Winds of Change.NET Regional Briefings run on Tuesdays & Wednesdays, and sometimes Fridays too.
This Regional Briefing focuses on the enigma that is Russia, via Joel Gaines of No Pundit Intended. Joel is a veteran of the Gulf War, where he worked in an intelligence capacity. He speaks Russian, and has worked in several of the former Soviet satellites.
TOP TOPICS
- As the Ukraine inaugurated its new President, in a highly contested event which showed the best of democracy and the worst of those who try to subvert it, Neeka's Backlog has a play by play of the event and Orange Ukraine has some photos. Yuschenko lost no time ensuring the Kremlin understood where things stood. While calling Russia "our eternal partner", he appointed the Kremlin despised Yulia Tymoshenko to be Ukraine's interim Prime Minister.
- Investigations into the Beslan attack are bringing up more disturbing developments. There are allegations, and so far two arrests, of participants and abettors of the attack who are in the employ of Russian Federal services. One official is quoted as saying, "Two abettors have already been detained, and now I think there will be another two," he said, adding that there are people with shoulder straps among them including at the rank that is higher than major. According to him, "these people are still staying at their working places."
- Andrei Zorin provides an interesting synopsis regarding the re-introduction of the Soviet era national anthem and the changing of a Soviet era holiday. The final analysis seems to be - the State reasserting itself.
- After the elections in the Ukraine were - finally - final, Russian FM Lavrov claimed "we never said we would not work with a Yushchenko government". The events of Supreme Rada (parliament) Chairman Volodymyr Lytvyn's, recent visit to Moscow underscores Lavrov's claim - sort of.
Other Topics Today Include: investors holding off in Russia, 2004 domestic growth, pay raise for troops, shrinking population, final governor elections, end to soviet era benefits, Beslan parents block highway, sappers check roads, Russia-Chechnya power sharing, Nalchik gun battle, Finns learn how to bribe, US asylum to Alyona Morozava, anxiety over Dr. Rice hawkish stance, Ribbentrop-Molotov Pact, secret cities
- Reports indicate that US investors, despite US government compliments of Russian business climate, are in no rush to invest in Russia. It seems Russian partners, with help from the Russian government express remorse with the deals they negotiate with US firms in Russia - saying the firms are not paying market value - well after the deals are made. There are several instances of this type of "sellers remorse" occurring with US-Russian ventures.
- Since the near collapse of the Russian economy 7 years ago and the subsequent bailout, Russia has aggressively pursued "any means necessary" to recover and even compete with Western nations. Economists have stated Russia's domestic growth for 2004 was 6.9%. This is down from 7.3% in 2003. Inflation going forward is forecast at somewhere between 9% and 15% and growth is unforecast as of yet. Indication are that it will not be as high as 2004. Russia, apparently, still relies too heavily upon oil revenues, despite attempts to diversify.
- President Putin has asked lawmakers to implement a 20% pay raise for military personnel. His reason for the increase is to compensate for the higher than normal public transportation costs for some of those serving. If a 20% raise will only cover high public transportation costs, how little do they make? From the little I have been able to gather, an NCO makes about US $75 per month - maybe a little more.
- Like several other nations today, Russia is experiencing a shrinking population. This past year, the population was reduced to 143 million - a reduction of 716 thousand.
- Ahead of Putin's new policy to directly select governors, Russia's last gubernatorial elections were held in Nenets Okrug Despite the enormous ramifications of this event, coverage was almost nonexistent. What is most interesting is the Kremlin's candidate lost by a wide margin and has had a stunning effect on United Russia Party strategists. It is expected that the spring elections will strengthen the Kremlin's voice in the legislature. The legislature will then appoint the governors and the governors will be, it is rumored, responsible for implementing Putin's unpopular reforms - like the benefits fiasco - taking the focus away from Putin himself.
