I finally got my internet back. I can see that the comments section has become a verbal bloodbath in my abscence. The lunatics have taken over the asylum. Can’t promise I will join bacchanalia. But I promise posts about more pressing subjects will resume beginning tonight.
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Putin economic advisor Andrei Illarionov resigned yesterday, citing reasons that will surely confirm the fears of Russia watchers in the West. Illarionov said all the right things to reaffirm his liberal economic credentials, saying that Russia isn’t the liberal economic darling that the West hopes for, but instead, in his words, is “corporatist.” No surprise there. Corporatism harkens to the state controlled economics of the early 20th century, especially that of Mussolini’s Italy, where the state placed a variety of political controls on industry, regulating competition, investment, and in some cases, production.
Nothing shows this more than the current dispute between Gazprom (which is controlled by the Russian state) and the Ukraine. The former is engaging in nothing less than a muscling of the latter to accept higher gas prices under threat that the pipes will be shut off. This type of leverage has increased the already political riff between Russia and Ukraine. But some will argue that the political independence Yushchenko’s government seeks from its eastern “big bother” means that it must also accept an end to economic dependence and pay natural gas prices closer to “market value.” Ukraine has continued to enjoy the Russian gas subsidies at a rate of $50 per 1,000 cubic meters, but a few weeks ago Gazprom upped the price to $160 to begin at the new year. When Ukraine resoundly rejected this as blackmail, Gazprom raised the price again to $230 in retaliation. If one thinks that this is simply Russia adjusting to the laws of supply and demand and is not punishment for Yushchenko’s independence, keep in mind that Belarus, which is soundly in Moscow’s political pocket, will continue to get gas for $46 per 1,000 cubic meters.
The Russia-Ukraine gas dispute is just one example of the corporatism that Illarionov is speaking about. He already publicly blasted his boss for the Yukos sell off to Rosneft , which he referred to as “swindle of the year.” Public criticism is a big no-no in Russian politics and Putin punished Illarionov with removing him from Russia’s G8 envoy. But Illarionov’s statements concerning his resignation follow a typical narrative of how Putin’s has conducted his second term. He stated to Gazeta.ru that Putin has moved away from “liberal or even mainstream policies” adding, “It’s one thing to work in the partially free country that Russia was six years ago and another thing to do so when the country has ceased to be politically free.” Translation: I don’t really care about political freedom, only that I’m listened to. But when asked whether his criticisms will cause him to go into politics, Illarionov answered, “I haven’t done any politics, I’m not doing any politics, and I’m not going to do any politics.” Illarionov may be a fool, but he isn’t stupid. He knows that going into politics could mean ending up like other former Putin men who made public criticisms—suddenly faced with criminal “investigations.”
But all of this goes beyond Illarionov and to the nature of capital itself. The issue is more about what type of capitalist state Russia really is and how it differs from capitalist states elsewhere. Is it merely capitalist in form, but not in content? Or is it simply a capitalism that is more overtly corrupt and more openly based on gaft without the empty platitudes to free market ideology? I think capitalism in Russia is no different in that there are really two capitalisms at work. One for the rich and one for everyone else. The latter is where the average citizen is subjected to the “free market” in all its ruthless forms: free market in prices, labor, housing, etc., with a few caveats. Capitalism for the rich is the selective application of free market principles under the guise of “free market” rhetoric. The rich subject everyone else but themselves to it. And when the market doesn’t suit their purposes or profits, they resort to corruption and hypocrisy. After all, just take a look at the James Griffen corruption case where several American oil companies, with possible collusion with the CIA, funneled $80 million in bribes to Kazakh President Nursultan Nazarbaev and other Kazakh officials for exclusive rights to Kazakh oil. Given this, can someone explain to me the difference between what Russia is doing to the Ukraine and this? I guess that in many ways Illarionov’s charges of “corporatism” can be applied elsewhere as well, leaving Russia more in line with the rule, rather than the exception.
—Who will, if anyone, replace Putin after 2008? This is the question that has been on almost everyone’s lips for weeks, if not months. Opinions have vacillate between speculations about Putin changing the Russian Constitution so he could run again, or a candidate hand will be picked by Putin to run for President. That person would be an instant favorite. Both scenarios are possible. But it seems that the latter is the most likely. Putin himself was hand picked by Yeltsin. It appears that he is going to continue the tradition.
The question then becomes who? And further what kind of person will it be? The Moscow Times has an article suggesting that whoever Putin picks, it will probably be a compromise between him and the siloviki and an unnamed progressive St. Petersburg group. The siloviki are a Kremlin call of St. Petersburg intelligence officials who are the base of Putin’s power. In terms of what type of figure that will be, a report by Renaissance Capital (the report is only available to RC clients) suggests the following:
“If the siloviki are able to nominate a candidate, then the next president is likely to push to extend state control outside of the strategic sectors of the economy and into the most dynamic sectors of the Russian economy, undermining economic recovery.”
Perhaps so, but I am not convinced that increased state control will undermine economic recovery. If anything’s for sure, the lack of state control over Russia’s energy and natural resources has only lead to plunder, theft, and corruption. This is not to say that this wouldn’t happen under state control, but at least the state can direct the country’s resources in a direction that benefits the overall the interests of the country. The history of state deregulation, especially in conjunction with structural adjustment, has only led to further problems. Just look at Argentina.
The Russian government’s primary concern according to the Moscow Times is to facilitate a smooth and peaceful transfer of power. The 2008 election should not be viewed without Ukraine, Georgia, and Kyrgyzstan in mind. The so-called “colored revolutions” have cast a dark cloud over Russian domestic politics and there is fear that “revolution” in Russia might be next.
