December 2008 Archives

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The man from the magazine cover and the country in ruins

Grigory Pasko, journalist

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In the last new year holidays Time brought joy to the whole world by recognizing Putin as person of the year. Putin liked that.

Now it's a different person - Barack Obama. It's doubtful that Putin likes this.

The young oppositioneer Roman Dobrokhotov after he with his outcries had interrupted an appearance of president Medvedev and security had led him out of the hall wrote in livejournal: «They dragged me off to the office of the FSO [federal protection service--GP] and started to interrogate, finding out about my zhzh [«ЖЖ», the Russian abbreviation for "LiveJournal", by which the portal is known in the country--Trans.] and the movement "My" Some kind of gray-haired general-chekist came in, conversed, went out and when he closed the door (slamming it just a tiny bit) the ceiling came crashing down in the office. The general got frightened, opened the door back a crack, looked at the collapsed ceiling: "Did I just do that?", - asked. No-no, not you, they waved him off and he left».


From Irina Yasina in the Lebanon Daily Star:

Whole regions - the Urals and Mordovia, for example - are stagnant. Moscow, which used to rain gold on the economy, is also suffering, because it, too, depends on natural resources, and its biggest taxpayers - Gazprom, Lukoil, Transneft - are now in bad shape. Indeed, Moscow's budget has lost about a quarter of its revenues. But, given the tastes and appetites of Moscow's mayor, you can assume that he will continue to pour what money remains into the city's building boom. What does not bring in money - roads, schools, hospitals, and kindergartens - will suffer.

NYT television critic Virginia Heffernan had a great blog post yesterday taking a look at the bizzaro commercials being played inside New York City taxis advertising the 24/7 cable news Kremlin propaganda channel Russia Today.  I've also seen the ads on the Washington DC Metro and all over several U.S. airports.  Heffernan writes: "The newest enigmatic Russia TV ad, which is in heavy rotation in many NYC cabs, is graphically fascinating--and completely disconcerting. I can't get that mistaken-pill thing--the trucker with the blister pack--out of my head."

stalinphone123108.jpgIn relation to the previous post, I am catching all this news of a new mobile phone being released in Moscow by Nokia which features an image of Stalin - perhaps in the style of one of those U2-branded iPods.  After some hard searching, I came across one exclusive image from The Cell Freak.

If this is true, and not just another hoax, it would really be a breathtaking moment for cultural politics - the appropriation of communist icons for opportunistic commercial gain.  Almost as good as the $2,000 Red Army coats or the Kalashnikov bedside lamp.

Musings aside, it is pretty disgusting that a dictator whose death toll we conservatively estimate at 20 million people (other estimates point to 50 million) should become a fashionable pocket accessory.  Oddly, Nokia is a Finnish company, and it is not hard in Finland to locate someone whose relatives perished in Stalin's two wars against the tiny country during World War II.
I do agree with this author that it is particularly surprising how un-surprised everyone is that such as astoundingly large portion of the Russian population voted to forgive "Uncle Joe" Stalin and elect him as country's most popular historical figure. (read more on the subject here.)

What would we think if Germans voted Adolf Hitler one of the most popular leaders in its history? We might wonder about its implications; a German move to the extreme Right, and the failure of all the educational efforts made since the end of World War II to educate the current generation about Germany's dismal past. We would despair over what it might mean for minorities in Germany, especially the many new Jewish residents from the former Soviet Union who migrated to Germany in hopes of starting a new life.

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Writing in the Wall Street Journal, Leon Aron sees two trends emerging in Russia that the West should play close attention to:

The first will be a growing dissatisfaction with the government, which may lead to a political crisis. The second will be a reactionary retrenchment: increased internal repression and more of its already troubling foreign policy. Managing the relationship with Moscow in the face of these trends is something President-elect Barack Obama and his administration should start thinking about now.


The Gazprom-Ukraine natural gas price-supply fiasco seemed to be drawing to a close yesterday, but not before some last-minute threats to keep things interesting.  The Russians are on a New Year's Eve vigorous offensive, claiming that the Ukrainians are carrying out "blackmail" and threatening to seize supplies and cut off Europe.  Gazprom spokesman Sergei Kuprianov said that a letter received from Naftogaz had reduced the chances of clinching a gas deal before midnight:  "If yesterday we had a 50:50 chance of reaching a deal today it is now 70:30, or a crisis scenario."

Shareholders of Imperial Energy, a British-based firm with most of its assets in Russia, have agreed to a buyout by ONGC, the Indian state-owned company.
State-owned Vneshekonombank (VEB) has approved a proposal to lend $1.5 billion to domestic mining companies to help cover foreign debts - likely favoring those recently listed in the strategic sectors list.  Today concludes the final day of trading on the RTS for 2008, the worst performing year since 1992 with a cumulative drop in value of 72% - ranking at the bottom of the world's 20 largest equity indices.  The ruble has lost the most value against the currency basket since it was implemented in 2005.  State officials say that inflation clocked in at 13.3% for the year.  Chinese computer company Lenovo Group is considering merging its Greater China and Russia operations with its Asia Pacific operations in response to the crisis.  The IMF will extend a $2.5 billion credit line to Belarus, while Georgia will receive a $200 million loan from the EBRD.

And from the Financial Times, a Chinese law firm has its eyes on landing big petrodollar clients in Russia, and hopes this merger will help:

King & Wood, China's largest law firm, is set to announce the first merger between a mainland Chinese and a foreign law firm, underlining the growing international ambitions of Chinese legal practices.

King & Wood plans to integrate SG Fafalen, a Swiss law firm registered in Hong Kong.

The Swiss firm's founder and owner, Serge Fafalen, could facilitate access to "petrodollar" clients, particularly in Russia, where he has spent much of his professional life, King & Wood believes.

blast123108.jpgTODAY:  The RA Blog wishes you a very happy new year, Opposition gathers momentum in Georgia, Spain extradites a Chechen to Russia, reactions to the doomsday professor, former North Ossetian Mayor gunned down, Nicaragua wants closer relations with Moscow, and the Czechs prepare to handle a difficult EU presidency.

Celebrating New Year's Eve is pretty serious business in Russia - making Times Square look like a Disney on Ice - and as such, I'd like to communicate the personal best wishes to all our readers from Robert Amsterdam, Grigory Pasko, and the entire team at this blog. We're grateful for your interest in this project, and look forward to making the RA blog even better in 2009. We are especially happy that at least one political prisoner, Vasily Alexanyan, will finally be able to spend the holiday with family.  (The only downside of NYE - there is not a tremendous amount of exciting news for us to discuss, so the news blasts may be quite brief today.)

split123008.jpgVarious observers are beginning to note some early, outward indications that Prime Minister Vladimir Putin and President Dmitry Medvedev are growing apart.  Russophobe points to a comment piece by Vladimir Frolov as the beginning of a new narrative to blame the mishandling of Georgia on Medvedev, while this latest piece in the Financial Times indicates a new sense of assertiveness of behalf of the president - which naturally is not well received by Putin.  Is the new "cavalier" attitude from the president a reflection of frustration that none of his judicial reform and anti-corruption initiatives are making it past the Putinistas?

It was an innocuous sounding comment in what appeared to be a routine television interview. But in the six days since Dmitry Medvedev, Russia's president, described his feelings about taking the oath of office in May, the corridors of power have been buzzing.

"The final responsibility for what happens in the country and for the important decisions taken would rest on my shoulders alone and I would not be able to share this responsibility with anyone," Mr Medvedev told an interviewer. (...)

The terminally ill former Yukos executive Vasily Alexanyan has finally been released from custody after paying a punitively expensive $1.8 million bail bond.  Read more about the medical blackmail of Alexanyan here, here, and here, and also see the important opinion articles in RIA Novosti in support of leniency on political prisoners.
narod123008.jpgWhen I worked at a military newspaper as chief of the combat training department, the editor often told us journalists: don't write critical articles, more pozitiv, write more about good things... But the times were such that everything all around was collapsing: the country after perestroika, the combat education of the fleet at zero, the laws aren't working, everybody's thinking only about money and about how to survive... In response to the wailing of the editor we proposed to him to create in the editorial staff a department of «pink elephants» - a group of journalists who would write only about the positive, through a prism of rose-colored glasses.

More than ten years have passed. All this time they're telling us: stability, development, democracy...But you can't fool people's moods. And you won't fool the facts. All around in Russia - those same signs of uncertainly that had been in the years of postperestroika: the economy at zero (the oil price has fallen drastically), the laws aren't working, everybody's thinking only about money and about how to survive...

And those same calls by the leaders of the state: everything's fine, be calm, attune yourself to the pozitiv...


The Wall Street Journal has a column today discussing the humbled ambitions of several authoritarian leaders in these days of low oil prices:

We're not suggesting the mullahs, Putinocracy or the Chávez regime are at death's door. None will give up power easily. Suffice to appreciate the consequences of lower oil for America's enemies. Mr. Chávez can't prop up Castro or Colombia terrorists as before. Iran will have a harder time buying off its restive middle class, and perhaps less money to finance Hezbollah or its terrorist proxies abroad -- though we assume its nuclear program will continue as ever. And Mr. Putin looks his size, less able to wield the energy club against a Ukraine or European Union.

How nice it would be if oil stayed low long enough for a democratic Iran, Venezuela or Russia to emerge from this crisis. Odds are that won't happen. But American policy makers can ensure these rogues won't be inflated in another crude bender. How? It won't be with wind farms or tougher emissions standards. The main culprit in this decade's oil boom has been the Federal Reserve's excessively easy monetary policy and the decline in the dollar. Oil prices rose as fast as the greenback fell. It's a mistake American interests can't afford for Fed Chairman Ben Bernanke, or his successor, to repeat.

From George H. Wittman in the American Spectator:

As the financial crisis deadens the exuberance of Putin's leadership, there also has been an increase in dissension between the military/security factions on one side and the economic/business elements on the other. Each is pushing for ascendancy in the Putin-Medvedev bipolar leadership system. There may be no real division between the two men personally, but among the political classes there is a constant effort to test any nascent differences.

For Vladimir Putin's part the forthcoming year carries severe tests. He was very unhappy with command and control during the Georgia conflict. This has been one of the reasons for the military shuffle. The economic crisis is well beyond his ken and he is counting on Medvedev to keep in line the politically liberal but fiscally conservative finance minister, Aleksei Kudrin.

In strict political terms Putin must rule Russia for the first time with a diminishing economic hand. He is unable to reward his favored supporters with the economically related political favors of the past.

The question exists for the forthcoming Obama administration whether an economically weakened Russia is more or less of a danger.

Our readers are likely familiar with the unfortunate fate of Yevgeny Gontmakher, an economist who published the article Novocherkassk-2009 (translated on this blog), providing a bleak outlook of what many one-factory Russian towns are experiencing in the economic crisis.  Now it seems that another figure, Aleksandr Bragin, is being targeted for having published an article on the economic crisis.  Didn't he know that it's against the law for the media to cover the recession?

From RFE/RL:

Bragin's article was posted on December 29 on the website of the Russian Popular Democratic Union, an opposition party led by former Prime Minister Mikhail Kasyanov, whose regional Ulyanovsk branch is headed by Bragin.

Yelena Dikun, a Kasyanov aide, told RFE/RL's Russian Service that law enforcement agencies are accusing Bragin of tarnishing the region's image.
georgia123008.jpgFrom Simon Tisdall in the Guardian:

The Georgian eruption had wide-ranging consequences. It embarrassingly exposed the disunity, rivalry and weakness that characterises an energy-dependent European Union in its dealings with Russia. And it placed on full display the emptiness of western security assurances to Georgia as Russian tanks rolled towards Tbilisi.

The war threw the already stalling process of Nato (and EU) eastwards enlargement into disarray, not just in Georgia but also in Ukraine, and left the Bush administration floundering for retaliatory options against Moscow.

But most of all it revealed the bellicosity and insecurity of a Kremlin leadership still apparently controlled by prime minister and former president Vladimir Putin.

The New York Times reports on how the once mighty Gazprom has fallen on hard times to negotiate a govt. bailout, while the company offsets this news with financial reports from the second quarter that profits had tripled before the crash of the oil price.  Ukraine's Naftogaz is said to be negotiating a $2 billion loan to settle the supply dispute with Gazprom, which should put an end to fears of another New Year's Eve cut off.  Year-to-date, natural gas exports from Russia have grown by 5.6% while oil exports have contracted by 7.5%.  British firm Rolls-Royce has won a major contract from Gazprom to supply pumping turbines for the Nord Stream project.  Imperial Energy is likely to accept the takeover bid from Indian state-owned company ONGC this afternoon.  Rosneft expects a slight growth in oil output for 2009, but below expectations because of the financial crisis.
Yesterday Russia allowed the ninth devaluation of the ruble for the month, dragging down the value by 18% since August - however, against the dollar, the ruble has gained .08%.  Russian economic officials report 1.6% GDP growth for November.  Russia and the United States have signed a new meat and poultry agreement for 2009, allowing for Russia to cut back on imports and raise tariffs for supplies above quota.  Wal-Mart has joined a retail lobbying group in Russia, which is a strong indication of the group's interest of expanding in this market.  The Central Bank has revoked the operating license of the bank Agrochim, which has failed to meet creditors' demands - which is about the 20th bank to fail since August.  Alfa Bank will lend $513.2 million to Russia's Federal Grid Company, the state utility.  Norilsk Nickel has bought back some of its own shares for $1.59 billion.  Parlamat has rejected an offer to team up with Danone to expand into Russia - the Italians felt that the yogurt and milk production plants are too dispersed in this market.
blast123008.jpgTODAY:  Extended presidential terms signed into law - protests in response, a missile test gone awry, clashes in Dagestan claim life of top Russian official, Abramovich to sell yacht or Chelsea while Latvia asks to be bought, fallen hockey star Alexei Cherepanov is alleged to have used drugs, and Ded Moroz, Russia's version of Santa Claus, pulls a heist at a gas station.

