Business New Europe
Roadmap to reform
Ben Aris in Moscow
Ben Aris is the editor/publisher of Business New Europe
The Kremlin is scared. As the Russian economy emerges from the 2008 crisis, it is sliding smoothly and quickly into stagnation. In response, President Vladimir Putin challenged his government to implement 22 roadmaps to finally address some of the deep structural problems that has made Russia such an unattractive place for business over the last two decades. But the stakes are high, as the economy has already headed into a slump from which it will be hard to recover.
The Kremlin has not been sitting entirely on its hands in the last ten years, but with petrodollars pouring into the state coffers, what has been done mostly dealt with immediate problems. And even this unenthusiastic effort was stymied by the reluctance of the statists that populate the upper echelons of power and undermined by the stealing.
But Russia can no longer afford to be complacent. It will soon run out of money, as the oil dollars can only be expected to finance state spending for another few years. After that, rising imports and lacklustre growth will make deficits a permanent feature of the federal budget.
Already operating on a razor-thin surplus, the government is clearly on the hunt for extra revenue. In the middle of November, a rule to force state-owned companies to pay 25% of their profits as dividends was confirmed ≠ and this will become doubly expensive for the companies from next year when all Russia's companies will be forced to use International Financial Reporting Standards (IFRS), which will increase the amount counted as profit several-fold. It has also restarted the privatisation programme with the successful sale of a stake in Sberbank. However, neither of these measures will provide anything like the amount of money needed to maintain Russia's growth. Nothing short of fundamental change will do now.
Russia's reform efforts have moved into a new phase and President Putin got the ball rolling in February by calling for Russia to improve its standing in the World Bank's annual "Doing Business" ranking from 120th place out of a total of 185 countries to 50th by 2015 and 20th by 2018.
In addition to the set-piece reforms to things like the power sector and capital markets, a series of 22 "roadmaps" have been introduced, many of which are directly connected to lifting Russia up the World Bank's rankings, five of which have already been approved.
Moreover, a new sense of pragmatism has entered the Kremlin's rhetoric: unlike the Gref plan of 2000 (Russia's first attempt at systematic reform, named after the then-minister of economic development and trade German Gref), these are roadmaps, not plans: the Kremlin knows where it is and where it wants to get to, but concedes the path it needs to follow is not clear. Russian Prime Minister Dmitry Medvedev's cabinet is in charge of the process and already it has thrown out two roadmaps ≠ the power sector reform and Russia's innovation strategy ≠ because they were unrealistic. The respective ministries have been ordered to go back to the drawing board and told to do better.
Better late than never
The 2008 crisis has changed the nature of the game. During the boom years, the Russian economy was supercharged by a combination of sky-high oil prices and abundant cheap debt from abroad that kept economic growth at between 6% and 8% for most of the naughties. The crisis has changed all that and slower economic growth is now a permanent feature, leading economists to call for a new economic model that shifts the emphasis from the public to the private sector ≠ a call the Kremlin seems to be heeding.
The Economic Forecasting Institute of the Russian Academy of Sciences published a quarterly macroeconomic preview in November saying, "the ongoing developments in the economy can already be described as a crisis of the mechanisms of growth and economic management. Other growth mechanism must be found as government and quasi-government companies currently provide up to 40% of capital investments."
If anything the task ahead will be even harder than before the crisis, which is when the reforms should have started. The government-led rescue effort has resulted in the state actually increasing its share of GDP. A survey by BNP Paribas released in November said that state-owned companies now control 50% of GDP against the global average of 30%, and are particularly strong in oil and gas (40-45%), banking (49%) and transport (73%).
The government's policy-making was paralyzed by domestic politics until May; the powers-that-be had to concentrate all their efforts on securing first the Duma elections in December 2011, then presidential elections in May this year. However, on the day of his inauguration, Putin went straight from the lectern where he gave his acceptance speech to his desk, where he signed several decrees to slash red tape in the construction sector.
And not a moment too soon, as Russia's economy is already heading into trouble. Economic growth was a relatively healthy 4.9% between January and March of this year, but slowed sharply to 2.9% between July and September. It is expected to remain at these subpar levels next year too. Economists at the Central Bank of Russia say anything under 4% is equivalent to stagnation and Russia cannot afford to fail in its reform effort this time round. "For Putin this is evidently his last chance to get on top of a situation, which is objectively not going his way. And if he does not take advantage of the moment now, he will not have such an opportunity again. It is also important that the (excessively) repressive policies of recent months allow Putin to act as if from a position of strength, and not one of weakness," says Nikolai Petrov of Carneigie Endowment.
Petrov has dubbed the roadmap reforms "Putin's NEP" after Lenin's New Economic Policy that loosened Communist Party control over commerce from 1925 to stave off economic collapse. Private commerce flourished, giving rise to the "Nepman" - very similar to the crass "Novy Russky" of the 1990s, who became rich overnight from the arbitrage created by the remaining government restrictions.
The new reform effort is still very much in the planning stages, but Russia got off to an encouraging start when it moved up eight places in this year's World Bank "Doing Business" survey to 112th place. "Whilst many changes are relatively minor, we believe that [the roadmaps] add up to a more positive environment for investors," argues Kingsmill Bond, chief Russian strategist for Citigroup in Moscow.
The fire-fighting approach to reform of the boom years quickly shows up when you drill into the ten variables that go into Russia's ranking. And so does the challenge Russia faces in completing its transformation into a "normal" country.
Russia does surprising well in some aspects. Despite its reputation for lawlessness, Russia ranks 11th out of the 185 countries polled for contract enforcement. And this year it did particularly well in tax administration, improving from 105th to 64th, overtaking the US in the process. This was partly due to the fact it has a very simple flat tax regime for the most important taxes, but also because paper work has been slashed and punters were encouraged to submit their returns online: the number of people and companies filing their tax forms via the internet has jumped from 10% in 2000 to 75% now, according to the Federal Tax Service.
However, Russia does less well in many other areas and is amongst the worst in several crucial aspects. Although Putin acted swiftly to launch reforms to regulations in the construction sector, Russia remains in 178th place for the ease of getting construction permits. No progress has been made here at all. Even more surprising, despite being one of the biggest energy producers in the world, Russia is the second hardest place on the planet to get a factory or shop connected to the electricity grid (184th). And especially damaging is the inefficiency of the customs service (162nd). "As to the negative, we have three areas that clearly stand out where the situation is very poor, and it is no coincidence that we have developed roadmaps for these three areas," Economic Development Minister Andrei Belousov said following the release of the ranking. "Customs in particular remains a bottleneck for our entire economic development."
Belousov lashed out at the Customs Service in November, which is supposed to send lists of goods categories ahead of shipping to importers that would cut the time it takes to clear cargo. However, it has only done this for only a few goods and makes everyone else wait in line. Moreover, the waiting time in those lines has not gotten shorter.
Encouragingly, it is exactly those things that Russia is worst at that have gotten the most attention from the Kremlin and the roadmap list closely matches the variables that make up the World Bank's ranking (see table).
Clearly, Putin is very serious about lifting Russia up the rankings over the next half decade. And Belousov was not unduly pessimistic, saying it is still very early days; reforms for construction, customs procedures and connections to electricity grids are only due to be implemented next year. "The roadmaps really only began to be implemented in the second half of this year ≠ just now," said Belousov. "Of all the roadmaps, the implementation term for only five measures has come into effect. Thus we expect the main impact to be next year and in one year... The real task that I set is to become one of the top 100 countries in the ranking on these three indicators in the near future. This is completely realistic already next year."
More progress has been made at the regional level, where a parallel effort is going on. The new administration of Moscow City has taken up the baton and is dealing with the same issues. Deputy Mayor Andrei Sharonov says the average time it takes to process the paperwork for the connection of non-stationary retail outlets to power grids has recently dropped from 3-6 months to 15 days. And next year MOESK, one of Russia's largest inter-regional distribution grid companies, plans to introduce a "single window" for all applicants for 150 kilowatts or less that will reduce the delays further.
All these reforms are supposed to make it easier to do business in Russia, but they are also specifically targeting foreign investors. If Russia is to modernise, it desperately needs the technological know-how and management skills that come with foreign direct investment (FDI). However, Aton Capital recently released a paper, "Foreign investment into Russia: not that foreign, but very profitable", that showed Russia has one of the lowest levels of FDI per capita in all of Central and Eastern Europe (see "Chart of the Month").
But things are changing slowly as the crisis pushes investors out of Western Europe as much as Russia's emerging middle class pulls them in. Russia is on course to become the biggest consumer market in Europe sometime in 2018 and has already seen a raft of international fast food chains and other consumer companies arrive over the last 18 months, but the trick will be to go up the industrial weight spectrum.
The Kremlin set up the Russian Foreign Investment Advisory Council (FIAC), headed by First Deputy Prime Minister Igor Shuvalov and chaired by the CEO of Ernst & Young, James Turley. The FIAC conducted a survey earlier this year that suggests foreign investors are beginning to warm to Russia and the hope is that the roadmaps will help build the momentum. For example, the number that thought Russia was "enjoying success and attracting investment" had risen from 8% in 2007 to 35% today. Businesses that were "satisfied with the business climate" grew from 57% to 71%, and the number that thought the government was "taking the right steps" was up from 47% to 72% over the same period. Turley says he is impressed by the government's efforts to cut red tape and believes the roadmaps will reduce the administrative barriers by 94% when fully implemented.
FAIC surveyed 42 large corporations working in Russia and found that red tape is business' biggest concern, followed by corruption and then poor infrastructure. On the plus side, Russia's accession to the World Trade Organization and its large consumer base were the main attractions.
Russia is at another of its periodic crossroads, but this is by far the most serious yet. With economic growth of only 2.9%, Russia is already stagnating. Indeed, the experts at the Higher School of Economics (HSE), the intellectual force behind reforms, say the macroeconomic forecast in the draft budget for three years to come is unrealistic and Russia's economy could grind to a halt by the end of this year.
In the past, the Kremlin could afford to ignore reform because oil money more than made up for the lack of change. But even with oil currently at around $100 per barrel, the state is barely in profit and growth is slowing. And if the global economy keeps growing slowly, Russia will still only show a GDP growth rate of no more than 1.3% in 2015, predicts the HSE.
Rising pension obligations, the increasing bill for imports and the massive amounts that the government needs to spend on things like modernising Russia's infrastructure mean the Kremlin can literally not afford to fluff these reforms.
November 27, 2012
Thawing Permafrost Threatens to Intensify Warming
By Alex Morales
Thawing permafrost threatens to intensify global warming, sending the planet beyond the 2 degrees Celsius (3.6 degrees Fahrenheit) of increases that envoys at United Nations climate talks have set as a maximum.
Frozen soils that cover a quarter of the land area in the northern hemisphere contain 1,700 gigatons (1,700 billion tons) of carbon, twice the amount currently in the atmosphere, the UN Environment Program said today in a report released at the latest round of treaty negotiations in Doha.
Higher temperatures threaten to unlock greenhouse gases trapped in the soil, adding to the greenhouse effect and amplifying warming, according to the study. The thaw undermines buildings and roads, and threatens to drain lakes that are currently contained by the impermeable frozen soil, the report's author, Kevin Schaefer, told reporters in Doha.
"Thawing permafrost in turn can impact global climate," said Schaefer, a researcher at the U.S. National Snow and Ice Data Center in Boulder, Colorado. "It will begin to trigger what is called the permafrost-carbon feedback. Once the feedback starts, it's irreversible because once you take that organic matter out, it's impossible to put it back. It'll also persist for centuries."
Schaefer, speaking in Doha, said thawing permafrost could account for 39 percent of total global greenhouse gas emissions by 2100. Because emissions from permafrost aren't included in current projections of future emissions, the world risks overshooting its 2-degree warming target, he said.
The report recommended the UN conduct a special report into permafrost emissions, and the creation of monitoring stations in the main countries with the terrain: Russia, Canada, the U.S. and China.
November 27, 2012
Medvedev Motorist 'Megafine' Spurs Disdain
By Roland Oliphant
Prime Minister Dmitry Medvedev was showered by a wave of ridicule and negative public sentiment on Monday following a weekend tirade against bad driving.
The backlash kicked off on Saturday when Medvedev used the latest entry on his video blog to call for a crackdown on the country's notoriously lax attitude to driving rules by setting traffic violation fines higher than the average annual wage.
The video featured a leather-clad Dmitry Medvedev disembarking from an SUV to deliver a lecture on the dire state of the country's road safety record.
"Some 28,000 people have been killed on the roads in the past year alone," the prime minister said in the blog posting.
To tackle this grim statistic, he added, drivers who don't respect traffic lights and speed limits must be punished.
Drunk drivers who seriously injure two or more people should face five to 15 years in prison; reckless drivers should have their cars temporarily confiscated; and drivers who speed, run red lights or drive in the oncoming lane should face more serious fines, he said.
"These fines should be differentiated on individual specifics. For example, for Moscow and St. Petersburg [the fines] could be up to 500,000 rubles ($15,600), for other regions 250,000 rubles," Medvedev said to the camera.
Critics immediately argued that the "megafine" would be impossible for many people to pay and would give corrupt police officers the perfect leverage to extract larger but relatively more affordable bribes.
"Who outside of Rublyovka does he think has that much money? I've never seen that kind of money in my life," one Muscovite caller to the Ekho Moskvy radio station complained.
According to the State Statistics Service, the average monthly income was 20,700 rubles in 2011 ≠ meaning the average Russian earns 248,400 rubles a year.
The current fine for running a red light is 1,000 rubles.
Even those who would have little trouble paying such a fine weighed in. Billionaire and former presidential candidate Mikhail Prokhorov wrote on a blog post Saturday that Medvedev was obviously "disturbed by the growth of incomes" of ordinary Russians, and had therefore come up with a "new method to strip them of their honestly earned money."
"I suggest a bill to charge only Medvedev 500,000 rubles, every time he runs red lights, enters the oncoming lane or blocks traffic, making us all suffer for hours in traffic jams," the tycoon and one-time presidential candidate said.
Others argued that the differentiation of fines by region ≠ a nod to the comparative wealth of Moscow and St. Petersburg ≠ would be a violation of the Constitution, which guarantees equality before the law.
Medvedev quickly back-pedaled, writing on Twitter that the half-a-million fine would only apply to drunk drivers.
"I'm most surprised by comments like 'such a fine would be difficult to pay.' Maybe it'd be easier just not to drive drunk?" he wrote on his Facebook page.
But even Kremlin allies joined the chorus of disdain. Deputy chairman of the State Duma Committee on Constitutional Legislation Vyacheslav Lysakov, a key figure in the pro-Putin All-Russia People's Front who has backed a flurry of road safety legislation, told RIA-Novosti that the idea would be "inadequate," without clear criteria written into law.
Lysakov has suggested introducing a Western-style points system for traffic violations, so that habitual offenders would be more severely punished.
He is also pushing to change the law so driving with trace amounts of alcohol in the blood will not be criminalized ≠ overturning a zero-tolerance policy Medvedev introduced as president.
While some challenged the idea of a megafine, others seemed to take umbrage at the prime minister's choice of props: a flashy motor vehicle and a shiny leather hoodie.
"Perhaps he just wanted to make a popular decision that would be cheered by the electorate ... [and] the appearance of the prime minister in a leather jacket in a luxury SUV would strengthen positive emotions," Kommersant FM said.
Political analyst Yevgeny Minchenko was less charitable. "The only thing missing was the music from [2003 gangster road movie] Boomer. He shows up in a black BMW X5, the most gangster car there is, in a black leather jacket," he said on TV Rain. "I think it's simply an image disaster. You can't do that," he added.
Campaign against hard drinking in Russia starts bearing fruit
By Itar-Tass World Service writer Lyudmila Alexandrova
MOSCOW, November 27 (Itar-Tass) ≠ The Russian authorities' crusade against heavy drinking ≠ a social ill which in Russia's modern folklore is commonly portrayed and referred to as the Green Dragon (with a pitch of bitter irony, of course), seems to have started bearing fruit at last, although Russians still keep drinking a lot. Several sociological polls point in this direction. However, some skeptics call the results in question.
Specialists at the national pollster VTsIOM have attempted to find out how effective the legislative methods of restricting the sale and consumption of alcohol really are. According to a VTsIOM poll, the share of those who take alcohol regularly (several times a week) reduced from eight percent in July 2009 to 5% in November this year. The group of those who take alcohol several times a month and even more frequently, has shrunk from 49 percent to 38 percent.
In the meantime, the share of those who do not take alcohol at all has been up from 24 percent to 33 percent.
However, as the same opinion poll has shown, the ban on night-time trade in alcohol practically does not work. In any case over the past month many Russians chanced to come across instances of abuses of the law regulating trade in and the consumption of alcohol. As many as 60 percent of the polled said they saw people drinking in public, 41 percent saw alcohol being sold at crowded places, 34 percent were witnesses to alcohol being sold to minors and 29 percent saw or heard advertisements of alcohol on television, on the radio or in the cinema.
VTsIOM sociologists confirmed the monitoring of social media by the agency Social networks. Of the 516 reports devoted to the struggle against alcohol most were negative (54 percent), and only eleven percent of posts in the personal blogs or on Internet portals voiced support for the policy of restricting the sale of alcohol.
Most reports described the ineffectiveness of the measures being taken from the standpoint of users (88%). A large share of the posts contains fears the restrictions on trade in alcohol will push up the rate of poisonings with surrogate alcohol (31 percent).
"Not a single sociological poll can be trusted! When asked about alcohol-related themes, people have invariably told lies and they will keep telling lies," the director of the Center of Federal and Regional Alcohol Market Studies, Vadim Drobiz says with certainty.
"I have far more trust towards the statistics agency Rosstat," the daily Komsomolskaya Pravda quotes Drobiz as saying. "According to the agency alcohol consumption grows by 2-3 percent a year. And it is only legal products that I am talking about."
According to the expert, the sociological poll pursues only one aim ≠ finding some excuse for the campaign against heavy drinking underway in the country. Or the sociologists believed every single answer they got. For instance, the one who told them, "No, I do not drink at all!" in reality had in mind this thought, "A glass or two with a good snack? That does not count!"
In the meantime, officially registered alcohol addicts in Russia, according to the chief sanitary doctor number more than three million. The country consumes an annual ten liters of alcohol per person, including breast-fed babies. If one throws in other alcohol-containing products (perfumery, household chemicals, etc.), the rate will be as high as 18 liters. That's twice the amount the World Health Organization identified as a health hazard. Back 100 year ago, during World War II Russia was consuming a tiny 3.4 liters of alcohol per capita.
Child and teenage drinking is of particular concern to the authorities. According to the weekly Argumenty I Fakty, the narcological services have on their files 91,000 young people aged 15-17 and 20,000 alcohol abusers aged 10-14. And more than 2,500 teenagers have been diagnosed as alcoholics. That's only those who have turned to doctors or assistance. According to Rosstat 80.8 percent of young people in the age group between eleven and 24 take alcohol regularly. In the rural areas this rate is 90 percent. The average age at which children and teenagers start taking beer and mild alcoholic beverages has been down from fourteen years to eleven.
Alcohol abuse causes about half a million premature deaths every year, and one in four deaths in Russia must be directly blamed on alcohol ≠ about 30 percent of men's deaths and fifteen percent of women's deaths.
In August 2009 President Dmitry Medvedev said that alcoholism in Russia had become a national disaster and declared struggle against this ill as one of his social priorities.
In December 2009 the government approved of a concept of preventing and reducing the level of alcoholism in the country. The concept was expected to lower the consumption of alcohol in the country by 2013 to 15 liters per person a year, and by 2020, to no more than eight liters a year. The concept identified a number of tools for achieving that goal ≠ promotion of healthy lifestyles, support for efforts by various organizations, legislative restrictions on retail trade, a ban on latent advertising and abolition of wine and beer festivals.
New fines were introduced for drinking in public places. Showing up in a public place drunk is punishable with a fine or with an administrative arrest for a term of up to fifteen days.
In July 2010 a harsh law prohibiting drunk driving was passed. Last summer bans were imposed on selling beer at night and restrictions on trade in beer, which was declared an equivalent of alcohol. In October 2012 fines went up for selling alcohol to children ≠ to up to half a million rubles. And involvement of minors in systematic drinking is now a punishable criminal offence. The jail term for it is two to six years.
Prime Minister Dmitry Medvedev several days ago addressed the country with a video message devoted to road accident rates. He called for tightening punishment for drivers who abuse alcohol or drugs. His idea of raising fines for ignoring the red light and for abusing the speed limit to 500,000 rubles has triggered a tide of angry comments from society, which earlier supported the authorities' measures against hard drinking. Medvedev's latest proposals were interpreted as too harsh.
