News 21 July: Expansion amidst Turbulence

Let’s start with two excellent new resources I’ve recently come across. Russia: Other Points of View states its objectives thus:

We believe there is need in the public forum for a venue which offers opinions and facts that at times may differ from the prevailing view in western media.

Hmm… Sounds quite similar to Da Russophile, in fact, and makes a substantial part of our News posts redundant. As such I’ll be referring to it frequently.

The other is the Moscow Defence Brief, an English-language quarterly that offers analysis on Russian, Eurasian and world military affairs from a Russian perspective.

Moving onto developments in Russia, the economy continues to boom, driven by investment and consumption. The vast majority of foreign investors have made handsome gains and are bullish about future prospects, despite recent global financial perturbations that have cut the RTS back below 2000 by around a quarter from its peak. Manufacturing growth remains strong at 8.4% for the first half of 2008 (artificially brought down by 0.6% yearly growth on June, due to the effects of celebrating Euro08 successes on Russian productivity). Overall industrial growth of 5.8% is as usual lowered by anemic growth of 0.5% in the extractive sectors, including a 0.6% fall in oil production (as covered in the previous News, Russia has now almost certainly reached its oil production peak). While slowing down in Moscow, the construction boom continues apace in the rest of the country. Russia’s mean salary has surpassed 700$ this year and as of May in real terms salaries and pensions had increased by 14.5% and 13.8%, respectively, on the same period last year. The Sukhoi SuperJet 100 made its maiden flight and Cisco announces investment in venture capital fund to focus on Russia and CIS.

No wonder then that Russia has overtaken Germany as Europe’s biggest car market, with 3.8mn units expected to be sold this year (compared with 3.2mn in Germany) and Russia (with 2% of the world population) predicted to account for 20% of global growth in the automotive market through to 2015. The Economist has a much more detailed (and, unusual for it, quite professional) overview of Russia’s bourgeoning car market. Exploding purchasing power means car sales are expected to approach 4.5mn units by 2010, when it is expected car ownership will rise to 253 / 1000 people. Government industrial policy has led to the world’s major car producers rushing to build factories in Russia, with their new capacity by 2012 estimated at 1.6mn units (in effect doubling Russian car production from 2007).

On the other hand, the Economist‘s oily hallucinations continue (“Is it “peak oil” or a speculative bubble? Neither, really”). The last “really” says it all, really. When you were so really, really wrong on predicting 5$ oil back in 1999, might as well burrow your head even deeper into the conventional ‘wisdom’. (Really reminds me of Newsweek‘s ‘Russia is really, really weak‘ line, made fun of in the eXile.) And to connect these issues together, the Economist repeats its catechism that a) Russian oil production is stagnating due to a lack of investment as opposed to basic geological limits and b) its economy is more dependent than ever on oil. This is in stark contrast to the Financial Times (‘Running on empty? Fears over oil supply move into the mainstream‘), which is beginning to see the light. Gazprom predicts oil will reach $250 in 2009.

Nikitsky Fund released an apocalyptic-sounding issue of its excellent Truth and Beautnewsletter, the Crack of Doom. Many things, from medium-term American economic prospects to long-term global sustainability, do indeed look apocalyptic…

The World Bank has revised its GDP estimates for 2007. According to the new figures, Russia overtook the UK last year to become the sixth-largest economy in the world and second in Europe behind Germany. Its PPP gross national income per capita reached 14,400 $, which is comparable to that of Croatia or Poland.

Russia has managed to occupy 9 places in the list of the world’s top 500 supercomputers in June 2008. Although it doesn’t sound impressive, it is a significant improvement on previous releases of the list; and besides, it is dominated by just a few players (the UK, Japan, France, Germany and above all the US, which accounts for more than half). As I pointed out here, national strength in things like supercomputers, nanotechnology and electronic connectivity will be to this century as steel, oil and literacy were to the last. Moscow State University also released a list of the Top 50 supercomputers in Russia and the CIS.

Medvedev’s new Presidency has brought a new burst of rhetorical energy to themes such as fighting corruption, easing bureaucratic regulations on small businesses and computerization. My interpretation on this is that just as restoring state power and implementing a national industrial and socio-economic policy were the dominant talked-about themes at the start of Putin’s first and second terms respectively, and followed up by measures to that effect, so this is the prelude to the sort of institutional reforms that are becoming increasingly important for further economic growth and rapid convergence to advanced industrialism. But we’ll see.

