Archives for April 2008

News 2 May: Russia’s Second Oil Peak

For all the noise being made this month about Georgia, about NATO, about Tibet, etc, possibly the most portentous is that it seems Russia hit its oil peak (strictly speaking, its second – the first happened in 1987), well in line with peakist predictions. Production increases via application of new technology, as seen in the late 90’s and early 2000’s have been mostly exhausted; there are no megaprojects to bridge the gap beyond 2010. (There has been some noise about new oil field discoveries off Brazil’s coast which could contain as many as 33bn barrels, which has our dear Economist rejoicing: “the discoveries do suggest that the gloomiest pundits are wrong to predict that the world will soon run out of oil”. Just two problems. The issue is not about the world running our of oil – it’s about economically damaging declines in production which will, and are, hitting crucial sectors like transport and agriculture. Secondly, and more to the point, even the high estimate of 33bn barrels is enough for less than half a year of today’s demand of 85bn barrels.) Massive expansion in Russia has been the main reason while oil is peaking now, rather than five years ago. This, coupled with stagnant Saudi Arabia ‘refusing’ to increase oil production so as to leave more for future generations and oil prices rising to 120$, looks set to vindicate the Oil Drum predictions below.

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Demography II – Out of the Death Spiral

As we covered in the previous instalment, Demographics I: The Russian Cross Reversed?, fertility rates are not abnormally low by European standards and are likely to rise further in the future. The same cannot be said of mortality rates – a ‘quiet crisis‘ that has been a ‘catastrophe of historic proportions’.

Take life expectancy. As of 2007, the average age of death in Russia was 65.9 years. This is way below First World levels (United States – 78.0; EU – 78.7; Japan – 82.0) and even many developing country standards (Mexico – 75.6; China – 72.9; Egypt – 71.6; India – 68.6). Note: this figure was actually 67.7 years in 2007 (the CIA relies on its own projections to estimate demographic data), but the general point stands.

Even compared to other post-Soviet countries, Russia’s mortality stats are far from impressive – as you can see from the graphs in that link, total life expectancy, male life expectancy and death rates for both sexes all hovered near the worst levels. Nor is so-called healthy life expectancy anything to write home about (in 2002, it stood at 53 years and 64 years for men and women respectively, compared with 55/64 for Ukraine, 63/68 in Poland and 67/71 in the US).

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Demography I – The Russian Cross Reversed?

The demographic situation in Russia is usually painted in apocalyptic terms. The Russian Cross – the post-Soviet transition into a world of death without new life – will supposedly preclude it from attaining First World living standards and wreck any Great Power, let alone superpower, pretensions. Is Russia Too Sick to Matter and the Sick Man of Europe, as alleged by Nicholas Eberstadt in two reports in 1999 and 2004, respectively? Are we seeing the Death of a Nation?

To answer these questions, we’ll look at the statistics and trends, and extrapolate into the future under three different scenarios – 1. Stagnation, 2. Improvement and 3. Transformation. In the end we conclude that while the demographic, or rather the mortality, problem is indeed serious, it need not entail pessimism if appropriate measures are taken. Nor will it have anything but a negligible effect on the economy.

First, let us look at the historical trends. Below, I have collated the birth and death rate for Russia from 1959-2008 using data from The Human Mortality Database, Soviet Economic Statistical Series and Rosstat. Subtracting the death rate from the birth rate gives the rate of natural increase.

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News 7 Apr: NATO Founders, Western Media Deconstructed

America’s desire to have Ukraine and Georgia accede to MAP foundered on European opposition from Germany, France and (somewhat surprisingly) the UK, despite Saakashvili’s implicit comparison of this to Nazi appeasement. Nonetheless, this is good for NATO as an alliance (as we’ve covered previously, the European desire for a rapprochement is linked to Russian logistical help on Afghanistan), as well as in line with public opinion about the importance of good relations with Russia amongst the Ukrainian and Georgian publics. This is not to mention Russia itself, where 64% think Georgian accession to NATO is a security threat and where Ukrainian accession could result in restrictions in territorial revisionism and new visa controls.

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More Reflections on Election Fraud

Two weeks ago Illarionov gave an interview on the Echo of Moscow radio station. Covering it in-depth is somewhat of a pointless exercise, what with him comparing 1999-2007 Russia with Nazi Germany in 1932-40 (because of their rapid economic growth and Russia’s supposed loss of the rule of law). Now not only is invoking Godwin’s Law usually treated as a concession, suffice to say, had he been a German in the 1930’s he’d be lucky not to have vanished into the Nacht und Nebel, let alone been interviewed by a liberal Berlin media outlet. Nonetheless, it is worth looking into his PowerPoint presentation on Echo‘s website, a summary of which has been written up by Kim Zigfeld (La Russophobe) on Publius Pundit in More on Russian Elections Fraud.

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Lying Liars and their Lies

1. The Myth of Russian Corruption

In this blog, I have documented how a) corruption in Russia is similar to the average for middle-income countries and b) it has improved slightly under Putin. This is backed by data from the World Bank’s Governance Indicators, Transparency International’s Global Corruption Barometer and World Bank statistics on problems with corruption and bureaucracy.

Nonetheless, the Western media has other ideas. Take their coverage of the Indem report in 2005 by the BBC, for instance, which claims that “Its annual report on corruption says that bribes paid to officials by businessmen may have grown as much as 10 times over the last four years alone” and “the shadow economy at least twice as large as the state budget“. And I can’t say Beebie is the worst. More propagandistically inclined outlets implied that corruption per se increased by an order of magnitude.

Now for the facts. The shadow economy fell from 45% to 37% of GDP from 1998 to 2002. The state’s share of expenditures was 34.1% in 2002 – in other words, it was very similar to the size of the shadow economy. And even assuming there have been no improvements since then (according to ivanivanov333, a contributor, the figure is now 28%, as opposed to gov’t spending of 34.2% in 2007), this is not that different even from Latvia (40%) or even Italy (27%) in 2004. Yet nonetheless it’s supposedly worse than in the late 1990’s, when the media was coming up with books like Sale of the Century and articles like What Russia Teaches Us Now (which described its social contract as an “exchange of unaccountable power for untaxable wealth”).

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Lovely Levada

As long time readers probably know, I’m a bit of a sucker for statistics, and I’ve recently found a site that I’ll no doubt be sucking dry from now on. Levada Center is Russia’s foremost polling company (equivalent to America’s Gallup), and releases a poll or two every workday. However, unfortunately their English language version is quite limited, so I’ll be using the Russian. I present…

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