On Tuesday, President Dmitry Medvedev signed into law a proposal to extend Russia's presidential terms from four to six years, which made its way through the legislative bodies with record speed - the constitutional amendment cleared the parliament at 83 regional legislatures in less than 50 days.  The pro-democracy Yabloko party held a last-ditch protest demonstration to oppose the change to the constitution, pointing out that under law the regions have one full year to consider any such change.  "They're completely ignoring the law," said Sergei Mitrokhin, chairman of Yabloko. "Unfortunately, this happens quite often, but this is the first time the process has been ignored for such a significant issue as a constitutional amendment."
Alistair Gee has a report on the time-honored Russian tradition of dodging the Army draft, which brings to mind the recently forced conscription of the activist Oleg Kozlovsky.

The lengths that Russians go to avoid the Army hint at other problems--notably dedovshchina, or rule of the grandfathers, an informal and widespread discipline system in which draftees can be subject to degrading, sometimes violent hazing by their seniors.

In a famous case, conscript Andrei Sychyov had his legs and genitals amputated after being beaten by senior officers on New Year's Day 2005. Another conscript, at the Plesetsk cosmodrome near the Arctic city of Arkhangelsk, was beaten by drunk officers, locked in a dog cage, and died later. More recently, investigators in Novosibirsk said a private slit his wrists in March after suffering abuse.

Draft dodgers in turn fuel corruption, as they bribe officials to give them deferments and certificates saying they served, which they need when applying for jobs.

"It's a giant, corrupt system that includes workers in the conscription offices, medical institutions, and institutions of higher education; because a lot of institutions only exist to give out draft deferments, they don't teach anything," says Golts. In 2005, Georgiy Satarov, a researcher at Indem, a Moscow nonprofit group that tracks corruption, reported that there were around $350 million in bribes related to the draft annually. An Army spokesman was not available for comment.


Transdniestria.gifIt's been a while since we've heard news from that other problematic frozen conflict in Moldova, Transnistria, where separatists groups are more hopeful than ever that the invasion and occupation of regions of Georgia by Russian military forces could eventually set precedent for their own annexation back to the perceived mother country.  While many observers from Estonia and Lithuania down to Ruthenia and Crimea hold serious concerns about Georgia being the first domino to fall in a grand Kremlin plan to re-unite the territories of the former Soviet Union, in this breakaway statelet, that is exactly what they are hoping for (not to mention a desperate hope for aid and subsidies to prop up a failing independent state).

But lest we jump to conclusions in comparing South Ossetia with Transnistria, Thomas de Waal had an excellent recent article highlighting the major differences, including observations that this is more like a quarrel between rival clans, characterized by a total absence of bellicose rhetoric.

The latest from the Associated Press:

"If only we had one centimeter" of border, said Alyona Arshinova, 23, an activist with the Kremlin-funded youth group Proryv or Breakthrough, who has a small Russian flag hanging from her key chain. "For me Russia is everything, for me Russia is knowing who I am. Who am I? I am Russia."

The group leader, Dmitry Soin, is no less fervent, praising Russia's commitment to democracy at a time when the West is criticizing it for rolling back democratic reforms. "The winds that are blowing in Russia must start blowing in Transnistria," Soin tells the  group.

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Deng Xiao Pu and his team

Grigory Pasko, journalist

Recently in the Russian mass information media there appeared a publication, the main theme of which was - the rating of the broadcast "A Talk with Vladimir Putin", which had been demonstrated to Russians on 5 December of this year. According to this rating, the teleconversation with the premier of the RF was watched by nearly half of the televiewers of Moscow. I don't know how much this is when calculated as human individuals. But , in the opinion of the mass information media, these indicators bear witness that the popularity of mister Putin among the people remains high, while the significance of the format of his teleperformance is incomparably higher than for president Dmitry Medvedev.

Personally, I'm convinced: the ratings of both Putin, and of his protégé Medvedev - are purely a television phenomenon. Were there no television and newspapers, there would be no popularity for these television personalities.

In relation to my earlier posting of Garry Rodan's article, below is an extract of a book review of Beyond Suspicion? The Singapore Judiciary by Francis T. Seow, written by Australian academic Michael D. Barr

I don't think that I will be the only one who sees a positively chilling reminder of some experiences in Russia in these descriptions of the the Singaporean justice system:

For instance, what are we to make of a legal system that gives a defendant a couple of hours (literally) to find a solicitor, a translator (since she could speak no English), and prepare and present a defence in court to a procedure about which she had literally no understanding? Or where a judge sits in judgement on a case where he himself is implicated as a recipient of one of the real estate discounts that started the whole procedure, and who had previously worked for the family law firm of the primary litigant (Lee Kuan Yew)? Or where a judge (not the same judge) can receive many sets of documents, each hundreds of pages thick and so badly copied and paginated as to substantially illegible and unreadable, and yet two and a half hours later bring down a legal judgement based on his considered legal interpretation of the implications of their contents? Or where a summons to chambers is issued by an appellant's lawyers rather than by the court, but the court upholds it? Or where evidence that proves beyond all reasonable doubt the innocence of the defendant is not only refused admission in court, but all record of its existence is expunged from the record?
Earlier this month Garry Rodan had a great article in the Far Eastern Economic Review about Dr. Chee Soon Juan, the Singapore opposition leader facing a long campaign of savage repression by the local authorities.  I assist in Dr. Chee's international legal defense effort.

Singapore's authorities already enjoy a reputation as the world's most litigation prone, but even by local standards this year has been exceptional. Not only was the REVIEW in September found to have defamed Prime Minister Lee and Minister Mentor Lee Kuan Yew, with an appeal now pending, but The Wall Street Journal Asia was also fined a record amount for contempt of court in a finding last month.
ukrainegas122908.jpgThere's a confusing editorial today in the Boston Globe, which draws heavily on the assumption that it is up to President-elect Barack Obama to draw up a plan to intervene in the Russia-Ukraine natural gas supply disputes, and that the key thing for him to do is withdraws support from any talks between NATO and Kiev in order to guarantee secure energy supply to Europe.

Wait a moment - I thought that we were meant to understand that Gazprom's threat of supply cuts was a purely commercial dispute, focused on weaning the Ukraine off their Soviet era subsidies and asking them to pay something closer to market rates like everyone else.  There is certainly a legitimate point held by the Russians on pricing, but one that has been pursued with very little skill or diplomacy.


The Ukraine natural gas crisis with Gazprom remains in crisis as a delegation from Kiev arrives in Moscow to negotiate - possible solutions may include future fees or even economic sanctions.  Bolivian Energy Minister Saul Avalos has told the Mexican media that initial investment from Russia in Bolivian gas fields will reach $4 million.  A Nigerian state oil official has said that the long-rumored Gazprom deal to invest a significant amount in oil and gas production in the country has failed to result in any deal.  Gazprom Neft has sealed up its acquisition of 51% of the Serbian state energy company NIS, while Alexander Medvedev has said that investment in Serbia could reach "$2.5 billion, if we are optimistic."  Spanish bank La Caixa has said it will not sell its stake in Repsol to the Russian oil company Lukoil following fierce political opposition to keep the company in Spanish control - other reports indicate that Sacyr is still talking to Lukoil.
In trading on Monday, the Russian ruble again fell to a record low against the euro as the Central Bank again widened the band to loosen its defense of the currency.  State bank Vnesheconombank (VEB) spent $26 billion on infrastructure projects in 2008, designed to help small- and medium-sized business growth.  Worldwide steel production is expected to suffer its biggest decline in 60 years, with a big reduction in orders hitting Russia's Severstal - the company has idled a blast furnace at its Cherepovets Steel Mill because of weak demand.  Mikhail Prokhorov has announced that he may increase his stake in Rusal to 19% in lieu of receiving payments from the debt-burdened group, which could cause another shake up between Oleg Deripaska, Vladimir Potanin, and the government.  In light of struggles face by the national airline, Aeroflot, the government has announced plans to launch a second, competing state-owned airline - a controversial proposal which puts great pressure on the largest individual owner, Alexander Lebedev.
blast122908.jpgTODAY: China and Russia establish high military links, Putin holds cabinet meeting on crisis, promising continuity, Stalin comes in third, predictions of a U.S. collapse, Gaddafi defends Russia, anger over Israel's Gaza bombings, Gazprom-Ukraine deadlock continues, and a new film production of a 1968 science fiction story resonates strongly with today's Russia.

Today top military officials from Beijing and Moscow held their first conversation over the newly established "hot line," which is meant to signal closer "pragmatic cooperation between the two armed forces on global events.  Even though the link was established last March, it was not clear why it was just inaugurated today with such ceremony.  The Pentagon has not yet been able to negotiate a military hot line with China.

A year-end wrap up cabinet session was called in the Kremlin this morning, in which both President Dmitry Medvedev and Prime Minister Vladimir Putin called for unity in face of the difficult economic crisis the country will face in 2009. 
"We can have different points of view on various problems. But at a time of global challenges it is important to maintain the unity of the government. In my opinion, today we are succeeding in this," Medvedev said.  Putin said that despite the "negative dynamic" in the fourth quarter, Russia would still grow by 6% in 2009, and the government would not change its spending plans.

By the time you read this exclusive translation, the original article will probably have been pulled from the net by censors. We found this remarkable posting in the "Forum" section of the official website of the MVD RF - the Ministry of Internal Affairs of the Russian Federation - the siloviki agency responsible for, among other things, the country's police force. The author is apparently a policeman himself, addressing his colleagues. He posted his message on Friday evening, quite likely because, as one of the many people who have already commented on the article explains, "there usually aren't moderators on the site weekends." By the way, the overwhelming majority of the incredible number of readers who have left comments have chosen to remain anonymous, while the bulk of those who do provide a name give a pseudonym and don't provide their email address, no doubt in the naïve belief that this will make it less likely their true identity can be traced by the organs.

Subject: WE ARE THE REGIME'S DOGS ON A CHAIN
Author:
Date: 19.12.2008 20:48

Dear colleagues. Russia is found at a critical boundary. Economic catastrophe is drawing near. Hundreds of thousands of our compatriots, our fathers and mothers, brothers and sisters will be thrown out on the street. This crisis has opened the eyes of the people, has shown who is who in our country. The soap bubble of the stabilization fund has burst and has not brought us benefit. Billions of petrodollars flowed as a river to us, but our rulers did not even think of putting this money into the development of the economy, science, agriculture, many sectors. And now they are rendering assistance to bankers, allocating them 5 trillion rubles at 5 percent, so those would give out loans to our enterprises at 20 percent per year.

From Denis MacShane on Comment is Free:

Now, the Kremlin has thrown down a new challenge to Sarkozy, to the EU, and to the OSCE (one of the most important examples of successful US diplomacy) at a time when Washington preferred jaw-jaw to war-war. In the six-point agreement Medvedev signed with Sarkozy pride of place went to a clause which stated "the international observation team of the OSCE will continue to exercise their mandate" as defined before the conflict.

The OSCE mission with the duty to observe and report on what was happening in the disputed territories has been in place since 1991. Now the Kremlin has ordered its expulsion in clear violation of the Sarkozy-Medvedev agreement. The mission was never more than 200 strong. It could not stop Russian ethnic cleansing of Georgians or prevent Georgian president Saakashvili's attack. But the contempt and cynicism with which the Kremlin has expelled the OSCE mission shows that a solemn agreement signed by the Russian president is worthless. Pacta non sunt servanda is Putin's new contribution to the lexicon of 21st century diplomacy.

From Reuters - more on this topic here.

"The younger generation is fed with myths about Stalin. It knows nothing about the millions who died in Gulag camps but well knows he was a strong leader who defeated (Nazi) Germany," human rights activist Lev Ponomaryov told Reuters.

He said a whiff of Stalinism was felt in Russia's harsh tone with the West which has criticized Moscow of backtracking on democratic reforms and keeping a tight lid on dissent.

"Again, foreign enemies are to blame for all internal problems, so you need to rule with an iron fist -- it's a purely Stalinist method."
Here's a story of a peculiar accident from the Daily Mail, but interestingly enough, the tax authorities re-opened their claims against the British Council several days earlier.

A British diplomat in Moscow knocked over a pedestrian who turned out to be a senior Russian spy.

The accident threatens to reopen a simmering diplomatic row between London and Moscow which has seen British officials intimidated and institutions closed.

Andrew Sheridan, 35, told police he was driving his official Ford Mondeo on General Dorokhov Street in western Moscow when the pedestrian walked out from behind a parked car, giving him no time to stop. (...)

The Russians later revealed that the man he hit, causing head injuries and a broken leg, was a colonel in the FSB, the successor to the KGB.

He was named as Alexander T, 38, apparently to help to hide his identity. He works for an elite academy training agents for frontline duties, including securing borders.


From the intro of a very interesting story in tomorrow's Washington Post by Tara Bahrampour, which seeks to provide a glimpse of the human side of the conflict in Georgia.

This fall, as I was preparing to travel to the Georgian breakaway region of Abkhazia, one of the cafeteria ladies in the journalism school where I teach stepped out from behind the pastry counter and asked a favor.

"Go talk to my neighbors," she said, writing down an address in Abkhazia's capital, Sukhumi. "Find out what happened to my husband."

time122708.jpgI must confess that I was expecting this New York Times editorial on President-elect Barack Obama and Vladimir Putin to be much, much worse.  Still, most everyone who has found their way to this blog is likely way above this shallow treatment of U.S.-Russian relations.

