gorbachev and don’t want to understand that Yeltsin didn’t add anything to Russian freedoms, relative to the Secretary General of the CPSU Central Committee Gorbachev.

But with that very same freedom of speech, we’ve advanced very far. It has become a market. People got the opportunity, and learned to earn themselves a decent living. But all this is tossed to the side and ignored.

Our non-systemic opposition decided to ascertain the road to democracy with the American ambassador, coming as guests to Michael McFaul almost on his first day of work in Moscow.

For a large part of the US, Russia doesn’t exist

Grishin: There’s this anecdote, some people are on a famous radio station and having a live discussion on how there is no free speech in Russia and are not allowed to express their views. (AK: Refers to Echo of Moscow)

Lozansky: As regards this radio station, it truly amazes me. The majority shareholder is a structure, in which the government has a controlling stake. (AK: Gazprom) In the US we have “Voice of America”, which exists on government money. And they have no right to criticize either US policies, nor any individuals in government. In your country, this radio station almost acts as an opposition organizer. Here Russia is ahead of us on democracy.

Pankin: By the way, there are now some very interesting developments in the “Arab Spring” countries. From the stands come the same speeches which we heard back in the early 90′s, but when you climb down, you hear entirely different conversations in the gullies. That it was iPad-toting people who came out on the streets, but entirely different people came to power. In Cairo today there is panic among female professors: They fear that they’ll have a hijab forced over their heads.

Lozansky: Did you know, that after the Arab revolution, the Egyptian authorities raided the offices of Freedom House and arrested their employees, accusing them of interfering in the internal affairs of the state. And this was all after Mubarak. Also arrested were members of the International Republican Institute, the National Democratic Institute, which all continue to operate entirely freely in Moscow. And they had to be bought back.

Grishin: Let’s leave the Arabs aside, return to Russia and America and press freedoms. Edward, do you, with you views, get printed in the US? You do have, after all, many more freedoms than we do, according to US opinion.

Lozansky: Of course we have freedom – nobody is imprisoning me for my views. But there are problems with publication. The editors say, as you here put it, “Newspapers aren’t made of rubber.” And so it’s good when just one out of 15 articles goes through. But I also have an alternate path. I have a small business – “Russia House” in Washington – and I can sometimes just buy a page in the Washington Times newspaper and write everything I want to there.

But in general, I’m amazed by the significance that you attach to what they say about Russia in America. I can tell you that in America few people are actually interested in Russia. The Russian factor is mostly raised by those groups, which I described above, and they do it to advance their own interests. For the average American, especially during election season, the most important issue is the economy. The budget, gas prices, the unemployment rates are what most concern the American family. These are simple and human things, to which Russia is irrelevant.

(Republished from Da Russophile by permission of author or representative)
 
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It’s been a great year! To recap, in rough chronological order, 2011 saw: The most popular post (with 562 comments and counting; granted, most of them consisting of Indians and Pakistanis flaming each other); Visualizing the Kremlin Clans (joint project with Kevin Rothrock of A Good Treaty); my National Comparisons between life in Russia, Britain, and the US; my interview with (now defunct) La Russophobe; interviews with Craig Willy and Mark Chapman; lots of non-Russia related stuff concerning the Arctic, futurism, Esperanto, and the Chinese language; possibly the most comprehensive analyses of the degree of election fraud in the Duma elections in English; TV appearances on RT and Al Jazeera; and what I hope will remain productive relationships with Al Jazeera and Inosmi. Needless to say, little if any of this would have been possible without my e-buddies and commentators, so a special shout out to all you guys. In particular, I would like to mention Alex Mercouris, who as far as I can ascertain is the guy who contributed the 20,000th comment here. I should send him a special T-shirt or something.

In previous years, my tradition was to review the previous year before launching into new predictions. I find this boring and will now forego the exercise, though in passing I will note that many of the defining traits in 2010 – the secular rise of China and of “The Rest” more generally; political dysfunction in the US; growing fissures in Europe, in contrast to Eurasian (re)integration; the rising prominence of the Arctic – have remained dominant into this year. The major new development that neither I nor practically anyone else foresaw was the so-called “Arab Spring”, as part of a pattern of increasing political stress in many other states: Occupy Wall Street and its local branches in the West; the Meetings for Fair Elections in Russia; Wukan in China and anti-corruption protests in India. I don’t disagree with TIME’s decision to nominate The Protester as its person of the year. However, as I will argue below, the nature of protest and instability is radically different in all these regions. I will finish up by reviewing the accuracy of my 2011 predictions from last year.

