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Assesing Russia's helmsman/despot legacy

by FarEasterner Wed Jun 16th, 2010 at 10:28:16 PM EST

As poemless went into semi-retirement ;-), not many here keep an eye on what is happening behind the erstwhile Iron Curtain. I was never interested in what is going on there, by any means not so much as poemless did (actually I never wrote a diary on Russia) but today I took a break from my daily South Asian diet.

I was puzzled by reports in Russian media on discussions about results of 10 years of Mr Putin's rule. His reign is not yet finished, many speculated he would be back soon in Kremlin. Naturally opposition is more active in publicizing disastrous results of his work twice as PM and twice as president. Have they been fair, what kind of arguments they are presenting to tear apart his legacy if not his career?

Where is Russia heading? Cartoon from Moscow Times.

It's always nice to start writing with piece of extravaganza, to raise eyebrows of sophisticated readers. I could not find better beginning than this information about new forms of protest against Putin's rule:

Penis protest rises to greet Russian economic forum

ST PETERSBURG Russia (Reuters) - Radical Russian artists painted a giant protest penis on a drawbridge in central St. Petersburg ahead of a meeting that is the Russian answer to the World Economic Forum, police said on Wednesday.

Measuring 65 metres (220 ft) long and 27 metres across, the light-coloured phallus rises and glistens against the imperial-era capital's elegant skyline when the bridge is drawn up to let ships pass in the twilit northern summer nights.

Politically minded art collective Voina, or War, said they drew the graffiti on Monday to protest the heightened security measures expected at the International Economic Forum, held from June 17 in Saint Petersburg, the hometown of both Russian President Dmitry Medvedev and Prime Minister Vladimir Putin.

So, opposition to the regime is not wasting time, the so-called Russian Liberals (the most pro-Western groups, remnants from Yeltsin era) today are all over Russian media, making gloomy assesments of Putin's reign. The one group, former Union of Right Forces, renamed "Solidarnost" after successful Polish opposition movement, today was in the spotlight because police confiscated their anti-Putin booklet:

Russian Police Impound Opposition Brochure On Putin

ST. PETERSBURG -- Police in St. Petersburg have impounded 100,000 copies of a critical brochure about Prime Minister Vladimir Putin, RFE/RL's Russian Service reports.

The brochure, "Putin. Results.10 Years," was co-authored by Boris Nemtsov, cochairman of the opposition Solidarnost (Solidarity) coalition, and economist Vladimir Milov. It was scheduled to be distributed in St. Petersburg during the upcoming international economic forum.

The police seized 100000 copies but could not arrest 900000 more - Mr Nemtsov invested his money in printing one million booklets for free distribution around the country. Mercifully to save our time he gave press conference where he presented the 8 main points of proof that Putin has failed miserably:

Nemtsov: not afraid of Putin

1. Corruption has reached catastrophic proportions. Russia on the level of bribery is among the most backward African countries and has 146-ranked Transparency International.

  1. Russia loses about half a million people a year because of the extremely low life expectancy, super-mortality from alcoholism and poor health.

  2. For ten years, commodity dependence in the country only worsened. If the export of raw materials in 2000 was 44% in total exports of the country, in 2010 - already 65%.

  3. Degraded road network. Because of the high corruption in road construction, the annual input of roads for 10 years halved.

  4. For ten years the number of [terror] attacks has increased by more than 6 times. Targeting corrupt clan of the Caucasus has led to the actual loss of control over the North Caucasian republics, while the federal government continues to subsidize them at $ 5-6 billion per year.

  5. During the years of Putin's social stratification in the country increased by 15%. During the crisis in 2009 the number of dollar billionaires has doubled, with 18.5 million people live below the poverty line, unemployment reached a level of 9%, while public sector wages are frozen.

  6. Against the background of the budget deficit and crying poverty made multibillion-dollar scam: Winter Olympics in the subtropics; gas pipeline Nord Stream and South Stream ", and" Altai ", the APEC summit on the island of Russian.