November 27, 2012
RUSSIAN PRESS REVIEW
Dmitry Medvedev doesn't rule out running for president again
Prime Minister Dmitry Medvedev does not rule out the possibility for himself to run for president in the future. He said so in an interview to the France Press news agency and the newspaper Le Figaro in the runup to the visit to France. The prime minister said the necessary conditions for it were "enough strength and health," and "Russians' support."
According to Medvedev, "he finds it quite comfortable to work at the government building" and that he is "not particularly nostalgic for the Kremlin," the Rossiiskaya Gazeta noted. "I've long decided for myself that by no means should one get attached to certain places of work, because otherwise, you won't be able to work elsewhere," Medvedev said as he elaborated on his principles. For a person who thinks otherwise, getting another job turns into a tragedy. "And surely you cannot assume you've been elected for good to any post, from village head to the country's president," the prime minister noted.
The Nezavisiamya Gazeta notes that "these reflections on the theme of the premier's recollections of the future," were voiced in the heat of the defamation campaign, when the number of rumors about a possible and inevitable resignation of the prime minister exceeded the permissible norm per unit of politicized space." Medvedev does not wish to be "a lame duck," the newspaper underlines. Furthermore, he is sending to his ill wishers an ominous message: "not only will I be Russia's second person in the next five and half years, I also intend to be the master of your fate during the six subsequent years. Accept it and submit, sheathe your swords."
In the newspaper's view, Medvedev actually began to reanimate the image of the idea of tandem as a model to govern Russia. But he began the campaign without the Kremlin's assistance.
The Novye Izvestia asked experts to comment. Political scientist Andrei Piontkovsky was very categorical in saying that Medvedev's comeback as president "cannot happen." "The flow of materials against Medvedev has increased lately, especially regarding his initiative about the insane fines for drivers. The wave of Medvedev's discreditation is not accidental. I believe serious work is underway on the issue of his resignation," Piontkovsky said.
Direct or the Institute for Political Expertise Yevgeny Minchenko agrees that as of now, Medvedev's return is less and less probable. "As for his tenure as prime minister, I believe there is a possibility of both his keeping the premier's chair during the whole of Putin's term and his resignation within the next few months. For Putin, it would be correct to use such a potent weapon as government resignation as seldom as possible. So he will keep it as a measure of last resort and delay it as long as he can. But the elites' discontent with Medvedev is growing, and all his attempts to get additional public support yield the opposite effect. Such as his statement about the 500,000-rouble fines for drivers, which he then began to refute, claiming misunderstanding," the expert said.
Doctor of political sciences Sergei Chernyakhovsky, cited by the Kommersant, believes "Medvedev, by his age, status and the way he sees his future in politics, should show that he is not an outgoing politician, but the one with prospects."
By his statement, he is trying to solve two tasks: "to tell that he is ready and that future belongs to him, and that he acknowledges Putin's priority."
"I wouldn't look for hidden meanings here; everything is open and transparent," political analyst Pavel Danilin said.
"Dmitry Anatolyevich has presidential ambitious. It is a political statement and a political bid. Taking into account Medvedev's unpopular decision in the recent time; his public support and popularity have plunged," Danilin said.
November 27, 2012
NOBODY WANTS TO BE A LAME DUCK
Russian leaders are thinking about themselves. It' time for them to start thinking about the rest of Russia
DMITRY MEDVEDEV: IT IS NOT INCONCEIVABLE THAT I WILL RETURN TO THE KREMLIN
Prime Minister Dmitry Medvedev told French journalists that his
return to the Kremlin was possible, depending on his health and
stamina and, of course, trust of the people. In the meanwhile, a
campaign to discredit the premier is well under way. The rumors on
his impending resignation actively circulate in the halls of
Medvedev refuses to be a lame duck. In fact, he is sending an
undisguised message to his enemies implying that he plans to
remain number two man in the Russian state the following five
years and number one after that.
By and large, Medvedev is trying to reanimate and restore the
image of the so called tandem. On the other hand, it certainly
seems that he launched this one-man crusade without the Kremlin's
help or approval. His idea of grandiose (500,000 rubles) fines for
unruly motorists was frowned on within the ruling party and the
Neither is Vladimir Putin in a hurry to go public and say
that this is his last term of office. On the contrary, the scale
and intensiveness of the anti-corruption campaign show that he is
fully aware of his responsibility for the thievish elite he
himself elevated into the positions of power. It shows as well
that he himself is determined to remedy the situation. Putin
apparently knows that there is nobody nearby who might be trusted
with this job. Notice how neither he nor Medvedev say anything
about Anatoly Serdyukov? Neither condemns the former defense
minister. They only suggest cooperation with the investigation and
remind everyone within earshot that it is not the year 1937.
In a word, Putin does not mean to step down. Medvedev in the
meantime does not think it inconceivable that he might return to
the Kremlin one fine day. Lucky them. It is the period of global
crises, local wars and revolutions, radical Islam and general
unpredictability... Nobody can be certain of what will happen to
him or to her tomorrow.. but these guys are stone-cold confident
that they will be wanted and demanded several years from now.
Demand is fine. And yet, modern economy and politics develop
in check with the model "the offer generates the demand". Because
"the demand generates the offer" is associated with
Our leaders are clearly thinking of their own future. It is
time for them to start thinking about the rest of Russia. Apart
from themselves, is there anything else they have to offer the
[return to Content
Medvedev interview to be broadcast live on Dec 7 - newspaper
MOSCOW. Nov 27 (Interfax) - An interview with Prime Minister Dmitry Medvedev will be broadcast live on Rossiya 1 television and Medvedev will be fielding questions from journalists representing Chanel One, VGTRK, NTV, REN TV and the Dozhd television station, business daily Kommersant wrote on Tuesday.
"Such interviews at the end of the year have become a tradition. The April interview, granted to journalists from five television companies, was a success and we have decided to do this again," Medvedev's spokesperson Natalya Timakova told Kommersant.
The televised interview will be intended for "the entire spectrum of TV viewers from conservatives to liberals," she said.
Part of the interview will deal with this year's results eight months after Medvedev assumed his "new duties," she also said.
But the interview will mostly concentrate on plans for the future, Timakova said.
Since the interview will be broadcast live, no restrictions will be put on questions, as before, she said.
The live broadcast of Medvedev's interview will begin at noon on December 7, and it will last an hour at minimum, although the duration is not limited, the daily writes.
November 27, 2012
1.3 million Russians on minimum wage, far below poverty line
Over a million Russians get a monthly wage of $148, most of them from the public sector, well below the $220 poverty line.
650,000 Russians out of 1.3 million living on the minimum wage work in the public sector, according to the country's Public Health and Social Development Ministry. The minimum wage is the lowest monthly wage employers may legally pay workers. It will be increased next year by 13% to 170 dollars a month, less than the minimum cost of living. According to the Russian statistics agency Rosstat 12.5% of Russians live below the poverty line.
The minimum wage in Russia is much lower than in developed countries, the auditor FBK reports. According to its rating, Luxembourg, Netherlands and Belgium top the list with a minimum wage of over $1500 a month. Last in line is Kyrgyzstan where minimum wage is the equivalent of $24 a month.
"In Russia, the minimum wage does not guarantee a decent standard of living for low-paid workers," Anna Bolsheva from the Global Labour University told Expert magazine.
According to the Center for Labor Studies there are almost no private companies that pay salaries at the level of the minimum wage.
"95% of cases are municipal enterprises related to education, science, health, etc.," Anna Lukyanova from the Center for Labor Studies says.
The European standard for the minimum wage equates to earnings which are at least 60% of the average salary in the country, experts say. On the basis of these calculations, the minimum wage in the Russian Federation should be $515 a month.
November 26, 2012
Rosy poverty picture comes under fire
Critics are questioning new estimates of the size of Russia's middle class
By Anastasia Matveyeva, Moskovskiye Novosti
Over the 2000-2012 period, the income of Russians has grown by 2.5 times. This has radically changed the country's social structure, say two academics who presented a report at a Gaidar Readings conference in Moscow on Nov. 13: such conditions as poverty have practically disappeared and the proportion of poor has sharply declined. At the same time, the middle class has grown. These conclusions have triggered an active discussion, presenting a question of whom we should describe as poor and of whom we should assign to the middle class, and by what criteria.
Using criteria from the World Bank, the Center for Strategic Development's Mikhail Dmitriyev and the Center for Social Policy at the Institute of Applied Economic Research's Svetlana Miskhina conclude, that if one applies them to Russia as a developing country, then the proportion of poor is currently no larger than 0.5 percent. According to the criteria for developed countries, the proportion is around 30 percent.
Thus, Dmitriyev and Miskhina say, even if we define Russia as a developed country, around 60 to 70 percent of its population belongs to the middle class, though there is a fair-sized layer of the rich (around 10 percent, following from the report).
No government illusions
But no one even in government offices has drawn a rosy picture from these figures. In a long-term development strategy through 2020 that the Economic Development Ministry prepared before the global economic crisis, for the middle class to reach 50 percent of the country's population was a target for 2020. In an updated post-crisis "Strategy 2020" this year, experts produced other figures: a 27 percent middle class currently, and 40 percent by 2020.
Dmitriyev and Miskhina's critics direct attention, above all, to the fact that the two have based their conclusions on data about consumption. According to these data, Russia's poor are no different from other parts of the population in owning cars, refrigerators and televisions, and pets, or in the consumption of tourist services and even in homeownership.
However, ownership of apartments is explained by the results of free privatization, and a significant amount of expensive goods is bought on credit that the poor frequently do not have the possibility to pay back. Critics interpret the increase of credit in the Russian consumer market over the past year from 15 to 29 percent negatively: a large part of these debts is incurred by people with limited financial means.
The possibility of developing absolute criteria of want and, correspondingly, the line of where the middle class begins, also fall within the critics' doubts. Calculations of the level of poverty, made according to the World Bank's criteria (less than $2 a day for developing countries and less than $15 a day for developed) do not look right, in their opinion.
"Poverty is a phenomenon that depends on how you measure it," said Lilia Ovcharova, director of the Independent Institute of Social Policy. According to her data, the real portion of the population that is middle-class in Russia consists of no more than 19 percent. She said that leading World Bank economist Branco Milanovic ≠ on whose figures "Farewell, Poverty" was largely based ≠ presented only international standards of poverty and corresponding international criteria of the middle class that he thought up.
"Milanovic proposes, that if your income is higher than the American poverty line, then that means that you are middle-class in the Western understanding. But those who study the middle class, I think, have done a double-take, because the economic theories of the middle class lie in this completely other understanding," Ovcharova said. "The theory of the middle class and the theory of poverty did not intersect. They are theories about different things, and we should not confuse them."
Quality, not quantity
As Yevsei Gurvich, director of the Economic Expert Group, in the situation when the average level of per capita income exceeds $10,000 per year, which has already happened in Russia, demand for more quality institutions arises in society, however there is no basis to think that they change for the better.
"It means not only the level of per capita income, but its distribution, differentiation and source," Gurvich said. "The country with the highest per capita income is Qatar, but it is not a leader in the quality of its institutions."
The middle class is, in his opinion, about values more than anything.
"Society is split into two parts with different values, with a different orientation: a small but active vanguard, for whom values of freedom prevail, and a large majority, for whom economic values and values of parity are a priority," Gurvich said.
Both the lowering of the poverty level and the growth of the middle class are an official priority for the state's socialeconomic policy, shared by almost everyone. It is understood that the choice of objective criteria for one and the other are not in the least merely academic, but a daily task. The almost polar position of experts on this subject shows only that we are still far from its resolution.
Russia Beyond the Headlines/Ogoniok
November 26, 2012
Ronald Inglehart: Russia heading toward liberalization
American sociologist Ronald Inglehart talks to the Ogoniok magazine on the values of Russian society.
By Sergei Melnikov, Ogoniok magazine
The World Values Survey project has reported its results. American sociologist and political scientist Ronald Inglehart, after 20 years of research, tells Ogoniok magazine's Sergei Melnikov about what values are important to Russian people.
Ogoniok: In what way do Russians differ from the rest of the world?
Ronald Inglehart: Rather than looking at a single poll, much more can be learned about the inhabitants of a country by studying the dynamics of changing values. For Russians, the collapse of the Soviet Union created an ideological vacuum, which was followed by an economic collapse: our surveys show that many Russians became discontent quite abruptly. Satisfaction with life in Russia bottomed out in 1999, when its indicators came close to those of African countries.
Since 2002, the country has witnessed an overall rise in subjective happiness, although the process is very slow. The fact is that those who describe themselves as happy tend to be under the age of 30.
Ogoniok: It's not surprising that young people describe themselves as happy, because the young are active and carefree...
R.I.: By no means are all young people happier than their parents. Our first study in Russia, in the 1980s, recorded no such age divide. Today in the West, for example, happiness is fairly evenly distributed across the age range.
In 1970, I developed the concept of post-materialism. It essentially states that, in Western democracies, young people's values shift from purely physical and economic survival to self-expression, civil liberties, environmental protection...
That was the decade when the post-war generation came to the fore, having grown up in a time of economic recovery. Overall, the ideals of that generation have been realized: Western societies have become more tolerant and overcome gender inequality, and other areas of life have seen a shift toward post-materialism.
Now, the gap in values between 30- and 50-year-old Europeans is almost non-existent. But we still see it in Russia.
Ogoniok: Could the post-Soviet generation change the face of the country?
R.I.: Probably. We are talking not only about Russia, but also about Ukraine, Belarus, and even China, which, despite the ruling Communist Party, lives by the laws of market economics; and the values of its people are changing accordingly.
Ogoniok: In what way does Russia differ from the West and other countries?
R.I.: In Russia, an interesting paradox can be observed: your country is quite secular, but in contrast to Western countries, there is growing religiosity. That is understandable: the collapse of communist ideology created a spiritual vacuum that had to be filled.
We are seeing a renaissance of Orthodox Christianity and Islam, which our findings in Tatarstan back up. Every person needs a system of beliefs. Many in the West, for example, believe in human rights, gender equality, and environmental protection.
Ogoniok: It is a commonly held view that Russia must tread its own path, and that the country is not ready for democracy. Is that so?
R.I.: I can only say that Russia's path in the 20th century was one of terrible tragedy and great misfortune. Because of this, your country harbors strong authoritarian traditions, which finds expression in bureaucracy of a kind I have not seen in any other country where I've lived.
What's more, in Russia, values of self-expression prevail over values of survival only in a portion of young people; but, if the economic trend continues, the former will soon become dominant.
Liberalization is a long-term global trend, and, in some sense, Russia is already heading that way.
Ogoniok: So the only direction to take is the one toward post-materialist values?
R.I.: It is the only forward direction. People are happier if they live in a tolerant society: in intolerant societies, both the oppressors and the oppressed experience a constant state of anger and frustration.
The article is abridged and first published in Russian in the Ogoniok magazine.
Poll shows Russians mostly opposed to longer military service
Moscow, 26 November: Most Russians believe that the head of the State Duma Committee for Defence's initiative to increase the duration of army service to 18 months is unjustified, an opinion poll conducted by Superjob.ru portal has shown.
According to the study, which was carried out among 1,600 respondents on 22-25 November, 44 per cent of Russian citizens do not approve of the proposal to change the duration of army service.
Many among them believe that what should be done is to improve conditions for regular servicemen and the quality of training of military personnel rather than to increase the duration of young men's training: "It is impossible to train military specialists in one year or 18 months. This has to be done seriously at the level of military schools and other educational institutions", "Until the prestige of the army has been raised to the proper level, increasing the term of service will only cause negative emotions". This point of view is held most widely by those participants in the poll who are aged under 24 (59 per cent) and by women (45 per cent).
The share of those who support the introduction of 18-month regular service was 36 per cent. They see this measure as necessary to educate young people. "One year's service is not serious", "It has to be increased, because how can spoilt children defend the Motherland?!", "Let the young learn how easy life in civvy street is, I am very much in favour of increasing the term of service!". The State Duma initiative is supported above all by men (43 per cent) and people aged 45 and over (45 per cent).
One in five respondents (20 per cent) chose not answer the question.
(Passage omitted: background on the proposal, negative response from the Defence Ministry and the Kremlin - reported earlier)
Moscow Cossack Patrol Unsanctioned ≠ Officials
MOSCOW, November 27 (RIA Novosti) ≠ Self-proclaimed Cossacks who began patrolling central Moscow on Tuesday were not authorized to do so, despite claiming otherwise, the district administration said.
A group of people styling themselves Cossacks patrolled a downtown square by the capital's Belorussky train station on Tuesday, reports said.
Eight men in furry hats and striped trousers, outnumbered five to one by journalists, expelled two beggars, a street merchant and an elderly woman selling mushrooms, who walked away crying, photoblogger Rustem Agadamov reported.
But Tuesday's street patrol was not authorized by police or city officials, the administration of Moscow's Central Administrative District said.
An authorized system for Cossack patrols is in the works, but will not begin operating before early 2013, the district administration said. Similar patrols already operate in Moscow's southeast and the southern Krasnodar region, the traditional Cossack heartland.
The Cossacks have never claimed to be allowed to do actual police work, but said earlier they were endorsed to aid law enforcement over misdemeanors like illegal parking and unlicensed street vendors.
"There are even Cossacks in America, they're called Texas Rangers," one patrolman said on Tuesday, Dozhd online television reported. American TV series Walker, Texas Ranger, starring Chuck Norris, aired in Russia to mass audiences in the 1990s.
Cossacks have traditionally been seen as staunch defenders of the state in Russia, as well as the Orthdox religion, though in fact they often rebelled against the government, protecting their freedoms. They are also remembered for their role in fighting against the revolutionary side in the 1917 uprising against the Tsar, and suppressing demonstrations with ruthlessness.
Recent years have seen a revival of the Cossack culture in Russia, though critics have questioned the authenticity of some self-proclaimed Cossacks, many of whom tend toward an aggressively rightwing ideological stance.
Moscow Times/BBC Monitoring
What the Papers Say, Nov. 27, 2012
1. Khalil Aminov article headlined "VEB Covers Krasnaya Polyana" says that businessman Vladimir Potanin is giving his developers company as a pledge for a VEB bank loan. The money is allocated for construction of a resort in Sochi for the Winter Olympics in 2014; p 1 (680 words).
2. Taisia Bekbulatova and Maxim Ivanov article headlined "Federal Assembly Address to Be Explained on Dec. 20" says President Vladimir Putin is expected to make his Federal Assembly address on 12 December and hold a large news conference on Dec. 20 to speak on the key points of his address; pp 1-2 (651 words).
3. Ivan Safronov article headlined "No State Corporation Observed in Roskosmos" outlines the Russian space sector development plans made public at the meeting chaired by Prime Minister Dmitry Medvedev; pp 1, 3 (541 words).
4. Olga Shestopal et al. report headlined "Bookkeeping in Accordance With Criminal Standards" says that Russian bankers may soon face criminal responsibility for forging their accounts, as the Finance Ministry has drafted a relevant bill; pp 1, 9 (686 words).
5. Andrei Kolesnikov article headlined "Moscow to Receive G20 in St. Petersburg" reports on preparations for the G20 summit to be held in St. Petersburg; p 2 (776 words).
6. Arina Borodina article headlined "Conversation With Dmitry Medvedev Will Be Broadcast Live" says Prime Minister Dmitry Medvedev is to be interviewed by journalists from five TV channels on Dec. 7; p 2 (592 words).
7. Yelena Chernenko article headlined "Vladimir Putin Approves International Traffic" says that Putin plans to go on four visits abroad in December 2012: to Turkey, Turkmenistan, Belgium and India; p 2 (491 words).
8. Anna Pushkarskaya article headlined "Vladislav Surkov Starts Dealing With Officials" says the head of the Russian government staff Vladislav Surkov has started checking the way government officials are implementing Constitutional Court rulings; p 3 (600 words).
9. Anna Pushkarskaya interview with the Russian presidential envoy to the Constitutional Court, Mikhail Krotov, explaining why officials ignore the court's rulings; p 3 (523 words).
10. Irina Nagornykh article headlined "Either Changes, or One Thing Out of 2" says acting Moscow Region governor Andrei Vorobyov has unveiled his development plans for the region, which is considered to be his election platform; p 3 (617 words).
11. Kirill Belyaninov article headlined "Pentagon Fills Mediterranean Sea" says the U.S.A. has deployed additional forces to the Mediterranean Sea: around 2,500 marines were sent to four warships by the Israeli coast; p 6 (543 words).
12. Sergei Strokan article headlined "Afghan Operation Prepared for New Conclusion" says U.S. President Barack Obama is shaping his Afghan strategy as the NATO forces are to leave the region in 2014; p 6 (464 words).
13. Yegor Popov et al. report "They Say Hello to Russia in WTO" says that a EU representative in the WTO has voiced a complaint in relation to Russia's failure to observe the organization's rules; p 8 (750 words).