tsar-putin 1. There is little doubt that Putin will comfortably win the Presidential elections in the first round. The last December VCIOM poll implies he will get about 60%. So assuming there is no major movement in political tectonics in the last three months – and there’s no evidence for thinking that may be the case, as there are tentative signs that Putin’s popularity has began to recover in the last few weeks from its post-elections nadir. Due to the energized political situation, turnout will probably be higher than than in the 2008 elections – which will benefit Putin because of his greater support among passive voters. I do think efforts will be made to crack down on fraud so as to avoid a PR and legitimacy crisis, so that its extent will fall from perhaps 5%-7% in the 2011 Duma elections to maybe 2%-3% (fraud in places like the ethnic republics are more endemic than in, say, Moscow, and will be difficult to expunge); this will counterbalance the advantage Putin will get from a higher turnout. So that’s my prediction for March: Putin wins in the first round with 60%, followed by perennially second-place Zyuganov at 15%-20%, Zhirinovsky with 10%, and Sergey Mironov, Mikhail Prokhorov and Grigory Yavlinsky with a combined 10% or so. If Prokhorov and Yavlinsky aren’t registered to participate, then Putin’s first round victory will probably be more like 65%.

2. I will also go ahead and say that I do not expect the Meetings For Fair Elections to make headway. Despite the much bigger publicity surrounding the second protest at Prospekt Sakharova, attendance there was only marginally higher than at Bolotnaya (for calculations see here). So the revolutionary momentum was barely maintained in Moscow, but flopped everywhere else in the country – as the Medvedev administration responded with what is, in retrospect, a well balanced set of concessions and subtle ridicule. Navalny, the key person holding together the disparate ideological currents swirling about in these Meetings, is not gaining ground; his potential voters are at most 1% of the Russian electorate. And there is no other person in the “non-systemic opposition” with anywhere near his political appeal. There will be further Meetings, the biggest of which – with perhaps as many as 150,000 people – will be the one immediately after Putin’s first round victory; there will be the usual (implausibly large) claims of 15-20% fraud from the usual suspects in the liberal opposition and Western media. But if the authorities do their homework – i.e. refrain from violence against peaceful protesters, and successfully reduce fraud levels (e.g. with the help of web cameras) – the movement should die away. As I pointed out in my article BRIC’s of Stability, the economic situation in Russia – featuring 4.8% GDP growth in Q3 2011 – is at the moment simply not conductive to an Occupy Wall Street movement, let alone the more violent and desperate revolts wracking parts of the Arab world.

3. Many commentators are beginning to voice the unspeakable: The possible (or inevitable) disintegration of the Eurozone. I disagree. I am almost certain that the Euro will survive as a currency this year and for that matter to 2020 too. But many other things will change. The crisis afflicting Europe is far more cultural-political than it is economic; in aggregate terms, the US, Britain and Japan are ALL fiscally worse off than the Eurozone. The main problem afflicting the latter is that it suffers from a geographic and cultural rift between the North and South that is politically unbridgeable.

The costs of debt service for Greece, Portugal, Italy, and Spain are all quickly becoming unsustainable. They cannot devalue, like they would have done before the Euro; nor is Germany prepared to countenance massive fiscal transfers. The result is the prospect of austerity and recession as far as the eye can see (note that all these countries also have rapidly aging populations that will exert increasing pressure on their finances into the indefinite future). Meanwhile, “core Europe” – above all, Germany – benefits as its superior competitiveness allows it to dominate European markets for manufactured goods and the coffers of its shaky banking system are replenished by Southern payments on their sovereign debt.

The only way to resolve this contradiction is through a full-fledged fiscal union, with big longterm transfers from the North to the South. However, the best the Eurocrats have been able to come up with is a stricter version of Maastricht mandating limited budget deficits and debt reduction that, in practice, translates into unenforceable demands for permanent austerity. This is not a sustainable arrangement. In Greece, the Far Left is leading the socialists in the run-up to the April elections; should they win, it is hard to see the country continuing on its present course. On the other side of the spectrum, the Fidesz Party under Viktor Orbán in Hungary appears to be mimicking United Russia in building a “managed democracy” that will ensure its dominance for at least the next decade; in the wake of its public divorce with the ECB and the IMF, it is hard to imagine how it will be able to maintain deep integration with Europe for much longer. (In general, I think the events in Hungary are very interesting and probably a harbinger of what is to come in many more European countries in the 2010′s; I am planning to make a post on this soon).