Mr. Obama does have a few advantages in dealing with Russia: He is new, and the Russians are no less intrigued by him than the rest of the world. Neither he nor his foreign-policy team can have any illusions about Vladimir Putin's Kremlin. And Russia is deep in economic crisis. Mr. Putin's popularity and power have been based largely on Russia's windfall profits from soaring energy prices. Now the Russian stock market is in free fall and factories are closing, while Mr. Putin's ratings slip.

Mr. Obama should signal to the Russians that he wants better relations. That would mean cutting back on belligerent talk and inviting the Russians to high-level consultations on areas in which the two countries can quickly achieve cooperation -- say, on combating piracy. Mr. Obama should consider renewing the Start 1 treaty on reducing strategic nuclear forces, which expires in December 2009. He could tone down demands for NATO membership for Georgia and Ukraine, especially since neither is ready, and review plans to station defensive missiles in Poland and the Czech Republic.

For every gesture, the United States would make clear that it expects a tangible response, starting with help in ending Iran's nuclear program and continuing with cooperation against international terrorism and a withdrawal of Russian troops from Georgia.

It's been a pretty slow news week in Russia, and my suspicion that this involves something more than just the approach of the Jan. 7 Orthodox Christmas. We've had relatively few events of any major importance in the political environment (at least that we know of), no major moves against companies or individuals, and the economic and currency reports feel like a broken record - the same announcements of another devaluation seemingly seem not to change from day to day.

However for those of us involved in highly public legal cases in Russia, we long ago became accustomed to this condition of "suspended animation." Whenever I attempt to explain to colleagues what it is like to fight a truly political case, I often say that the first thing to understand is that this genre often resides completely outside of the law. For so many of these cases, every "legal" outcome is in fact a decision handed down from the highest levels of the Russian Federation.


patriarch122608.jpgKarl Marx's famous declaration of religion being the opium of the masses continues to raise interesting discussions even today, as various observers debate the new role of church-and-state ties in the context of moral ambiguity and armed conflict.  Russia is one of the most interesting examples, though not the only one, where the government's professed ties to the Orthodox Church and vice versa appears unitary in some instances, but fractured and potentially contradictory in other cases.  If it was communism's failure to account for culture, religion, and nationalism in its theory for worldwide proletariat revolution, then will it be new regime's success or future fiasco to incorporate so tightly with the religious institution?  Furthermore, might the divisions exposed by the war in Georgia be exacerbated if events take a certain course during the economic crisis?

The passing of Alexei II certainly brought a number of these questions back into the foreground, as this editorial from Spanish newspaper El Pais brings to light the renewed proliferation of media outlets linked to the Orthodox Church.  (The publication Foma, discussed in the article, maintains an English website here.)  Keep in mind that in typical style of Spanish journalism, the argument here is very subtle and suggestive.  Our exclusive translation:

In light of the unraveling of the prosecution's case in the Anna Politkovskaya trial, David Satter has a new column in Forbes detailing some of the alleged connections between the FSB and several murder cases of journalists.

The involvement of law enforcement officers in contract killings should be a momentous scandal, but the elimination of independent centers of power in Russia under Prime Minister (and former president) Vladimir Putin has created a situation in which the organs of law enforcement are integrated into the corrupt oligarchies that run the country. When the interests of those oligarchies are threatened by independent reporting, law enforcement is unable to restrain corrupt interests and is often in league with them. As a result, contract killers function as the ultimate censors.

Various analysts have been predicting over the fall that the economic crisis would provide the Russian government with an opportunity to gradually take over the crown jewel of mining, Norilsk Nickel.  Today's appointment of Alexander Voloshin, a Kremlin insider and alleged proxy of the executive, looks like a step in that direction.  This measure is consistent with the trend of increasing state participation in the economy, despite Dmirty Medvedev's statements to the contrary.

From the Associated Press:

"There are no representatives of the state on the board," Voloshin said after his appointment, but added that "the successful development of Norilsk Nickel will benefit my dear country."

Voloshin brings to the post a wealth of government experience and connections. He served as former President Boris Yeltsin's chief of staff, a job he retained for several years under Yeltsin's successor, Vladimir Putin. One of his deputies under Putin was Dmitry Medvedev, the current president. (...)

David Kakabadze of RFE/RL has a piece up commenting on Russia's successful campaign to eliminate most outside participants (the OSCE) from the conflict resolution process in the Caucases - and argues that the West should really stop pretending to be "so surprised" by Russia's foreign policy decisions.

That, of course, seems highly unlikely. Less than five months after the August war, the West is gradually returning to business as usual with Moscow. In November, the EU decided to resume talks on a Partnership and Cooperation Agreement with Russia. NATO, after refusing to offer membership road maps to Georgia and Ukraine earlier this month, last week resumed high-level meeting with Moscow after a four-month hiatus in response to the war. That informal meeting between NATO Secretary-General Jaap de Hoop Scheffer and Moscow's NATO Ambassador Dmitry Rogozin was intended to explore ways of restarting formal contacts.

In short, Russia's military muscle-flexing in August seems to be paying off, as David Smith, director of the Georgian Security Analysis Center, argues in "Jane's Defense Weekly." Nikolas Busse wrote in "Frankfurter Allgemeine Zeitung" that the August war seems to have had little downside for the tandem of Prime Minister Putin and Russian President Dmitry Medvedev. (...)


gazprom122508.jpgIt is rational and logical for some governments to declare certain sectors of the economy as sensitive to national security, and therefore requiring some type of overview process before allowing foreign ownership and management - defense and utilities, for example.  However in Russia, when a sector is declared as "strategic," and therefore vulnerable to arbitrary state interference, this brings an entirely different set of concerns to the equation for any foreign investors.  The Kremlin is far from unique in using strategic sector designations as a blunt instrument of protectionism - just look back at the ridiculous Dubai Ports World controversy, or even repeated attempts by the Spanish and French to block energy mergers - but they may be unique in their reputation for abuse of these regulatory privileges for private and personal gain.

But in these days of crisis, the designation of strategic enterprises is more meaningful in terms of receiving state subsidies than the restriction on foreign investment and shareholdings.  Today Reuters reports (see below) on the announcement of Russia's list for 2009.  The winners:  Gazprom, Rosneft, Aeroflot (who knows if this means Lebedev can hang on), Norilsk Nickel (same goes for the beleaguered Deripaska), and Vimpelcom.  The losers:  Polymetal and Integra.
Gazprom has renewed its warning to Ukraine that it will cut gas deliveries on January 1 if new contracts were not signed for 2009 and all debts cleared, and now Dmitry Medvedev has threatened Ukraine with sanctions if the money is not paid.  'It is impossible to go on like this,' he said.  'It's embarrassing to watch.  They should pay the money to the last rouble.' Energy Minister Sergei Shmatko says Russia has no plans to raise electricity tariffs for households in the first quarter.  Transneft, the state-run oil pipeline operator, will raise transit prices next year by an average of 15.7%.  
'In reality, Russia is not going through an economic crisis. The real crisis is that its government model is fundamentally flawed,' says Yulia Latynina.  Russia has let the ruble fall for the third time in five days - the eleventh time in six weeks - and it has since fallen to another record low against the euro.  Stocks continue to rise and fall with the price of oil, and the gold and foreign exchange reserves rose by a record $15.4 billion during the last week.  Japan has announced sizable investments in Russia's rubber and instant noodle markets.  Aeroflot predicts that its 2009 profits will hit record levels - possibly because it plans to retain the right to collect fees from foreign carriers crossing Siberian airspace?  The Kremlin has unveiled its list of strategic enterprises - those entitled to government support in the economic crisis.

261208.jpgTODAY: Medvedev interview focuses on security and sport, dodges Khodorkovsky question; soldiers sent into regions badly hit by economic crisis; Orthodox media.

President Dmitry Medvedev's Christmas Eve message to Russians focused on Russian security and the necessity of using force to protect it, defending his relationship with Vladimir Putin as 'right, and rather effective', and praise of Russian sport.  One UK report says his comments were 'interspersed with highly nationalistic video footage'.  He also dodged a question on a potential pardon for jailed former Yukos executive Mikhail Khodorkovsky, saying all decisions would be left to the courts.  'No one should interfere, neither a village elder nor the president of the country.'  A Moscow court today found Alexei Kurtsin, a former manager of Yukos, guilty of abuse of office and embezzlement.  The Kremlin's youth organization, Nashi, has awarded Georgia, Ukraine and the US the honor of holding the most antagonistic relations with Russia in 2008, and intends to deliver gifts to their respective embassies.

The other day I was reading an interesting article over The Power Vertical, which was published last week, about an open letter signed by the eminently respected former Moscow City Court judge Sergei Pashin to President Dmitry Medvedev urging him to reject the resolution passing through the Duma to eliminate jury trials for terrorism cases (a subject we have reported on also).  The Power Vertical article referred to an interview given by Pashin to Novye izvestia which we offer in full exclusive translation below, which brings to light all the problems of corruption and opportunism of the judicial process by members of the FSB and Kremlin - which is essentially the cornerstone of everything that has gone wrong in the case of Mikhail Khodorkovsky.

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16 December 2008
Merited jurist of the RF, judge (ret.) Sergey Pashin:
«The article about espionage - rubber»
NADEZHDA KRASILOVA

Yesterday a group of representatives of the intelligentsia, jurists and human rights advocates directed an open letter to the president with a request to lay a veto on the draft law adopted by the State Duma that limits the activity of jurors. We will remind that they now will not be able to decide the fate of persons accused of terrorism, the taking of hostages, mass disorders, as well as of treason and espionage. Practically concurrently the government introduced in the State Duma a new draft law, which significantly expands the content of the understanding «state treason». This initiative likewise evoked the protest of human rights advocates. One of the authors of the letter to the president merited jurist of the RF Sergey PASHIN recounted to«NI» what such laws can lead to.

ruble122508.jpgThis is very good news, if not unexpected, for Russia's economy - thanks to a rise in the value of the euro and greater efforts by commercial banks to make foreign currency deposits, the country's foreign exchange reserves rose by a record $15.4 billion in the last week.  That's a record.

But this isn't a coincidence, according to the Reuters:

Russian authorities told commercial banks not to increase their foreign currency positions or risk losing their access to the central bank's liquidity through collateral-free auctions.

Instead, the central bank gave banks a possibility to park their foreign currency in interest-free accounts with the central bank. Ulyukayev said "several billion" were currently held in these accounts.

Commercial banks' accounts in the central bank are matched by corresponding foreign currency positions in the central bank's assets, which count as part of the international reserves.

We have oftentimes pointed out the similarities between Vladimir Putin's Russia and Hugo Chávez's Venezuela on this blog, arguing that these symbiotic developments go far beyond joint naval exercises, illegal expropriations of oil companies, and constitutional destruction.  In fact, it's often hard to tell who is copying who.  Now we see that Venezuela also has their own political prisoners - as below an exclusive translation from El Nacional tells the story of Eligio Cedeño, an innocent businessman who has spent 22 months behind bars without any sentence from any court.  Download the original Spanish here.

The Government uses the courts to punish "prisoners of the state"

The lawyer Gonzalo Himiob assured that the victims are not only political, but also personal.

By Vanessa Gomez Quiroz
El Nacional, Dec. 23, 2008, pp. 5

"There's no difference between political prisoners and the prisoners of the state," said Gonzalo Himiob, a lawyer specialized in human rights, who now has become one of the legal representatives of the businessman Eligio Cedeño, who has been imprisoned for 22 months.

Himiob explains that after studying the case against Cedeño, he determined that there aren't any legal variations between what happened to this banker and other individuals, for example such as the police chiefs Henry Vivas, Lázaro Forero, and Iván Simonovis, who are already icons of judicial rights and due process violations.

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From Guy Chazan in the Wall Street Journal:

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Gazprom has also been hit. Last summer, Mr. Miller boasted it would be the world's biggest company by market value within seven to ten years, with a capitalization of $1 trillion. At the time, Gazprom's market cap was $360 billion. Now it's around a quarter of that.

Worse lies ahead. Natural gas prices tend to follow oil prices with a six- to nine-month lag: With crude down more than $100 since reaching a record high of $147 a barrel in July, gas prices are expected to fall steeply next year. That will mean a sharp decline in Gazprom's export revenues from mid-2009.

Still, Mr. Putin, addressing the gas exporters' forum, warned that the price of gas would inevitably rise again in coming years. Producing gas fields are in decline, he said, and most untapped resources are in remote areas. Russia will need to invest billions of dollars to develop new fields in places like the Yamal Peninsula and the Barents Sea, which lack basic infrastructure and will need to be connected by pipeline to areas where gas is consumed.

Gazprom said Tuesday its board had approved investments for 2009 of $32.5 billion, up 12% from this year's levels.

"That means that despite the global financial crisis...the era of cheap energy, including cheap gas, is ending," Mr. Putin said.

A new report in the Financial Times points to the continued weakening of oil prices caused by an overall flight from risky assets over the Christmas holiday.  In related news, other reports indicate that Russia is facing its first budget deficit for 2009 in a decade because of these low oil prices, while another Kremlin aide points out the obvious - that the crisis is causing widespread unrest.

It's hard not to feel a slight energy schadenfreude as OPEC experiences what it is like to be at the mercy of an unresponsive market.

From the FT:

By late morning on Christmas Eve, WTI was down 51 cents at $38.49 a barrel, while Brent crude was 60 cents lower at $39.76 a barrel.

The latest price falls came as bickering between oil producing nations intensified. The Organisation of Petroleum Exporting Countries suggested it may hold a meeting in January to discuss further production cuts after those announced in previous meetings failed to halt the slide in prices.