1. Mikhail Sergeyev article headlined "Prime Minister's Privatization Games" comments on Medvedev's interview with French journalists, in which he has not made clear the Russian government's economic plans; pp 1-2 (862 words).
2. Tatyana Ivzhenko article headlined "Ukraine Hands Over Strategic Facilities to Private Owners" says that part of the Ukrainian port infrastructure may be privatized and partly rented. Russian and US businessmen are said to be interested in the plans; pp 1, 6 (727 words).
3. Alexei Gorbachev article headlined "EU Threatens to Enlarge Magnitsky List" says the European parliamentarians are going to ask Putin a number of uneasy questions on human rights violations in the country. They are drafting a list of unwanted Russian officials involved in various violations including the Pussy Riot trial; pp 1, 3 (644 words).
4. Vladimir Mukhin article headlined "Guards Sent to Heating Pipelines" says the corruption scandal in Oboronservis has made military commanders in Chita send servicemen to guard heating pipelines as a strategic facility and thus prevent providers of public utilities services from cutting heating supply to military units; pp 1, 3 (515 words).
5. Viktoria Panfilova article headlined "Brussels Strengthens Its Positions in Central Asia" says Catherine Ashton, the EU's High Representative for Foreign Affairs, has started a Central Asian tour. The EU is concerned about Russia's influence in the region and is developing a new cooperation agreement with Central Asian countries; pp 1, 6 (614 words).
6. Tatyana Dvoynova article headlined "Governor and Mayor Quarrel in Public" says an argument between Primorye region Governor Vladimir Miklushevsky and Vladivostok Mayor Igor Pushkarev over the planned privatization of the Primvodokanal water supplier and the Primteploenergo energy provider has shown that a mayoral election campaign has begun in the city; pp 1, 5 (792 words).
7. Editorial headlined "Nobody Wants to Be Lame Duck" says that both Dmitry Medvedev and Vladimir Putin seem to plan to get elected Russian president in five years; p 2 (522 words.
8. Ivan Rodin article headlined "FSB Knows Illegal Migrants by Sight" reports on a new bill drafted by the Federal Security Service to punish the foreigners who were denied entry into Russia and forged their documents to visit the country; p 3 (557 words).
9. Igor Naumov article headlined "Skrynnik Kays Claim on Serdyukov's Laurels" says that the TV channel Rossia 1 is to show a film about the activities of former Agriculture Minister Yelena Skrynnik as part of the ongoing anti-corruption campaign; p 4 (693 words).
10. Artur Blinov article headlined "Washington and Kabul Discuss Plans for Period After 2014" says around 10,000 U.S. servicemen will stay in Afghanistan after NATO withdraws its forces from the country; p 7 (555 words).
11. Nikolai Surkov report "Egypt Is One Step From Fresh Bloodshed" says that the Egyptian president's supporters and opponents are getting ready for new clashes; p 7 (600 words).
12. Yury Solomonov interview with head of research at the Higher School of Economics, Yevgeny Yasin; p 13 (1,500 words).
1. Natalya Bianova and Tatyana Voronova article headlined "Absolute Blagosostoyanie" says that Absolyut Bank is to be sold to the Blagosostoyanie pension fund owned by Russian Railways; p 1 (723 words).
2. Irina Kezik article headlined "Gas Independence" says Ukraine is declaring energy independence from Russia as an LNG facility is to be built in Odessa; pp 1, 8 (649 words).
3. Bela Lyauv et al. report headlined "More Than With Shoigu" says the Moscow region is to get an additional 30 billion rubles ($1 billion) in funding for road construction; p 1 (371 words).
4. Editorial headlined "Parade of Sovereignties" looks at sovereignty trends in Europe as Catalonia is seeking independence from Spain and Scotland from the U.K.; pp 1, 4 (511 words).
5. Irina Novikova and Natalya Kostenko article headlined "Protest No Longer Topical" says that no critical questions are expected to be raised at Putin's meeting with the leaders of the State Duma factions; p 2 (457 words)
6. Bela Lyauv report headlined "Stripes at Railway Station" says that Moscow Cossacks want to expand their patrol zone in the city. Police and officials say they know nothing about this; p 2 (500 words).
7. Another editorial headlined "Lawyers' Country" comments on a study that links school leavers' choice of future profession with human rights and business guarantees in society. It turns out that young people in authoritarian countries prefer to study law rather than science; p 4 (271 words).
8. Alexei Levinson report "They Behave Like Owners" looks at the problem of nationalism in Russia; p 4 (550 words).
9. Roman Dorokhov report "List's Habit" says that Google, whose service has been put in the list of banned websites for the third time over the week, is displeased with its cooperation with Roskomnadzor (Federal Service for Supervision in Telecommunications, Information Technology and Mass Communications); p 11 (500 words).
1. Yelena Mishina interview headlined "Almshouse as Extreme Measure" with Deputy Labor Minister Alexei Vovchenko speaking on a bill allowing businesses to be engaged in providing people with social services; pp 1, 5 (722 words).
2. Vyacheslav Prokofyev article headlined "Ready to Be Maximum Helpful" says that French Senator Jean-Pierre Chevenement has been appointed the French Foreign Ministry's special envoy to Russia; he is to visit Moscow in early December; p 8 (635 words).
3. Vsevolod Ovchinnikov article headlined "Main Task of 5th Generation" outlines the tasks and challenges the new Chinese leadership is facing; p 8 (729 words).
4. Viktor Feshchenko article headlined "Truth About Arafat" says that Russian experts are to take part in the exhumation of the body of Yasser Arafat as traces of polonium have been found on his clothing; p 8 (590 words).
1. Anastasia Alexeyevskikh article headlined "Finance Ministry to Control Foreign Credits of State Corporations" says the Russian Finance Ministry is to control the credit policy of state corporations; pp 1, 4 (858 words).
2. Alexei Mikhailov article headlined "General Staff Asks Shoigu to Set Up 'Commandos'" says the General Staff and the Main Intelligence Directorate have asked Defense Minister Sergei Shoigu to set up the special operations command to operate in emergency situations abroad; pp 1, 4 (552 words).
3. Vladimir Dergachev article headlined "All-Russia People's Front Comes Out Against Dmitry Medvedev's Initiative" says that lawmakers and public organizations in Russia have spoken out against the proposal by Prime Minister Dmitry Medvedev to raise fines for drunk driving up to 500,000 rubles ($16,000); pp 1-2 (972 words).
4. Yelizaveta Mayetnaya and Gennady Zubov article headlined "Its Own Magnitsky May Appear in Oboronservis Case" says that one of the suspects in the Oboronservis corruption case, Dmitry Mityayev, has been transferred to a prison hospital as he reportedly has a serious heart disease; pp 1, 4 (935 words).
5. Pyotr Kozlov article headlined "FSB to Teach Future Officials How to Use Internet" says that the special courses for the students of Moscow leading universities, who are likely to become officials, will teach them to work in social networks without violating security regulations; p 2 (512 words).
6. Vladimir Gusev article headlined "Ketchum Continues Work on Russia's Image" says the Kremlin has prolonged a contract with the U.S. company Ketchum engaged in shaping Russia's image abroad; p 3 (530 words).
7. Anastasia Alexeyevskikh article headlined "Central Bank Instructs Banks to Spy on 'Foreign Agents'" says that the Central Bank has issued instructions for banks obliging them to report on operations with the NGOs that receive funds from abroad; p 3 (600 words).
8. Yanina Sokolovskaya interview with Armenian Prime Minister Tigran Sargsyan speaking on the Customs Union, relations with Russia and European integration; p 5 (579 words).
9. Igor Yavlyansky article headlined "Judges Rebel Against President in Egypt" says the powerful union of judges has called for a national strike against controversial rulings by the president allowing him to control courts; p 5 (540 words).
10. Stanislav Khotuntsev report "2nd Election Campaign and Strike on Iran" looks at the situation in the Middle East; p 9 (700 words).
1. Alexander Minkin article headlined "Prime Minister Casts in Granite Again" says Prime Minister Dmitry Medvedev has made it clear in his interview with French journalists that he would like to return to the president's post; pp 1-2 (1,119 words).
2. Darya Fedotova article headlined "3 Days Without Right to Correspondence" says that neither relatives of prisoners nor rights activists can find out what is going on in the prison in Kopeisk after a mutiny broke out there; pp 1, 3 (530 words).
3. Alexei Lebedev article headlined "2 Troubles: Fools and Money" slams Russian football club owners for their ill-thought-out policy; pp 1, 8 (293 words).
4. Yekaterina Petukhova report "Verdict to Peoples' Friendship?" says that the verdict on Rasul Mirzayev, a martial arts champion charged with killing a student, will be pronounced today; pp 1, 4 (1,700 words).
5. Vladislav Inozemtsev article headlined "Time to Leave" analyzes the U.S. and EU government support to the agrarian sector and slams Russian officials for their failure to help domestic farmers; p 3 (1,200 words).
1. Anastasia Maltseva article headlined "Limit of Possibilities" says that more platforms popular among bloggers and online libraries are being closed in Russia as part of the new measures against the so-called harmful content on the Internet; p 1 (565 words).
2. Nadezhda Krasilova article headlined "Lessons of Survival" says that the Russian NGOs affected by the bill on foreign financing have to ask people for help. For example, Moscow Helsinki Group has asked Russians for financial support not to get registered as a foreign agent; p 2 (536 words).
3. Vera Moslakova article headlined "Less and Less Possible" quotes pundits as saying that Prime Minister Dmitry Medvedev does not have much chance of being re-elected president; p 2 (300 words).
4. Margarita Alyokhina article headlined "Mystery Beyond Barbed Wire" says that human right activists are still unable to get objective information from the Kopeisk prison; p 5 (600 words).
1. Yulia Yakovleva article headlined "Court Non-Stop" says the argument between Pussy Riot punk group members and their former lawyers is likely to end up in a lawsuit; p 2 (400 words).
2. Interview with acting Moscow region Governor Andrei Vorobyov speaking on his plans to take part in the governor election; p 3 (400 words).
3. Polina Stroganova article headlined "BP to Join Nord Stream" says BP is conducting talks with Gazprom over participation in the Nord Stream project; p 6 (450 words).
4. Ivan Petrov and Alexander Litoi article headlined "Support 'From Outside'" says that according to a preliminary investigation, the relatives of inmates were the cause of unrest in a prison in Kopeisk; however, Chelyabinsk region Governor Mikhail Yurevich blames the Federal Penal Service instead; p 2 (450 words).
1. Viktor Baranets article headlined "Former Official Asks to Remain Under House Arrest With Private Cook, Hairdresser and Ability to Visit Theater" investigates the latest developments in the case of Yevgenia Vasilyeva, former head of the Defense Ministry's property department; pp 1, 7 (700 words).
1. Viktor Ruchkin article headlined "Kurds Strike Back" looks at the situation in the northeast of Syria; p 3 (800 words).
November 27, 2012
"NO LAW TELLING THE DUMA TO ADOPT LAWS"
An interview with Mikhail Krotov, presidential envoy to the Constitutional Court
Author: Anna Pushkarskaya
Question: Addressing the Constitutional Court when it was
considering the scandalous Gudkov's Case, you said that any power
structure ought to wield the authority to suspend the civil
servants who go against the Constitution. Does this approach apply
to representatives of the executive branch of the government who
would not obey decisions of the Constitutional Court... the people
whose actions Dmitry Medvedev called "legal nihilism"?
Mikhail Krotov: Legal nihilism is a broad concept... and
something typical of Russia, unfortunately. The law states that
civil servants ought to be dismissed for the inadequate
implementation of laws. It should be noted, however, that the
spectrum of matters government members handle is much broader than
implementation of the decisions made by the Constitutional Court.
Besides, there is more to it than the government's presumed
unwillingness to come up with appropriate draft laws. Everything
has to be analyzed first. Why do they fail to come up with draft
laws? Is it because they do not want or because they can't? After
all, what is termed as decisions of the Constitutional Court also
includes resolutions and even recommendations.
Question: All right then, what prevents their implementation?
Mikhail Krotov: Some decisions of the Constitutional Court
cannot be implemented because the situation changed. Some others
require so dramatic an amendment of the acting legislation that it
just cannot be done swiftly. Or it happens sometimes that some
decision was partially implemented by other means or other
mechanisms... Formally, we are talking non-implementation too.
There are episodes when the government fails to come up with
a draft law whenever the budget lacks money for it.
Also importantly, political aspects ought to be taken into
consideration. There is no law telling the Duma to adopt laws just
because the Constitutional Court says so.
Question: Supreme Court of Arbitration Chairman Anton Ivanov
once suggested a practice where decisions of the Constitutional
Court are overruled by amendments to the Constitution. What do you
think of this idea?
Mikhail Krotov: No comment.
Question: So, there is no reason for the government to
consider some additional measures that will ensure implementation
of decisions of the Constitutional Court, is there?
Mikhail Krotov: What mechanisms already exist are quite
adequate and sufficient. I'd say, however, that the period of
implementation of decisions is something that has to be changed.
Three months is a period when little can be accomplished.
November 27, 2012
Chelyabinsk Prison Revolt Ends With Calls for Reform
By Jonathan Earle
A revolt at a maximum security prison in the Chelyabinsk region by prisoners complaining of corruption and abuse has ended, regional prison officials said in a statement Monday.
But the fallout appears to be just beginning, as prosecutors quickly opened a check into the incident, and two senior officials appeared to confirm the prisoners' complaints.
Chelyabinsk region Governor Mikhail Yurevich admitted that the region's prison system needs reform, a matter he blamed on the system's former administrator, now deceased.
The prison system leads to an "enormous number of suicides," Yurevich told Russian News Service radio on Monday. He also said he had information about kickbacks in prisons.
National human rights ombudsman Vladimir Lukin said he had also received evidence of abuse and corruption at Prison No. 6 in the city of Kopeisk, Interfax reported on Monday.
An initial check by prosecutors failed to confirm prisoners' complaints of beatings, or reports of escapees, fatalities and evidence of bodily harm, the Prosecutor General's Office said in an online statement on Monday.
But prosecutors plan to conduct a full probe into the revolt, and Lukin said he would oversee his own.
"I'm extremely worried that a superficial investigation might cause the situation to deteriorate elsewhere, and something similar might happen at a different prison," Lukin said.
Two hundred fifty prisoners revolted on Saturday, demanding a more relaxed prison regime and the release of a prisoner from solitary confinement, prosecutors said.
A video taken on Saturday showed prisoners standing on top of the prison with long banner that read, "Free people, help us! The administration is embezzling $ [sic]. They torture and humiliate."
As of Monday, however, all prisoners at Prison No. 6 in the city of Kopeisk had returned to their blocks, and administrators are in complete control of the facility, prison officials said.
The revolt was accompanied by bloody clashes outside the prison between riot police and prisoner supporters, including relatives and ex-convicts.
Thirty people outside were detained for disturbing the peace, and eight riot police officers were injured in the violence, police said.
About 30 relatives remained at the scene Monday afternoon, police said, adding that the situation had "stabilized."
November 27, 2012
RUSSIAN PRESS REVIEW
The mutiny of prisoners suppressed at the penitentiary
On Monday, the situation at a penitentiary in the Ural city of Kopeisk, where the prisoners staged a protest action last Saturday, still remained unclear. On Monday morning, the Federal Penitentiary Service department in the Chelyabinsk Region stated that the mutiny is over. But the human rights activists claimed that the situation is far from being settled.
On Monday, the statements about "a successful settlement of the conflict" between the authorities of the penitentiary number six and the prisoners were posted on the official websites of the law enforcement agencies, the Novye Izvestia daily reported. According to the official version, the prisoners demanded loosen the imprisonment regime and release the convicted mafia bosses from the punishment cell (according to the human rights activists, real demands of the prisoners were just to conduct a prosecutor's inquiry in the activities of the prison authorities, which had allegedly extorted the money from the relatives of the prisoners, and those, whose families failed to pay the illegal fees, were brought to the punishment cell). "The situation at the penitentiary number six is stable and fully under control of the prison authorities now," the press service of the Chelyabinsk regional department of the Federal Penitentiary Service reported. The press service also rejected the reports about the police riot commandoes put in action and a massive hunger strike: "No convicts officially went on a hunger strike."
The Rossiiskaya Gazeta daily noted that the dramatic events at the penitentiary received the first assessments in the regional government on Monday. "The situation at the regional penitentiaries is tense. Massive tortures and suicides are reported there. The system, which was built by the former regional penitentiary department, is obviously malign and should be changed," Governor Mikhail Yurevich said.
Neither the human rights activists nor the relatives are going to leave the territory next to the penitentiary, where they came to make sure that their convicted relatives are all right, the Moskovsky Komsomolets daily reported. "Now about 40 relatives of the convicts are staying at the penitentiary. But their number is changing every hour, as new cars are driving up to the gates of the penal colony. Those who arrived there do not leave the territory near the penitentiary. One woman has her whole face in frost bites. But she is not going to leave, unless she makes sure that her husband, who is imprisoned at the penitentiary, is all right," coordinator of the movement Gulagu.net in the Chelyabinsk Region Oksana Trufanova told the newspaper.
November 27, 2012
Urals prison riot: Governor blames 'corrupt jail system'
After a two-day riot in a Russian prison ended with injuries and arrests, the local governor has confirmed inmate claims of torture and extortion at the penal colony in the Urals Region.
Mikhail Yurevich, the governor of the Chelyabinsk region, blamed the uprising in Penal Colony No. 6 on a "flawed" system which "should be changed."
"The situation in [regional] prisons is tense," the governor stressed. "Now it is tough to clarify all the details of the incident," he added, in any case noting "numerous cases of beating and tortures, suicides." He maintained a "need to investigate seriously."
Yurevich added that there are constant riots in local prisons ≠ with no break in sight, even though human rights organizations are investigating the cases.
Commenting further, he confirmed reports of extortion in the local facilities, stressing that the old, corrupt prison system was established by Vladimir Zhidkov, the ex-boss of the local FSIN, Russia's penal system administration. Too little time has passed since the new head was appointed, he said, and so it is too early to judge any recent reforms.
Penal Colony No. 6 in Kopeisk, in the Chelyabinsk region, made headlines on November 24, when 250 prisoners walked out, demanding better conditions and the immediate release of some inmates from solitary confinement.
Putting an end to cruelty and extortions in prisons in particular were the main demands laid out by rioters and their relatives.
Eight riot police officers were injured in an attempt to rein in the two-day riot, and 39 people were arrested.
'They don't touch those who give them money'
Olga Belousova, the sister of one of the inmates, was allowed inside Penal Colony No. 6 along with two other relatives. As a witness, she was able to speak to the press about the situation there.
"There were 60 people in the room; all were standing quietly," Belousova said. "I told them that we support them and came to make sure that everything is fine, and that we want to make their voices heard outside the colony."
The complaints, which were mainly communicated by the prisoners, include extensive extortion, inappropriate use of force and numerous other humiliations, Belousova says.
"They don't touch those who give them money, but against those who can't they use force to make their relatives pay," she added.
Former convict Mikhail Ermuraky believes that this system of exploitation was the main reason for the riot.
His mother said her son was tortured multiple times, sometimes even including sexual abuse.
"They start beating those who don't want to pay," said Ermuraky in a recent interview with the RIA Novosti.
The father of another convict, who spent three months in colony No.6, told Russia's Dozhd television that he has twice paid off prison staff.
"Every month... If you don't bring money, there will be problems," a man who wasn't named told Dozhd.
Payments in prison are typically euphemistically termed "voluntary contributions." Local human rights ombudsman Aleksey Sevastianov has noted complaints from relatives that such "contributions" can sometimes reach up to 200,000 rubles ≠ more than US$6,400. By comparison, the average Russian's annual income is just over $10,000.
For convicts, such sums are impossible to pay ≠ roughly half the prisoners in the colony are not employed. Those who do have jobs in the prison are paid extremely little ≠ less than 100 rubles, or just over $2, per month. Such a wage is not enough even to buy food in a convenience store in the territory, where prices are said to be higher than in the town.
The head of the detention facility met with inmates' relatives after the uprising, assuring them that he is willing to abolish "the system of contributions." However, relatives now fear that this change could bring retaliation from the prison staff.
When asked if such a system could be considered as criminal corruption, Human Rights Ombudsman Sevastianov agreed that it is illegal, and should be investigated.
He explained that with the scheme working in the facility, relatives wire money to a bank account given by the colony's administration. Thus, for example, millions of rubles sent by convicts' families were spent to build a new church on the territory.
Examiners Allowed into Post-Riot Prison
CHELYABINSK, November 27 (RIA Novosti) ≠ Members of Russia's Public Oversight Commission were allowed on Tuesday to enter a local prison in the Chelyabinsk Region where a riot erupted over the weekend, according to a spokesman for the local Federal Penitentiary Service.