Maybe not in 2012, but in the longer term it is becoming likely that the future Europe will be multi-tier (not multi-speed). The common economic space will probably continue growing, eventually merging with the Eurasian Union now coalescing in the east. However, many countries will drop out of the Eurozone and/or deeper integration for the foreseeable future – the UK is obvious (or at least England, should Scotland separate in the next few years); so too will Italy (again, if it remains united), Greece, the Iberian peninsula, and Hungary. The “core”, that is German industrial muscle married to Benelux and France (with its far healthier demography), may in the long-term start acquiring a truly federal character with a Euro and a single fiscal policy. But specifically for 2012, I expect Greece to drop out of the Eurozone (either voluntarily, or kicked out if it starts printing Euros independently, as the former Soviet republics did with rubles as Moscow’s central control dissipated). The other PIGS may straggle through the year, but they too will follow Greece eventually.

I expect a deep recession at the European level, possibly touching on depression (more than 10% GDP decline) in some countries.

4. How will Russia’s economy fare? A lot will depend on European and global events, but arguably it is better placed than it was in 2008. That said, this time I am far more cautious about my own predictions; back then, I swallowed the rhetoric about it being an “island of stability” and got burned for it (in terms of pride, not money, thankfully). So feel free to adjust this to the downside.

  • The major cause of the steep Russian recession of 2008-2009 wasn’t so much the oil price collapse but the sharp withdrawal of cheap Western credit from the Russian market. Russian banks and industrial groups had gotten used to taking out short-term loans to rollover their debts and were paralyzed by their sudden withdrawal. These practices have declined since. Now, short-term debts held by those institutions have halved relative to their peak levels in 2008; and Russia is now a net capital exporter.
  • I assume this makes Russia far less dependent on global financial flows. Though some analysts use the loaded term “capital flight” to describe Russia’s capital export, I don’t think it’s fair because the vast bulk of this “flight” actually consists of Russian daughters of Western banking groups recapitalizing their mothers in Western Europe, and Russians banks and industrial groups buying up assets and infrastructure in East-Central Europe.
  • The 2008 crisis was a global financial crisis; at least *for now*, it looks like a European sovereign debt crisis (though I don’t deny that it may well translate into a global financial crisis further down the line). There are few safe harbors. Russia may not be one of them but it’s difficult to say what is nowadays. US Treasuries, despite the huge fiscal problems there? Gold?
  • Political risks? The Presidential elections are in March, so if a second crisis does come to Russia, it will be too late to really affect the political situation.
  • Despite the “imminent” euro-apocalypse, I notice that the oil price has barely budged. This is almost certainly because of severe upwards pressure on the oil price from depletion (i.e. “peak oil”) and long-term commodity investors. I think these factors will prevent oil prices from ever plumbing the depths they briefly reached in early 2009. So despite the increases in social and military spending, I don’t see Russia’s budget going massively into the red.
  • What is a problem (as the last crisis showed) is that the collapse in imports following a ruble depreciation can, despite its directly positive effect on GDP, be overwhelmed by knock-on effects on the retail sector. On the other hand, it’s still worth noting that the dollar-ruble ratio is now 32, a far cry from what it reached at the peak of the Russia bubble in 2008 when it was at 23. Will the drop now be anywhere near as steep? Probably not, as there’s less room for it fall.
  • A great deal depends on what happens on China. I happen to think that its debt problems are overstated and that it still has the fiscal firepower to power through a second global crisis, which should also help keep Russia and the other commodity BRIC’s like Brazil afloat. But if this impression is wrong, then the consequences will be more serious.

So I think that, despite my bad call last time, Russia’s position really is quite a lot more stable this time round. If the Eurozone starts fraying at the margins and falls into deep recession, as I expect, then Russia will probably go down with them, but this time any collapse is unlikely to be as deep or prolonged as in 2008-2009.

new-eurasia 5. Largely unnoticed, as of the beginning of this year, Russia, Belarus, and Kazakhstan became a common economic space with free movement of capital, goods, and labor. Putin has also made Eurasian (re)integration one of the cornerstones of his Presidential campaign. I expect 2012 will be the year in which Ukraine joins the Eurasian common economic space. EU membership is beginning to lose its shine; despite that, Yanukovych was still rebuffed this December on the Association Agreement due to his government’s prosecution of Yulia Tymoshenko. Ukraine can only afford to pay Russia’s steep prices for gas for one year at most without IMF help, and I doubt it will be forthcoming. Russia itself is willing to sit back and play hardball. It is in this atmosphere that Ukraine will hold its parliamentary elections in October. If the Party of Regions does well, by fair means or foul, it is not impossible to imagine a scenario in which accusations of vote rigging and protests force Yanukovych to turn to Eurasia (as did Lukashenko after the 2010 elections).