  7. Ruined Pension Fund. His deficit of more than a trillion rubles. In connection with the aging population and a reduction in the number of employees per 1 million people a year prospects dismal - the authorities are ready to raise taxes, increase the retirement age.

[translated by Google TranslateTM]

Let's consider Nemtsov's points. What apologists of the ruling regime would say to counteract him I don't know but I found many of these "facts" laughable or questionable.

  1. Corruption - I was stating many times that corruption in Russia obviously much higher than in the West but considerably lower than in the rest of Asia, Africa (and perhaps) Latin America. Transparency International's rating is not about corruption but about "perceptions" of corruption which is not the same. India, Pakistan, Bangladesh occupy respectable places around 60-70. Are they twice less corrupt than Russia? Nevertherless the charge of corruption under Putin's regime is the strongest argument in Nemtsov's arsenal. Many people in Russia would share Nemtsov's views. Elsewhere in the article Nemtsov'aid mentions sudden rise from rags to riches of Putin's pals - Timchenko, Kovalchuk, brothers Rothenberg, some of them were mere judo coaches who in few years became billioners. On this point I agree with Liberals, Putin-Medvedev regime needs to come clean on shady deals which benefited former KGB officers. At the same time the government needs to do more to curb rampant official corruption by elimination of legislative holes, streamlining and dramatically simplifying bureaucratic procedures, rooting out corruption in judiciary and increasing punishments for corruption. The cancer of corruption even began to affect delivery of basic services, healthcare and education and will increase social discontent especially in poor regions.

  2. Nemtsov's charge is about poor demography, which is not exactly Putin's fault. Russian demography has been deteriorating since 1970s at latest and such negative trend is not possible to reverse in 10 years even with generous benefits for newly-wed couples, for children, families with many children etc, granted by Putin's government. However I think not everything is lost for Russia in future - besides improving healthcare system and increasing taxes on incredibly cheap vodka and cigarettes Russia has option to increase immigration into the country to compensate for the demographic fall. The other important question in this regard will be whether authorities will take strict measures to curtail racist crimes especially in big European cities.

  3. Overdependence of Russia on raw materials and oil and gas in particular is well known problem again since 1970 at latest. The share of fuels in country exports have been rising due to Bush's wars, not because Putin wanted to sell only oil and gas.

  4. On road construction I have neither data nor personal impression as I have not been in the country for many years. Actually I thought road construction is prerogative of local authorities and I always blamed Moscow's mayor Luzhkov both for corruption and poor quality of roads - how on Earth his administration had approved 2-lanes links from MKAD (12-lanes circular road around Moscow) to Leningrad highway (also busy 6-8 lanes road). Once I was stuck there under flyover for two hours and almost missed my flight from Sheremetevo to Mumbai.

  5. As for terrorist attacks observers from abroad have had impression that Islamist insurgency was brutally crushed in early 2000's and turned into lower intensity conflict, mainly confined to restive North Caucasus autonomies. There were many innocent victims on both sides but predictions of Mr Glucksmann and likes about genocide of Chechens have not come to pass.

  6. Increased inequality. This argument is especially cynical to hear from Mr Nemtsov, the ardent proponent of "shock therapy" in early 1990s. Inequality increased elsewhere too, most notably in India and China, Western economists defended it as indicator of economic growth. I am not economist but I did not fail to notice that Putin's government at least started three years ago raising pensions and other benefits when his popularity began to fade. Basic social pension (for people who never worked) is about 250 US doll a month, my mother gets just more than 400 doll a month because she never had highly paid job. It's a pittance considering almost Western level of prices of essential commodities and services but still higher than in developing world (one Chinese guy from Guangdong told me recently that his grandfather has pension about 80 doll a month). Then Russian state has to provide many other benefits but not all obligations are usually met, delivery varies from region to region.

  7. Scams - I don;t see where Nemtsov sees scams in Olympics or APEC summit. The one unfloding scam of Skolkovo he does not mention. [Skolkovo near Moscow is so-called Russian Silicon valley, favourite child of Messrs. Medvedev and Surkov, but obviously it will become just new Rublevka full of elite property and devoid of hi-tech companies].