Vladimir Putin has heralded the end of cheap energy resources, but short-term energy markets do not reflect his comments, analysts say.  The meeting of the Gas Exporting Countries Forum saw producers maintain that they would be unable to fix prices, because supplies remain tied to fixed pipelines and long-term contracts.  Producers did agree to consult each other on future production and to study ways of setting future prices for natural gas.  'There is, however, some scepticism about whether a gas cartel will be able to operate in the same way as Opec.'  Gazprom's board has approved its 2009 capital spending plan of $24.7 billion.  Russia is to assist Nicaragua - the only nation after Russia to recognize the independence of South Ossetia and Abkhazia - in building hydroelectric and geothermal plants.  After securing significant energy price cuts from Moscow, Alexander Lukashenko said that Belarus would consider recognizing the two breakaway regions in the new year.
Russia is facing its first budget deficit in a decade, which it intends to cover with the remains of its reserve fund.  The ruble has been devalued three times this week, and seven times this month. 'As long as oil remains depressed and at many year lows the central bank has no other choice but to carry on with its devaluation.'  Analysts suspect that Vneshekonombank could take advantage of the low trading volume on the MICEX and RTS exchanges to prop up prices.  To help cut company expenses, the board members of Magnitogorsk Iron & Steel Works will forfeit their salaries until their contracts expire.  On the trials of Novokuznetsk, a Russian city dependent on steel. 

241208.jpgTODAY: Russia to increase number of nuclear missiles; Duma to raise 'financial literacy', comedians avoiding the crisis; Russia wants UN corruption officials out; Nikita Belykh, Anna Politkovskaya.

The State Duma is in the process of creating a state program for 2009 that will raise the level of financial literacy in society, supposedly guarding against further financial crises by 'raising the population's level of trust in the banking system'.  But there are worse jokes, particularly amongst Russian comedians who are steering clear of making any overly insightful gags about the crisis.  The Russian government is seeking to oust a senior UN corruption investigation team as revenge for their probes into a Russian diplomat and national, and supposedly as part of a larger push to thwart aggressive investigations.

From a new column by Anders Aslund on Russian economic policy:

Apart from Russia's excellent fiscal policy, just about everything has been wrong with the country's economic policy since authorities arrested former Yukos CEO Mikhail Khodorkovsky in October 2003. Shortly after this, Yukos was confiscated. The only significant short-term relief is to free the ruble so it can depreciate. Apart from the very fall in oil and other commodity prices and the international liquidity squeeze, Putin has caused the lion's share of the country's current economic problems.
gasfinger.jpgAlthough it feels like a subject we have beaten to death with a heavy stick, today's first official meeting of the gas cartel can't go by without comment.  We've written about why it's different than the oil cartel, why it might be bluff, why the perceptions of the cartel are just as important, the important role of North Africa, how it is politically relevant and very misunderstood, all the times Russia has denied their interest in it, how Gazprom already is a self-contained cartel, and how Italy became its first victim.

Is there much left to add?  Yes.  Despite the fact that everyone clearly understands that the gas troika really doesn't pose a threat with regard to their ability to manipulate immediate prices via production quotas (like oil), nobody seems to be talking about what the cumulative impact of these coordination efforts have on the rapidly diminishing competition between suppliers and the carve up of markets.  Also, attention should be given to the coordination of investments.

The Financial Times has an interesting piece today which points to a few reasons why driving gas prices higher isn't what Russia needs right now, and how this new group could result in fewer development opportunities for the multinationals - who needs Exxon's funding when you've got the Saudis?

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Phillip Pan of the Washington Post offers some ideas about the meaning of Nikita Belykh's appointment as governor of Kirov province - a move which destroyed the Union of Right Forces in one swipe, but inserted an unexpectedly fresh face into the governing coalition.  Wouldn't it be nice if the governors could just freely compete in elections?

The appointment, which prompted accusations of betrayal by some of Belykh's colleagues, is a sign of the uncertainty surrounding Russian politics as Putin confronts the country's worst economic crisis in a decade and the fractured opposition tries to tap into rising public discontent and mount a new challenge. (...)

Although more than three-quarters of Russians continue to approve of Putin and Medvedev, 40 percent now say the country is headed in the wrong direction, compared with 24 percent in September, according to a recent poll by the Moscow-based Levada Center. About 43 percent said the country was moving in the right direction, and 18 percent declined to answer.


gas122308.jpgWell, the end of another year is quickly approaching, which means one thing for all us Russia watchers:  time for another natural gas war.  Will it be Belarus again this year?  Nope, it looks like the clever Lukashenko has danced his way out from under Gazprom once again.  The Ukraine is exactly back to where they were in 2006, however with less money to pay the tab and a greater PR effort from Russia to help Europe brace itself mentally for the cut-off (maybe they learned something about preemptive diplomacy from the Georgia misadventure?).  Meanwhile for the rest of Gazprom's customers in Europe, the message from Russia is clear:  "Costs of exploration, gas production and transportation are going up -- it means the industry's development costs will skyrocket. (...) The time of cheap energy resources, cheap gas is surely coming to an end," PM Vladimir Putin said today during a meeting of the much-discussed gas cartel.

Industry analysts may be puzzled by the frosty bluster of these threats from the sidelines of the Gas Exporting Countries Forum (GECF), which includes 16 states such as Algeria, Iran, Qatar, Venezuela, Indonesia, Nigeria and others.  After all, there were similar appearances of an intent to manipulate the market when Russia sent Igor Sechin as an observer to the last OPEC meetings along with vague promises of a voluntary slashing of production.  However in the end, the Russians declined to go along with the OPEC, frustrating several other members and perhaps raising some problems in the mutual cooperation on pricing coordination for natural gas.  Will the new, emboldened GECF also be just talk, or action?

Regardless, both the upcoming potential supply cut to the West and the growing monopolization of the oil and gas market place an increased emphasis on the region's most highly prized resource trophy:  Central Asia (for example, the central dispute in the Ukraine revolves around the non-transparency of the Russo-Turkmen gas trade).  Earlier this week, the journalist John Daly published an impressive survey on the energy politics and business issues of the region over at World Politics Review, which is well worth a read.  After the cut, an excerpt.
Details of Russia's agreement with Belarus on the price of gas are being kept under wraps, as the Kremlin merely stated that 'the talks have produced an agreement'.  This silence is giving rise to speculation about Belarus having won a price victory, after warning Dmitry Medvedev not to cripple its economy with high prices.  Private and state-owned power companies are to receive equal financial aid, says Deputy Prime Minister Igor Sechin.  Despite opposition from within the Serbian government, Gazprom is to buy the Serbian state oil refiner, Naftna Industrija Srbije, in exchange for agreeing to route the South Stream pipeline through Serbian territory.  The Gas Exporting Countries Forum, comprising Russia, Iran, Qatar and Venezuela - often referred to as the 'gas OPEC', is meeting today to discuss a potentially more formalized structure for itself.  TNK-BP has replaced all nine members of its main board, and given the deciding vote to 'an independent director'.  The price of oil has fallen below $40 a barrel.  
The number of unemployed in Russia will double over the next year to 10 million people.  Aeroflot is not considering a merger with S7 because the airline's profit has dropped 57% and 'there is nothing to merge with'.  Cyprus' top-range properties are still being bought up by Russian buyers whose wealth remains largely unaffected by the economic crisis.  Could the Kremlin's offer of one-year loans to bail out Russia's oligarchs be part of a plan to renationalize the economy?
231208.jpgTODAY: United Russia blocks logging enquiry, party leader resigns over car tariffs?  Putin's image suffering, no apparent plans to reverse tariff decision; confusion over supply of weapons to Iran, US calls for clarification; OSCE mission in Georgia to end over Russia dispute; navy's missile fails another test launch, military to receive spending boost.

The United Russia party allegedly blocked a State Duma deputy enquiry into the logging going on at the Bolshoi Utrish reserve, which many environmentalists, activists and locals say is illegal.  A senior United Russia leader in the Far East has resigned, supposedly following the protests against the government's plan to increase tariffs on imported cars, although he has not explained his decision.  Vladimir Putin's spokesman has been unavailable for comment since Friday, amid plummeting public faith in the prime minister's 'Teflon image' and the Vladivostok protests exhibiting some of the first ever public criticisms of Putin.  Putin has given no indication that the government will reverse its decisions on auto tariffs, and a recent poll by the Public Opinion Foundation found that 39% of Russians are dissatisfied with their government, compared with 24% in September.  'The anger over increased import duties is particularly strong among residents of the Far East, the majority of which -- perhaps as high as 80 percent -- make a living either directly or indirectly connected with the sale or servicing of imported automobiles.'  Journalists in Russia's Far East are calling for an investigation into the way reporters at the car tariff protests were treated.

We've posted several articles already about the recent mass demonstrations in Vladivostok and other Russian cities against the recent steep increase in import duties on foreign cars - Vladimir Putin's version of the recent Detroit "bailout" in the US. Today, our own Russia correspondent Grigory Pasko, who spent a significant portion of his adult life in Vladivostok as a reporter for the Pacific Fleet newspaper, weighs in on the subject as well. But a few points of explanation are in order before he does:

Pasko does not refer to these demonstrations as "demonstrations" in his article. He calls them "mitingi" in Russian, which is a word derived from the English "meeting" but which actually means something more akin to "rally". In Russian, a "demonstration" means a government-sponsored event with lots of red flags and happy proletarians "voluntarily" expressing their support of (or outrage at) whatever they've been told to express it about.

ruble122208.jpgIn case you haven't noticed, the Russian ruble appears to be in a lot of trouble, under tremendous pressure from sellers fleeing to other currencies like monetary refugees.  Although the Central Bank widened the band and allowed the ruble to slip for the third time in four days on Monday (and slip it did down to 33.5 against the euro-dollar basket), there are indications that the government's strategy of managed devaluation is coming into strong disfavor among institutions and market analysts as the currency falls to a three-year low against the dollar.

Chris Green, chief economist of London-based VTB Bank Europe, tells the AP: "The continued defense of an unsustainable currency is like trying to push water uphill.  The dynamics are suggesting that it's going to fall back again."

But the most startling news comes from the World Bank, as reports emerged today that a strongly worded recommendation has been sent from the institution to Russia's financial authorities asking them to scrap the managed exchange rate regime in order to moderate capital outflow and staunch the leak in the rapidly depleting reserves.

Russia Profile is carrying the following opinion article by Alexander Arkhangelsky.

December 22, 2008
Mercy for the Fallen
Comment by Alexander Arkhangelsky
Special to RIA Novosti

Acts of compassion should be the rule, not the exception

In the past month small, unconnected and apparently spontaneous steps forward have been made on several humanitarian issues. Alexander Arkhangelsky argues that these could be a reason for optimism, if the state allows these small steps of compassion to become the rule, rather than the exception. The alternative - continuing to resist opening up the political system - means denying any outlet for popular sentiment to let off steam. The results of that could be disastrous.

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Are hangmen sad at night?

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

President of the RF Dmitry Medvedev, appearing at the beginning of December at the All-Russian Congress of Judges, made a series of important declarations. In part, he declared about the necessity of adopting a law consolidating various forms of promulgating information about the work of courts. He likewise said about the necessity of creating a unitary disciplinary organ, which would be able to control the application of disciplinary measures of influence on judges.

"If there arise substantive questions toward a judge, he needs to be kicked out not during the course of three years, but right away, when this has taken place", - said the president.

There is probably nobody in the world already who could have been deceived by these words of the Russian president. The fact of the matter is that the leadership of Russia already has a reputation: this is people who nearly always say the right words, and these words nearly always diverge with the real deeds.


Traders should be happy to hear this holiday news from Reuters:

Russian state bank VEB may launch a last-ditch attempt to improve the Russian stock market's dismal 2008 performance with stepped-up cash interventions in thin holiday trade, analysts and traders said on Monday.

"VEB is expected to take advantage of quieter international markets to push the price of state enterprise shares higher into the year-end," Uralsib equity strategist Chris Weafer said in a weekly stock market comment.

VEB, the clearinghouse for hundreds of billions of roubles in government bailout funds, said late last month it had received 115 billion roubles ($4.15 billion) out of a promised 175 billion roubles for direct intervention on the stock market.

From an editorial in the Rocky Mountain News:

"We are hurtling back into a Soviet abyss, into an information vacuum that spells death from our own ignorance," Politkovskaya wrote in The Guardian two years before her death. "All we have left is the Internet, where information is still freely available. For the rest, if you want to go on working as a journalist, it's total servility to Putin. Otherwise, it can be death, the bullet, poison, or trial - whatever our special services, Putin's guard dogs, see fit."
FT columnist Gideon Rachman blogs about the crisis protests over this weekend, and takes a look at the remarkable speed with which Russia's once abundant foreign reserve fund is emptying:

More broadly, the Russian government is facing a serious economic crisis on several fronts. Just six months ago, its huge pile of almost $600 billion in foreign reserves seemed a symbol of the country's new-found strength. But they have got through roughly a quarter of that in just three months - mainly through supporting the rouble. At this rate, it will all be gone well before the end of 2009. That is not an entirely implausible scenario, because the fiscal pressures on the Russian government are only likely to grow over the next year. Official projections are still that the economy will grow by about 3%; but private-sector economists in Moscow are talking about a deep recession. With oil down at just over $40 a barrel, the cash-spigot has been turned off.

There is a danger that, as the government comes under increasing fiscal pressure, it will be tempted to raid the foreign reserves for ordinary budget spending - espescially if the alternative involves cutting social spending and risking further popular unrest.
UPDATE: Reuters is on the story now.  The following news release was arrived in our email box from the defense team of Vasily Alexanyan.

alexanyan102008.jpgEuropean Court of Human Rights orders Russia to release AIDS prisoner

The European Court of Human Rights (ECHR) held in a judgment issued today, 22nd December 2008, that the continued detention of Vasily Aleksanyan by the Russian authorities is 'unacceptable'.