Western hypocrisy is heroically exposed by Gorbachev, Russia’s UK ambassador and Medvedev.
The demographic situation continued to improve over the first five months of May, as noted in my recent Demographics series of posts. There was an almost 10% increase in the crude birth rate, which nonetheless strongly suggests the TFR will exceed 1.5 this year and thus more than exceed the projection in the High scenario. On the other hand mortality has stagnated, the crude death rate rising by 0.7%. Nonetheless, I strongly suspect this is just a short-term flunctuation, in particular in view of the fact that the alcohol / food price ratio has plunged this year due to huge food inflation (the close link between that ratio and death rates was explored in Demographics II; the fact death rates have stagnated, rather than plummeted (as in 1994 and to a lesser extent post-1998), may actually be a positive sign, since it would indicate mortality is slowly but incessantly becoming divorced from the affordability of alcohol). Here’s a table showing mortality and fertility in Jan-Apr 2008 by region and change over the previous year. A few notes. Lower mortality in Muslim and rich Russian regions (Moscow, Tyumen oblast), higher birth rates in Muslim and less densely populated (e.g. Urals, Siberian, Far East) regions.

(Two remarks. It seems that the bigger the increases in number of births per month, the bigger the increase in deaths. For instance, January and April both saw relatively big increases in mortality and fertility as compared to the previous year; February to a lesser extent. March saw a small increase in fertility and small drop in mortality. May say smaller fertility and a big drop in mortality. As far as I’m aware the number of days per month remains constant from year to year (with just one minor exception, leap year Februaries), Russian maternal mortality and even infant mortality is statistically insignificant here. So I ask the question, do more babies lead to more heart attacks or something? (Most mortality increase was due to heart attacks; deaths from external causes fell). Secondly, a prediction – mortality will increase during July. With all the celebrations ensuing after Russia’s football successes that month, this is more or less inevitable.)

I found an interesting demographics opinion piece from the Moscow Defence Brief, Russia does not need a pro-immigration policy. It is true that the benefits of immigration as a source of cheap labor (as opposed to an intelligent policy of letting in only well-qualified, easy to integrate, ‘especially desirable’ workers) are overstated. I disagree with two of its claims, however. The idea that Russia’s hypermortality doesn’t actually exist because of the effect of illegal immigrant deaths is complete nonsense (they make up, ultimately, only a small fraction of Russia’s population and most of them will be young people with comparatively very low death rates). Secondly, it is not a good idea to replicate American suburban planning (for the purposes of increasing fertility, according to the article) as it is even now becoming obsolete with the era of expensive oil.

Boosting Population a Vague Science – comprehensive, conventional article about Russian demographics from Moscow Times. Happiness in Russia has increased, which should help lower mortality (unhappy people tend to die younger and Russia, as with other post-Soviet republics, have one of the world’s lowest levels of happiness).

Rampant inflation and political crisis in Ukraine do not stop it from intensifying Russophobic moves in language, religion and NATO enlargement.

Russia, along with China, vetoed sanctions against Zimbabwe in the UN (pushed most aggressively by the UK, who I suppose dislike this particular African tinpot despot because unlike the others he messed with the British whites who got the land they stole from indigenous blacks, stolen back. And I find it a bit suspicious that you have all these piteous people who whine about supposed torture, genocide, etc, but seem free enough to find and talk with Western journalists, especially those from the BBC). While this is certainly not an altruistic action on Russia’s/China’s part, it’s not as if the West concerns itself itself much (at all) over the plight of ordinary working Zimbabweans, as proved by British insistence that their companies withdraw from the country and their ruthless, cowardly support for sanctions.

Tensions have risen over Abkhazia, with both Georgia and Russia warning of a risk of war, while Russia and the US have hosted suspiciously simultaneous war games in the region. The Rise and Fall of Georgia’s UAVs casts doubt on whether the video of a Russian fighter shooting down a Georgian UAV (as shown in the previous News).

As for the video provided by Georgia, there are several reasons why their authenticity is in doubt. First, UAVs are made to observe objects on the earth, not in the air. Their cameras are housed in a semisphere on the underside of the vehicle, which makes it extremely difficult to focus on another flying object. The chances that this sort of camera could have caught another flying object at the very moment when it fired a missile are simply nonexistent.

Second, as a rule, high-definition photos and video are stored on board the UAV, while only low-quality pictures are sent in real time, due to the restricted bandwidth of the transmission system. The video shown by the Georgians was ostensibly captured in real time, since the UAV was destroyed, and the low quality of the video does not allow for the identification of the type of plane, let alone the country to which it belongs. Arguments to the effect that «the aircraft has a twin rudder and is therefore Russian» simply do not stand up to examination.