  8. I don't know about financial position of the State Pension fund and have no comment on it. Putin's government by prudent conservative fiscal policies managed to accumulate considerable financial reserves which are being spent on populist programs and fulfilling social obligations of Russian state which I mentioned above. I don't see even theoretically how the State Pension fund can dishonour its obligations if it has state guarantees.

So in my view this Liberals' chargesheet is looking rather weak except the first point of corruption and Putin's ties to ex-KGB and ex-Judo nouveau riches.

Much better assesments of current state of affairs in Russia are provided by next two articles which I linked to my diary as useful comparisons to Nemtsov's 1-mln strong booklet.

Moscow Times in Sailing Toward Soviet Stagnation compares today's situation with the Soviet past:

we must not overlook important differences that create strong incentives for modernization. First, Soviet leaders were less competent in macroeconomics. Today, Russia has no sovereign debt and still has a substantial sovereign fund. Second, Soviet leaders did not imagine that the Soviet Union could fall apart. The current Russian leadership lived through the collapse of the country and understand very well that stagnation is a dead end. Third, Russia is no longer isolated -- its elites and upper middle class know the world outside of Russia through travel and the Internet.

But we haven't yet seen the changes the country badly needs.

The second one is from Wall Street Journal, it is written for Western investors in Russia:

WSJ: Medvedev Ups the Tempo of Change

Does it really matter, from an investor's point of view, if, over the next decade, Russia remains as corrupt and bureaucratic as it is at present? For fixed income investors, the government has proved itself very capable of prudently managing its foreign exchange reserves, and it is serious about its reputation on the international debt markets, to the point of spending billions of tax-payers' rubles on the foreign debt of privately-owned companies like Rusal.
Equity investors are slightly more bearish and Russia still trades at a discount to other emerging markets because of its reputation for bad corporate governance and political risk. But the stock market still performs very well whenever the oil price is on the rise.
However, foreign direct investors, who run businesses in Russia, are hoping that the government is serious about combating corruption, reducing red tape and improving the investment climate..

As you can see Western investors in Russia are divided into three groups: financiers, portfolio investors and direct investors. The first two just love Putin's Russia and don't care what kind of image Russia or Russian rulers have as long as the latter pay debts on time and don't forget to bailout oligarchs and quasi state companies to whom the former lend money. On other side Russia and direct investors had rocky love hate relationship and investors' attitude (virtually identical to what reasonable Russians think of their country without russophobic tunes) will be crucial in determining whether Russia can have better future and whether Skolkovo remains just a conglomeration of elitary estates or would really assist in modernization of this vast Eurasian country.

I am flying to Thailand in less than 24 hours but if I have spare time I will be glad to discuss results of Putin's reign.
by FarEasterner on Wed Jun 16th, 2010 at 10:53:38 PM EST
i arrived in Bangkok few hours ago, it seems monsoon not yet started, steam bath. dunno what to do next as my sister will arrive only after 2 weeks maybe will move north or south. i did not get internet connection in room (prepaid wi-fi is very expensive, around 4 doll per hour), let's see.
by FarEasterner on Fri Jun 18th, 2010 at 08:41:38 AM EST
[ Parent ]

"Pretending that you already know the answer when you don't is not actually very helpful." ~Migeru.
by poemless on Fri Jun 18th, 2010 at 11:07:40 AM EST
[ Parent ]
Spasibo, Far Easterner.

Sean Guillory's got the rundown on Nemtsov's fiasco here.  And as always, Anatoly Karlin is ready to address any misinterpreted demographics statistics...

OT, well-meaning readers have been flooding my inbox with pictures of the protest.  I'm afraid to open my e-mail at work now!

Also, I've not retired!  If anything I write more now...

"Pretending that you already know the answer when you don't is not actually very helpful." ~Migeru.

by poemless on Thu Jun 17th, 2010 at 10:16:40 AM EST
Odds and Ends has a worthy successor here on ET, now...

