Archives for January 2008

News 31 Jan

The Western media has begun to whine about the Russian presidential elections five weeks in advance. Their beef is that Kasyanov was barred from running, ostensibly because above 5% of his required signatures were rigged, but actually to undercut the last independent candidate – Russia’s last and only hope of salvation from the ‘slippery slope to totalitarianism’ (according to Misha “Two Percent” Kasyanov, anyway).

Nonetheless, let’s apply some common sense. Kasyanov’s level of support is around 1% of the electorate, as even the BBC, grudgingly admits. This means around 1 million people. Are we supposed to believe, then, that below 5% of his supposed 2 million signatures were illegitimate? Or were they much higher than 5%, and much higher even than 13.36% (according to the Electoral Commission)? My opinion is that they simply only bothered discarding the most egregiously falsificated ones – enough to disqualify Kasyanov and reveal him for the corrupt, seditious fraud he is.

Perhaps Westerners may care to consider the reason ‘liberals’ lose in Russia has rather more to do with the liberals themselves rather than Stalin Reborn, aka Putin.

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News 25 Jan

The conventional wisdom seems to be that Russia, due to its strong macroeconomic fundamentals and relative isolation from the world economy, will weather the oncoming credit crisis well. In fact, Kudrin (the Finance Minister) suggested ‘Russia and other countries with large gold and currency reserves can…can support the global economy by flexing the financial might of their sovereign funds’, insisting that Russia remains a ‘haven’ of stability amid global financial crisis. This is a sentiment shared by Russia’s senior executives, 73% of whom are ‘very confident’ of revenue growth in 2008 (up from 35% last year). CEO’s from Brazil (63%), India (90%) and China (73%) also feel confident, in contrast to most Western businesspeople, e.g. the US (36%), Japan (31%) and Italy (19%) – who are much less confident than a year ago.

Flextronics and Peugeot plan to build plants in Russia, while Russia is going to build a railway in Saudi Arabia and a hydropower station in Tajikistan. The Russian search engine Yandex enters the world’s top ten, with 566 million searches, or 0.9% of the world’s search requests. Russia, Kazakhstan and Belarus are to expand the role of the Eurasian Economic Community by signing nine treaties to draw up a regulatory framework for the Customs Union.

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Annals of Resurgent Russia – CIA World Factbook 2008

The 2008 version of the CIA World Factbook has been published. While the demographic data has not been updated, new economic estimates have been published for 2007.

Firstly, let’s take a look at the basics. Russia’s GDP is now estimated at 2076bn $ in 2007, up from 1723bn $ in 2006. This is not just because of Russia’s 7.4% growth and dollar depreciation, but because estimates for it have been revised upwards – apparently it has taken a hint from the World Bank, which has used new data on international price comparisons to slightly improve Russia’s position and massively downgrade (by 40%) China and India.

This also means that in purchasing power parity terms, Russia’s GDP is now the seventh largest in the world, moving up two places since 2006 by overtaking Italy and France. Now, it is within shooting distance of the UK (2147bn $). Assuming, like the Economist Intelligence Unit, that Russia will grow by 6.7% and Britain by 1.9% in 2008, this means Russia will overtake Britain in 2008. Assuming a conservative 6% Russian growth and 2% German growth, Russia should overtake Germany in 9 years from 2007 (in 2016), thus fulfilling predictions that it will become the world’s fifth largest economy by 2020 some four years earlier. It also means Russia’s PPP GDP as a percentage of the world’s increased from 2.65% in 2006 to 3.15% in 2007. All this is also evidence that the ‘economic catch-up’ forces I described in Towards a New Russian Century? are in gear.

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Hiatus/Plans

Dear readers,

(of whom there are 160 now) Unfortunately, we have some pressing commitments at the moment, which will last up to January 27th.

This means that there will be few, if any, posts until then.

Nonetheless, we certainly don’t plan to stop blogging, and here’s a look at some of the topics that are going to come up once we free up some time:

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News 16 Jan

Freedom House publishes its 2008 report on Freedom in the World.

Russia scored a 6 for Political Rights and and 5 for Civil Rights (1 is best, 7 is worst). According to their figures, Russia is no different from Algeria, Azerbaijan, Bhutan, Brunei, Egypt, Kazakhstan, Oman, Pakistan, Qatar and the UAE, and less free than Afghanistan, Jordan, Kuwait, Morocco, Nepal, Togo, Thailand and Yemen. In other words, it sits right alongside the the tinpot dictatorships and monarchies of this world.

As you might well imagine, we have issues with that – and we’ll cover them in detail, probably in our next Editorial. Suffice to say for now that Da Russophile disagrees.

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Core Article: What We Believe

In the first 5 days of its existence, this blog has been priveleged to receive more than more than 200 page views from more than 100 visitors from 18 different countries. We have also been linked to by the Winthrop88 blog and Marginalia (probably the leading English-language blog about Latvia) – of those that we’re aware of, anyway.

We have also also been receiving mail. While most of it is constructive, some is of a negative character, along the lines of us being ‘unreconstructed Stalinists’, a Nashi-sponsored ‘Kremlin mouthpiece’ and ‘shameless apologists for Putins dictorship (sic)’.