STRASBOURG, 22nd December 2008: The ECHR, in a judgement issued this morning, ordered the release of Mr Vasily Aleksanyan, a 37 year old lawyer who has been held in detention by the Russian authorities since April 6th 2006 (991 days). Mr Aleksanyan suffers from AIDS and a number of concomitant diseases, including AIDS-related lymphatic cancer, and is nearly blind.
Read a summary of Russia's attempts in 2008 to secure a share in the Caspian's oil and gas reserves.  A deal has just been ratified between Russia, Kazakhstan and Turkmenistan to build a natural gas pipeline along the Caspian.  Russia's exports of uranium products and uranium-enrichment services will grow by 30% year-on-year for 2008.  Gazprom has warned its European customers it cannot rule out a disruption to its gas supplies because of a debt dispute with Ukraine. 
Vladimir Putin issued a warning to employers over the weekend about job cuts. 'Business should not... fire people without extreme need,' he said.  State-run banks are planning to inform the authorities of any breach of workers' rights by employers, such as sending them on unpaid leave.  Russia's oligarchs are in line for $78 billion of Kremlin loans to help them survive the credit crisis.  Despite the economic crisis, the BRIC economies will account for 40% of global economic growth between next year and 2020, according to new research.  The ruble continues to fall...
221208.jpgTODAY: Car tariff demonstrations see protesters beaten and arrested - video; Russia delivers air-defense system to Iran; Belarus could get $3 billion loan if willing to pay the price; presidential term vote unanimous; the Merchant of Death on trial, UK prime minister's anti-Putin aide.

A demonstration against raising tariffs on imported cars in Vladivostok over the weekend saw protesters beaten and arrested.  A Putin deputy described the protesters as 'provocative rogues', and one source reports that 'ten journalists were detained by police, who demanded that several cameramen and photographers turn over videotapes and memory chips.'  The decision to raise these tariffs, notes the Times, was a contradiction of the G20 undertaking not to impose or raise any new barriers to trade or investment for the next year.  'For me, the car business is the only way to support my family,' said one car dealer.  Some video footage of police detaining protesters can be found here.

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The following is an exclusive translation from today's edition of El Nacional, a leading daily newspaper in Venezuela - an interview with an expert on Russia-Venezuela relations.

EL NACIONAL - Domingo 21 de Diciembre de 2008Mundo/14

Carlos Romero - an academic disapproves ideologization

Chavez operates with Russia like the Cold War

The UCV and Unimet professor argues that the government is looking to get into the international game through the rivalry between Washington and Moscow

BY ARMANDO AVELLANEDA

Politicization and ideologization are, for Carlos Romero, professor of international relations at the Central University of Venezuela and the Metropolitan, the words that best sum up in his judgment the management of Hugo Chavez's diplomatic relations with Russia in 2008.

He does not think it is entirely negative that relations have been getting closer with Moscow. He regrets, however, that the president is using these relations to attack the United States and attempt to play "international poker."

Although this has not yet turned into a full fledged manifestation of the "greek virus" of widespread social discontent, over the weekend Russia has been assailed with protest actions in multiple cities in response to the state's idea to place an import duty tax on foreign cars in effort to cover the increasingly burdensome budget gap.  Oddly, it is a luxury tax on imported automobiles which has provoked such public disapproval, but as we have reported, the Kremlin has already prepared itself to put down any crisis-related marches.  In light of these developments, some believe that Vladimir Putin's aggressive warning to foreign enemies yesterday was an attempt to paint the demonstrations as caused by outside opponents.  The heavy-handed response to the auto protests by riot police, which has included hundreds of arrests and cases of beatings, is causing a wider escalation.  One protestor told the AP that "The Russian people have started to open their eyes to what's happening in this country. (...) The current regime is not acting on behalf of the welfare of the people, but against the welfare of the people."

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People form a human chain outside the regional government building during a rally of motorists protesting against car import duties in the Siberian city of Krasnoyarsk December 21, 2008. Russian riot police detained at least 100 people on Sunday protesting against government measures linked to the economic crisis, a crackdown that highlighted official sensitivity to growing hardship. Protests took place across Russia against car import tariffs, which are being raised to prop up car producers and discourage Russians from buying second-hand vehicles.REUTERS/Ilya Naymushin (RUSSIA)

Although it's not exactly clear who he is talking to, Prime Minister Vladimir Putin is sending an aggressive warning for the holiday season:

Prime Minister Vladimir Putin warned Russia's foes on Friday against trying to destabilize a country facing broadening economic crisis, Russian news agencies reported.

Putin did not specify who might pose a threat to Russia's stability. But in the past, he has often blamed Western security services of trying to destabilize the country using opposition groups and non-governmental organizations as their instruments.

"Any attempts to weaken or destabilize Russia, harm the interests of the country will be toughly suppressed," they quoted ex-KGB spy Putin as telling an annual meeting of top spies and security officers ahead of their professional holiday.

Guy Sorman has an interesting column exploring the deep fractures within Europe's left-leaning political parties in light of the riots currently assailing Greece:

Moreover, without the Soviet Union, European socialists have few foreign causes to take to heart: few understand Putin's Russia, and today's totalitarian-capitalist China is too far and too strange. And, since Barack Obama's election, anti-Americanism is no longer a viable way to garner support. The good old days when Trotskyites and socialists found common ground in bashing the United States are over.

The ideological weakness and division of the left will not, of course, exclude them from power. Leaders can cling to office, as José Zapatero is doing in Spain and Gordon Brown is doing in the UK. The left may ultimately win general elections elsewhere if the new Keynesian right proves unable to end the crisis. But whether in opposition or in power, the socialists have no distinct agenda.

The lesson from Greece, however, is that what European socialists should fear most is the far left's taste and talent for disruption. For the hollowing out of socialism has a consequence. To paraphrase Marx, a spectre is haunting Europe - the spectre of chaos.


Remember back when Russian billionaire Alexander Lebedev criticized the government and founded an opposition party?  Seems like that may now cost him his stake in Aeroflot, as the state banks selectively withhold a bailout.  The Financial Times is pushing the rumor:

An outspoken Kremlin critic could face the loss of a 25 per cent stake in Aeroflot, Russia's national airline, if his bank is refused a bail-out loan by the Russian state.

Aleksander Lebedev, chairman of Russia's National Reserve Bank, confirmed yesterday that he was in talks with VEB, the Russian state bank, for a $130m loan to stave off a margin call on a stake of about 25 per cent of Russia's national airline, which fell due last night.

"We've been trying, but I'm not sure if we've been successful, because the procedure is not very clear," he said in an interview with the Financial Times. "But we haven't been told no." (...)

medvedputin121908.jpgRealism has a lot of advantages over other schools of thought on international relations.  If, for example, you find yourself in an ardent debate over Russia, you can easily dismiss the competing approaches as being "unrealistic" - or naively optimistic - thus winning the point by the simple title of your paradigm.

The truth is that realism is making quite the comeback, and that is a negative trend.  All summer long, we braced ourselves for Henry Kissinger's brand of realism to dominate throughout the presidential campaigns - but his sudden interest in Russia disappeared rather promptly after the invasion of Georgia (perhaps so as to not complicate McCain's bid for the White House).  But if anything, the war brought the return of the R-word to the mainstream.

A realist argument for Russia's invasion of Georgia was recently presented by Dmitri Simes of the Nixon Center in the National Interest.

bolivar121908.jpgAlthough it may not be apparent from my recent blog posts, I have just completed a week-long business trip to Latin America.  Among the many interesting topics in the news my colleagues and I have been discussing is Ecuador's decision to default on its bonds - not because they don't have the money, but rather that President Rafael Correa (a U.S. educated economist who has been slowly pushed into the orbit of Hugo Chavez, thanks to American neglect) believes that the former administration accrued these debts in bad faith.  Call it a politically motivated sovereign default.

One impact of Correa's decision to stop servicing debt is that the country will likely be forced to abandon the dollar, according to Goldman Sachs.

But now we have a big problem:  how can Ecuador successfully de-dollarize and bring back the Sucre?  This is the problem that economists call "original sin" - and other than Liberia in the 1980s I can't think of any country that has been able to wean itself off dollars.

So here's my wild and crazy prediction:  Ecuador could just choose to adopt the Venezuelan Bolivar.  It would be an absolutely unprecedented, unwise, and largely political statement - in other words, exactly what both Chavez and Correa would love to do.  Maybe even the Russians could kick down $20 billion as a FOREX starter.

In these strange times, I think we have to learn a new mantra of "never say never."
This one is from an article in the Times of London on Russia sending warships to Cuba for the first time since the days of the Soviet Union.  Also see yesterday's post on the visit of the Nicaraguan president to Moscow.

By sending its warships to the Western hemisphere, Moscow aims to show that it too can flex its muscles in an adversary's backyard.

But its cruise through Venezuelan and Panamanian waters have ruffled frustratingly few feathers in Washington.

Asked how it felt to watch the first Russian warship since the Second World War to transit the Panama Canal, the Secretary of State, Condoleezza Rice, said: "I guess they're on R&R. It's fine".

Writing in the Moscow Times, Yevgeny Kiselyov points out that the latest changes to the criminal code on treason present some frightening possibilities.

Human rights advocates are in shock. The definition of an "act" of treason is so loosely defined that prosecutors and law enforcement agencies can interpret it any way they see fit. Moreover, even inactivity could qualify as an "act" of treason. Imagine that a journalist or political commentator submits to the foreign press an article that criticizes the constitutional amendment to extend the presidential term from four to six years or expresses the same idea to a foreign diplomat during an embassy reception. That could easily qualify under the new law as consulting a foreign organization on a subject directed against Russia's "constitutional order."

And what if a person, after finding out that his fellow citizen has established a "suspicious contact" with a foreigner or foreign organization, fails to inform the police or Federal Security Service in a timely manner about the suspected traitor? His failure to act would also make him guilty of high treason under the new legislation.

gaoxiqing121908.jpgMeet Gao Xiqing - the man who runs the $200 billion China Investment Corporation.  The Atlantic Monthly has a very interesting profile of him this week.

Gao dressed and acted like a Silicon Valley moneyman rather than one from Wall Street--open-necked tattersall shirt, muted plaid jacket, dark slacks, scuffed walking shoes. Rimless glasses. His father was a Red Army officer who was on the Long March with Mao. As a teenager during the Cultural Revolution, Gao worked on a railroad-building gang and in an ammunition factory. He is 55, fit-looking, with crew-cut hair and a jokey demeanor rather than an air of sternness.

His comments below are from our one on-the-record discussion, two weeks before the U.S. elections. As I transcribed his words, I realized that many will look more astringent on the page than they sounded when coming from him. In person, he seemed to be relying on shared experience in the United States--that is, his and mine--to entitle him to criticize the country the way its own people might. The conversation was entirely in English. Because Gao's answers tended to be long, I am not presenting them in straight Q&A form but instead grouping his comments about his main recurring themes.

Does America wonder who its new Chinese banking overlords might be? This is what one of the very most influential of them had to say about the world financial crisis, what is wrong with Wall Street, whether one still-poor country with tremendous internal needs could continue subsidizing a still-rich one, and how he thought America could adjust to its "realistic" place in the world. My point for the moment is to convey what it is like to hear from such a man, rather than to expand upon, challenge, or agree with his stated views.

Continue reading here.

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The Wall Street Journal has an interesting piece today on a very influential former British Army captain, Ryan Grist, who was serving as an OSCE war monitor in Georgia before he went AWOL across the Russian line on his own improvised fact-finding mission.  Grist's comments to the media on the start of the war have been twisted and turned by both parties, and it's clear in this article that he's eager to clear up confusion.  (RA also had a post yesterday on the war debate)

Mr. Grist was in charge on the ground for the Organization for Security and Cooperation in Europe when fighting erupted in Georgia's separatist enclave of South Ossetia on the night of Aug. 7. Last month, he caused a stir when he told interviewers that his ceasefire monitors never heard Russian-backed provocations that Georgia says triggered the war.

He also says he repeatedly warned OSCE diplomats that Georgia might attack, but was ignored. Since giving his reports on the war, "I've been accused of working for MI6 and the KGB and I have been called a liar," says Mr. Grist. "I just wanted to find out what was going on." (...)

The Kremlin has proposed to increase its holding in the electricity sector, offering to bail out big electricity companies such as OGK-1 by organizing the purchase of company stakes by state banks, and is also drafting plans for a $5.25 billion electricity aid package.  Chalva Tchigirinsky has agreed to indemnify any losses made by Sibir Energy in a controversial deal under which the company will buy a portfolio of properties from him - but the deal has been postponed following opposition from Moscow City Hall.  Does the 10% drop in crude price since OPEC's announcement that it plans to cut 2.2 million barrels indicate skepticism about its commitment?  Or is it just that the deepening recession is scuppering demand?  Kiev's residents 'seem almost resigned to another demonstration of Russia's "gas diplomacy" - and a cut-off'.  Falling oil prices raise questions about the sustainability of Venezuela's foreign policy, says the Financial Times.  
Despite its falling value against the dollar, its new record low against the euro, fears of devaluation and its third fall in a week, this report alleges that Russians still trust their national currency and still want to be paid in rubles.  Unemployment rates are rising, disposable income has seen a 'shocking' drop, and the economy is not expected to grow until the second half of next year.  The head of AvtoVAZ expects the Russian car market to contract by 40-50% next year, as Prime Minister Putin today discusses the possibility of providing domestic car producers with financial aid.
191208.jpgTODAY: Concerns over potential unrest; bill could impose curfews on teenagers; Russia suggests deal with US on missile defense, blocks UN resolution on Holodomor.