This article concludes that the “Georgian Army would be quickly defeated if Tbilisi tries to settle the conflict by force”.

Further to the excellent NY Sun article casting doubt on the mainstream Western account of Litvinenko’s death (poisoned by polonium by nefarious KGB agents), the Independent produces a piece worthy of its namesake, The Litvinenko files: Was he really murdered? It mostly covers the same points.

BP has been treating Russians as subjects (Financial Times) the point of view from the Russian oligarchs, who reject British claims of Russian intimidation and strong-arming, and argue that BP has thwarted the company’s expansion plans abroad and long-term strategic development, in a bid to shore up reserves for BP itself.

Assessing Russian fighter technology concludes that since the end of the Cold War, Russian military aviation has for all practical purposes closed the technological gap with the West. Very succinct and detailed. Nagorno-Karabakh: Shift in the Military Balance analyzes the balance of power between Armenia and Azerbaijan, and concludes it is tilting towards Baku. Russian nuclear forces, 2008. Baiting the Russian bear – US plans for ballistic missile defences in eastern Europe risk alienating Russia and stirring up old resentments.

I liked Sean’s little insightful scribblings, Surveying Putin’s Generation and Putin: Leader or Revolutionary? He also penned a cynical critique of Nemtsov’s White Paper.

Kissinger penned Unconventional wisdom about Russia, emphasizing for US concern for Russia’s strategic interests if it wants to have its way in the world.

Russia’s energy drive leaves US reeling – Russia continues to strive for greater control over Eurasian energy flows under Medvedev, this time venturing into Africa. Washington’s reprisal (blocking Russian oil companies’ access to Iraq) was met by further Russian interest in a gas OPEC, with Iran as the other main partner.

The ever brilliant Nicolai Petro reports on yet another Western MSM smear job on Russia in Mr. Levy and the Magic Media.

The Misconception of Russian Authoritarianism – PhD thesis by an American graduate student at the University of St.-Petersburg makes a forceful argument that Russia has decisively shed its authoritarian past and is engaged in building up stable long-term democratic institutions.

Russia’s Other Great Victory – the War Nerd’s colorful (as usual) account of Russia’s crushing defeat of Japan in Manchuria in 1945. A Japanese POW’s life-affirming account of his time in Siberia.

Russia’s hawks (rather tellingly) support McCain, who will accelerate America’s decline (as per contributor Brother Karamazov’s theory). Not that that’s very relevant however since Obama will almost certainly win.

Michael Averko pens some excellent articles, including Chechnya, EU-Serbia and a Disputed Lands Update, Contradictions to the “New Cold War” Theme and book review of Not My Turn to Die.

For a laugh take a look at this Russphobic drivel (its volume continues to increase). School-child spanking afficianados from the conservative neo-imperialist Telegraph have decided Bully-boy Russia needs a lesson in manners. Loco Lucas indulges in more of his heartfeld mad rantings in Kremlin’s blast from the past in the Daily Mail (a British tabloid read by their near-illiterate football hooligans) and his spymania and Molotov cocktail fetish. The poor maiden Georgia is in jeopardy. Professional Russophobe freak Max Hastings belives Hopes of close cooperation between Russia and the west are now dead. I have a lively exchange with deranged La Russophobe here and sent a letter complaining about the inaccuracies in the Enough Rope for Russia WSJ Op-Ed, albeit to no avail.

Russia: A totalitarian regime in thrall to a Tsar who’s creating the new Facist empire takes the cake, however. The title alone wins it.

Russia performed far better than generally expected in Euro2008, losing only to the champion. I think it certainly has the potential to win the World Cup in South Africa; perhaps Hiddink’s luck could make it finally realize that potential. In any case it’s certainly not a bad bed (most bookies give returns of 25:1).

Finally, polls. Plans for summer holidays – since 1997, the number of Russians without money for holidays decline (from 30% to 20%), while a constant percentage plan to remain at home or on their dacha. Those planning to go abroad or to the Black Sea region remain few in number abut are on the increase. Russians tend to be positive about Israel and neutral/apathetic on the Palestine issue. Most Russians favor a policy of diplomacy and restraint towards regions of the former USSR. This detailed poll on corruption shows most Russians are tired of it, want greater measures against it and think it has registered a slight improvement over the past three years. Internet penetration is spreading fast but is still at relatively low levels nationally, especially amongst the older generations. Most Russians continue to read avidly.

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