Human rights activist Nikolai Schur and three colleagues were granted permission to enter the prison, after being denied on Monday, to inspect whether the prisoners' rights had been violated.
The team was assisted by officials from the prosecutor's office, the Investigative Committee and deputy director of the FPS, Eduard Petrukhin, who promised to uncover any apparent rights violations, the spokesman said.
Around 250 prisoners at the colony near the Urals city of Chelyabinsk rioted on Saturday, demanding a more relaxed regime and release of several of their number from a special punishment isolation unit.
The prisoners held up makeshift banners including one saying in red letters "We Have a Thousand on Hunger Strike" and another saying "People, Help."
The police said at least 38 people were detained over the incident, also claiming some of them were drunk.
Vladimir Lukin, Russia's top ombudsman, said on Monday he would look into the case. Around 30 prisoners' relatives remained outside the jail on Monday, shortly after the riot ended.
Prison officials denied on Monday that the prisoners were on hunger strike.
New York Times
November 26, 2012
In the Penal Colony
This Being Russia, a Massive Prison Protest Isn't Being Reported
By MASHA GESSEN
Masha Gessen is the director of Radio Liberty's Russian Service and the author of "The Man Without a Face," a biography of Vladimir Putin.
MOSCOW - All anyone can be sure of is that near the city of Chelyabinsk, by the southern Urals, something horrible is going on. Photographs circulating on the Web show dozens of tiny figures, all wearing black coats and black hats with ear flaps, gathered on the roof of a yellow brick building.
They are holding handmade banners. "The administration extracts $. They beat and humiliate us," says one. "The administration extracts $," says a smaller one, hung on a different wall, clearly to maximize the chances that someone will see the men's message. "There are 1,500 of us," say two of the banners. The banners appear to have been made from white bed sheets, several of them sewn together for the longer messages.
The photographs are from Prison Colony No. 6 in Kopeysk, a small town outside Chelyabinsk. From what my colleagues have been able to ascertain, on Saturday morning 250 inmates went into the hallways to begin a protest, demanding that several of their fellow prisoners be released from solitary confinement, where they had been placed for violating colony rules. The protest turned into a full-scale prison uprising that was still continuing Sunday night. Dozens, possibly hundreds, of the inmates' relatives gathered outside the colony's gates.
There have been dozens of different accounts of the events in Kopeysk circulating on the Internet and in the media, one less reliable than the next. One account that went viral claimed that 12 people had been killed inside the colony.
All day Sunday, the press office for the prison authority for the Chelyabinsk Region was assuring reporters that "the situation is stable, manageable and under control."
Meanwhile, Ekho Moskvy, an independent radio station, made telephone contact with one of the inmates' relatives gathered around the colony. "There is a real riot here, you understand?" a man named Vasily shouted into the phone. "Because they were being bullied and having sexual perversions done to them, beaten constantly and always being put in solitary for nothing, you understand?"
Another relative of a prisoner, identified as V. Yolkin, stepped in: "They are killing them! Many people have died or cut their veins. One guy cut his veins, you understand?" And then he added a detail that had been circulating on the Web: "The inmates are writing their banners with blood!"
Meanwhile, the top news story on the official Web site of the Chelyabinsk regional prison authority, posted two days before the protest began, reported that Colony No. 6 had installed a new 3D home theater system. It was illustrated with a photograph of five inmates with shaved heads wearing 3D glasses, seated in comfortable leather armchairs in front of a small screen.
The remarkable part of this story is not the underlying cause of the riot: The mistreatment of prisoners, including torture and rape, is endemic to Russian prisons and has been well-documented by human rights organizations. Nor is it surprising that the riot has drawn so much attention: With thousands of entrepreneurs and dozens of political activists behind bars, an ever greater number of Russians have good reason to identify with members of the country's swelling prison-camp population.
To me, the most remarkable part of what is happening in Kopeysk is how difficult - virtually impossible - it is to obtain any reliable information on events that have captured the country's attention.
Our Chelyabinsk correspondent was able to learn precious little, facing panicked relatives and their rumor mill on one side and stonewalling officials on the other. But even having our own correspondent out there is very unusual for Moscow-based media, though Chelyabinsk is one of the dozen largest Russian cities.
Russia is a profoundly atomized society. Its only potential information unifier is federal television. TV reporters might have been able to extract answers from prison officials, but after showing some footage of the protest they chose not to pursue the story. As it is, no one in Russia ever really knows what is happening 2,000 miles away or on the floor above.
Christian Science Monitor
November 26, 2012
Russian NGOs say new law makes them look like spies
The majority of Russian NGOs with outside funding sources have given notice that they will not submit to the law and some are bracing for a legal battle to protect their existence.
By Fred Weir, Correspondent
Moscow - Russian nongovernmental organizations are holding their breath a few days after a new law came into effect, requiring those who receive any amount of outside funding and engage in "public outreach" that authorities deem political to register as "foreign agents" and identify themselves as such in all their materials.
Mostly the mood is defiant. The majority of groups with outside funding sources and some kind of political agenda have given notice that they will not submit to the law. They insist the "foreign agent" label is designed to make their work look to average Russians like espionage.
The law is part of what critics say is a broad legislative assault on Russian civil society, including a clampdown on political organizing and freshly enacted Soviet-style treason laws. Their sum effect will make it much harder for Russian NGOs to work in any realm deemed political by the Kremlin, to gather information, participate in public debate, and share their findings with the outside world.
That sets the stage for a confrontation in the courts, probably early in 2013, which could see pillars of Russian civil society such as the election monitor Golos, the anti-corruption watchdog Transparency International and Russia's largest human rights group, Memorial, and many others face legal shut down by authorities.
"This law says we must determine whether we should register as a foreign agent, and we are emphatically not going to register ourselves," says Grigory Melkonyants, deputy head of Golos. "We do not understand this law, it does not seem to be in the spirit of Russia's constitution and other legislation, its definitions are vague, and it doesn't describe any procedure for implementation. We're preparing a brief to the European Court of Human Rights in Strasbourg, we're willing to go to the Russian Constitutional Court. We will not agree to this."
There are more than 300,000 NGOs in Russia, most of them apolitical groups like charities, sports clubs, or cultural organizations. Just a handful have annoyed the authorities by engaging in public education and agitation around issues that can be politically sensitive, such as human rights, democracy awareness and electoral transparency, and corruption. Most of those groups have never been able to find sufficient funding in Russia, where wealthy donors are also sensitive to political concerns, and have traditionally turned to outside sources such as governments and international foundations to fund their work.
One of those is the Russian branch of Transparency International, which was picketed last week by the pro-Kremlin United Russia party's youth group, with signs and slogans that urged it to accept the law and get itself registered as a "foreign agent."
"Under the law, the Ministry of Justice has to issue us with a warning that we are not complying with the law," says Anton Pominov, research director for the group. "If that happens, we will attempt to take it to the Constitutional Court, because we consider this law to be deeply unconstitutional. It's also wrong. When you call someone an "agent" in Russian, it has a very negative connotation, it means you are serving some master, and with us, that is simply not the case," he adds.
According to a public opinion survey conducted by the state-run VTsIOM agency in July, 64 percent of Russians say it's unacceptable in the political life of a country to have nonprofit organizations financed from abroad. Just 21 percent thought it was permissible.
Supporters of the law insist that it's just about bringing order to the tangled jungle of Russian NGO's, enforcing rules of financial transparency and that it's the right of any sovereign government to impose such controls.
"The idea of this law is common sense," says Leonid Syukiyanen, professor of law at the Higher School of Economics in Moscow. "I don't know of any big, complex country where the government is completely indifferent to the organizations working on its territory, involving themselves close to or on the political field, and receiving foreign funding. I wouldn't stand in opposition to the basic idea of the law if I were an NGO. But the problem here is that they do not have any mutual trust, there is no chance of a calm dialogue. Authorities adopted a flawed law, and NGOs are reacting in very inadequate ways," he says.
The most objectionable aspect of the new law, says Mr. Syukiyanen, is the tag NGOs will be forced to wear.
"Here in Russia, the term 'foreign agent' means spy. In the West, it may have more flexible meanings, but here it's purely negative. The drafters of this law should have come up with something different if they wanted to avoid creating such a perception," he says.
Activists say that most NGOs have been subject to strict accounting and reporting rules since the first tough NGO law was enacted back in 2005. Financial transparency can therefore not be the main goal of the new legislation.
"This is part of a whole set of new developments that will make it much harder for NGOs and international organizations to work here," says Anna Sevortyan, head of the Russian office of Human Rights Watch. "We are very worried about the new treason law that will potentially make human rights advocacy a formal pretext for treason charges.... Any Russian who works with or shares information with any international organization or foreign media group could be vulnerable, and that will make most people unwilling to talk to them. What we're seeing is that a signal is being sent, and the environment for NGOs and international organizations is getting much worse," she adds.
Long battle ahead
Most target NGOs are bracing for a fight, and say they will not wear the "agent" label no matter what happens. A few, such as the Moscow Helsinki Group, Russia's oldest human rights organization, says that it will refuse to accept any foreign funding if it comes to that.
"We haven't registered as a foreign agent, and we won't," says Lyudmilla Alexeyeva, head of the group. "We're not optimistic. If we go to court, knowing Russian courts, we'll probably be declared foreign agents. So, rather than be stripped of our registration and our right to take part in public discussion, we will have to give up foreign funding and look for funds here in Russia," she says.
Only a few say they're thinking of accepting the "foreign agent" label, and they're not happy about it.
"I consult with a number of small NGOs, mostly those engaged in charity and social aid, who say that if they're made to register they'll probably do it, because they need to go on working," says Ramil Akhmetgaliev, a lawyer with Agora, an interregional human rights NGO based in Kazan, in the Volga region of Tatarstan.
"But as for ourselves, Agora will not register itself voluntarily. We are not engaged in political activity, we are a public organization offering legal services to people who need them," he adds.
November 26, 2012
Year-old protests hit snag
Plagued by infighting and a seeming caste system, the opposition is at a crossroads
By Anna Arutunyan
Nearly a year after a modest opposition rally against an allegedly rigged parliamentary vote sparked the biggest demonstrations Russia has seen in two decades, anti- Kremlin groups are suffering from fatigue ≠ and an identity crisis.
"If someone knew what to do in this situation, then [President Vladimir] Putin would be gone. There isn't any know-how," Maria Baronova, an activist leader who is facing jail time over charges of inciting mass protest, told The Moscow News.
The elation of the first protest in December 2011 is gone. The opposition took an unprecedented step in electing its leaders to a coordination council last month. But it took weeks of debates to finally agree, over the weekend, to hold the next March of Freedom on Dec. 15 ≠ as disputes raged over the motive of a rally where the key challenge seemed to be getting people to show up in the first place.
Tatyana, a middle-class Moscow entrepreneur in her 30s, attended every protest held in Moscow after the Dec. 4 parliamentary elections.
Now she is willing to go only "if the rally doesn't interfere with work and leisure," she said.
Initially, the rallies grew in size. Up to 60,000 turned up during the first rally on Bolotnaya Ploshchad Dec. 10, and then up to 120,000 showed up at Prospekt Sakharova on Dec. 24, and as many as 160,000 at a Feb. 4 march to Bolotnaya, according to organizers (police provided considerably smaller numbers).
But an apparent crisis within the opposition movement emerged after Putin's re-election in March.
The protests began to radicalize, turning violent.
Police clashed with demonstrators on March 5, and then on May 6, on the eve of Putin's inauguration.
Now, oppositionist political pundit Andrei Piontkovsky is waging a blog war against it-girl-turnedprotester Ksenia Sobchak over which one of them kowtows more gracefully to the Kremlin. Radicals accuse more moderate liberals of selling out the cause, while the latter maintain that a more aggressive stance would lead to a crackdown and political marginalization.
"The moderates want reform. The radicals say the regime must be changed," said Alexei Makarkin, an analyst with the Center for Political Technologies.
That split is exacerbated by the fact that many opposition leaders have close ties to the ruling elite.
"There are those who have traditionally fought against the regime, and there is a part of the nomenclature," Oleg Kashin, a Kommersant journalist who was elected into the opposition's coordination council, told The Moscow News. "And in word or deed, [the nomenclature] won't do anything that's truly against Putin."
According to one opposition activist who spoke on conditions of anonymity, mutual suspicions and fierce loyalty within the protest movement mimic those of the ruling elite.
"The principle is, you're friends with whomever you like, but you don't talk about it," the activist said, describing a caste system where everything was decided at the top.
"You can be on the Aeroflot board if you're [popular protest leader Alexei] Navalny... But a lower-level [opposition] activist isn't allowed to talk to a lower-level pro-Kremlin activist."
Baronova concedes to one of the most oft-voiced criticism of the opposition ≠ its lack of a clear-cut program.
"We're not hungry, we're not in poverty, and people who aren't hungry can't keep this up for long, [while] making philosophical demands. You can't build a civil society on philosophical demands," she said, referring to the fact that the bulk of the protesters is made of the educated middle-class urban residents.
And as the opposition's elected body debates what kind of demands to make at its next rally in December, they seem locked in the same type of authoritarian model they're trying to overthrow: their cries for free elections and reforms are still addressed to a government that they don't recognize as legitimate.
"It's not that they are expecting something from the government, but they have to articulate their demands whether they see the government as legitimate or not," Makarkin said. "Since the decisions are made by the government, it's logical that the demands are addressed to the government."
The May clashes provoked harsh repression ≠ a series of law enforcement raids on opposition leaders' apartments and offices were followed by the arrests of at least a dozen people that were involved in the May 6 rally.
Meanwhile, the parliament, controlled by the pro-Putin United Russia party, passed a series of draconian bills targeting opposition rallies, critical media and civil rights NGOs with foreign funding.
If some 44 percent of the population supported the protest rallies in December 2011, that number dropped to 30 percent by October 2012, according to a Levada Center poll released last month.
"A lot of things did change [following the rallies], but protest leaders see [the changes] as inadequate," Makarkin said. "We now have popular gubernatorial elections returned, for example. But selection of candidates is still controlled by the authorities. So, there is a disappointment on a lot of levels."
Last month's election of the opposition's first representative body ≠ the coordination council ≠ has been seen widely as a promise of getting opposition demands onto a new level.
But little other than resolutions condemning recent arrests came out of it.
Still, the protest movement is far from over as the government is shaken by corruption scandals, while public demands for political liberalization remain unanswered properly by the ruling elite.
"When people once again feel themselves humiliated and insulted, we'll see new eruptions of dissent," Makarkin said.
November 27, 2012
New Strategy for Opposition
By Vladimir Ryzhkov
Vladimir Ryzhkov, a State Duma deputy from 1993 to 2007, hosts a political talk show on Ekho Moskvy radio and is a co-founder of the opposition RP-Party of People's Freedom.
When the authorities allowed new political parties to be registered this year ≠ including the Republican Party-Party of People's Freedom in August ≠ many hoped this was a small step toward more political pluralism. But it soon became clear that this was just another Kremlin decoy.
The authorities shifted from a complete ban on registration to nearly absolute freedom for all new parties. As political analysts predicted, the result has been the widespread creation and registration of new parties, with almost 40 now on the Justice Ministry books. Many are extremely similar to each other and fall into the standard categories of communist, socialist, patriotic and liberal parties.
The vast majority were created by the authorities themselves with the clear goal of misleading voters and splitting the vote between the real opposition and spoiler parties. These pseudoparties were already used with some success against the Communist Party, A Just Russia and the Republican Party-Party of People's Freedom in the regional elections on Oct. 14. That is why those parties won fewer than their usual number of votes.
To be sure, generous administrative resources have helped United Russia claim victory in recent elections. The party's standard tools were used to guarantee victory: pressuring government employees to vote for United Russia, restricting monitors access to polling stations, busing pro-United Russia voters from one polling station to another and other ballot-stuffing methods.
But apart from the outright electoral fraud and manipulation, there is another side to United Russia victories. In its own distorted way, the party has learned to conduct effective political campaigns. Over the past decade, United Russia has built a powerful electoral machine. During election campaigns over the past couple of years, United Russia has mobilized thousands of canvassers who knock on almost every voter's door.
In addition, the party systematically holds numerous meetings with voters, bringing with them local officials who immediately write down and promise to carry out "voters' demands." That is exactly the type of campaign that guaranteed victory for Oleg Shakhov in the mayoral race in Khimki, just outside the Moscow city limits.
And that is exactly how many United Russia candidates campaigned in Barnaul for the Oct. 14 regional elections. What is surprising is that despite the enormous financial and administrative resources the ruling party invested, it produced only modest results. Consider Vladivostok. Even after billions of rubles was spent on developing the city and the region prior to the APEC summit, only 12 percent of voters turned out for the municipal Duma elections, and of those, about 40 percent voted for United Russia. That means only about 5 percent of all voters in the city supported the ruling party.
United Russia is experiencing a deep crisis of voter confidence that even widespread falsifications and modern and costly election campaigns cannot cure. When United Russia candidates attend public meetings with local officials in tow, they are greeted not only with a flood of questions, but also with a barrage of curses.
Considering the deep crisis that United Russia is experiencing, the opposition has a chance to win regional and local elections, despite the enormous resources the Kremlin provides the ruling party.
But the opposition must do a great deal of work to achieve that goal. It must find a large number of strong, active candidates and train its own political analysts and headquarters staff. It must create its own network of canvassers, volunteers and elections monitors. It must learn to plan and manage modern election campaigns and learn to organize attractive political programs that answer the needs of the local population.
The opposition forces must respond to United Russia's administrative resources and outright electoral manipulations with the four main weapons that it has at its disposal: activism, hard work and diligence, professionalism and faith in the morality and rightness of its cause.
Time Nominates Pussy Riot for 2012 Person of the Year
NEW YORK, November 27 (RIA Novosti) - Members of the Russian punk band Pussy Riot were nominated by influential magazine Time for the 2012 Person of the Year.
The punk band is among 40 candidates, who influenced news this year for better or worse. The list also includes US President Barack Obama, US Secretary of State Hillary Clinton, Syrian leader Bashar al-Assad, Olympic champion Michael Phelps and others.
"In a year when so many voices of liberty and dissent have suffered harsh retribution, the Russian feminist punk group Pussy Riot has paid a particularly steep price for provocative political expression," the Time wrote describing the nominee.
Five women from Pussy Riot performed in late February a "punk prayer" in downtown Moscow's Christ the Savior Cathedral, which is Russia's biggest Orthodox church.
An edited clip of the band's protest posted online showed the group high-kicking near the entrance to the altar of the cathedral accompanied by the song "Holy S**t" urging the Virgin Mary to "drive [Vladimir] Putin out." The song mocked Patriarch Kirill of Moscow and All Russia and believers in insulting terms.
Soon after, police arrested three of the suspected performers. The three women said their performance was a political protest against Patriarch Kirill's support for Putin ahead of the March 4 presidential elections that returned him to the Kremlin, but the court found the performers guilty of hooliganism aimed at inciting religious hatred and jailed them for two years each on August 17.
The prison term for one of them was later replaced with a suspended sentence.
New York Times
November 27, 2012
Pussy Riot's Perky Antithesis
By SOPHIA KISHKOVSKY
MOSCOW ≠ If the punk band Pussy Riot has become the poster child for Russian dissent in the era of Vladimir V. Putin, then Svetlana Kuritsyna is the very antithesis: a disarmingly direct, red-cheeked, 20-year-old Putin supporter from an impoverished rural region.
Pussy Riot ≠ three of whose members were sentenced to prison for singing an anti-Putin song in a cathedral ≠ became synonymous with outlandish behavior. Ms. Kuritsyna has stood out for her very normality and has become an accidental celebrity after an innocent, and somewhat inarticulate, video interview in which she glowingly praised Mr. Putin. It quickly became an Internet meme, drawing more than two million views on YouTube and leading to the ultimate prize of the modern media age: her own reality show.
But she and Pussy Riot have one thing in common, and that is an uncanny knack for dividing Russian passions. Since Ms. Kuritsyna stumbled into the limelight, media and protest circles alike have debated both the social significance of "Sveta," and the plight of a naÔve young woman thrown into a media and political circus.
She has been both mercilessly mocked for her earnestness, and held up as a provincial ideal. To some she is a stand-in for all that is wrong with Russia's ill-guided and uninformed hinterland; to others, a symbol of what they see as the wrong-headed, belittling treatment of Russian women.
It all started with a journalist for Moskovskie Novosti, a Moscow newspaper, who was reporting on Nashi, the pro-Kremlin youth movement, and interviewed Ms. Kuritsyna after one of its demonstrations last December.