Crashing energy prices are stirring concerns about the potential for unrest in Russia.  Yegor Gaidar, prime minister in the early 90s, said, 'I've already seen how things get worse as the result of an oil-price collapse.  It's dangerous -- but people who have not governed a nuclear-armed country don't quite understand that.'  Read more opposition concerns about reforms to Russia's justice system, including recent decisions to suspend crimes against the state from being tried by jury, and to expand the definition of treason.  In a bid to reduce juvenile delinquency, Russia's parliament is studying a bill to impose a night-time curfew on under 14-year-olds that would ban them from 'places deemed harmful to their morals' after 10pm.

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Marcel H. Van Herpen, who heads up the Cicero Foundation, has released a new paper entitled "Russia, Georgia and the European Union: The Creeping Finlandization of Europe."  As one can observe from the opening allegory in the paper about Europe's soft post-invasion response to Russia's military actions in Georgia, Van Herpen intends to pull no punches in his condemnation of European sycophancy:

It is as if suddenly a wolf had broken into a henhouse and the chickens run in all directions in a desperate sauve qui peut. After the first shock the chickens start to accuse each other: whose fault was it that the wolf came in? And they come up with different reasons. Maybe we spoke too loud, or the wolf has been humiliated. Maybe we provoked the wolf or did not treat him with the necessary respect. Thereupon they decide not to provoke him, to treat him gently and with more respect than ever. The wolf, however, knows very well why he came: he simply had hunger...
The paper, written in what even I would call an angry tone, calls European leaders to task for having put their trust into the Russian explanations for war, and subsequently debunks some of the common myths.  Much of what is argued in this short report was also discussed in much greater (even excruciating) detail at a recent conference at the Hudson Institute featuring Andrei Illarionov and Svante Cornell (watch the video of the event here).

Is this just a minor backlash to Russia owning the news cycle last month, or will it be an all out blowback?

This has nothing directly to do with Russia, but the news clip below contains a short discussion on this week's 30th anniversary of China's economic political reform - a time for us to take a look at what has changed (and what hasn't), what's been accomplished (and failed), and measure the strengths of this emerging competitor with its weaknesses. This blog is of the opinion that too many of us overestimate China in future projections, and fail to address the size and scope of its many systemic problems.

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Photo: Nicaragua's President Daniel Ortega, left, shakes hands with Russian President Dmitry Medvedev, right, after a signing ceremony in the Kremlin, Thursday, Dec. 18, 2008.AP Photo by Mikhail Metzel)

Today the president of Nicaragua, Daniel Ortega, is on an official state visit to Russia, attending a series of events alongside President Dmitry Medvedev, who, perhaps grateful for Nicaragua's recognition of South Ossetia and Abkhazia (not even Belarus was up to that task), talked about a number of vague promises of increased ties and aid to the Central American nation.  Ortega, whose party won a landslide of seats in a flawed mayoral election last month (the Netherlands has just announced they will suspend aid because of the vote rigging), last visited Moscow under dramatically different circumstances in 1985, back when Central America occupied a disproportionate amount of real estate within Ronald Reagan's nightmares and paranoia.  Russia's effort to recreate Washington-Moscow antagonism over the region couldn't be clearer - but so far nobody is buying it.
naftogaz121808.jpgThere are probably three moments we can identify over the past six years which may be regarded as the critical junctures in Russia's relations with Europe and the United States:  1) the state's theft of Yukos, 2) the 2006 New Year's Day gas supply cut-off to the Ukraine, and 3) the 2008 invasion of Georgia.  Each case involved radically different groups and forces, but all three underscored an institutional rejection of long-standing international rules and norms.

With Yukos, the state seems to have refined its methodology to joint-venture expropriation, while the Georgia war is so recent that we still await to see how much territory will be annexed back into Russia, but the Ukraine dispute - and the issue of the energy weapon in general - looks like it is about to make a comeback this holiday season. 

According to media reports, Gazprom executives are refusing to sign any new supply agreements with the Ukraine until a $2 billion debt is paid - an amount which officials dispute as being distorted by the extraordinary opacity of the third-party gas traders.

His vice presidential candidate, Joe Biden, was the first one to say it during the campaign, and we agreed wholeheartedly that Barack Obama would face a serious test, predicting that it would be Moscow to take the debate.  We thought perhaps we had already experienced it with Dmitry Medvedev's dreadfully miscalculated threat to put to missiles in Kaliningrad on the same day as his victory (even Venezuela and Iran sent their cordial congratulations).

But according to a top U.S. diplomat, John Rood, under secretary of state for arms control and international security, the testing is just about to begin.  Rood tells Reuters that so far talks with Russia are getting worse and worse, and that he senses that his counterparts handling arms control and security are currently delaying to assess the Obama team, and devise a strategy to push a hard line on the new president:  "They have paused with the election of a new administration in the United States, and they are looking carefully at the position of the new team," Mr. Rood told reporters. "My assessment is that the Russians intend to test the mettle of the new administration and the new president."

Perhaps they are eagerly awaiting the arrival of Strobe Talbott.
stalin121808.jpgWe have seen the policy become implemented in incremental steps - a new history textbook here, closed access to historical records there, mounting pressure on reconciliation and truth groups, and even a television poll for the most important Russian putting the out-sized dictator Joseph Stalin on top.  Today's Kremlin appears to be engaged in an all-out campaign to restore the legacy of Stalin, erase the crimes and abuses of his regime, cast a new proud light on his record, and re-write the past.  Even the state propaganda news channel RussiaToday has happily borrowed the Stalin brand for ads in the Washington DC subways.  As Grigory Pasko has written on this blog, Russia is one of the only countries where the past is unpredictable.

The question isn't so much whether or not the siloviki are carrying out a policy of "Re-Stalinization," but rather, toward what end?  What purpose do these history games serve, and where does this sudden fear - which was not present whatsoever in the 1990s - to critically examine the past come from?

The latest episode of this confusing restoration of history's most brutal dictator is reported on by Alex Rodriguez at the Chicago Tribune, who speaks to several people at the NGO Memorial, following the sudden raiding of their offices by security forces, who beyond the run-of-the-mill harassment these researchers and academics face regularly, were out to seize something in particular:

Russia's lack of support for a cut in oil production is causing problems for OPEC, which has agreed to remove an additional 2.2 million barrels of crude from the market, starting in January.  Russia's retreat makes Azerbaijan the only non-OPEC nation to offer output cuts.  The news had no effect on the price of oil - 'only hours after the official communiqué was delivered in Algeria, the price of US Light crude fell to a four-year low of $40 per barrel' - potentially because 'OPEC and other oil-producing countries can't cut production fast enough to stay ahead of plummeting demand'.  Russia has ruled out joining OPEC for the present.  Members of the Caspian Pipeline Consortium have agreed to double the pipeline's capacity, but BP is pulling out, saying that there isn't enough oil to pump through it.  Russia, Iran and Qatar will meet in Moscow next week to discuss cooperation on gas exports.  Amid repeated threats from Gazprom, Ukrainian President Viktor Yushchenko says his country has already paid back $800 million of its gas debts, but Gazprom is set to warn the EU of the threat posed by Ukraine's debts.  European governments are supporting drilling for coal bed methane in the hope that it will provide some energy security and reduce dependence on Russia for gas.  
The ruble has fallen to an all-time low against the euro.  There have been seven devaluations of the ruble since early November, with analysts predicting more frequent and dramatic drops.  The number of overdue market payments has increased by over six times this year, creating banking nightmares of devalued property and lack of funds.  Read an in-depth report on the Kremlin's regaining control of Norilsk Nickel and the wider implications of state bailouts.  A German businessman alleges that the Kremlin owes him up to $10 million for an alleged 'cunning' plot regarding rent payments on an apartment block in Cologne.  Truck maker KamAZ has announced that it will halt assembly lines for a month on the back of 'no demand'. 
181208.jpgTODAY: Motorist protests are first sign of public anger over financial crisis, activists concerned over widening of treason definition; Russia to give Lebanon fighter jets; Medvedev to have early meeting with Obama.

Protests by Russian motorists on foreign car duty, some of which involved clashes with riot police, 'were on such a scale that they can no longer be considered only isolated affairs', writes Boris Kagarlitsky, who sees the tariffs as an opportunity for 'disenchanted citizens to mobilize'.  Sunday's protests, reporting of which was very limited in Russia, may have been 'the first visible public anger at one of the government's responses to the global financial crisis'.  Activists and opposition members are concerned that the Kremlin's move to widen the definition of treason will outlaw protests and completely shatter the remains of Russian civil society.  Solidarity, the new opposition party, intends to 'dismantle' the present system of power.  But with pressure from the government increasing, how is it going to do this, wonders a Guardian columnist.

Writing in the Moscow Times, Yulia Latynina thinks that that the Russian government should be more worried about losing territory to China in the long-term than collective security in Europe in the short term.  The answer: focus on economic development in Russia's far East before envy of China grows into a political reality.

The problem with China is that, in the Russian Far East, people are living in the 21st century on the Chinese side of the Amur River, while on the Russian side they are still stuck in the 19th century. On the Chinese side is the prosperous boom town of Heihe. On this side is the dilapidated and run-down city of Blagoveschensk. Russia ships train cars filled with raw timber and oil south into China, while on the opposite tracks, trains bring in manufactured goods and laborers from China.

In contrast to the United States, China has territorial claims on Russia. And in contrast to our officials, the Chinese think in terms of millenniums, not dollars. But we do not discuss our "China problem" at all because Russia's government is in about the same condition as those buildings in Blagoveschensk -- and that makes it too frightening to even bring up the subject. It is easier to discuss problems that don't really exist, such as the issue of collective security in Europe.

Defining treason in legal terms is an inherently political process, fraught with bitter contention, weight of history, suspicions of abuse, and no shortage of nationalist grandstanding.  But probably not for Russia, which this week introduced a new bill to the Duma asking for modifications to the legislation to make the criteria more open and arbitrary - which critics see as a naked weapon of repression for the executive to prosecute any national acting against their political interests.

We shouldn't expect any kind of vigorous public debate.  It's difficult to imagine that the new legislation will awaken any more public concern or conscience among citizens as the changes to extremism legislation a few years ago.  Beyond just a handful of can-you-believe-this-latest-Russian-outrage type articles in the Western media, the matter will quickly be forgotten and buried until the authorities choose to deploy the legislation.

The very introduction of theme of treason, for any country, carries a difficult implication for the judiciary, which includes a definition of the national interest and an splitting of sovereignty between the state, the people, and the individual.

The following is an exclusive translation from RBK Daily on the preparations being made by the Russian security forces to handle an uprising or unrest over the economic crisis.

In expectation of uprisings

The powers have rethought reducing interior troops

Yesterday, the MVD [Ministry of Internal Affairs] decided not to reduce the interior troops (VV), called upon, in part, to disperse demonstrators. The command of the troops justifies this by «tasks that have been set», without specifying them. In the opinion of experts, the siloviki seriously fear unrest among the unemployed, automobilists, discharged military, those dissatisfied with the growth of housing-and-public-utilities tariffs and other victims of the crisis and of the decisions of government officials.

«Reduction of the internal troops of the MVD of Russia will be suspended», -- reported, citing a decision of the leadership of the country, commander in chief of the VV general of the army Nikolai Rogozhkin. He in no way connects the decision to maintain the numbers of the VV with the financial crisis, citing the «necessity of fulfilling all tasks that have been set», but which ones specifically, Mr. Rogozhkin does not specify.

Yesterday we blogged that Russia had a number of reasons to stay outside the sway of OPEC, not least because they wouldn't want to risk their hard-earned international standing in groups such as the G8 and the succession effort to the WTO, but rather because this government in particular is very sensitive about committing to legal or political interdependence with other groups (the Kremlin has ignored the European Court on Human Rights for many years now, and is not likely to allow a Saudi oil minister to call in their production quotas).

Today, the gap between Russia's rhetoric and reality in participating in the oil cartel became clearer:

Russia proved only a half-hearted helper to OPEC at a key meeting Wednesday aimed at boosting oil prices, and distanced itself from talk of a closer union with the oil producers' club. (...)

Russian Deputy Premier Igor Sechin said his country's oil companies could slash output next year to help bolster tumbling crude prices, but stopped short of solid commitments beyond cuts the struggling producers have already made.

Neither OPEC nor Russia announced any decisions Wednesday on closer ties between the two, despite recent talk from Russian officials about possible cooperation.

Sechin said Russia had proposed "permanent observer status" but said the group still has to determine what that means.

Sechin did not rule out full membership eventually, but said, "We are not rushing."

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We've done a fair amount of blogging about the case of the terminally ill former Yukos general counsel Vasily Alexanyan, who after spending years in prison under no charges and subjected to essentially fatal medical blackmail, was recently given an opportunity to be released on bail - but only by paying the Russian government a staggering $1.78 million bond.  Today the Associated Press reports that he is understandably not too happy about that:

Ill former Yukos executive denounces bail request

The gravely ill former executive of the dismantled Russian oil giant Yukos says the $1.8 million bail for his release from jail is "cynical."

Vasily Aleksanian, who suffers from AIDS and tuberculosis and has almost lost his eyesight, has been jailed since 2006 on embezzlement and money-laundering charges.

The 36-year old U.S.-trained lawyer said in Wednesday's statement that the bail granted by the Moscow City Court earlier this month was a "cynical derision of law and common sense."

Yukos, once Russia's largest oil producer, was broken up and sold off in auctions ordered by the state.

Criminal cases against jailed Yukos founder Mikhail Khodorkovsky and his executives are widely regarded as Kremlin revenge for Khodorkovsky's political ambitions.