- The Kremlin implemented changes, which eliminate Soviet era benefits - reduced pharmacy costs, free public transportation, etc. - and replace them with cash. This sparked a wave of outrage among benefits recipients and saw protests spontaneously occurring all over Russia. The recipients state the cash does not come close to the value of their current benefits and the Kremlin states the bureaucracy of the old system is an economic drain on the country. What most see as significant is unprecedented criticism of the Kremlin by Russians. Opposition legislators in the State Duma were able to secure the 90 signatures needed to put a no-confidence vote against the government in early February.
- The blockade of the Kavkaz federal highway by parents of Beslan victims was lifted, but will probably be reinstituted. The protesters demand accountability by certain Russian officials - claiming no one resigned after the cowardly attack last September. Talks with Kremlin envoys may stall the next bout of protests, but are not expected to produce any results acceptable to the parents. CBS has a new video of the hostage takers working with a negotiator
- ITAR-TASS reports that Russian sappers check more than 1000 Km of roads daily in Chechnya - looking for explosive devices. Apparently, IEDs are not a cornered market in Iraq.
- A "power sharing" agreement between Russia and Chechnya is ready after two years of deliberations and political roadblocks. This is a Putin advised plan which is meant to be a step toward "normalizing" relations between the two countries. I guess the question is: Normal for whom? With Russian troops on the ground and Russian backed government in office, it seems the power sharing agreement is little more than a formality.
- Hundreds of Russian officers stormed an apartment building in Nalchik in the Kabardino-Balkariya province, killing at least seven islamist militants said to be part of the terrorist forces making attacks against Russian soldiers in Chechnya.
International Relations & Security
- The Finnish-Russian Chamber of Commerce has published a booklet advising Finns of the proper bribery etiquette in Russia.
- Another indicator that all might not be as it appears between the US and Russia could be the US granting political asylum to Alyona Morozava. Ms. Morozava lost her grandmother and boyfriend in a 1999 Moscow apartment bombing. Her asylum was granted due to fear that she would be persecuted in Russia after her attorney stated he was going to present evidence that the bombings were carried out by Russian Security Services. Crackpot? Maybe, except that her attorney is Mikhail Trepashkin. He is a former Russia Security Services Lt. Colonel, who was sentenced by a Russian court in May to four years in prison for illegal possession of a firearm - a firearm he says was planted on him.
- Kremlinologists have expressed some anxiety over Dr. Rice's "Hawkish stance" with regards to US policy in traditionally Russian spheres of influence.
- Estonia 's President Arnold Ruutel and Russian President Putin met recently and supposedly discussed Russia's repudiation of the Ribbentrop-Molotov Pact. This is significant in Eastern Europe because of the Secret Protocol within the pact, only admitted to by Russia in 1989. This was a promise of Germany giving the Soviet Union all of the Baltic States and part of Poland in return for not attacking Germany. While Putin did not actually state Russia would repudiate the pact, Ruutel seemed to hold hope that Putin would make good on the 1989 Supreme Soviet condemnation of the pact. Yet, the Kremlin stated the re-evaluation would only be from an historic standpoint - not a legal one.
- During the Soviet era, town-forming military enterprises were in high fashion. If one worked at a munitions plant, for example, the best way to keep the production a secret was to make it unnecessary for anyone to leave the area. If you consider that in the Soviet Union all travel had to be approved by aparatchiks, it was easy to make travel to the secret city impossible as well. Global Security has some interesting information and a list of some of Russia's Secret Cities.
I try to be optimistic about Russia, but sometimes I just have to shake my head in utter disbelief: < ahref="http://www.baltictimes.com/art.php?art_id=11818">far too many still long for the good old days of Uncle Joe.
Gah. Sorry. Link here.
Preview is my friend. Preview is my friend. Preview is my friend...
Russia, The Sick Man of Europe By Nicholas Eberstadt
The Russian Federation today is in the grip of a steadily tightening mesh of serious demographic problems, for which the term "crisis" is no overstatement. This crisis is altering the realm of the possible for the country and its people—continuously, directly, and adversely. Russian social conditions, economic potential, military power, and international influence are today all subject to negative demographic constraints—and these constraints stand only to worsen over the years immediately ahead.