6. Russia’s demography. I expect births to remain steady or fall slightly (regardless of the secular trend towards an increasing TFR, the aging of the big 1980′s female cohort is finally starting to make itself felt). Deaths will continue to fall quite rapidly, as excise taxes on vodka – the main contributor to Russia’s high mortality rates – are slated to rise sharply after the Presidential elections.

7. Obama will probably lose to the Republican candidate, who will probably be Mitt Romney. (Much as I would prefer Ron Paul over Obama, and Obama over Romney). I have an entire post and real money devoted to this, read here.

The US may well slip back towards recession if Europe tips over in a big way. I stand by my assertion that its fiscal condition is in no way sustainable, but given that the bond vigilantes are preoccupied with Europe it should be able to ride out 2012.

8. There is a 50% (!) chance of a US military confrontation with Iran. If it’s going to be any year, 2012 will be it. And I don’t say this because of the recent headlines about Iranian war games, the downing of the US drone, or the bizarre bomb plot against the Saudi ambassador in the US, but because of structural factors that I have been harping on about for several years (read the “Geopolitical Shocks” section of my Decade Forecast for more details); factors that will make 2012 a “window of opportunity” that will only be fleetingly open.

  • Despite the rhetoric, the US does not want to get involved in a showdown with Iran due to the huge disruption to oil shipping routes that will result from even an unsuccessful attempt to block of the Strait of Hormuz. BUT…
  • While a nuclear Iran is distasteful to the US, it is still preferable to oil prices spiking up into the high triple digits. But for Israel it is a more existential issue. Netanyahu, in particular, is a hardliner on this issue.
  • The US has withdrawn its troops from Iraq. In 2010, there were rumors that the US had made it clear to Israel that if it flew planes over Iraq to bomb Iran they would be fired upon. This threat (if it existed) is no longer actual.
  • The US finished the development of a next-generation bunker-busting MOP last year and started taking delivery in November 2011. But the Iranians are simultaneously in a race to harden and deepen their nuclear facilities, but this program will not culminate until next year or so. If there is a time to strike in order to maximize the chances of crippling Iran’s nuclear program, it is now. It is in 2012.
  • Additionally, if Europe goes really haywire, oil prices may start dropping as demand is destroyed. In this case, there will be an extra cushion for containing fallout from any Iranian attempt to block off the Strait of Hormuz.
  • Critically, the US does not have to want this fight. Israel can easily force its hand by striking first. The US will be forced into following up.

The chances of an Azeri-Armenian war rise to 15% from last year’s 10%. If there is any good time for Azerbaijan to strike, it will be in the chaotic aftermath following a US strike on Iran (though the same constraints will apply as before: Aliyev’s fears of Russian retaliation).

world-crude-oil-prodcution-and-fitted-growth-oil-drum

[Source: The Oil Drum].

9. Though I usually predict oil price trends (with great and sustained accuracy, I might add), I will not bother doing so this year. With the global situation as unstable as it is it would be a fool’s errand. Things to consider: (1) Whither Europe? (demand destruction); (2) What effect on China and the US?; (3) the genesis of sustained oil production decline (oil megaprojects are projected to sharply fall off from this year into the indefinite future); (4) The Iranian wildcard: If played, all bets are off. But I will more or less confidently predict that global oil production in 2012 will be a definite decrease on this year.

If investing, I would go into US Treasuries (short-term) and gold to hedge against the catastrophic developments; yuan exposure (longterm secular rise) and and US CDS (potential for astounding returns once SHTF). Property is looking good in Minsk, Bulgaria, and Murmansk. Any exposure to Arctic shipping or oil & gas is great; as the sea ice melts at truly prodigious rates, the returns will be amazing. I do think the Euro will survive and eventually strengthen as the weaker countries go out, but not to the extent that I would put money on it. Otherwise, I highly agree with Eric Kraus’ investment advice.

10. China will not see a hard landing. It has its debt problems, but its momentum is unparalleled. Economists have predicted about ten of its past zero collapses.

11. Solar irradiation was still near its cyclical minimum this year, but it can only rise in the next few years; together with the ever-increasing CO2 load, it will likely make for a very warm 2012. So, more broken records in 2012. Record low sea ice extent and volume. And perhaps 100 vessels will sail the Northern Sea Route this year.

12. Tunisia is the only country of the “Arab Spring” that I expect to form a more or less moderate and secular government. According to polls, 75% of Egyptians support death for apostasy and adultery; this is not an environment in which Western liberal ideas can realistically flourish. Ergo for Libya. I can’t say I have any clue as to how Syria will turn out. Things seem strange there: Russia and Israel are ostensibly unlikely, but actually logical, allies of Assad, while the US, France, the UK, and the Gulf monarchies are trying their best to topple him. These wars are waged in the shadows.