Her face framed by a white fake fur collar that made her look like a Russian doll, Ms. Kuritsyna said Mr. Putin's United Russia party "has made very many achievements," adding, ungrammatically in Russian: "We have started to dress more better."
In the Putin era, she said, "We have begun to sow more land ≠ vegetables, rye and all that." "Medicine has gotten very good," she added, and, clearly grasping for more good news, volunteered that "there are no problems with housing."
Played over and over again on the Internet, her poor Russian and her praise of the Putin era was instantly derided by liberal Russian Web commentators and the opposition that formed last winter in protest at the manipulation of parliamentary elections in favor of Mr. Putin's political allies.
But they launched her star. Ms. Kuritsyna became known simply as "Sveta from Ivanovo," a region some 250 kilometers, or 155 miles, east of Moscow that was famous in the Soviet era as the "city of brides" because of the disproportionate number of women working in its main industry, textile production.
Then, the tables turned somewhat, with Ms. Kuritsyna being championed by some intellectuals and most feminists who came to her defense.
Eventually she was rewarded for her simple loyalty to Mr. Putin with the starring role in the TV show "Luch Sveta" ≠ the title is a play on words with her name that means "Ray of Light" ≠ which premiered in late July on NTV, a television channel run by Gazprom, the state-controlled gas monopoly, and often criticized by liberals as a mouthpiece for the Kremlin and a purveyor of trash programming for the masses.
NTV made no secret of exploiting Ms. Kuritsyna's provincial roots. The show's logo depicts her as a perky village milkmaid; several episodes have focused on her ample figure and advice on exploiting it from stars of Russia's kitsch-laden pop and personality scenes.
In the first episode, Ms. Kuritsyna shrieked with delight at meeting Na-Na, a 1990s boy band whose lead members are now in their 40s. She listened intently as Bari Alibasov, the band's 65-year-old producer, ogled her body and intoned, "You have very vivid, expressive tits," adding: "In order to get ahead, you need to exploit them to the utmost."
Further episodes featured men old enough to be her grandfather commenting on her most "vivid" feature. Sergey Zverev, a prominent celebrity stylist, ordered her to jump in front of him to check the bounce of her breasts and dyed her hair blonde as part of a makeover. Pyotr Listerman, known as matchmaker to the oligarchs, tried to help her find a billionaire husband ≠ regarded as the ultimate dream of every girl from the impoverished provinces.
Wittingly or not, the program shed unusual public light on the plight of those regions when it showed Ms. Kuritsyna visiting her hometown of Privolzhsk, just outside Ivanovo. Her mother works as a spinning machine operator; she and others interviewed complained that their wages ≠ at the equivalent of $100 to $200 a month ≠ had long gone unpaid.
The journalist Oleg Kashin, who has gone from Kremlin apologist to a media symbol of the anti-Putin opposition after being brutally beaten by unknown assailants in 2010, condemned Ms. Kuritsyna as a cynical provincial careerist.
But Andrei Loshak, a television and magazine journalist who has criticized Mr. Putin's rule and authored hard-hitting reports about hopelessness in provincial Russia, called for sympathy.
"I remember very well the eyes of girls in small towns that we would visit with our film crew," Mr. Loshak wrote on Colta.ru, an opposition Web site. "You ask her the time or for directions. She answers something. But in her eyes you can read the plea. 'Get me out of here, take me beyond the seas. Anywhere, just as far as possible from this hopelessness."'
Some of his male colleagues, Mr. Loshak noted, exploited that despair, taking trips across Russia to combine "business with pleasure." "It's hard to accuse the girls they seduced of being sluts, or greedy," he added. "The girls are just victims of crappy circumstances."
Vera Akulova, a feminist, sees the treatment of Ms. Kuritsyna as typical.
"There is sexist commentary against any woman who becomes a notable figure in the public sphere in Russia," she said. "In the Pussy Riot trial, the physical appearance of the defendants was also discussed. Public support and attention is given to each of them based strictly on the extent to which each of them corresponds to the prevailing standard of beauty."
After gaining top viewer ratings over the slow summer period, "Luch Sveta" has since moved to a late-night slot and the segments have become even tackier. In October, Ms. Kuritsyna was seen filming a music video with a sex-film star.
Some opposition activists have held out hope that Ms. Kuritsyna's experience in Moscow and in the national spotlight will bring her into their camp. Perhaps in the first step in that direction, NTV announced in September that it was trying out Ms. Kuritsyna as its parliamentary correspondent.
In her first foray to the State Duma, the lower house of Parliament, Ms. Kuritsyna took offense at opposition politician Gennady Gudkov, who was being stripped of his parliamentary seat that day by the United Russia party, for insulting her in a speech. But she accepted his apparently heartfelt apology after confronting him in a corridor.
The episode opened with her throwing a pie into the face of Yevgeny Gladin, the Moskovskie Novosti reporter who first made her famous, saying he had made her a laughingstock. Mr. Gladin walked off the show's set with the words: "Sveta, good job! You'll go far."
November 26, 2012
A moveable riot
The saga of Pussy Riot has one source
By Anna Arutunyan
Anna Arutunyan is the politics editor of The Moscow News.
I'm going to tell you a story about three pretty girls who defied the patriarchy ≠ no, wait, scratch that. This is a story of deceit, betrayal and revolution. No, scratch that, too. Here's a tale of greed, vengeance and high-stakes PR. Or not! Because, however much we try to make it into one, the fact that two young, pretty women are in jail over singing a song in a church is not a movie by the Wachowskis or a novel by John Fowles.
The Pussy Riot saga, that gift that keeps on giving, has unraveled into counter-allegations of publicity-mongering and betrayal, proving that in Russia, the wrath of the sovereign can be as pricey as his favor.
Last week, following a prolonged controversy over registering the Pussy Riot brand, the group's firebrand lawyers, Mark Feigin, Violetta Volkova, and Nikolai Polozov, announced they were no longer representing its imprisoned members. Their official reason was that it was in the girls' best interests to be represented by someone else.
Given that Yekaterina Samutsevich's earlier decision to switch lawyers helped her get out of jail last month, I don't necessarily doubt that explanation. Still, this is not the full picture. So what really happened?
Ask a man on the street about Pussy Riot, and he will be convinced that someone powerful was behind the stunt, using the girls in some high-stakes political game. I never bought into these conspiracy theories, but I suspected that something simpler was going on. Someone was getting rich. Or trying to.
When I asked Samutsevich last month about reported attempts to register the Pussy Riot brand, she brushed my question off, saying she didn't know anything about it. Besides, the very nature of her art was non-commercial ≠ registering a brand wouldn't make sense.
I didn't press further into this or her real reasons for switching lawyers. With her friends in jail, she would be reluctant to undermine their credibility by suggesting a schism. And rightly so.
But now that jailed Pussy Riot members Maria Alyokhina and Nadezhda Tolokonnikova have distanced themselves from the lawyers, Samutsevich has spoken out. In an interview to Lenta.ru, she alleged that Feigin had her sign blank pages, which were then used in an attempt to register the Pussy Riot brand. She accused Volkova of withholding her passport. And she bluntly called the lawyers out on fame-mongering.
That's when the story unraveled. In a flurry of tweets, the lawyers countered with accusations that Samutsevich was lying and complying with the Kremlin as part of her deal for freedom. Detailed reports appeared on Lenta.ru about Feigin's political career, his stint in Serbia in the 1990s, and Volkova's involvement in a high-profile trial over Kremlin-connected raiding. Sources close to the case started talking of Feigin's fabulous wealth.
Meanwhile, in a separate development, publishers in Moscow released a book titled "Pussy Riot: What was it?" with Tolokonnikova, Alyokhina and Samutsevich listed as authors. The women had no part in this: the editors compiled the book from interviews with them from various sources, including The New Times, where a reporter is now threatening to sue the book's publisher.
All this lends itself to the notion that the entire stunt ≠ not just the incident in Christ the Savior Cathedral, but the subsequent jailing ≠ was staged as an elaborate PR performance, with a number of beneficiaries cashing in. But is that reality, or itself another layer?
Indeed, the aesthetic elegance of the Pussy Riot story may explain the unrelenting appeal of the feminist punk group in the West. Life becomes art: the dramatic narrative of three young, pretty punk activists fighting The Man simply must end in The Man putting them in jail ≠ otherwise your movie isn't going to fly at the box office. But to appeal to the critics, your movie also needs biting commentary on the commercialization of society, and the row over the brand provides all that.
But what's disconcerting is that this isn't a movie. It's a political fight with real people winding up in jail. And Orthodox Russians I've spoken to are appalled not just at Pussy Riot for staging a "disgusting" stunt in a church, they're equally appalled at the government for giving the band members publicity by jailing them.
I don't want to blame Pussy Riot for deliberately trying to cash in on anything. Samutsevich, I believe, is sincerely bewildered by what she's gotten herself into. But inadvertently, every player in this postmodernist drama, where every layer reveals an underlying one, is getting rich via some form of capital, where even a jail term has an exchange rate. The ultimate source of that capital sits in the Kremlin.
Veteran Russian journalist calls for privatization of all federal TV channels
Moscow, 26 November: TV host Vladimir Pozner is calling for a real privatization of all federal TV channels, with one of them being turned into public TV.
"Who is to blame for the fact that Russia has this sort of TV - I mean the federal channels, Channel One, Rossiya 1 and NTV? Who do these channels belong to, directly or indirectly? To the state. So who is to blame? Logic suggests that it's the state," Pozner wrote on his website on Monday (26 November).
In his view, TV in Russia is such that "its contents rouse total, or almost total dissatisfaction and irritation, to put it mildly".
"And what can we do to fix this? I think that the state needs to leave all media - both federal and local. And Dmitriy Medvedev called for this when he was still president. One of the three federal TV channel needs to be turned into true public TV which will not depend on advertisers or the authorities," Pozner said.
November 27 ,2012
Kashin Fired From Kommersant
By Nikolaus von Twickel
Kommersant has fired opposition-minded journalist Oleg Kashin for writing too much for other media and too little for his employer, the leading daily's editor said Monday.
"An agreement has been reached with Kashin [to terminate his employment] because he practically has not worked for Kommersant for one year," editor Mikhail Mikhailin told Interfax.
The news triggered a wave of media speculation Monday that the journalist has become the latest victim of an ongoing crackdown on the opposition. Kashin is a member of the opposition's Coordination Council, formed last month.
A source inside the Kommersant publishing house said Monday that Kashin's relations with his superiors had been deteriorating for months and that he reduced his contribution to a weekly column for the Kommersant FM radio station.
"This has been expected for some time," the source said, requesting anonymity because she was not authorized to speak on the record.
She added that while Kashin's opposition activities were seen as controversial inside the newsroom, it was wrong to interpret his dismissal as political.
"Some here viewed it as unacceptable ≠ you're either a journalist or a politician," the source said, adding that the underlying conflict of interests applies to any political activity, be it oppositional or pro-government.
Reached by telephone on Monday, Kashin refused to comment. National media reported that he would join the OpenSpace.ru website, where he has been running a column since this summer. His name was already up Monday on the site's list of newsroom staff.
Oleg Kashin made headlines in 2010 when he was badly beaten in the courtyard of his house in Moscow. The incident is still unsolved, prompting his lawyer to announce earlier this month that Kashin would appeal to the European Court of Human Rights because the authorities' allegedly poor investigation violated his right to life.
A prolific writer, Kashin worked for Kommersant since 2003, with a four-year break after 2005, during which he worked for a range of media outlets, including the Kremlin-friendly Izvestia daily and Expert magazine. For two years he served as deputy editor of Russkaya Zhizn magazine before returning to Kommersant as special correspondent in 2009.
November 27, 2012
How Journalists Defend Against Lawlessness
By Alexei Pankin
Alexei Pankin is the editor of WAN-IFRA-GIPP Magazine for publishing business professionals.
I received an invitation last week to attend the national Restoring Leadership forum to be held on Tuesday. Speakers at the forum were listed as senior managers from leading private and state corporations, governors, ministers, deputy ministers and presidential advisers. "Unfortunately," I responded, "I will not be able to attend because I will be protesting the closure of the Chertanovsky market that day."
When I stopped by an indoor market near my home last week, I was surprised to find the vendors in shock and tears. I learned that a local official had informed them an hour earlier that the market would be torn down and that vendors had only three days to clear out. One farmer from Ryazan sobbed, "If I can't find a new place to set up shop quickly, I will have to butcher three of my cows." She had been selling homemade dairy products at the market for years. Others echoed her plaint, lamenting that they would have to toss their unsold sausage and other foods in the trash. A woman selling beer on tap wailed, "I'm bankrupt!" She had to return the empty kegs for the hefty deposit and had too little time left to sell the remaining beer. The vendors were all seized by a sense of desperation and hopelessness.
From home, I called Zhukovskiye Vesti newspaper editor-in-chief Natalya Znamenskaya for advice. Her publication had led a successful protest campaign against the authorities' attempt to cut down part of a forest to make way for real estate development in the Moscow region town of Zhukovsk.
"Our situation was different," Znamenskaya said. "The protest was conducted by young people who grew up on the Internet and who did not accept restrictions or prohibitions in any form. If we, as traditional journalists, had not led the charge, activists would have simply destroyed the construction equipment at the site. But the market vendors sound like they won't stand up for their rights," she explained.
She was right. The vendors were mostly over 45 years of age and law-abiding. Their one wish was that they be given at least 10 days warning instead of three in which to sell their remaining goods.
On Saturday, the marketplace looked like it was either beset by looters or the scene of a charitable giveaway. Everything was sold at ridiculously low prices and the mob of buyers snatched it all up by the armful ≠ either to save money or as an act of solidarity with the merchants whom they had known for years.
But soon, the atmosphere at the market changed. People were saying that they would sell what they could by Monday, their last day, but that they would not throw out whatever remained. They would stand their ground even if the bulldozers came. It seemed that the presence of a Vechernyaya Moskva correspondent at the market had inspired them to stand up to the authorities. People of middle age and older recalled how during Soviet times, the media was the last, best hope for restoring justice. To support the growing spirit of protest, I phoned the editors of the Moy Rayon newspaper network. They told me to keep them updated on the situation and that if the authorities attempted to raze the market on Tuesday, the newspaper would send a correspondent.
That is why I will be standing vigil against bulldozers alongside my neighborhood vendors on Chertanovskaya Ulitsa. After all, journalists should make themselves useful in some way.
Medvedev confirms education development program through 2020
November 27, 2012
Prime Minister Dmitry Medvedev has confirmed the state program for the development of education for 2013-20, the government press service reported on Tuesday.
"The goals set in the program are to make the quality of Russian education compliant with citizens' changing demands and with the strategy of Russia's social and economic development, and to enhance the efficiency of the youth policy in the interests of innovative socially-oriented development," it said.
Among other major tasks are those of shaping a flexible system of continuous education, accountable to the public, that would promote the development of the human potential and ensure the fulfillment of the current and projected needs of the country's socioeconomic development; further developing the infrastructure and organizational-economic mechanisms guaranteeing the maximum and equal access to the services of pre-school, general and additional education for children, and upgrading educational programs within the system of pre-school, general and additional education for children aimed at achieving modern quality of learning and socialization results.
The program is intended to create a modern system of appraising the quality of education on the basis of the principles of openness, objectivity, transparency, social-professional involvement, to maintain an effective system of the young generation's socialization and self-realization, and to develop young citizens' potential.
Euro remains in Russia's foreign currency reserves
PARIS, November 27 (Itar-Tass) ≠ Prime Minister Dmitry Medvedev told a press conference in Paris on Tuesday that Russia would not give up keeping the euro in its foreign currency reserves and that Russia wishes the European Union soonest settlement of its economic problems. "Today, a piece of good news in respect to settlement of the Greek debt has come. We hope it will be a full and final settlement," Medvedev said in a reply to a question asked by Itar-Tass at the press conference.
"The Russian Federation and the Russian government wish every success to the European Union as well as the states which belong to the euro zone and hope that the situation will stabilize. We are really very close partners, and Russia really has 42 percent of its foreign currency reserves nominated in euro. This is quite a large sum because Russia's foreign currency reserves are large," Medvedev explained.
"We are not going to revise things because we have confidence in the strength of an absolute majority of the economies which belong to the euro zone," Medvedev said. "Nevertheless, problems do exist and these problems must be settled as soon as possible," Medvedev stressed.
He reminded of his own words he said four years ago when the world economic crisis broke out:"It was good luck that the world faced another crisis in a situation when we have not only the dollar, but also another very strong reserve currency -the euro, which cannot be lost because if we face more crises with one or two reserve currencies involved such a situation might pose a threat to the strength of the whole economic construction, the whole world economic order."
"We do not change our plans and wish our colleagues from the European Union to cope with these problems as soon as possible," the Russian prime minister said.
Russia Beyond the Headlines
November 27, 2012
Russia still struggles to improve its Doing Business rankings
In the past 12 months, the Russian authorities have managed to reanimate the political system and bring the country up eight notches in the Doing Business ranking. Yet, experts have concerns that the positive trend might reverse next year.
By Dmitry Kahn
The political crisis of 2012 has remained front and center for months. However, economists have recently joined political experts in voicing their concerns about the new challenges that the Russian economy will face and ways for the country to respond to them.
According to the Levada Center, more than half of Russians believe that the country needs reforms, and that the authorities led by President Vladimir Putin fail to introduce them properly. The Levada Center is known primarily as an opposition think tank, but reports by the Center for Strategic Research (CSR), which is loyal to the incumbents, are even more pessimistic, with up to 66 percent of Russians said to be disappointed with the authorities.
The drop in Putin's approval rating does not make the opposition any stronger, though. CSR specialists draw the following conclusion: New mass protests are very likely in Russia, and there is even a chance of a revolution.
While experts continue to argue over whether some "Navalny" or any other opposition leader might be able to compete with Putin, economists are clearly more concerned about Russia's first year as a World Trade Organization member.
The Financial Times shares a pessimistic scenario: The newspaper believes that the investment climate will gradually deteriorate in Russia. Only 15 percent of the experts polled by the newspaper in late November called the official economic policy favorable for doing business in Russia.
Besides subjective opinions, there are objective figures: During the last 12 months, Russia has climbed eight positions to number 112 in the Doing Business ranking.
The main achievements have been the reduction of the administrative burdens on businesses and the easing of procedures for paying taxes. When it comes to the Paying Taxes indicator, Russia has moved up 41 notches to rank 64. The main problems that businesses encounter in Russia are dealing with construction permits and receiving electricity.
Other important factors are the thematic rankings, in which Russia has substantial untapped potential, according to Andrei Nikitin, general director of the Agency for Strategic Initiatives.
"The main focus areas for us today are the construction of energy facilities, import and export. But it is in those areas where we need to have a breakthrough that we lag behind so miserably," Nikitin said.
Customs clearance has traditionally been a central problem for the focus areas. The year 2013 may become a point of no return for Russia. In June 2012, the government approved a roadmap for improving customs administration, and 2013 will show how well these improvement plans are implemented.
The program aims at a 60 percent reduction in the number of documents required to export commodities from Russia, whereas the timeframe to draw up the necessary documents is supposed to decrease from 25 days to seven. Furthermore, specialists hope that the customs system will benefit from the Customs Union framework ≠ cargo delivery periods have been significantly reduced since customs control was canceled on the borders of Russia, Kazakhstan and Belarus.
However, some experts have doubts that everything will go smoothly and that Russia will be able to climb a few more places in the Doing Business ranking of 2013.
"Russia had paved the way for making this breakthrough in 2013," said Timofei Shatskikh of RosBusinessConsulting. "But we need to understand that the international market doesn't have much sympathy for mistakes. Everyone is moving toward integration, and it is imperative for Russia not only to move forward, but also to move faster than everybody else."
Nikitin shares this view: "Construction is the most indicative example. We have made progress in many areas here, but the rank remained unchanged which means that someone was moving faster than we were."
In any event, amid the ongoing crisis in the eurozone, Russia seems to have a fair chance of making yet another breakthrough.
OECD urges tighter monetary policy in Russia next year
PARIS, Nov 27 (Reuters) - Russia may have to raise interest rates and tighten rules on lending next year to crack down on inflation, the OECD said on Tuesday.
"More tightening will probably be required in 2013 to gain credibility in the run-up to a more formal inflation targeting regime," the Organisation for Economic Co-operation and Development said in its annual economic outlook.
Russia is gradually moving from a policy regime that targets the rouble's exchange rate towards that of inflation targeting, which involves tighter control of interest rates and a greater role for official inflation targets.
A rise in inflation above the central bank's formal 5-6 percent target range for 2012 led the bank to raise policy rates by 25 basis points in September, although a recent moderation in inflation has eased pressure for further imminent hikes.
While higher inflation mostly resulted from a poor harvest and a delayed increase in regulated prices, core inflation had also risen, suggesting that price pressures were feeding through into other sectors, the OECD said.