Russia is now at the brink of a steep population decline—a peacetime hemorrhage framed by a collapse of the birth rate and a catastrophic surge in the death rate. The forces that have shaped this path of depopulation and debilitation are powerful ones, and they are by now deeply rooted in Russian soil. Altering Russia's demographic trajectory would be a formidable task under any circumstances. As yet, unfortunately, neither Russia's political leadership nor the voting public that sustains it have even begun to face up to the enormous magnitude of the country's demographic challenges.
====================It was Eberstadt and Murray Feshback who first heard the creaking of the timbers of the Soviet Union through its demographic statistics, and warned of its weakness.
Robert
The same sickness is spreading thruout all of Europe, all on a rather steep slope of population decline.
I do not know if you are aware but as of 1:03 EST the ITAR-TASS article on the Beslan massacre is no longer available to be pulled up.
Yes - it appears they have pulled the article. It no longer exists in their archives either.
A few brief notes:
-- It is surprising that you overlooked the upgrade by S&P.
-- The "subsequent bailout" (subsequent, that is, to the 1998 crisis) did not happen. Russia had been borrowing from the IMF before the August 1998 meltdown, and a large (USD23 bn) bailout package had been arranged a month earlier, but did not materialize. Russia recovered on its own, rapidly and successfully.
-- "Attempts" at diversifying the Russian economy have been almost as illusory as the bailout. There has been much talk about diversification but no policy measures.
-- The Moscow--Grozny power sharing agreement is not all a formality: else, why would it have taken two years to negotiate? Quite the opposite, it may signify a transfer to native rule, provided, of course, that Grozny remains reasonably loyal to Moscow, which will let Putin to finally pull out the troops, to the country's relief. In fact, the Kadyrov government is offered more than any of its separatist predecessors ever asked for, save for nominal independence perhaps. A huge price to pay, but apparently part of Putin's "Chechenization" strategy.
-- Andrei Zorin is bending over backwards to prove the abolition of a Bolshevik holiday is a sign of the state reasserting itself. He ignores the fact that most Russians continue to mistrust or hate the said state.
-- The lady asylee's last name is Morozova.
I didn't overlook the upgrade.
From the text: "The upgrade reflects recent, crucial improvements in the government's
debt level and external liquidity," said Standard & Poor's credit analyst
Helena Hessel. "These improvements are so significant that they now outweigh
the serious and growing political risk that continues to be a key ratings
constraint on Russia."
My point was that investors are stating they are reluctant to invest regardless of indicators the financial environment is investment friendly.
Granted, Russia instituted some solid structural reforms after August, but IMF loans continued well after August 1998.
If Putin did not have soliders and a Kremlin-backed president in Grozny, there would be no "power sharing".
Thank you for the insight on Zorin. I know little of him. I did not get the feeling he was including the people with the state. The gist seemed to be that things are looking as if they are returning t the "good old days" regardless of what the people want.
Thank you! "Morozova" Makes a heck of a lot more sense. I was using the spelling from the article.
The first link in the Economy section refers to an article in Nezavisimaya Gazeta published on June 28, 2002. It is hardly news, unlike the S&P upgrade, announced on January 31, 2005.
A history of IMF disbursements to Russia can be found in this IMF working paper (see Table 2; Table 1 is also helpful) and on the IMF's site (click on the linked numbers to see disbursement schedules for each year). It follows that on July 22-23, 1998 -- a month before the currency collapse and domestic debt default -- the IMF disbursed a total of SDR3.6 bn (about USD4.85 bn) to Russia. This is a very modest amount compared with the bailout of Mexico in 1995 (USD30 bn) and the IMF's assistance to Indonesia, Brazil or Thailand in 1997-8.
After the August-September 1998 crisis, the IMF has only lent about USD600 million to Russia, disbursed on July 30, 1999. In the same year, Russia repaid the IMF USD4.2 bn -- its largest annual repayment to this day. In 2000, Russia paid back USD2.9 bn; in 2001, USD3.8 bn, while borrowing nothing. Thus, Russia's recovery coincided with outflows to, not inflows from, the IMF.