I've got some ways to go before I reach Navalny's demagogic stature.

I’ve got some ways to go before I reach Navalny’s demagogic stature.

13. As mentioned in the intro, 2011 has been a year of protest. As I argued in BRIC’s of Stability, in countries like China, Russia, or Brazil they will remain relatively small and ineffectual. Despite greater scales and tensions, likewise in Europe (though Greece may be an exception); these are old societies, and besides they are relatively rich. They won’t have street revolutions. I do not think Occupy Wall Street has good prospects in the US. By acting outside the mainstream (as part of a “non-systemic opposition”, to borrow from Russian political parlance) it remains irrelevant – the weed smoking and poor sartorial choices of its members works against its attaining respectability – and municipalities across the US are moving to break up their camps with only a few squeaks of protest. (This despite the arrests of 36 journalists, a number that had it been associated with Russia would have cries of Stalinism splashed across Western op-ed pages). I say this as someone who is broadly sympathetic with OWS aims and has attended associated events in Berkeley.

The nature of protest in the Arab world is fundamentally different, harkening back to earlier and more dramatic times: Bread riots, not hipsters with iPhones; against cynical and corrupt dictators, not cynical and corrupt pseudo-democrats; featuring fundamental debates about reconciling democracy, liberalism and religion, as opposed to weird slogans like “Occupy first. Demands come later.” Meh.

14. The world will, of course, end on December 21, 2012.

What about the 2011 Predictions?

1) My economic predictions were basically correct: “Today I’d repeat this, but add that the risks have heightened… The obvious loci of the next big crisis are the so-called “PIGS” (Portugal, Italy, Greece, Spain), and Ireland, Belgium and Hungary.”

2) Neither the Iranian war (chance: 40%) or an Azeri-Armenian war (chance: 10%) took place. If they don’t happen in 2012, their chances of happening will begin to rapidly decline.

3) Luzhkov still hasn’t been been hit with corruption charges, but merely called forth as a witness. Wrong.

Prediction of 3.5%-5.5% growth for Russia was exactly correct (estimates now converging to 4.0%-4.5%).

With headlines this December cropping up such as “End is nigh for Russia’s ‘reset’ with US“, my old intuition that US – Russia imperial rivalry couldn’t be set aside with a mere red plastic button may have been prescient: “In foreign policy, expect relations with the US to deteriorate.”

4) Pretty much correct about the US and the UK, though I didn’t predict anything drastic or unconventional for them.

5) “Oil prices should stay at around $80-120 in 2010 and production will remain roughly stable as increased demand (from China mostly) collides with geological depletion.” Totally correct, as usual.

6) China will grow about 9.4% this year, well in line with: “China will continue growing at 8-10% per year. Their housing bubble is a non-issue; with 50% of their population still rural, it isn’t even a proper bubble, since eventually all those new, deserted apartment blocs will be occupied anyway.”

7) 2011 was the warmest La Nina year on record, so in a sense thermometers did break records this year.

“Speaking of the Arctic, as its longterm ice volume continues to plummet and sea ice extent retreats, we can expect more circumpolar shipping. I wouldn’t be surprised to see up to 10 non-stop voyages along the Northern Sea Route from Europe to China, following just one by MV Nordic Barents in 2010.” If anything, I low-balled it. 34 ships made the passage this year! Sea ice cover was the second lowest on record, and sea ice volume was the lowest. So in the broad sense, absolutely correct.

“Likewise, expect the Arctic to become a major locus of investment.” This year, plans were announced to double the capacity of the Port of Murmansk by 2015.

8) Wrong on the Wikileaks prediction. The insurance file was released by The Guardian’s carelessness (whose journalists, David Leigh and Luke Harding, then proceeded to mendaciously lie about it), not by Assange. And the extradition proceedings are taking far longer than expected, though my suspicions that his case is politically motivated is reinforced by US prosecutors’ apparent pressure on Bradley Manning to implicate Assange in the theft of the State Department cables.

9) On Peter’s enthusiastic reminder, I did get my Russia Presidential predictions for 2012 wrong. Or 75% wrong, to be precise, and 20% right (those were the odds that I gave for Putin’s return back in May). I did however cover it separately on a different post, here. That said, I do not think the logic I used was fundamentally flawed; many other Kremlinologists ended up in the same boat (and most didn’t hedge like I did).

(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.