To clear this up, we will compile a list of our opinions on various topics, Russia-related and not. This will make up a Core Article. This is so that you, dear reader, don’t have to waste your time on deconstructing our articles.

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News 14 Jan

President Putin’s visit to Bulgaria to bring pipeline deal, NPP contract

A new company is being created, in which Russia will own a 51% stake, to build a pipeline to carry Russian oil via the Bulgarian Black Sea port of Burgas and Greece’s Alexandroupolis on the Aegean, so as to bypass the congested Bosporus. It will pump 35mn metric tons a year, though capacity can eventually be increased to 50mn.

Atomstroyexport, Russia’s state nuclear equipment monopoly, has also been awarded a contract, estimated at 6bn $, to build two reactors for Bulgaria’s second nuclear power station in the town of Belene. According to Foreign Minister Lavrov, more agreements could be signed on Putin’s visit to the country, timed to coincide with celebrations of the 130th anniversary of the liberation of Bulgaria from Ottoman rule by a force led by Russia’s Tsar Alexander II.

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Annals of Resurgent Russia – It’s the Economy (in 2007), Stupid!

Twice a year the World Bank files a Russian Economy Report. The last one was in November 2007. Let’s look at its first chapter – “Recent Economic Developments”. It does what it says, i.e., condenses Russia’s economic situation in 2007 into a few pages of dense text, stats and charts.

First comes the summary:

RUSSIAN ECONOMIC REPORT – NOVEMBER 2007

Russian economic performance remains robust. Having grown by 7.9% (year on year) in the first half of the year, Russia is likely to post full-year GDP growth of over 7% in 2007. Output growth was driven by rising domestic demand, in particular, buoyant household consumption and business investment. On the supply side, sectors servicing the domestic demand (construction and retail trade) continued to boom. Manufacturing growth remains solid but is tapering off. The negative contribution of net exports to GDP growth is explained by the real appreciation of the ruble, which is making Russia’s exports more expensive abroad and imports less expensive to domestic consumers.
In a context of an economy growing close to potential, with high energy prices and large capital inflows, Russia faces two main challenges: inflationary pressures and rapid appreciation of the exchange rate. The most notable monetary development in 2007 is the surge in inflation. While it remained under control in the first quarter, inflation kept gaining momentum in the remainder of the year. Inflation reached 9.3% over the first ten months of 2007. Most likely, end-of-year inflation will reach 11 percent (Dec/Dec) compared to 9% in 2006 over the same period. The surge in inflation is explained by rising world food prices and by monetary factors. Large capital inflows pushed the balance of payment surplus to record highs and are becoming an important source of reserve accumulation ($450 bn). However, unlike oil revenues, capital inflows are not absorbed by the Stabilization Fund, driving money expansion and exerting upward pressures on the ruble. Given limited monetary instruments for sterilization and the current stance of monetary policy (that limits the pace of nominal exchange appreciation), reducing inflationary pressures is becoming exceedingly a difficult task.

The Russian government continued to enjoy fiscal surpluses. The federal budget surplus reached 7.1% of GDP over the first nine months of 2007. But the approved 3-year budget entails a fiscal relaxation that under the current oil price outlook would reduce the overall budgetary surplus to 0.2 percent of GDP by 2008. The amendments introduced to the budget 2007 law entail an increase in non interest expenditure that would bring the budget surplus down from 4.8% to 2.8% at the end of 2007. These amendments aim at increasing public investments in priority infrastructure and social sectors with a view of boosting growth. However, raising public investments might not be enough to close Russia’s infrastructure gap and drive sustained economic growth. Keeping up private investments and improving the efficiency of investments will be as important. In addition, the pace of fiscal expansion needs to be studied carefully to avoid exacerbating tensions between fiscal and monetary policies.

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News 13 Jan

Rally against Georgia poll result

Thousands of opposition supporters have taken to the streets in Georgia in protest at what they say were rigged presidential elections last weekend. Those gathered in the capital, Tbilisi, are demanding a second round of voting. Pro-Western leader Mikhail Saakashvili polled 53%, narrowly averting a run-off against his nearest rival, Levan Gachechiladze, who won 25% of the vote. Mr Saakashvili called the snap poll to resolve a crisis after suppressing anti-government rallies two months ago.

The BBC’s Neil Arun, who was at the rally, said much of the protesters’ anger was directed at Western observers who have said the polls were essentially democratic, although there were significant problems. The authorities have warned the demonstrators they will not tolerate any more civil unrest.

And time and time again, consistently, there surface allegations of fraud. This is not to say Georgia is a failure at democracy, but that there were serious problems in the conduct of these elections is in no doubt.

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Mailbag: Back from a Russian Century?

Four days and 50 reader views into our baby blog’s existence, we have been priveleged to receive a number of letters to our darussophileATyandexDOTru address. All of them deal with our Towards a New Russian Century? core article (which is, in addition, the most popular item on this blog by far – possibly because colleen was kind enough to link his winthrop88 blog to it).

The biggest critique of it, voiced by colleen and the letter writer DP, was my neglect of the topic of peak oil in my analysis of geopolitics in the next 20-30 years.

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