As for Putin himself, some are claiming that he will stay in politics perhaps as the head of United Russia or run one of Russia’s energy outfits. Only time will tell.
Komsomolskaia Pravda also ponders life after Putin but from a different perspective. The concern for the Norka Analytical Group is not who, but what will happen after Putin. Their focus is also on the question of state de/regulation. The article states:
“In the course of their economic transformations, Russia and China have dispelled the myth that private property is superior to state property. As practice shows, industrial efficiency doesn’t depend on the form of property ownership – it depends on the efficiency of the management system, which is not determined by the form of property ownership. Without going into a detailed analysis of the efficiency of China’s state economy and the inefficiency of Russia’s private sector, a number of conclusions may be drawn, the most important of which is this: the private sector in Russia is incapable of ensuring national economic development. The Russian-style capitalist will never build new enterprises that take five to seven years to provide a return on investment. He might invest in a football club, a casino, or a hotel, but he’ll never invest in innovation projects that are a method of industrial development.
The only source of funding for this development, inherited by modern Russia from the USSR, is undoubtedly the natural resources sector – which Yeltsin’s reformers hastened to transfer into private ownership. At present, even though most of the profits from energy resources are going to a group of individuals, the state is receiving substantial sums in the form of taxes and tariffs. But the economic bloc of the federal government, as represented by the so-called liberal ministers, is denying the need to develop the state sector of the real economy and doesn’t know how to use this money in private enterprise.” [Translation: Tatiana Khramtsova]
Putin’s achievement, according the Kom Prav, is that he’s put a stop to the liquidation of Russia’s state industries that began with Gorbachev and accelerated under Yeltsin.
—The Economist sets its sights on the ubiquitous problem of corruption in Russia. According to a report by Indem, “since 2001, in the number and size of bribes given by young men and their families to avoid conscription and, relatedly, in those paid to get into universities. (Fixing a court case, Indem found, has got a bit cheaper.)” Russia’s corruption index, as calculated by Transparency International, ranks Russia next to Niger, Sierra Leone and Albania.
As the Economist is quick to point out: Corruption in Russia is not simply about paying bribes to lower officials and police, it kills. The corruption of local officials has aided the blowing up to two planes and the Beslan and Nalchik attacks. Corruption makes Russia’s fight against terrorism that much more difficult.
—Mosnews is reporting that Kyrgystan’s Prime Minister, Felix Kulov is offering to resign after the in response to protests and a possible parliamentary inquiry into his involvement in the killing of deputy Tynychbek Akmatbayev. Akmatbayev was killed in a convict’s riot on Thursday in a Kyrgyz penal colony. According to witnesses,
“The clash in the prison colony No.31 in the village of Moldovanovka, it was Akmatbayev and one of his aides who first opened fire. One of the convicts, Aziz Batukayev, who is considered to be the ring leader among the convicts, ordered the killing of the MP. It was reported that he had hostile relations with the MP’s brother, Ryspek Akmatbayev, a well-known criminal. According to sources from the penitentiary, “the riots started after convicts demanded that their living conditions be improved”.
Protesters in Bishkek are claiming that Kulov is connected to the murder.
—Another outbreak of bird flu is being reported in Chelyabinsk region, in Russia’s South Urals. So far 33 birds from two different farms have died. According to an unnamed Russian agricultural ministry official,
“The risk of the lethal strain of avian flu rearing its head in Moscow or its surrounding area was “minimal”, despite an outbreak in Tula, 300 kilometres (188 miles) south of the capital. Veterinary services said Friday they suspected that the bird flu virus had now spread to 24 areas, of which 20 were in the Novosibirsk region of Siberia, three in the Kurgan region of Siberia and one in the southern region of Stavropol, though tests were still ongoing.”
The Moscow Oblast administration has decided to destroy all wild birds near poultry procession facilities to prevent the spread of bird flu into the area. Russia Profile claims that this aggressive stance in is reaction to the EU upholding its ban on Russian poultry exports.
—Kommersant is reporting that Russia’s Deputy General Procurator Nikolai Shepel’ is claiming that preliminary investigations show the Nalchik attacks were carried out by an underground international terrorist organization, and that there are strong connections between the Nalchik attacks and similar acts in Ingushetia and Beslan. He told Kommersant, “a serious organization resists us with an ideology that is a dangerous to the state.” He also claims that while the majority of militants in Nalchik were Kabardins, “persons of Chechen and Ingush nationality” were also present. Found among several of the “bandits” were written letters testifying that they were dying for “glory of God and belief.” Thus continues the effort by the Russian government to connect their regional conflict to the global war on terrorism.
For a more comprehensive discussion on Nalchik and its significance, I recommend Russia Profile’s very interesting weekly roundtable.
In a reversal of its own decision, the Russian Supreme Court upheld the Moscow Regional court’s ban of the National Bolshevik Party. The Supreme Court’s ruling further reveals the farce of Russian democracy. Forget about what you think about the NBP, the fact that the Supreme Court contradicted itself so quickly, shows that either larger forces were at work behind the scenes or that the Court itself wields arbitrary power. In a statement to reporters after the verdict, NBP leader Eduard Limonov had this to say: “This was a historic humiliation for the Supreme Court. Big players such as the Prosecutor General’s Office intervened and pressed the judges to discard their previous verdict.” Could this be any closer to the truth? Hardly.
The ban is in response to the fact that the NBP uses the word “party” in its name even though it’s registered as a social organization. But as Limonov tells Kommersant, the NBP repeatedly tried to reregister to comply with the law but were denied. What’s next for the Natsbols? According to Limonov, “We will collect 50 thousand applications as the law demands. This is the only thing left for us, to demand legal recognition. This is a struggle. But we also exist as a large organization. Needless to say, the drama continues.