The highly-anticipated OPEC meeting is being held today in Algeria, where members and non-members, including Russia, will discuss what is expected to be a significant cut in production - currently being reported at 2 million barrels per day - to try and raise the price of oil.  Russia's oil majors have already voiced their support for a potential cut, whilst Mexico is keeping its intentions quiet although views a cut as 'positive'.  Despite another round of talks, Gazprom and Ukraine's Naftogaz have yet to make progress in talks on natural gas deliveries to Ukraine in 2009 and the settlement of the country's 2008 debt.  Mosenergosbyt, the state-controlled electricity sales company, says it is willing to accept delayed payments from its industrial clients.  Gazprom has signed a six-year general cooperation agreement with state nuclear corporation Rosatom, and is expected to post strong second-quarter profits.  GE Energy will supply power generation equipment for energy infrastructure and economic development as part of a $3 billion deal with Iraq.  
Russia's economic situation is worsening by the day - 'the big question is whether the regime's political control will crack too.'  Despite the financial crisis, Russia's arms exports will exceed $8 billion this year, a $1 billion increase on last year's figures.  Russia is considering buying an unspecified number of remotely piloted reconnaissance aircraft from Israel, and could provide Lebanon with fighter jets.  Deputy Prime Minister Viktor Zubkov has announced an increase in spending on grain purchases this year to provide reserves in case of a bad harvest in the future.  A Google statistics search has revealed Russians' concerns about the financial crisis.  Disney anticipates the possibility for 'vast growth' within Russian television.
171208.jpgTODAY: Pro-Putin ministers slam Finance Ministry; anti-corruption bill to get second reading; Peskov goes after negative stereotypes; Kremlin backing Lukashenko?  Russian mayor stabbed to death.

President Dmitry Medvedev's anti-corruption bill will have its second reading in the Duma today, although changes made thus far, according to the Communist opposition, 'make life easier for corrupt officials'.  Meanwhile, Duma deputies from the pro-Kremlin United Russia party have criticized the Finance Ministry for the way it has spent the government's reserve funds during the crisis, saying that too much money was given to large corporations, who promptly converted it into foreign currency.  The deputies have reportedly proposed to raise direct subsidies to the citizens through higher pensions and public sector wages.  

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Contract with the devil

Grigory Pasko, journalist

The regional congress of non-commercial (human rights and civic) organzations (NCOs) took place from 4 through 7 December in Penza. In the year 2005, the congress took place in Poland, while in 2007 -- in the Ukraine. Then the co-organizers were the Council of Europe and representatives of the NCOs. This time, for the first time ever, appearing as co-organizer of the event was the Commission of the Federation Council of the RF for Questions of the Development of Institutions of Civil Society. This circumstance aroused the indignation of Russian human rights advocates, because there exists a long-standing understanding - the state must not participate in such an event in the capacity of an organizer, inasmuch as in this case it itself forms the agenda, the participants... In short, it functions according to the principle: whoever pays the piper gets to call the tune. The «tune» for the Russian power is just one and it's rather old: to incorporate Russian NCOs into the infamous vertical of power.

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As if right on cue to accompany the news that Russia's industrial output has slumped by more than 10% for the month of November - far exceeding even the worst expectations - the Financial Times is running a piece which asks how long the political leadership will be able to weather the storm.  Although Masha Lipman says mass protests aren't likely to spring up immediately, one should never underestimate the cohesive, organizational power of suddenly having a common grievance to fight for.  The article also mentions the swelling rumors of Vladimir Putin's increasing discomfort in the role of prime minister, and the possibility of a shift in office to make someone else carry out the deeply unpopular devaluation of the ruble.

Pavel Teplukhin, president of Troika Dialog Asset Management, points to a 20 per cent drop in railway freight traffic between October 2007 and October 2008, and a drop in electricity consumption of between 3 and 5 per cent over the same period. The iron and steel sector has been hard hit, with the big steel plant at Magnitogorsk, in the Urals, cutting production by up to 30 per cent.

There are two big dangers for Mr Putin. One is a substantial forced devaluation of the rouble. The other is a sharp increase in unemployment.  (...)


opec121608.jpgSo far there's been no shortage of smiles.  As OPEC members prepare for the big meeting tomorrow in Algeria, all eyes are suddenly looking toward the Russians in an attempt to gauge how much production they will agree to cut or what degree they will verbally express their agreement with the cartel's plans to push the oil price back up from its 70% collapse in value from July.

Heading up the Russian coalition is of course Deputy Prime Minister and Rosneft head Igor Sechin, whose arrival in Orun will be carefully studied, and could represent Russia's first definitive steps toward a new kind of relationship with the exporter's group, one in which Moscow could selectively agree to participate in certain measures, but stopping short of being bound by obligations to the cartel.  As the largest oil producer outside of OPEC, the attendence of Sechin to this meeting, his second meeting with the group since Sept., is a considerable and unprecedented development.

But is it all just for show?
Today the Wall Street Journal is running an extensive autopsy of BP's herculean effort to become the first foreign company to be a player in Russian oil through their joint venture in TNK-BP - a story of vast misunderstandings, mistaken presumptions of regularity, and spectacular failure. Greg White and Guy Chazan's piece is detailed with numerous anecdotes, missteps, and lessons, and although not bringing in any shockingly new information, the overview is comprehensive and dramatic.

Of particular note is the mention of BP's James Dupree in the article, who is believed to have been made responsible for managing the TNK-BP government relations effort - an individual who some are now saying (with 20-20 hindsight) was not senior enough to command sufficient respect within the Kremlin.  A subtle message that comes through in the article as well is the unpredictable nature of negotiating with Gazprom - that it's impossible to do anything of this sort without your partners knowing exactly what you are trying to do (a crisis of confidentiality).

The article also has an interesting account of a meeting between BP Chairman Tony Hayward and the Kremlin kingmaker Igor Sechin - in which the British counterparts failed to understand the message that Sechin would not allow Gazprom to push in and take over the AAR stake, creating unwanted competition for Rosneft.

In short, it's just another horror story from the world of the Russian energy sector, and not likely the last one we'll ever hear.

From a book review of History's Greatest Heist: The Looting of Russia by the Bolsheviks by Sean McMeekin.

'The knell of private property sounds', wrote Karl Marx. 'The expropriators are being expropriated.' Nothing could have been more true. From the beginning, the Bolsheviks had embraced violence and terror: 'A revolution without firing squads is meaningless,' said Lenin. But he had also, since the early years of the twentieth century, used 'expropriation' - the Marxist-Bolshevist euphemism for bank robbery - to raise party funds: the planning and execution of a run of violent but daring heists was how the young Stalin had first won Lenin's approval. When a worthy and prim comrade criticised this style of banditry, Lenin just laughed and said, 'That's precisely the type of man we need.'

In a particularly gruesome and shocking act, pranksters allegedly from the Young Guard (the Nashi-like youth group linked to United Russia) sent a strong message this weekend by dumping 20 or so dead and dying sheep wearing Solidarity t-shirts right in front of the hotel where the new opposition coalition was holding its meeting.  The now widely distributed video, captured by Oleg Kozlovsky, leaves little to the imagination.

From the Moscow Times:

"There were two people in the bus who were throwing them out," said delegate Ella Polyakova, who witnessed the incident. "We started to yell at them, and they shouted back saying the same fate awaits us." (...)

Irina Novozhilova, head of the animal rights group Vita, said her organization along with several others will ask the Prosecutor General's Office to open a criminal case in connection with animal cruelty.

"This is shocking to torture animals to achieve political goals," Novozhilova said. "Those who organized this disgusting act must be found and punished."
Sadly, it seems quite implausible that the prosecutor's office would do anything in response to this incident - especially given that the police spent the next few days arresting the leaders of the opposition.  It is a very ugly and disappointing illustration of what has happened to political discourse in Russia.
According to the president of Lukoil, OPEC wants Russia to cut its crude output by at least 200,000 barrels per day, and slowing demand from China is adding pressure to the need for a coordinated production drop.  The price of oil is currently just below $45 as it is expected that OPEC will make an output cut of 'much more' than 1 million barrels per day.  Financial concerns have forced Rosneft to abandon its plans to buy a stake in Imperial Energy.
Workers at Magnitogorsk Iron & Steel Works are apparently being pressured into resigning from their jobs, in some cases saving the company from having to pay severance packages.  MICEX has suspended three brokerages from trading for failing to meet obligations on repurchasing agreements.  Sberbank is predicting that Russian property prices could fall by as much as 60% by the end of next year.  Prime Minister Putin's rescue package for 1,500 Russian businesses could see the state buying equity stakes in 'key companies'.  Russian officials were just some across the globe to receive bribes from Siemens in exchange for government contracts last year.  Russian industrial production for November has shown the greatest drop since the economic collapse of 1998, at a rate of 10.8%.  Putin today is attending a conference convened to discuss the support of agriculture.
161208.jpgTODAY: Duma to extend definition of treason; grassroots protests succeed on car duty; analyst predicts 2009 will see Putin return to the Kremlin; ultra-nationalists, military reforms, Iran.

The State Duma is in the process of widening the definition of treason to include damage to the constitutional order and state integrity, with human rights activists protesting that the changes could impede the work of NGOs in the country.  The changes have reportedly been designed to intimidate opposition to the Kremlin, and were announced just as Andrei Lugovoi said that anyone causing damage to the Russian state 'should be exterminated'.  The raising of import duties on foreign cars is to be postponed following protests by drivers in Russia's Primorye region in a 'rare example of grassroots political power'.

Below we've got another exclusive translation from RBK Daily, which our regular readers understand is almost amusingly pro-government news source from Russia which at times can help glean insights into Kremlin thinking.  According to this latest piece, it seems like we should brace ourselves for a full-on assault of what's left of the besieged constitution of the Russian Federation.  Original source link here.

A tsarist attribute

Russians do not consider that the Constitution plays a particular role

A mere one fifth of Russians consider that the current Russian Constitution guarantees the rights and freedoms of citizens. A third of citizens assert that the Constitution does not play a significant role in the life of the country, «inasmuch as few reckon with it». Such are the results of a survey timed by the Levada-Center to coincide with the 15th anniversary of the adoption of the Fundamental Law of the country.

Recently, my German acquaintance phoned and asked how people in Russia are weathering the crisis. I replied: they tell each other jokes. He, apparently, did not understand. I will explain in this article. Inasmuch as there aren't so many owners of steamships and factories and stocks in Russia, then the quantity of jokes about those who do own them, naturally, has increased.

The statistics, for example, on the new website www.sokratili.ru [the word "sokratili" means "they laid me off" in this case--Trans.], of course, are not happy. But the people rejoice. Probably this is a kind of way to get oneself out of a state of depression and to avoid a lousy mood from getting lousy news.

Specialists assert that humor in Russia since Soviet times, when strict censorship reigned, is the revenge of the little person, a safety valve with the help of which he or she makes the often unbearable reality bearable and with the help of laughter becomes its master. I don't know if this is so. For example, I like my humor without all those socio-political inferences. When the people laugh - that means they're alive and are going to keep on living.

It's an ongoing debate.  Is the threat of an OPEC-like natural gas cartel being bandied about by the Gazprom for real, or just all talk?  It's not about whether the exporting countries are willing to form a new series of practices to manipulate prices, but rather how successful they could possibly be in controlling a commodity as difficult as natural gas.  We've published opinions on both sides, and this latest item from Warren Wilczewski, a researcher at the Carnegie Council, in the Journal of Energy Security points toward the negative.

The general dynamics of the LNG market suggest a cartel may be much more difficult to put together than is feared. Russia, dominant in Europe, may benefit from a short-term respite in competition over European market share, yet with over a quarter of the world's gas reserves it is bound, in due time, to seek a larger presence there and in other regions. Iran currently plays a negligible role on the international gas market, while Qatar, at 9.2% of world's gas reserves, accounts for less than 2% of international gas production. OGEC would therefore need to be structured in a way that reflects not only current production but also allows for Iran and Qatar to capitalize on their reserve base by ratcheting-up production and market-share over time. Otherwise, any cooperation on price or production levels would at most be a "cessation of competition," quickly recognized by smaller members as an attempt to throttle their revenues and ambitions.

Related to the earlier post, here is the news clip of Russia's alleged spy, Lira Tskhovrebova, sent to pitch the invasion of Georgia in Washington DC.

File this one under "caught red handed."  The Kremlin might take note that they shouldn't have their spies posing as "independent South Ossetian activists" hiring elite public relations firms.  From the Associated Press:

Georgia's interior minister, Vano Merabishvili, told the AP on Monday that Tskhovrebova was spying for Russia's security services. Tskhovrebova ridiculed the idea and said she is the victim of a smear campaign. But U.S. officials said they have become wary of her - questioning who paid for her Washington tour - and regret providing U.S. government money to pay for the event this week at George Mason University where Tskhovrebova was expected to speak.

Tskhovrebova's trip reflects the high-stakes campaign between Georgia and Russia, each eager to blame the other for their August war and to influence U.S. policy as Barack Obama assumes the presidency.

Tskhovrebova said she did not know Georgian intelligence had been intercepting her calls until the AP showed her transcripts of the conversations. The wiretaps make clear her conversations have been routinely intercepted since at least 2005. There is no evidence Tskhovrebova had access to secret information, but Guliev appeared interested in her frequent contact with Western organizations.

Today the Wall Street Journal is reporting on Siemens $528.3 million bribery settlement with German authorities, while the claim with U.S. under the Foreign Corrupt Practices Act is now underway.  Anyone still curious where the majority of the bribes went?

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There's been a lot coverage recently of these outbreaks of violence from Russian nationalists directed toward migrants and foreigners - a trend that some say is passively tolerated by the state.  Though the loss of jobs caused by the economic crisis appears to worsening the situation, most acknowledge that Russia's future economic growth is heavily dependent on migrant labor given the demographic situation.