It forecast that the average monthly rate of consumer price inflation would rise to 6.4 percent in 2013 from 5 percent in 2012. But it expected that inflation would fall gradually towards the central bank's policy target of 4-5 percent in 2014.
While some economists are concerned that tighter monetary policy would exacerbate a deepening economic slowdown, the OECD was relatively optimistic about Russia's growth prospects.
It forecast that growth in gross domestic product would rebound to 3.8 percent in 2013 and 4.1 percent in 2014, from 3.4 percent this year. It anticipated higher oil prices, an easing of headwinds from the euro zone crisis and domestic consumption growth driven by low unemployment and rising real wages.
However, the OECD was concerned over the long-term impact of additional government spending promised by President Vladmir Putin, who won election for a third Kremlin term earlier this year.
"It is uncertain how electoral spending promises that amounted to a cumulative 6 percent of GDP by 2018 will be actually implemented, but they might contribute to overheating," the report warned.
November 27, 2012
Stephen Jennings' Exit Is a Big Loss for Russia
By Bernie Sucher
Bernie Sucher, is a long-time competitor of Stephen Jennings, is a board member of ATON, an investment bank.
Since the fall of Bear Stearns in 2007, the scene has been repeated tens of thousands of times. With colleagues staring, you search your desk for the things most important to you. You pack up the lot as best you can with whatever bag or box might be at hand. You say a few awkward goodbyes and walk out for the last time.
Stephen Jennings followed this script in mid-November, making his lonely exit through the doors of Renaissance Capital, the firm he led for 17 years. The world of finance offers bigger stages, but none of its actors has so captivated an audience as Jennings did in Russia. From the first day, Renaissance Capital was a high-wire act, a collection of colorful and super-aggressive money men banded together by vaulting ambition for wealth amid the land grab that was Russia in the 1990s. That ambition was feral, just barely restrained by the superior, concentrated professionalism that became the firm's competitive attribute. Renaissance, inspired by Jennings' beloved Kiwi rugby tradition, was in your face: muscular, fierce, fast and intimidating.
By the time Boris Yeltsin beat the Communists in the 1996 presidential election, Renaissance commanded a field filled with dozens of homegrown competitors, startup brokers and investment banks growing pell-mell with the opportunities of privatization and the spread of the market economy. Brunswick, Grant, Alfa, Rinaco Plus, UFG, Nikoil, ATON, Troika Dialog and other investment banks were the pioneers of a new, robustly capitalist and entrepreneurial Russia.
The country's financial and economic collapse in August 1998 slashed each of these green shoots like a reaper's scythe, with the towering Renaissance taking the deepest cut of all. Amid the ruin, with no liquidity, excessive staff and no prospect of revenue, clients and counterparties reneging on obligations, the firm's founding partners turned on each other. The fight wasn't pretty, but it was over quickly. Even in this hopeless condition, Jennings wanted the bank more than anyone else. Renaissance was now his.
Recklessly daring and capable, Jennings proved indomitable in defending the shattered remains of the company. A charismatic, intense leader, he rallied his best people to a challenge few of them understood and for which none of them had bargained. Having once achieved historic firsts, like bringing Russia's inaugural initial public offering to the New York Stock Exchange, the Renaissance team instead now collected on bad debts. In the long winter that followed Moscow's default, during which traditional Western clients avoided trading any Russian securities, Renaissance scraped out a living in the murky shadows of what passed for the country's capital markets: desperate but somehow sharp and opportunistic enough to stay alive. If you were watching, what you felt was the iron will of one man who refused to let Renaissance die.
When the turn came, in the hopeful young years of Vladimir Putin's reign, Renaissance's surviving veterans were combat-ready and utterly committed to their leader. "OK, guys, where are we?" he would say, interrupting a contentious meeting of his officers. "Just give me the facts, cut through to the economics, and we'll know what to do."
Jennings knew Russia was going to boom. With renewed audacity and determination to make history in his own way, Jennings rallied hundreds of new recruits to his banner, fielding teams and products in businesses where many of his competitors did not yet imagine there were markets. As it had a decade before, Renaissance was setting the commercial pace for its peers. These were mostly stronger and larger firms now, with some of the original names merged into history and others becoming the bridge over which international investment banks crowded into Russia's version of Wall Street. If these new players lent the market a certain appearance of maturity, Russian finance was still in the first decade of the 2000s recognizably what it had been when Renaissance began: promising terrain for the profitable deployment of capital and for independent investment banks.
One is tempted to conclude that when the next big August crisis hit Russia in 2008, it was hubris that undid Renaissance. Many of the usual signs of overreach could certainly be cited: the breakneck expansion on many fronts, including Africa; five-star extravaganzas for headline personalities and political figures; breathtaking bonuses; and sprawling offices atop Europe's tallest and most expensive tower. But knowing what his grit and ingenuity had accomplished in even more dire circumstances, I believe that Jennings would have triumphed yet again.
In 2012, however, there is one powerful dynamic at work, one not internal to any firm or a function of any particular businessman's decisions. That dynamic was set in motion nearly five years ago, when Jennings was at the zenith of his power. It was in early 2008 that a large and skilled group of corporate money men set up shop at VTB, a state-controlled bank. Ironically, the global financial crisis that followed shortly thereafter ensured VTB's early success. That success encouraged Sberbank, the largest state financial institution, to swallow up Troika Dialog, Renaissance's worthy blood rival.
There was a time not long ago that Renaissance and Troika, entrepreneurial to their bones, vied with each other in a free market for the informal title of Russia's "national champion." Jennings, born in New Zealand, ill at ease with the language of Pushkin, never really had a chance at winning that particular contest. But over nearly two decades of vision, creativity, smarts and relentless drive, he brought to Russia more international investment capital, competitive talent and commercial dynamism than any other person. Russia's new model for the investment banking industry, which was based on state-owned actors, ensured that a firm like Renaissance could not endure. As a consequence, Jennings' singular record of accomplishment will likely never be challenged.
Stephen Jennings has taken his last walk out the door of Renaissance's Moscow offices. He is bound for Africa, a continent buzzing with boundless possibilities for someone with his rare gifts. Watching him go, I say Russia has lost a true champion.
The National Interest
November 27, 2012
Russia's Murky Energy Future
By Robert A. Manning
Robert A. Manning is a Senior Fellow at the Atlantic Council. He previously served in the State Department as a senior advisor to the Assistant Secretary for East Asia and the Pacific (1989-93) and on the Secretary's policy planning staff (2004-08).
Earlier this month, the U.S. House approved a bill to establish permanent normal trade relations (PNTR) with Russia, also a newly-minted member of the World Trade Organization (WTO). These moves toward integrating the country into the global economy came at the same time as state oil company Rosneft took over the Russian-British partnership known as TNK-BP. But which is likely to have more impact on Russia's fate?
While accession to the WTO can spur trade and competitiveness, don't hold your breath waiting for Russian reform. The $60 billion Rosneft acquisition is likely to shape Russia well beyond the energy industry: it dims the already faint prospects of Russia diversifying and modernizing its economy to become more than a petrostate.
The focus of most assessments has been on how the deal will result in Rosneft, a state-controlled operation run by Putin associate Igor Sechin, becoming the world's second-largest oil company that produces nearly half of Russia's 10+ million barrels of oil per day. With BP buying back 19.75 percent of Rosneft shares, it is also heralded as a new model for joint ventures. This will be critical to the future of Russia's oil industry, as the scale of investment and technologies required to develop offshore Arctic oil will require involvement of the supermajors, the world's largest oil companies. The theory is that Rosneft will benefit from BP management skills and technology.
Some Kremlin watchers also see the the rise of Sechin in Moscow's politico-economic hierarchy, making the Rosneft boss perhaps second only to Putin. Whether true or not, the larger issue is what the newly beefed-up Rosneft means for the future of the Russian economy.
Putin's Antidote to Shale?
The Rosneft deal may have been≠in effect, if not intent≠Putin's answer to the U.S. shale revolution. Until now, Gazprom, the state-controlled gas monopoly, has been the cash cow for Putin's ruling political network. There is still some head-scratching as to the whereabouts of its $44 billion profits in 2011.
But since 2008, North American shale has taken off, driving down the price of natural gas. Gazprom's future has grown increasingly problematic as the United States has emerged the world's largest gas producer. Since 2008, Gazprom's market value has plummeted from $365 billion to $120 billion. It is being sued by the EU for price gouging and already has had to drop the price of gas supplied to Europe substantially, as shale has driven down the price and made LNG on the spot market more attractive (now nearly 50 percent of the EU market). One need not be a conspiracy theorist to see that Putin's rule will become more dependent on Russia's energy sector≠even as Gazprom fades from the scene.
More than 60 percent of Russian GDP is based on oil, gas, and other extractive industries. But Russia's oil output is projected to reach a plateau from the middle of this decade onwards. The Rosneft deal offers new opportunities to harness western technologies to develop the very complex and difficult Arctic resources and the harder-to-get oil in Western Siberia needed to sustain current levels of oil production. It will also tend to reinforce Russia as a petrostate.
The Rosneft deal is likely to worsen what some call the "oil curse," reinforcing state capitalism and reducing incentives for economic reform. Moscow's ascension to the WTO membership in August≠the last G-20 nation to do so≠raised hopes that the imperatives of new trade obligations and benefits, of a Russia more integrated into the global economy, might spur some of the economic modernization that Russian Prime Minister Dmitry Medvedev (remarkably low-profile these days) has talked up for some time≠and that Putin himself included in his campaign rhetoric.
Russia ranks 120th on the World Bank's ease of doing business index. Despite promises of reform, Moscow has yet to transform its image, if not reality, as a corrupt Mafia state. It is some distance from being competitive with major economies in most industrial and service sectors. Capital flight more than doubled in 2011 to $84.2 billion (from $33.6 billion in 2010) and is projected to be some $50 billion in 2012. The current political environment has made it more difficult for small and medium businesses to thrive.
Still more worrisome looking to the future is Russia's brain drain. Over 1.25 million people have left Russia in the past decade, and in a recent poll in Novaya Gazeta, 62.5 percent of 7,237 readers surveyed said they were considering leaving because of discontent with the economic and political regime. This is playing out against the backdrop of negative demographic trends and projections suggest that Russia's population will shrink from its current 142 million to some 124 million by 2030.
Putin's Empty Promises
Russia's president made a bevy of promises during the election campaign: large salary increases for teachers, civil servants and engineers; 25 million highly-skilled jobs; an increase in investment from 20 to 27 percent of GDP by 2018; a move up to 20th from 120th on the World Bank ease of doing business index; and a shift away from dependence on oil and gas. Running for president, Putin also pledged to fight corruption, decentralize power and reduce the state role in "non-strategic sectors" of the economy, echoing many of the reform goals touted by his predecessor Dmitry Medvedev in recent years.
But even if Rosneft provides Putin with walking-around money to reinforce his power structure, he is unlikely to have either the financial wherewithal or the political will to realize most of those things. The middle class that mushroomed on the oil boom of the past decade is increasingly restless. Moscow's budget is pegged to oil at $115/barrel to avoid deficits, but many analysts project a soft oil market with very low U.S. and EU growth and slower growth in BRIC economies. The International Energy Agency (IEA) lowered its forecast for oil-demand growth in the last quarter of this year, and projects less than 1 percent growth (800,000 barrels a day) in demand for 2013. Oil prices may remain in the $70-$100 range. The Russian state bank is forecasting current account deficits as early as 2015.
Since resuming the presidency, Putin has shown few signs of any inclination toward serious reform or loosening control≠with the possible exception of the energy sector. , Moscow's behavior and failure to implement key reforms has deepened skepticism about its ability to change. Charges of rigged Duma elections, new laws that penalize protesters, require NGOs receiving foreign funds to register as foreign agents, and censor the internet≠and not least, the emblematic Pussy Riot episode.
There is active debate within the Russian elite about the trajectory of Russia's future. Prime Minister Dmitry Medvedev put forward ideas for the past several years for diversifying the economy, building a competitive tech sector, bolstering rule of law, and taking advantage of WTO imperatives to boost industrial exports and the service sector. Putin has in his cabinet most of Medvedev's liberal economic team such as Deputy Prime Minister Arkady Dvorkovich and Finance Minister Anton Siluanov. Moscow is gearing up for a new round of privatizations and according to the Economist has moved some 600 state industrial firms to a restructuring agency, Russian Technologies, which is attempting to create a Silicon Valley-type technology park outside Moscow.
But so far, these initiatives have had little effect. The problem is that moving in the direction of more economic modernization and less tight political control would likely put Putin's power network at risk. Instead, as financial pressures from slow oil demand growth limit Moscow's ability to deliver the goods to the Russian middle class, Putin appears to be keeping his focus on tight political control of the middle class and keeping oil at the center of Russia's economy. As hinted at by the Rosneft deal, Putin seems inclined to try to modify the oil sector by allowing more joint ventures with Western firms, which have the technology to develop more difficult oil reserves in Western Siberia and the Arctic.
Such a scenario may keep Putin and his supporters in good stead in the short run. But it is difficult to see how Russia can become a globally competitive modern economy without a concerted effort to move toward a modern diversified knowledge economy, a more credible judiciary confronting corruption, and political reform. The interesting question is whether the middle class, whose benefits from this political path are minimal, will be seriously looking for alternatives when Putin thinks about a second term in 2018.
Valdai Discussion Club
November 27, 2012
The shale gas economy
By Marsel Salikhov
Marsel Salikhov is tht Head of Economic Department, Institute of Energy and Finance.
[Tables and charts here http://valdaiclub.com/economy/51940.html
Shale gas continues to provoke fierce debates and discussions, and has split the world into two opposing camps. The skeptics claim that this is yet another financial bubble that is bound to collapse sooner or later. Their main arguments center around high production costs, low domestic prices and shaky finances. The supporting fact is that the United States and Canada are so far the only countries to produce shale gas on a large scale. Other arguments are based on the potential environmental hazards of the shale gas technology.
The advocates of the shale gas revolution offer their own arguments. For example, IHS Global Insight writes in a survey prepared for America's Natural Gas Alliance that the shale gas contribution to GDP was more than $76 billion and the shale gas industry supported 600,000 jobs in 2010. The growth of shale gas is leading to lower natural gas and electric power prices, which offers competitive advantages to all gas consumers.
I will not go into technological, geological or environmental aspects of shale gas production, because I do not have professional knowledge of these areas, but I can write about the economic side. We have recently made a special survey of the financials and economy of the U.S. shale gas industry and some of the companies involved. Here are the main conclusions.
Firstly, shale gas production is a major industry. In 2011, its production in the United States reached nearly 200 billion cubic meters (bcm), or approximately 30% of gas production in Russia. Production rates at the biggest shale gas deposits are comparable to large natural gas deposits (Table 1).
Despite impressive production figures, the shale gas industry is a patchwork of a large number of small and medium-sized companies. Only few companies (XTO Energy/Exxon Mobil, Chesapeake Energy, Southwestern Energy, and EOG Resources) produced more than 10 bcm of shale gas last year. Thus, even though major oil and gas producing companies entered the shale market in the past few years, it remains largely independent.
Secondly, despite major price fluctuations over the past five years, shale gas producers report sustainable financials. Their operating income margin is 20% to 25%, but their EBITDA margin is more variable, although mostly in a positive way (Chart 1). Profitability plunged only twice, in early 2009 due to the reassessment of investment based on new prices, and in the middle of 2012, when prices fell due to a rapidly growing offer on the domestic market.
In January-September 2012, prices on the U.S. market were below US$100 / thousand cu m, although they were 50% higher a year before. And yet the industry development has not stopped. Why?
Most companies are hedging price risks, so that effective sale prices differ from prices on the spot market. Our survey has shown that the largest producers sold their gas in 2012 at prices that were 20% to 40% higher than spot market prices.
Another major factor is business diversification through increasing the share of liquefied hydrocarbons and crude oil in overall output. Faced with low prices and overproduction, gas companies responded by increasing the output of higher priced products. Over the past two years, shale gas producers increased the output of gas condensate almost threefold, whereas gas production remained stable throughout 2012 (Chart 2). They have nearly stopped drilling dry gas wells and focused instead on the production of combination (fat) gas, which is earning them additional income from the sale of liquefied hydrocarbon gases (LHG), and on oil projects. One of the reasons behind these decisions is the major difference between oil and gas prices.
Considering domestic prices, the situation in the shale gas industry is complicated, yet it cannot be said that it is rapidly moving towards bankruptcy. The debt level in the industry remains acceptable, and shale gas companies have at least investment-grade credit ratings. Rather, the prompt actions taken by the majority of shale gas players, as well as rapid changes in their strategic priorities and in the structure and cost of investment programs, show that the industry is able to flexibly react to market signals. This also allows it to influence production costs.
According to our estimates, the long-term cost of shale gas production in the United States is about US$ 140-170 / thousand cu m. These estimates are confirmed by shale gas companies, as well as by the analysis of individual investment projects at large shale gas fields. In 2012, gas prices were lower than the long-term outlook for production costs, which explains the overall negative financial result in the industry.
Investment activity has plummeted, above all in terms of drilling, which may stabilize shale gas production in 2013-2014. To ensure the industry's growth, domestic prices should not be lower than long-term prime costs. The growth of domestic demand by the power generation and chemical industries and households will boost domestic prices that will stabilize at US$ 150-200 / thousand cubic meters. The U.S. Department of Defense is using these data in its long-term forecasts. Low domestic prices would discourage the inflow of investment into the shale gas industry.
What does this mean for the Russian gas industry and its position on the global market? The main shale gas threats are not connected with direct competition on Russia's traditional and perspective markets, but with changes in the trade flows of liquefied natural gas (LNG). All of the shale gas produced in the United States is delivered to the domestic market. The import of traditional gas has plummeted due to the rapidly growing production of non-traditional gas in the United States. This is why LNG designed for North American markets has been redirected to Europe and Asia. LNG deliveries to Europe, including those that are not associated with long-term contracts, have intensified price competition among suppliers. As a result, the difference in prices between the spot market and long-term contracts tied to oil prices has grown dramatically, forcing Gazprom to offer discounts in order to maintain its market standing.
Calculations of shale gas costs show that shale gas is an expensive commodity, much more expensive than natural gas produced at the existing large fields. In principle, shale gas cannot be cheap, because its extraction involves the use of additional, highly expensive technology. Any innovations that are able to reduce the cost of drilling for shale gas will also reduce the cost of traditional gas.
Therefore, Russian natural gas will remain price-competitive in the foreseeable future. But it is important that these advantages are used wisely, for example, by adopting an adequate pricing policy that would maintain the competitive edge for Russian gas. The shale gas revolution does not directly threaten Gazprom, but it could be seen as an incentive for enhancing the Russian gas industry's efficiency and for promptly reacting to market changes, as shale gas companies are doing.
November 26, 2012
Gazprom Tightens Control Over European Supply
By Matthew Hulbert
Well, it's finally coming; Russia is starting construction of the €16bn South Stream pipeline on 7th December to make sure it retains a strong grip over South East European and Central & Eastern European gas supplies. But whether this is in Gazprom's longer term interests remains to be seen. What's good for 'regional control' is bad for Gazprom's 'global posture'.
Russia always had first mover advantage in the Southern Corridor purely by virtue of being able to redirect initial supplies from Ukraine towards South Stream markets. Having bought its way through corrupt SEE and CEE states, that's exactly what it's going to do. With final investment decisions in place, Gazprom can start offshore construction across the Black Sea ≠ cutting through Turkish waters ≠ before resurfacing in Bulgaria. Onshore pipes then run through Serbia, Hungary, Slovenia and into the Trans Austrian Gas Pipeline towards Northern Italy. An initial 15.75bcm will flow by 2015, ramping up to 63bcm by 2019, but let's not beat around the bush: The moment pipeline construction starts next week, the market assumption will be that no other pipelines can compete. The EU inspired Nabucco project designed to bring Caspian and Levantine gas to European markets is 'officially' dead. Never to be resurrected. What's more, Russia has just signed a 30 year supply agreement with Turkey. Gazprom isn't just knocking out competing sources of upstream supply; it's keeping transit states firmly under its thumb as well. 'Russian gas, Russian prices, Russian monopoly of supply and rent'. Full stop.
The only remaining question is whether Europe might be able to squeeze some Azeri gas into Greece and Southern Italy via the Trans Adriatic Pipeline. That's still technically possible if Gazprom decides to keep to a single South Stream tranche into Austria-Hungary, rather than splitting onshore transit in two directions (Centre and South), and if Gazprom doesn't acquire DEPA (the main Greek utility) in an EU induced fire-sale on Greek assets. Given Gazprom's strategic interest to make sure Azeri gas doesn't reach European markets ≠ and especially not at competitive spot market prices ≠ it's hard to see any eventuality where Moscow won't make sure they kill off residual Azeri options in the Southern Corridor. If that's the case, the Turks might get more Azeri gas than they originally bargained for through the TANAP pipeline, while Azerbaijan will also have to dust down LNG options, either through Turkey or Georgia as potential outlets (or a combination of both). Procrastination comes with serious costs, a valuable lesson Baku must learn for future hydrocarbon production.