European Tribune - Assesing Russia's helmsman/despot legacy

It's always nice to start writing with piece of extravaganza, to raise eyebrows of sophisticated readers. I could not find better beginning than this information about new forms of protest against Putin's rule:

Penis protest rises to greet Russian economic forum

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Carrie (migeru at eurotrib dot com) on Thu Jun 17th, 2010 at 10:25:38 AM EST
[ Parent ]
I'm afraid to open my e-mail at work now!

Not much fun of being accused at watching pornography ;-)
by FarEasterner on Thu Jun 17th, 2010 at 11:05:07 AM EST
[ Parent ]
As magically predicted:

The Boris Bombshell. Two Years Later. Still a Dud.

"Pretending that you already know the answer when you don't is not actually very helpful." ~Migeru.

by poemless on Fri Jun 18th, 2010 at 03:18:16 PM EST
[ Parent ]
I know a few (russian) people, working in Russia, either in medium size or in very small businesses.

They all tell the same story : corruption is everywhere, at all levels, and make economic progress impossible. Just trying to work normally is an endless struggle.
They say there is no attempt from the higher powers at fighting it : just some feel-good operations on TV.

They hold Putin and generally the national and local authorities responsible for this state of affairs.
They do not believe this will change any time soon.

So yes, Putin is a failed leader.

by balbuz on Thu Jun 17th, 2010 at 12:25:16 PM EST
In the place where I have grown up there were not many Russians and I did not know any of them closely. Only when I was studying a short time in Moscow in early 1990s I got closer look and often I was startled at their habits. For example once I found my friend stealing lampball from corridor in university. I asked him why he's doing that, lampball is just few kopeks worth. He replied that the state was always cheating them and thus he pays back in the same coin.

So in a word Russians deserve fully leaders they elected. They like to complain about corruption but personally do next to nothing to fight it. Secondly corruption varies wildly according to regions and for example in my region (Sakha republic) small entrepreneurs do not face such problems. Thirdly corruption generally confined to relationships between the state and businesses (from licence Raj to building contracts) but comparatively less in delivery of essential public services like healthcare, education, heating, electricity, water supply etc.

When I moved to Asia I found that corruption here affects even basic services, many of them are non-existent (there is no universal health insurance, no social pensions, only private schools, no central heating, no gas, no hot water, very little and erratic power supply etc) or available only after bribing officials. I don't need to speak even about corruption in judiciary and state organs affecting private businesses.  

So not being Putin's apologist I disagree with his assesment as a failed leader, his track record is rather mixed, but nobody can deny that he was rather adroitful at maintaining macroeconomical stability and at accumulating financial reserves.

I remember when he came to power Financial Times greeted him with editorial where the paper claimed that post of President of Russia is the most unenviable job in the world, the scope of problems to solve was daunting.

Now it's not that clear, after Bush and Brown/Blair disastrous reigns posts of British PM and American president lost a lot of their former lustre while almost everybody in Russian polity wants Putin/Medvedev's jobs maybe just to plunder the treasury.

by FarEasterner on Thu Jun 17th, 2010 at 01:32:11 PM EST
[ Parent ]
Thirdly corruption generally confined to relationships between the state and businesses (from licence Raj to building contracts) but comparatively less in delivery of essential public services like healthcare, education, heating, electricity, water supply etc.

About essential public services, and remembering I am just repeating what "small people" say, this is where the worst degradation happened between the soviet times and now : drugs that used to be free and which are now paid for, miserable salaries for teachers with the best elements looking for a better fate elsewhere, etc.

What happens in small towns is that medical resources which used to be there (such as anesthesists) have just disappeared, so that unless one has the means to go get care in the larger towns, one's health is left to luck.

And after the jobs boom of a few years back, the situation has become quite grim again. I know of some young russians, educated in France, who couldn't adapt to the place, went back to Russia, but are now in a dead end over there : no jobs, no future.

I have no agenda, I don't have the overall view, but I can't help thinking resources don't go where they should, and authority is not applied where it should.

Now, the same can be said here, and I certainly won't say the western leadership is any better...

by balbuz on Fri Jun 18th, 2010 at 04:05:02 AM EST
[ Parent ]

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