From the New York Times article "Migrant Worker Decapitated in Russia"

In 2008, 85 people have been reported killed and 367 injured in attacks
by violent nationalists, said Ms. Kozhevnikova, though she said that
the numbers were likely far higher since many attacks go unrecorded or
are reported months after they occur. Most of the victims tend to be
dark-skinned men from Central Asia or the Caucasus region, though
tourists and foreign students have also been attacked.
From the Washington Post's "In Russia, A Grisly Message Marks a Rise in Hate Crimes"

Prime Minister Vladimir Putin has condemned racist violence but also called for new limits on the number of work permits given to migrant laborers -- a position critics say is impractical and inflames xenophobic sentiment. Last month, a Kremlin-controlled youth group staged a rally calling on officials to close the borders to migrants so more jobs would be available for Russians during the economic crisis.

A police spokesman said detectives are examining "various theories" in Azizov's killing and had "no proof of the suggestion that skinheads might have been involved."

But Rykova said the authorities were denying the obvious. She warned that violence could get worse if the economic crisis intensifies and politicians continue to use xenophobic rhetoric. "We're sitting on a mine that can blow up at any moment," she said.

A Russian deputy is to attend this week's OPEC meeting.  The price of oil is slowly rising on expectations that the meeting will lead to a significant cut in output, although this report suggests that, although Russia is willing to cooperate, Norway and Mexico may not act in accordance with OPEC's wishes.  Could a recovery of oil prices stabilize Russia's economic situation?  Gazprom's oil arm has signed a deal with construction firm Arabtec to build a project in Russia.  Lukoil has announced that it is putting off a number of next year's large, international projects, and will reduce investments.  It has also announced that there will be no deal to buy a minority stake in Spain's Repsol at present.  Energy demand in China, the world's second-largest energy consumer, has fallen for the first time in nearly three years.  
The economic crisis is driving minority shareholders, who had previously turned a blind eye, to demand responsible corporate expenditures.  Import levels have dropped 20% on last year's levels, due to the fluctuating ruble and slowing demand.  What is the Kremlin's reasoning behind its strategies for devaluing the ruble?  The currency has fallen for the second time in a week, with two or three more devaluations expected over the next seven days.  Vnesheconombank has approved a $36 million subordinated loan for TransCreditBank, and a loan of $800 million for steel maker Evraz Group.
151208.jpgTODAY: Weekend protests see activists detained; Solidarity given ominous gift; activist heckles Medvedev; Lavrov attending Mideast Quartet, US and Russia to discuss arms trade; hate crimes, killer blogs, Russophobia.

The opening day of the founding congress of Solidarity, Russia's new democratic movement, was reportedly marked by a delivery of 'dead and wounded sheep' clad in Solidarity baseball caps.  Sunday's unsanctioned anti-Kremlin protest by the Other Russia opposition group saw 150 people detained in St Petersburg and Moscow, depending on which numbers you believe.  Protesters were marching against the Kremlin's extension of the presidential term from four years to six, a move that President Dmitry Medvedev was defending during a Constitution Day speech when he was heckled.  The heckler was swiftly dealt with in the Moscow Times by Vladimir Frolov, a former Duma deputy and government PR, who wrote that the protest 'had more to do with promoting himself than anything else'.  A smaller protest at the Greek embassy also saw activists detained. 

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Back in the days when I was studying the lost science of Sovietology, every year the Soviet newspapers would boast of record harvests that had overfulfilled the plan, while the reality was much grimmer. Even if the numbers weren't doctored, the sad fact was that a very large part of this grain never made it far past the collective farm. In these days of the extenuated economic crisis and low oil prices, I think we are seeing the return of this kind of official hyperbole and Stakhanovite ambition, as an article we have translated after the jump reports on the curious combination of a "record" grain harvest yet continually higher prices for bread.

In the past, it wasn't hard to see through the ruse on the grain harvests.  First, there was always a shortage of hands to harvest it, and college students would be forced to leave their studies to go help the peasants; not that there were any living facilities for them in the middle of the steppe. Second, there was always a shortage of working farm equipment, so some of the grain was never even harvested, and was simply left to rot on the stalk, while what had been harvested would be piled uncovered in the open fields due to a shortage of storage elevators and trucks to transport it to them, and would spoil at the first autumn rain. Finally, much of the grain that did manage to get put on trucks would spill out of holes in the rusty vehicles as they bounced their way along Russia's notoriously horrible roads.

In commemoration (or perhaps, in mourning) of this weekend's anniversary of the Russian constitution, we offer an exclusive translation from human rights lawyer Stanislav Markelov from RuleofLaw.ru.


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Don't Read this Book
By Stanislav Markelov

There are books that are an element of ritual irrespective of their content. Earlier, as they say under the tsar Gorokh [in times immemorial--Trans.], every peasant always had a Psalter in his hut, although the greater part of them did not know how to read.

Today the same kind of ritual character is had by citing the Constitution. But even ritual has a tendency to break down when it starts to impede real life. And so they have easily changed the Russian Constitution with one wave of the magic wand, or more precisely one presidential speech. For some reason, everybody paid attention to why this was done, and least of all thought about the degree of significance of that document, which it is so easy to change. After all, it was not long ago at all that the head of the ruling party in the St. Duma, Gryzlov, had declared that «United Russia» will never allow for any changes in the Constitution. Apparently the time has come to break down the ritual formulas of fidelity to the Fundamental Law and to cast the idol into the dirt, as impeding real life and the ruling course.

govthroughcrime121408.jpgThere are few books that so reflect an author's mastery of a subject as much as the latest contribution from Jonathan Simon, the Associate Dean of Jurisprudence and Social Policy at the University of California Berkeley.  Simon's polemic and ambitious book, Governing through Crime: How the War on Crime Transformed American Democracy and Created a Culture of Fear, is a real eye-opener on law, justice, and the politics of public security in post 9/11 America, containing compelling arguments of far-reaching implications - not in the least in terms of observing the similar transformation which has occured in Russia.

First released in 2007, Simon's book contains an important prescription for the incoming president to be aware of, and can help contribute to a deeper understanding of the political mechanics behind the world's newest authoritarian leaning regimes.

It is Simon's argument that we must look past the immediate aftermath of the 9/11 terrorist attacks in searching for the original impetuous which has driven the U.S. government headlong into the war on terror, including all the accompanying constitutional and rule of law abuses which have accompanied it.  The legislative precursors for the latest sweeping arc of rights deprivations, including everything from the strengthening of the executive to the PATRIOT Act, generalized domestic wiretapping and Guantanamo Bay, can be observed in the Nixonian collapse of the "New Deal approach" to governing of the 1960s, when we saw the birth of the war on crime and the portrayal of society as a victim in need of government protection - quickly becoming the central trope in American neo-populism.
From the Associated Press:

Former chess champion Garry Kasparov and other prominent liberals launched a new anti-Kremlin movement in Russia on Saturday.

The organization, called Solidarity after the victorious Polish anti-communist movement, aims to unite the country's dysfunctional liberal forces and encourage a popular revolution similar to that seen in other ex-Soviet countries.

"We are fighting for victory because we have something to say to our people and something to offer them," Kasparov said at the founding congress Saturday in a Moscow-region hotel. "On this very day, we are in a position to take stock of past mistakes and act differently," he said. (...)

"One of the tasks of the Solidarity movement is to rehabilitate those basic principles that, unfortunately, for a significant or even overwhelming portion of our fellow citizens, have become associated with failure, misery or reduction of freedom," Kasparov said.

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"Newspeak" in Russian is "novoyaz."

This handy glossary of politically correct journalistic vocabulary in times of crisis comes to us courtesy of the "Open Electronic Newspaper" Forum.msk.ru, whose slogan is "Who owns information, owns the world". The article remains tantalizingly silent about whether or not this is an actual list handed down from above or merely the work of a humorist.

...real assessments of the situation somehow pass by the domestic media. On the blogs there has even appeared a "Handbook for Socially Responsible Journalists, Bloggers and PRasts" [sic], how to correctly describe what is going on in officialise:

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I am not ashamed that the president of my country - is the smallest president in the world - barely 160 cm [5'3''] tall. Not by height is the greatness of a person determined. I was, of course, ashamed for those journalists who in a fit of sleazy sycophancy compared Putin with Peter I. (Lord! How can the oh-so mediocre Putin possibly compare with Peter the Great!). I'm not even ashamed when Putin demonstratively displays his Patek Philippe watch for 60 or 70 thousand euros - let him! After all, there are people who pay more attention to expensive toys than to acts and deeds.

But I am terribly ashamed for the top leadership of Russia, when it behaves itself on the international arena insolently, stupidly, short-sightedly, and to the detriment of my country. Over the past 8 years of the rule of this leadership Russia has, it seems, not a single friend left. All around along the perimeter - nothing but enemies. The putino-medvedevs rail particularly loudly in relation in the countries of the former socialist camp. The recent manifestation of the stupid policy of Russia - Medvedev's letter to the president of Ukraine with respect to, as Medvedev writes, «the so-called holodomor» [the artificial famine of 1932-1933 in Ukraine, caused by forced requisitions of food by the Soviet authorities, which led to millions of deaths in peacetime and is regarded by some as a planned genocide of the Ukrainian peasantry--Trans.]

It used to be all about not saying the C-word, but now, you can get in big trouble if you dare to utter the R-word. This one comes from Reuters:

Russia's chief macroeconomic planner ran into trouble with Prime Minister Vladimir Putin on Friday, after saying Russia was already in a recession.

'It (recession) has started already. I'm afraid it will not be over in the next two quarters,' Deputy Economy Minister Andrei Klepach told reporters.

The comments, the first official acknowledgement the economy was shrinking, came at the end of a week of bad numbers: third quarter GDP growth was the slowest in three years and the October trade surplus hit a 13-month low.

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A conference on the theme "Ecology and politics" took place at the end of November of this year in the Institute named after N.Vavilov in Mosco. There weren't many speakers: chairman of the committee for ecology of the Public Chamber V.Zakharov, former minister of ecology of Russia V.Danilov-Danilyan, correspondent-member of the academy of sciences of the RF A.Yablokov and politician G.Yavlinsky. We offer our readers a part of the latter's speech.

From a speech by Grigory Yavlinsky at the "Ecology and politics" conference:

"...An authoritarian state... is not very interested in the opinion of citizens. When it was interested, then in every pre-election program there was [something] about ecology...Now about the crisis. From the middle of the 90s our state - this is a state of businessmen. The state machine represents the interests of clearly defined business- groups. These interests are perpendicular to the interests to the interests of the people. The task of business - to consume nature. That's how business works. While society's interest - is to protect nature. In this compromise - the guarantee of forward movement... We do not have a state that represents the interests of citizens.

The Associated Press press reports that trials by jury are on the way out in Russia, which is obviously very bad for rule of law.

The lower house of Russia's parliament approved a bill Friday that would end jury trials on charges of terrorism and treason. Critics denounced it as a retreat from democratic freedoms.

The Kremlin-controlled State Duma approved the bill in its final reading by a 355-85 vote. It will now go the upper house, where swift approval is expected.

The bill would strip defendants charged with crimes that include involvement in illegal armed units, violent seizure of power, armed rebellion and mass riots of the right to jury trials. Instead they would face judges.

"It's another blow to democratic principles of justice," Communist lawmaker Viktor Ilyukhin said.

Sparking several reports speculating that Russia will join OPEC, President Dmitry Medvedev has signaled a possible reversal of the Kremlin's oil independence, suggesting that Russia could cut oil output and join 'current organizations of producers' to bolster international oil prices.  Medvedev made it clear, however, that any group action would be taken in Russia's interests alone.  Russia may join the next OPEC meeting this month in Algeria.  Power consumption and output both fell in Russia last month, largely due to growth and production cuts.  TNK-BP will cut investment by $1.1 billion next year.  Lukoil is planning to develop Venezuela's Junin-3 oil deposit on its own.  The slump in the price of crude oil could hit investment projects for China's major oil companies.
Deputy Economics Minister Andrei Klepach has been quoted as saying that, for Russia, the recession has already started, and that Russia's next two quarters will see economic decline.  Russia devalued the ruble for the fifth time in a month yesterday, and spent $17.9 billion of its international reserves last week.  The ruble is facing its biggest weekly decline against the Euro since 2000.  Russia's Trade Union Federation predicts 250,000 job losses next year.  Holiday shopping is the one area of spending unaffected by the financial crisis - if anything, people are spending more this year for fear of losing their cash in a collapse, says this report.  Daimler is buying a 10% stake in Russian truck maker Kamaz for a reported $250 million.  News that the US has rejected an automaker bailout plan is negatively affecting the steel sector, with Russia's Novolipetsk Steel and Severstal already suffering losses.  A Russian businessman has trademarked the emoticon for a wink. ;-) 
121208.jpgTODAY: Putin names mountain after KGB; crisis sparks worries of unrest; 90th anniversary of Solzhenitsyn's birth; Poland modernizing its military; Russian troops leave Perevi.

An imagined scenario of what might happen as a result of the financial crisis, including protests and violence, has been branded an incite to extremism by Russian authorities - are the Kremlin's fears legitimate?  This UK columnist thinks so: 'The crisis threatens to reveal the glaring failure of Putin's reign to take advantage of strong economic growth and relative stability to push forward with modernisation and reform.'  An 'ultraright' artist was booed after winning Russia's top contemporary art award, the Kandinsky Prize, and this BBC report suggests that Russia's nationalist groups could increase as a result of the financial crisis.

Prime Minister Vladimir Putin has named a peak in the Caucasus Mountains in honor of Russian spies.  The previously unnamed mountain has been named 'the Peak of Russian Counterintelligence Agents'.