Depressing stuff no doubt, but fear not, Gazprom has missed a major trick. Despite sitting on 30% of global gas supplies, Russian LNG production accounts for less than 5% of global share. Moscow has become a fringe LNG player in a globalising gas world. Gazprom never grasped the most fundamental 'fundamental' of all; for Moscow to remain a market maker, able to play off competing Atlantic-Pacific basin price pressures, Gazprom had to get out of pipelines and into LNG. South Stream is merely another regional nail in Gazprom's global coffin. Rather than putting state capital where it's most needed to get Gazprom back on track, President Putin is going for strategic 'quick wins'.
It's far easier building South Stream pipes to show Europe who's boss, rather than seriously trying to sell 70bcm of gas to China, or indeed developing elephant fields to dictate terms to new gas players in the Middle East, Australasia and Africa. But until Russia gets a firmer grip on global fundamentals, it remains on the back foot. Pumping vast amounts of gas into saturated European markets via South Stream pipes isn't just a waste of precious capital; it merely adds to overall gas market liquidity. Whatever pricing terms Gazprom thinks it's secured, won't mean much when excess supply makes its way onto wholesale gas hubs and prices tumble. Russia has won the Southern Corridor battle, but in doing so, stands even greater chance of losing the larger gas market war.
November 27, 2012
Putin to Travel After 2 Months at Home
By Nikolaus von Twickel
President Vladimir Putin is visiting Turkey and Turkmenistan next week, signaling that he is fit for travel again after a two-month hiatus that raised speculation about his health.
Putin is expected to meet Turkish Prime Minister Recep Tayyip Erdogan and President Abdullah GŁl during a half-day working visit Dec. 3 in Istanbul, a Turkish diplomatic source confirmed Monday, speaking on condition of anonymity because an official announcement had not been made.
Two days later, Putin will attend the summit of the Commonwealth of Independent States in the Turkmen capital, Ashgabat, Konstantin Zatulin, director of the influential CIS Institute and a former Duma deputy, told The Moscow Times.
Putin is not known to have traveled since returning from an Oct. 5 visit to Tajikistan. The Kremlin subsequently canceled all visits planned for October and November, citing scheduling difficulties.
It also postponed Putin's annual TV call-in show until summer, citing climatic conditions. The annual presidential State of the Nation Address is also overdue.
In late October, Reuters reported that the real reason was a back ailment that required surgery. A week later, Vedomosti reported that the president was suffering from an old injury that came to the fore after he flew in a hang glider with endangered cranes in Siberia on Sept. 6.
Putin's spokesman, Dmitry Peskov, denied the reports, saying the president had merely pulled a muscle while exercising. He also said Putin would spend as much time as possible at his out-of-town residence, Novo-Ogaryovo, to avoid disrupting traffic.
But speculation of Putin's failing health has been spiraling since, with some opposition activists even claiming that the president is terminally ill with cancer.
"Bolen" (sick) was the second-most-popular search word to accompany "Putin" on the popular Yandex search engine Monday.
Apart from Turkey and Turkmenistan, Putin is expected to attend a summit with European Union leaders in Brussels on Dec. 21 and visit India on Dec. 24, according to the monthly schedule published on state-run news agency RIA-Novosti's website.
Also on Monday, the Kremlin announced that Putin would give his annual presidential news conference on Dec. 20.
Putin gave large annual news conferences during his first two presidencies, but the practice was discontinued by his successor, Dmitry Medvedev, who gave only one during his four-year term. That came in May 2011.
Putin to deliver video address Dec 1 on Russia's presidency in G20 - newspaper
MOSCOW. Nov 27 (Interfax) - President Vladimir Putin's video address on December 1 will highlight Russia's priorities as the G20's coordinator, the daily Kommersant wrote on Tuesday.
"Putin's special video address will highlight the strategy of Russia's presidency in this organization," the newspaper writes.
Also, a Web site will be launched on December 1 to cover Russia's G20 presidency, it said.
St. Petersburg will host a G20 summit on September 5 and 6 2013, Kremlin chief of staff Sergei Ivanov confirmed on Monday.
Putin plans to attend four international events as a minimum in December, the Kommersant writes. He will visit Istanbul on December 3, attend a CIS summit in Ashgabat on December 5, fly to Brussels on December 21 for a Russia-EU summit and travel to Delhi on December 24 for a Russian-Indian summit, the newspaper said.
Russia Beyond the Headlines/Vzglyad
November 26, 2012
USRF may pick up where USAID left off in Russia
The activities of the previously little-known U.S. Russia Foundation are suddenly at the center of a scandal. From the disclosed correspondence of USRF employees, it has become known that the U.S. State Department seeks to continue influencing internal Russian policy but not publicly.
By Alexander Bozhedomsky, Vzglyad
In mid-November, copies of e-mails to and from employees at the U.S. Russia Foundation for Economic Advancement and the Rule of Law (USRF) turned up in the Internet. The correspondence between USRF employees and various government and quasi-government organizations in the United States was posted by hackers.
After several days of silence, USRF President Mark Pomar admitted that the correspondence was genuine. However, he denied all claims that his foundation was interfering in Russian policy or Russia's legal system.
The hacked USRF letters mainly concerned the fate of $150 million that had remained unused following the hasty closing of The U.S. Russia Investment Fund (TUSRIF) in Russia. This fund was run by the U.S. Agency for International Development (USAID), which distributed grants through it. USAID recently shut down its operations in Russia.
The Russian side initiated USAID's closing: people in Moscow believed that the agency was trying through its distribution of grants to influence political processes in the Russia, including elections at various levels. Washington has categorically denied these claims.
The USRF correspondence, which spans several months in 2011-2012, also discusses a possible secret change of profile. Officially, USRF supports Russian non-commercial organizations (NCOs) that are of no interest to the U.S. State Department. The activities of these NCOs are "oriented towards economic and legal development, as well as support for enterprise" ‚€' no politics. However, if USRF increases its work in the political realm, it will receive the balance of TUSRIF's unspent money or part of it.
Sergei Borisov, head of the board of trustees for "Opora Rossii" (a public Russian organization for small and medium businesses) and a member of USRF's board of directors, denied the claims about the politicization of the U.S. Russia Foundation.
"USRF is the virtual successor of the U.S. Russia Investment Fund. It promotes the development of enterprise, investment development; it gives out grants for the study of commercialization. A second component is training work in the court system, the system of arbitration courts," said Borisov. "USRF has no influence on or connection with odious human rights organizations."
As for the details of the disclosed correspondence and its references to various profoundly political aspects, Borisov said that, that was only "emotions about events on Bolotnaya and the growth of the middle class in Russia." The protest events on Bolotnaya Square in the center of Moscow took place in December 2011 and January 2012.
"At the time, everything was seething; everyone was commenting on what was going on," Borisov said, adding that he categorically condemned the hacking of USRF e-mail accounts and considered that a cause for USRF to file suit.
Meanwhile, Russian experts doubt that USRF is not trying to influence politics. In their opinion, the plot is connected to legal and ideological matters, as well as with the struggle of "powerful clans" in the United States.
Political scientist Sergei Markov, a member of the Russian Public Chamber and rector of the Plekhanov Russian University of Economics, stated that, "the United States, in principle, cannot try to influence other countries, since it is a very ideologically-driven country with a missionary complex."
In Markov's opinion, various "powerful clans" are lobbying for such influence ‚€' not the current U.S. administration led by Barack Obama.
"The USRF may perfectly well become an agent of influence," said Deputy director of the Center for Political Environment, Aleksei Zudin. "After the closing of USAID in Russia, the United States clearly stated that it would not abandon its efforts and would search for other ways of influencing the situation inside the country. In general, influence on the humanitarian sphere in other countries has long been a component of U.S. foreign policy ‚€' and that's no secret. We have every reason to take seriously their statement to the effect that other channels will be found."
Aleksei Mukhin, general director of the Center for Political Information, in turn, explained why financial flows into Russia are kept in the shadows. In Mukhin's opinion, this is most profitable to the sponsors themselves ‚€' they are hiding not from the Russian government, but from their own government."
"In the United States, it's absolutely impossible to understand what is a shadow structure and what isn't," said Zudin. "They know all about legal concealment. It is entirely possible that their foundations abroad work in the shadows so as not to violate their own laws [at home]."
The article is abridged and first published in Russian in Vzglyad newspaper.
Moscow slams 'one-sided' interpretations of human rights
BRUSSELS. Nov 26 (Interfax) - Moscow has protested "one-sided" interpretations of the human rights concept.
"Hyping a one-sided interpretation as a universal standard has a destructive effect on people's attitude to the actual concept of human rights and makes it unacceptable to entire societies and population strata. On the other hand, the human rights doctrine will benefit by imbibing elements of different cultures, and will become truly universal," the Russian permanent envoy to the European Union, Vladimir Chizhov, said on Monday.
Chizhov was speaking at a roundtable held in a European Parliament facility in Brussels, entitled "Evolution of Moral Values and Human Rights in Modern Europe," and organized by Tatyana Zhdanyuk, a Latvian member of the European Parliament and the founder and chair of the European Russian Alliance.
The participants included Russian and European civil society figures, members of the European Parliament, diplomats, clergy, lawyers, and activists in Russian-speaking organizations in EU countries.
Chizhov mentioned the Russia-introduced resolution "Promoting Human Rights and Fundamental Freedoms Through a Better Understanding of Traditional Values of Humankind," passed by the UN Human Rights Council on September 27.
More than 60 countries where different religions coexist were co-authors of the document, which insists on extemporal and non-ideological respect for traditional values and argues that it helps protect human rights and basic freedoms.
"Unfortunately, despite the position of Russia, which is open to dialogue and cooperation and willing to take account of proposals from various nations, the United States of America and, alas, the European Union countries voted against that draft. The negative position of those nations, their being unprepared to work on the text and their far-fetched arguments against the Russian resolution are inevitably deplorable," Chizhov said.
November 27, 2012
RUSSIAN PRESS REVIEW
The European Union threatens to extend the Magnitsky list
European lawmakers have prepared several questions to Russian President Vladimir Putin that they are planning to ask him at a Russia-EU summit due in December, the Nezavisimaya Gazeta daily reported. The newspaper reported that the Russian delegation will have to answer the questions about the alleged delays in the investigation of the Magnitsky criminal case, the guilty verdict to the Pussy Riot members that the EU leadership finds unacceptable and constant violations of human rights in the country. Without clear answers to these questions, the improvement of bilateral relations is impossible, the EU lawmakers stated.
Ahead of the Russia-EU summit the European lawmakers are to approve the list of claims to Russia. The draft recommendations over the Magnitsky criminal case noted that his arrest and the conditions of his keeping in custody violated the fundamental human rights.
The Magnitsky list is planned to be added with all human rights violations, the lawmakers proposed. Since Europe finds the Hermitage Foundation criminal case as an example of Russian 'justice'.
Deputy of the European Parliament Kristiina Ojuland told the Nezavisimaya Gazeta daily that the foresaid issues of the Magnitsky criminal case will be put on the agenda of the summit. Ojuland recalled that the EU leadership criticized the Russian general elections last spring, and the same critical remarks will be publicly made to the Russian delegation.
Ojuland dwelt on the negotiations with Russia over an easier visa regime, which official Russian media focus on, covering bilateral meetings between Vladimir Putin and European politicians. For the last year the negotiations did not advance at all, she said. The visa-free regime can be discussed after Russia fulfils the conditions of all countries, which are the EU states. However, the Russian authorities did not even begin fulfilling the roadmap, which was developed a year ago.
The visa-free regime for Russian citizens in Europe is not in question in the near future, she reaffirmed this fact even for the holders of the so-called blue, diplomatic passports, since the officials, which are frequently the main violators of human rights in Russia, can travel in the EU states with these passports.
Ahead of the Russia-EU summit a special report, which is devoted to Russia, will be approved. Leader of the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament Hannes Swoboda has drafted the report. It can be already stated that the report is quite harsh, a source in the European Parliament told the newspaper. The essence of the report is that it is impossible to establish mutually respectful relations due to the whole information about violations of human rights in Russia, the Pussy Riot criminal case, the Magnitsky criminal case and many other issues.
The European parliamentary source did not rule out that that EU President Herman van Rompuy and President of the European Commission Jose Manuel Barroso will raise this issue in public. He does not doubt that Putin will be asked about the criminal cases of Magnitsky, Khodorkovsky and political purges. The source noted that Europe has a clear idea that it is high time to put an end to the reports over the potential in the sphere of human rights that Russia has, as everybody witnesses that the human rights situation did not improve, but deteriorated sharply in the country.
Stating the moods of European politicians, the source in the European parliament of the Nezavisimaya Gazeta daily voiced hope that the situation will not result in the imposing of sanctions against the country. The bilateral negotiations are obviously futile so far. European officials assumed that the full end to the dialogue will not improve the situation. On the contrary, Russian official media will claim as if Europe is seeking to make Russia weaker.
November 27, 2012
Another Blow to Russia's Bid to Boost Soft Power
By Peter Rutland
Peter Rutland is a professor of government at Wesleyan University in Middletown, Connecticut.
The re-election of Barack Obama raised hopes that U.S.-Russian relations could be launched on a fresh course. The nightmare scenario of a Mitt Romney presidency staffed with neocons has been averted.
But the ink was barely dry on Obama's electoral returns when the U.S. House of Representatives passed the Magnitsky Act, sanctioning individuals deemed to be involved in the persecution and death of Sergei Magnitsky in 2009. The bill now goes to the Senate for approval, where it is likely to pass, although some senators favor widening the bill so that it does not uniquely target Russia.
The good news is that the bill is tied to a repeal of the 1974 Jackson-Vanik amendment, clearing the way for the granting of permanent normal trade relations, in conformity with Russia's membership in the World Trade Organization.
Deputy Foreign Minister Sergei Ryabkov condemned the bill, arguing that it violates principles of "mutual respect, equal rights and noninterference in internal affairs." As with the Pussy Riot affair, Moscow has a neuralgic reaction to any Western criticism of its human rights record.
But the Magnitsky case is not a purely internal Russian affair. It began with the seizure of assets of Hermitage Capital, and Magnitsky worked for the Firestone Duncan law firm, which was founded by American lawyers. Even aside from human rights considerations, the U.S. has a clear and legitimate interest in sending a signal to other countries that if you abuse Western businesses and their personnel, there will be consequences.
Russian critics are convinced that the Magnitsky Act is part of some devious scheme to isolate Russia, but they cannot come up with any specific ways in which the U.S. would benefit from such a strategy. On the contrary, the U.S. stands to pay a considerable price if Russia were to respond by, for example, shutting down the northern route that gives the U.S. transit access to Afghanistan.
The primary factor motivating the U.S. response are the outrageous facts of Magnitsky's treatment. Then-President Dmitry Medvedev's own human rights commission reported in July 2011 that Magnitsky was probably beaten prior to his death.
Russia will never succeed in its campaign to be accepted as a regular member of the community of nations if it doesn't realize that human rights really matter. Nor will there be any benefit from spending millions of dollars on campaigns to promote Russia's "soft power" if the message those media carry is a crude defense of indefensible actions by Russian officials.
November 27, 2012
Ketchum to Continue Working on Russia's Image
Russian President's Press Secretary Dmitry Peskov said that the contract with Ketchum has been extended, which means that the American PR agency will continue to fine-tune Russia's image.
Peskov added that the Kremlin is not Ketchum's direct client. The agency was hired by a third party.
Ketchum's official reports refer to the Russian Federation as their client but the contractor is Evrofinance Mosnarbank.
Last September, it was announced that the contract would not be extended. A source in the Kremlin reported that a new agency, yet to be chosen, will handle Russia's publicity in the future.
Ketchum was hired by the Russian government in April 2006 in the run-up to the G8 Summit in St. Petersburg. It was the choice of the G8 Summit Organizational Committee.
The agency committed to developing a strategy and working out the logistics for providing consultancy and communication services to promote the agenda of Russia's G8 chairmanship.
Later, the agency covered Russia's accession to the WTO and Vladimir Putin's election campaign. Ketchum has also worked for some Russian companies like Gazprom and VTB.
The list of Ketchum's projects and expenses is available on the website of the U.S. Department of Justice. Over the first six months of 2012, the PR agency spent around $352,900 on Russia's public image via its subcontractors.
Political analyst Dmitry Orlov believes that Russian officials and Ketchum will have a successful relationship in the future. The agency is an excellent communicator but it never forces its vision on the client.
"Ketchum knows all about working with the western media. They don't, however, force their view of Russian politics on us. Unlike many other western agencies, they convey the message we suggest," Orlov says.
Iosif Diskin, member of the Public Chamber, would prefer to have a German company working on Russia's image.
"Russia has no economic interests in the United States, which gives room for ideological speculations," he notes.
Diskin also thinks one agency is not enough to build Russia's image. A bigger team should work on a strategy and coordinate its efforts with a large number of government agencies.
"This work should be managed at the top level by a presidential aide or a deputy prime minister," Diskin says.
Mikhail Maslov, Director of Ketchum Russia, is currently abroad and is not available for comments.
Valdai Discussion Club
November 27, 2012
Israel's shaky position adds up to the Middle East tensions
By Fyodor Lukyanov
Fyodor Lukyanov is editor-in-chief of Russia in Global Affairs journal, member of the Valdai Discussion Club.
After a series of wars, a system of formal and informal relationships has gradually emerged in the region since the late 1970s.
With American support, Israel made separate peace agreements with Egypt and then with Jordan, which broke the all-out blockade of the Jewish state by its Arab neighbors. The United States, in turn, was building ties with the richest and most influential Arab countries ≠ above all, the Persian Gulf monarchies.
While Washington's allies and partners remained Israel's adversaries, they did not do anything to upset that balance and kept it in place. Turkey even established cooperation with the Israelis at the level of special services and military and technical exchanges.
While the Palestinian question remained a bone of contention after the collapse of the Soviet Union, the Arab sponsors of the Palestinians preferred to keep the status quo ≠ especially as the "peace process" in the 1990s created the illusion of progress toward a settlement, and respectable Arab countries could make do by paying lip service to it.
Even Syria, Israel's sworn enemy, was party to an unofficial non-aggression pact; although the subject of the occupied Golan Heights remained a ticking time bomb.
Everything started falling apart with the advent of the 21st century. The peace process became deadlocked, something that has been manifested not only in the changing mood of Israeli citizens, who are no longer voting for left-wing doves, but also in Palestine's split into the West Bank, ruled by the old-time Palestinian elite, and Gaza, where Hamas calls the shots.
Attempts by the United States to stimulate a reorganization of the Middle East have led to Iraq becoming a de facto Iranian backyard, an increase in general anxiety, and the worsening of the confrontation between the Sunnis and the Shiites. When the energy of the masses exploded into the "Arab Spring," it turned out that these new sentiments carried many things, except growing sympathy for the West, America or Israel.
Besides the above-mentioned political and diplomatic balance, Israel's confidence in its own future has been based on its image as a country that always and inevitably resolves any problems by force, thanks to its military advantage, its readiness to follow through no matter what the cost, and guarantees of international support (because the United States was automatically blocking any anti-Israel measures).
Now, all three of those premises have been called into question.
The 2006 military campaign against Hezbollah in southern Lebanon did not bring Israel a decisive success. Its previous operation in Gaza (2009's Cast Lead operation) did not quite become a triumph either. In other words, the faith in its ability to effectively put out crises with armed force has been shaken.
In addition, Israel has been the target of scathing criticism by practically the entire global community, including the European Union, which it cannot ignore. Even the United States is forced to apply pressure on the Jewish state to put an end to violence; the best Washington can do is give its ally some more time.
Israel's outlook is even gloomier. The perennial Palestinian question has become small change in the complicated reorganization of the Middle East. The new Egyptian rulers are bent on re-casting Cairo as the political capital of the Arab world.
Therefore, they will most likely dismantle the Camp David accords gradually and behave more assertively on the Palestinian front (claiming the role of the principal patron), as well as on the Syrian issue (promoting a regional solution there through "The Four" of the regional powers).
However, Doha (State of Qatar) is trying to upstage Cairo on all of those matters. A visit by the emir of Qatar to Gaza a couple of weeks ago had everyone saying that Hamas, formerly oriented toward Syria and Iran, had found a new sponsor that views itself as the herald of change in the Arab world and the leader of the crusade against the influence of the Shiites.
In general, Qatar has nothing against acting as the "core" of the Muslim Brotherhood movement, which has already come to power in Egypt and is becoming increasingly active elsewhere, too.
Tensions are rising in Jordan, where discontent is growing and seemingly not without encouragement from the Gulf. Someone is ready to involve this country in the process of ideological change, as well, and, possibly, in the resolution of the Palestinian question. Turkey has taken an outspoken anti-Israeli stand.
The American positions in the Middle East have been shaky lately. Washington has traditionally relied on Sunni regimes, but they are turning Islamist, one by one. The Americans are in conflict over Iran with the increasingly influential Shiites. Their commitment to unconditional support of Israel is becoming, if not a burden for the United States, then a restraint on its attempts to build a new system of relations in the region.
A continuation of the operation would have threatened to leave Israel in total isolation, while a withdrawal short of achieving an unequivocal result may convince the Arabs that Israel is not what it used to be.
This article was originally published in Russian in Rossiyskaya Gazeta and in English in Russia Beyond the Headlines
Russia Beyond the Headlines/VPK Daily
November 26, 2012
Political Islam advances in the Middle East
At the end of the second decade of the 21st century, the Middle East has to go through changes that are as rapid and as extensive as the changes that Europe experienced in the late 1920s which makes the situation in the region is far from optimistic.
By Yevgeny Satanovsky, VPK Daily
Evgeny Satanovsky is the president of the Middle East Institute.
The Arab Spring moves forward, engulfing one country after another, even though the overthrow of authoritarian regimes that brings political Islam to dominance (instead of prompting Western-type democratization) has become bogged down in the Syrian Arab Republic (SAR). The civil war in the country has grown into a conflict between ethno-confessional communities with the active participation of foreign players, each of whom pursues their own objectives.
The main facilitators and sponsors of the war are Qatar, Turkey and Saudi Arabia, supported by the West.
Syria is gradually turning into the primary target of international jihad volunteers which, should Assad's government fall, makes it more than likely that the country either ends up as a failed state or collapses. The formation of yet another united opposition group in Doha is a demonstration of the alliance between Qatar, Turkey, the U.S. and France, with the Kingdom of Saudi Arabia playing an independent role in supporting radical Salafi groups in Syria.
No compromise with the acting regime is acceptable for the opposing sides. Any projects ≠ including Russian projects ≠ aimed at ending the conflict in Syria will be decisively blocked. The visit by Russian Foreign Minister Sergei Lavrov to the Arabian Peninsula has shown that the local players have no desire whatsoever not only to consider the Russian position regarding Syria, but also to discuss it with Moscow in any constructive way at all.
This shows the efficiency of the tactics adopted by Russia and China, who in the U.N. Security Council keep blocking the resolution that would enable an intervention following the Libyan scenario.
It would not rule out the possibility of the creation of no-flight zones, the formation of territorial enclaves on the border with Turkey and beyond the control of Damascus (where a revolutionary government would be formed as the alternative to the Assad's government), and the participation of special assault groups in operations against the Syrian army and security forces without facilitation from the United Nations.
Central-Asian Spring possible
The renaissance of political Islam in the Middle East is fraught with possibilities for its spread outside of the region.
For instance, there is an extremely high chance that a Central-Asian Spring could be organized in Uzbekistan and Kazakhstan during the upcoming transitions of power in those countries. That would mean expansion of "democratic Islamization" into the Chinese XUAR (Xinjiang Uyghur Autonomous Region), the Russian Volga region and the Caspian Sea region.
Technically, there is nothing impossible about organizing riots and provoking conflicts between Islamists and local authorities in the internal regions of Russia and on the northwestern border of China, under the banners of freedom of religion and social justice and with the support of the "global community."
As well as Uyghur separatists in China, Salafi groups in Central Asia and Russia can be easily recruited to carry out this scenario, given that they receive their financing and support from the same powerhouses that support the development of the Arab Spring.
Russia has a fairly good chance of dealing with the Islamist menace on its own territory, even though the operational situation in the North Caucasus (particularly in Dagestan, Tatarstan and Bashkortostan) shows that there is no room for complacency. The counterterrorist operation in Kazan has demonstrated how deeply rooted the problem is.
Cooperation with Central Asian governments and the government of China is especially important, in light of the approaching withdrawal of occupying U.S. troops (and smaller units of other countries of the coalition) from Afghanistan.
Moscow the outsider
It should be noted that Russia's opportunities to influence the countries that make the biggest contribution to the expansion of the Arab Spring and the renaissance of political Islam are rather limited, if existent at all. The only country in the region interested in negotiating with Russia is Turkey, due to its economic interests ≠ and it holds these negotiations on its own conditions and by its own rules, balancing between the West, the Arab countries, China and Russia.
The Gulf monarchies demonstrate their growing hostility toward Moscow: The rhetoric of their print and digital media is reminiscent of the Afghan war in the 1980s, the only difference being that they used to fear the Soviet Union, while Russia they choose to ignore.
The Islamic Republic of Iran feels no gratitude to Russia for the many years of support in the U.N. or for finishing the Bushehr Nuclear Power Plant despite international pressure, even though the Iranian lobby in Moscow keeps trying to find support in Russia in its confrontation with the West.
At the same time, contrary to the expectations of the proponents of the Iranian-Russian cooperation, Iran keeps insisting on a redistribution of the spheres of influence in the Caspian Sea region not to mention the suit against Russia that it filed in the International Court of Arbitration for a cancelled shipment of S-300 complexes.
Given that Gazprom feels ever-growing pressure on the European market from Qatar and Algeria (their gas supply is expected to reduce E.U.'s energy dependence on Russia), the oil and gas restrictions imposed on Iran are not a big problem for Russia ≠ quite on the contrary, actually.
The opinion is abridged and first published in Russian in the VPK Daily newspaper.
November 27, 2012
BRUSSELS IN CENTRAL ASIA
RUSSIA REINFORCES ITS POSITIONS IN CENTRAL ASIA; THE EUROPEAN COMMISSION IS DISTURBED
Author: Victoria Panfilova
[The EU is flirting with Central Asian countries.]
Catherine Ashton, EU's High Representative for Foreign Affairs and
Security Policy, embarks on a tour of the Central Asian region.
She will visit Kyrgyzstan first. Some experts even expect adoption
of a new document on EU-Central Asian cooperation.
The current program of Europe's cooperation with Central
Asian countries was drawn by Germany. It expires in 2013.
Alexander Rahr of the German-Russian Forum is of the opinion that
"Ashton's visit to Central Asia is supposed to demonstrate that
the European Union promotes its own policy in the region and that
it is interested in advancement of relations with Central Asian
It was announced once that Brussels would raise $750 million
for Central Asian countries so that they quite reasonably expected
that the European Union intended to become the sponsor of their
reforms. The European Union in its turn was interested in
partnership with these countries - stability and security of the
post-Soviet zone has always been one of the top priorities of
Western politics. "Anyway, the European initiative got stuck at
one point... first and foremost because of the economic crisis,"
"When the EU-Central Asia strategy was adopted, everybody
fully expected that clauses of the Maastricht accord would be
developed in new documents. The situation in Europe was different
then, there was no crisis to bear in mind and adjust to... There
is a crisis now. Besides, the EU itself encountered certain
constitutional problems when the EU-Central Asian cooperation
strategy was being launched. Failure of the referendum in Holland
compelled the European Union to rewrite documents... In a word,
the EU found itself unable to pay sufficient attention to
realization of this strategy and to finance its implementation
adequately. Objectively speaking, this nuance is playing into
Russia's hands. The image of the EU as an alternative to Russia...
was tainted in the eyes of the Central Asian countries. Of course,
the Europeans are the last to acknowledge it. Anyway, they are
still focused on humanitarian cooperation programs whereas the
clauses of the strategy that deal with global issues (say, the
water issue) are paid but lip service. They are barely mentioned.
By and large, there are no reasons at all to assume that the
European Union scored any victories in Central Asia," said Ajdar
Kurtov of the Russian Institute of Strategic Studies. "Moreover,
the European Union knows how strong Russia's positions in the
As for Moscow's idea of the Eurasian Union, it seems that
Kyrgyzstan an Tajikistan are prepared to join this structure.
According to Rahr, the EU objects to the strengthening of the
Eurasian Union. He said that at her meetings with Central Asian
leaders Ashton just might ask them to bide their time and abstain
from joining the Russian-dominated Eurasian Union. "Brussels wants
all of the Central Asian region dominated by the EU," said Rahr.
"Neither can it help being concerned over the forthcoming
devolution of power in Kazakhstan and Uzbekistan... The European
Union knows that some serious changes will take place in the
region within five years, that incumbent leaders will finally go.
Hence Brussels' attempts to establish close contacts with the new
elites in these countries. Also importantly, the EU perceives some
Central Asian countries as candidates for new color revolutions.
This is why its attention is centered around the region in
China's growing clout with the region disturbs the EU too.
Kurtov said, "As recently as five years ago the European Union
expected a large slice of the Central Asian pie... meaning
resources of course. Its hopes were crushed. All resources go
either to China or to Gazprom... That South Stream will be
launched is clear now. As for Nabucco, its future remains
definitely iffy. The European Union lobbied this project in the
first place to diversify energy flows. It remains interested in
alternative projects even now."
Experts suggest that the European Union will adopt a new
Central Asian cooperation strategy for the next decade soon. "The
EU is making the best of a bad bargain," said Kurtov. "The EU
lacks consensus... and without it, we may put aside all our fears
that this structure will gain too much clout with the Central
Georgia to be Washington's reliable partner ≠ Ivanishvili
TBILISI, November 27 (Itar-Tass) ≠ Georgia's government will pursue a policy targeted at deepening cooperation with the United States, Prime Minister Bidzina Ivanishvili said after a meeting with US Deputy Assistant Secretary of State for European and Eurasian Affairs, Eric Rubin, on Tuesday.
At the meeting "we analyzed bilateral relations between Georgia and the United States," he said. "I thanked the United States, which has been providing support and assistance to Georgia for 20 years and expressed the hope that these relations will deepen even more."
Ivanishvili assured Rubin that "Georgia will be even a more reliable partner for the United States."
Rubin, in turn, described the meeting with Ivanishvili as positive.
He said the meeting focused on deeper relations between the two countries and the implementation of the U.S.-Georgia Charter on Strategic Partnership and promised further support for Georgia's integration into Euro-Atlantic structures.
The U.S.-Georgia Charter on Strategic Partnership was signed in Washington on January 9, 2009. It envisages the two countries' cooperation in security, defence, economy, trade, science, culture, energy and other spheres.
November 26, 2012
How Saakashvili Tries to Avenge Ivanishvili
By Paul Rimple
Paul Rimple is a journalist in Tbilisi.
After Georgian PresidentMikheil Saakashviliconceded defeat the day after his party lost in the Oct. 1 parliamentary elections, he said he would work together with Prime Minister Bidzina Ivanishvili for the sake of Georgian democracy. Everybody in Georgia knew that was bunk. It isn't that these guys have fundamental political differences. They don't. It's that Ivanishvili is a threat to the private interests Saakashvili's United National Movement has accumulated in the past nine years. They are not going to let those go.
To highlight this point, Saakashvili created his own private army on Nov. 21 when he signed a decree establishing a "special paramilitary body of executive government directly subordinate to Georgia's President."
Some of us had hoped that the United National Movement's surprise defeat would have led Saakashvili and his team to do some soul-searching and honestly ask themselves "where did we go wrong?" Obviously, this hasn't been the case.
In a video address commemorating the 2003 Rose Revolution, Saakashvili magnanimously said, "We have handed them more powers than was envisaged by the Constitution because we want them to be able to govern and to deliver on those promises they made to you."
Who is he kidding? The United National Movement is a highly concentrated machine with one aim: to regain power. It wants Ivanishvili to fail and has placed booby traps everywhere to achieve this goal. To be sure, Ivanishvili has been good at stepping on them so far.
Ivanishvili's binge of arresting Saakashvili loyalists has backfired because everybody now believes that the campaign was politically motivated. A rash of nationwide strikes, believed to be instigated by the United National Movement, has reportedly shut down two companies, and the government's incapacity to confront the problem is scaring away foreign investors. Ivanishvili's prison reform means releasing perhaps thousands of prisoners, which the prime minister has admitted will likely lead to an increase in crime.
Saakashvili said, "I've been with my people in peace, war, hardship and during rebuilding, and I will not leave my people in the times of danger either." But it's no thanks to him there has been war, hardship and danger.
Saakashvili forgets that there was a reason his party lost the elections last month. Why else would he surround himself with his own private army? If he really wants to help Georgia, he can start by no longer putting himself before the country.
Belarus leader relishes reputation as dictator
By Timothy Heritage and Richard Balmforth
November 27, 2012
MINSK (Reuters) - He is a pariah in the West, viewed suspiciously by Russia and loathed by opponents in exile or jail, but Belarussian President Alexander Lukashenko is relishing his notoriety as Europe's last dictator.
After 18 years in power, the blunt, forceful and heavily built former state farm manager shows no sign of bowing to Western pressure to relax his grip on the former Soviet republic squeezed between Russia and the European Union.
Always defiant, often cantankerous and sometimes provocative, Lukashenko has added irony to his armory to deflect Western politicians' criticism, touting their dictator tag as a badge of honor.
"I am the last and only dictator in Europe. Indeed there are none anywhere else in the world," he told Reuters in a rare interview in the capital Minsk in which he repeatedly referred to himself as a dictator and to his rule as a dictatorship.
"You came here and looked at a living dictator. Where else would you see one? There is something in this. They say that even bad publicity is good publicity."
Lukashenko's words are delivered with a wry grin and a wave of his immense hands, and appear intended to taunt the critics whose calls for more economic and political freedom have gone largely unheeded since he first became president in 1994.
The 58-year-old leader does not tire of telling guests that Belarus is the geographical centre of Europe. But the country of 9.5 million does not share the same democratic values as its western neighbors.
Minsk's broad thoroughfares are still lined with monolithic Soviet-era buildings. There are streets named after Soviet founder Vladimir Lenin and philosophers Karl Marx and Friedrich Engels, though some may now boast smart Western shops, such as a showroom for Porsche cars and McDonald's fast-food restaurants.
There is not a single opposition deputy in parliament. Lukashenko, if re-elected, can rule indefinitely following a referendum that allowed term limits to be lifted, and the opposition has been all but crushed into submission.
His strongest rival, Andrei Sannikov, once a deputy foreign minister, took political refuge in Britain last month after 16 months in prison in which he said prison staff tortured him and tried to get him to commit suicide.
Years of diplomatic spats with the West have left Belarus isolated, but a European Union travel and assets ban on people and companies associated with his government has had no obvious impact on Lukashenko's policies.
He is promising to modernize the largely state-run economy and possibly one day build a party-based political system. But he scoffs at talk of rapid change or the possibility of upheaval like the "Arab Spring" that swept away Middle East leaders.
"There's no point in comparing the policy of Belarus and the Middle East. A few people tried through social networking to make the situation explosive," he said, referring to "silent" protests last year when opponents gathered in public places to applaud ironically.
"But nothing came of it. Nor will anything come of it. Every day we have changes here. There is no scope for revolutions coming to Belarus," he said, sitting in an ornate armchair in a luxurious room with green carpets and a chandelier in his cavernous presidential residence.
YEARS OF DEFIANCE
In mid-2010, after signs Lukashenko was easing pressure on the political opposition, it seemed that Western governments might be ready to relax their harsh criticism of him.
But all that ended in December 2010 when, after he was voted in for a fourth consecutive term, riot police broke up rallies by tens of thousands of people against his re-election.
Several politicians who ran against him for office were detained by security forces, including Sannikov, and scores of opponents were picked up in their homes. The EU and the United States tightened sanctions on Lukashenko and his inner circle.
This week the Justice Ministry closed down the Minsk office of the human rights organization Viasna whose head Ales Beliatski is serving a four and a half jail term after a trial for tax evasion described as unfair by Amnesty International.
Lukashenko's message to the West is one of defiance, coupled with a sense of seething injustice at being ostracized for not following Western-style policies.
"You (Europe) do not like the course Belarus is taking. You would like everything here to be sold off - in the interests of Russia or in the interests of Western companies," he said, shifting forward in his chair and almost shouting as he denounced the West, his face coloring with anger.
"You do not like the fact that we have good relations with Russia. This is determined by our history. During the last war we fought together in the trenches against the Nazis. We saved you, Europe, from being slaves to your own Fuehrer."
In a veiled threat to Europe to stop "choking" Belarus, he reminded Europe that it receives much of its oil and natural gas from Russia via pipelines that run through the country.
"Who needs these double-standards? Who needs instability in the heart of Europe? Not you, not us, not Russia. Let's talk, we are people," he said.
Lukashenko rejected Western charges of holding political prisoners, saying specific cases raised by the West relate to people who committed criminal offences.
Asked about alleged abuse of human rights, he waved the question to one side, saying he was the guarantor of the most important right - the right to live.
He seethes too as he recalls a pro-democracy stunt by a Swedish PR company in which hundreds of teddy bears were dropped from a light airplane over Belarus last July.
"You recently sent over a plane with humorous toys and this was a violation (of Belarus's air space). And what if the military had opened fire and people had been killed?" he said.
STABILITY AND KEEPING POWER
Lukashenko has sought to foster an avuncular image and revels in the affectionate sobriquet of Bat'ka - meaning 'father' - in his dealings with ordinary people, many of whom tune in to his earthy way of handling problems.
He has kept the loyalty of industrial workers in big factories by awarding them pay rises when economic times get hard, even though critics say this has contributed to the country's economic problems and rising debts.
Inflation in 2011 was 108 percent and, although it fell to 18 percent in the first 10 months of 2012, this is a coinless society where all banknotes and bills end in zeroes.
Belarus also has a $12-billion debt pile, a large amount for a country which Lukashenko says has an annual gross domestic product of about $60 billion.
Despite this, stability has been his by-word for two decades as he waged war on corruption and as neighboring Russia wilted under mafia-style crime, violence and sometimes political chaos.
"A simple nation put me in this chair. I have never moved away from my promises to people," he said.
Dismissing any concern about economic instability after a parliamentary election in October, he blamed fluctuations in the value of the Belarussian rouble last month on opponents he often describes as a "fifth column".
But the economy is a concern for many Belarussians.
"How can we live when there is a crisis every year?" said Andrei, 45, a Minsk resident who declined to give his last name.
An effective state security machine, still bearing the Soviet name of the KGB, ensures public protests against his rule are snuffed out fast. A statue to Soviet security police founder Felix Dzerzhinsky - long since removed in many former communist east European countries - stands opposite the KGB headquarters.
Lukashenko was the sole member of parliament in Belarus to oppose the agreement that preceded the end of the Soviet Union in 1991, and has been quoted as saying he regrets the country gave up its nuclear weapons.
Foreign observers have repeatedly refused to give elections in Belarus a clean bill of health.
Lukashenko dominates Belarus to such an extent that he feels comfortable admonishing even its sportsmen. Last month he rounded on Belarus's sports bosses for the country's "complete failure" at the 2012 London Olympics - 12 medals including two gold - and accused its soccer players of quaking in their boots before a 4-0 defeat to world champions Spain.
Despite his hostility to western Europe over criticism, he is wary of Belarus being drawn back in to Moscow's orbit.
Lukashenko has long played Russia's interests off against those of western Europe - but he has also gone to lengths to shut out large-scale Russian investment from an accessible market of potentially rich pickings for the Russian investor.
Despite their economic inter-dependency, and moves towards a customs union between Russia, Belarus and Kazakhstan, Moscow still shows signs of wariness about Lukashenko's unpredictability and, Belarussian political analysts say, he and Putin do not enjoy a particularly warm relationship.
The balancing act appeared to tip in Russia's favor last year, however, when it bailed Belarus out of a financial crisis.
Under the bailout package, Belarus made pledges to allow the privatization of some state companies that could interest Russian investors, and allowed the sale of the Beltransgas pipeline network supplying western Europe.
Lukashenko hopes for a new deal with the International Monetary Fund to help Belarus through an anticipated debt repayment crunch in 2013, if the international lender stops "playing politics". The country has to find $1.6 billion in repayments to the IMF alone next year under an old program.
There is nothing in the constitution to stop Lukashenko seeking a fifth five-year term in 2015, or then a sixth.
But the president, who has two adult sons and an eight-year-old son, Kolya, who attends some official functions, denies he is grooming a successor.
"I am reproached for allegedly preparing my children, my eldest son as a successor. But I swear to you: I have never discussed this idea even with my family or with my sons. These are dreamed up by the Fifth Column in our country," he said.
"I shan't be holding on to this job for life. As soon as people decline my services, I'll put my brief case under my arm and I'll be off."