Archives for March 2009

Decoupling from the Unwinding

Three months ago I wrote an extensive analysis of Russia’s economy during the crisis in which I said that although it is going to be damaged by the shutdown of its traditional financing mechanism – cheap credit from the West – sovereign solvency will not be threatened and there will be a strong recovery in the second half. I was too optimistic, mostly because I misunderestimated the sheer severity of the global crash. That said, let us see how well its predictions stack up against reality more than three months on. I will also update my thoughts on the US and world economy, including for the more distant future.

Following the ruble correction, the trade balance was shifting back into positive territory. As of January, although resource exports fell by about a half the decline was less pronounced, with machines / equipment and chemicals falling 30% and consumer goods / agricultural products by 20% – this despite the internal credit crunch, shrinking foreign demand and increasing protectionism. Imports fell severely, especially for the biggest category – cars and equipment. This is not surprising – import tariffs were raised on cars and sales have plummeted, while there’s little need for new physical capital (machine tools, etc) when demand falls for the goods it is used to make.

In my essay, setting oil at 50$ per barrel and making some assumptions resulted in 2009 exports of 245bn $ and imports of 223bn $ – annualizing the January figures gives 204bn $ and 104bn $, respectively. Pretty much what I expected for exports, but imports will probably rise as inventories clear out and the ruble (perhaps) strengthens against the US dollar and the euro, which is quite possible since I expect oil to finish the year between 60$ and 80$ (PS. In the article I guessed that oil will average 50$ for 2009 – looks like its going to be significantly higher, as it is already hovering around 52$). Nonetheless, the current account will remain very much in the black. Keeping our capital account assumptions constant for next year, I stick with the “78bn $ in the medium scenario (50$ oil)” (that assumed a 100bn $ capital outflow in 2009 and higher imports – now, some economists are predicting capital outflow will be less than 83bn $), so really the capital account may turn out to be slightly pink instead of deep red).

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Translation: Tatyana Korchevnaya – On Liberal Web Brigades

It is a pity that foreigners are not privy to the wild and wacky world of LiveJournal, Russia’s premier blogging site – many prominent people have accounts there and traditions of opposition and kompromat makes for a lively stream of scandal.

One recent case involved Tatyana Korchevnaya, who used to be a prominent member of the Russian “liberal” opposition (I’ve explained why I use apostrophes around the word in that context before and my translation of her work below will clarify it further) and ran one of the top 10 Russian political blogs, but now condemns Soros funded evangelical groups / NGOs in Russia and the mafia linked Vladivostok demonstrators. She made a huge splash and political Runet is abuzz with the story. Whatever made her change her mind?

She came to the movement young, naive and with a Manichean worldview in which the Putinists were bad and the oppositionists good. Little by little that black and white picture dissolved into the gray cynicism of virtual politics. In a nutshell, she became disillusioned with how the “liberals” organized web brigades, the cynicism of their leaders and the zombiesm of their followers and above all their unbearable hypocrisy. They put “democratic” ideals above common human decency and empathy, tossing aside their cripples once they were no longer useful in the fight (on which note, LR recently provided a good example of this) and treated ordinary Russians as a herd to be guided and manipulated. As in the movie Night Watch, we realize that the borders between good and evil are porous, if they exist at all, and that should their cancer spread and the likes of Kasparov and Limonov ever come to power in Russia we are doomed to replay the history of Bolshevik Terror.

Read all about it here in the original Russian or my English translation below. She writes in a very colloquial style and I did my best to maintain a balance between keeping it both true and readable. I also tried to fill in several points of possible confusion (it was not a well organized text) and tried to find suitable English replacements for Russian idioms. This is a two part series. Enjoy!

TRANSLATION: Tatyana Korchevnaya LJ post of Feb 24, 2009, Part 1

(http://tanya-ogf.livejournal.com/202793.html; accessed March 7, 2009)

Warning: I will not reveal any of your true names1 or LiveJournal2 (LJ) identities, but only in so far that you do not force my hand.

I decided to write all this only now because by this time the “for” arguments begin to outnumber those “against”. Call me a traitor all you like, I couldn’t care less – I’m just sick and tired of your lies and the lies of your (and not that long ago, my) leaders.

When you only have access to limited information, your knowledge, your beliefs and your opinions all revolve around that information. Sometimes, the more information you acquire – the more you understand that sometimes you go off on a wrong track.

It is natural for good people to be mistaken from time to time. What is inexcusable is to continue deceiving other people, and yourselves, even after receiving new information and realizing, knowing, that you strayed into error.

As I said before, I’m usually a nice girl – but I also mentioned that I don’t like it when people lie.

I will now tell you a snippet of history from my life. I have more than enough evidence that it all happened. The problem is that if I were to reveal it, it will not only confirm my story but will also strongly compromise everyone else who is mixed up in this mess. And so they have a choice – accuse me of lying (with all the consequences for them therein) or keep their peace forever.

Yes, I understand that there might be consequences for myself – I’ve been warned more than a few times already. But I’ve insured myself…

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Comrade Kasparov – Charlatan or Bolshevik?

Debunking Russophobic drivel is somewhat akin to grenade fishing – so damn easy that you almost feel a bit guilty for stooping to such a level and wasting your time. But that’s what makes it really fun. So although Fedia Kriukov, Eugene Ivanov, Eric Kraus and the folks over at Russia: Other Points of View have already blasted enough fish out of the water to feed a man for a lifetime, I can’t help but to add more to the pile. The article in question is Beware of Doing Deals with Putin by Kasparov in the WSJ.

Vladimir Putin’s regime is fighting for its political life. That’s the good news. But the bad news is that the Obama administration is sending out mixed messages that may help the Russian autocratic regime survive.

That is certainly news to me – both that the “regime” is fighting for its political life and that Obama has any influence whatsoever on whether it survives it or not.

It’s quite telling that given the context he says this is “good news” – apparently, Kasparov puts his own hatred of Putin and neocon agenda above the economic difficulties now besetting ordinary Russians. Kind of recalls the Bolshevik saying, “the worse, the better!”.

No wonder he has an approval rating of about 2%.

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Myth of the Yellow Peril

One of the staples of alarmist, pessimistic and/or Russophobic (not to mention Sinophobic) commentary on Russian demography* is a reworking of the yellow peril thesis. In their fevered imaginations Chinese supposedly swim across the Amur River in their millions, establish village communes in the taiga and breed prolifically so as to displace ethnic Russians and revert Khabarovsk and Vladivostok back to their rightful Qing-era names, Boli and Haisanwei. To a limited extent they have a point. Since 1989 the population of the Russian Far East declined by 14% to 6.7mn in 2002; shorn of subsidies from the center, it is now dependent on the rest of East Asia for food and consumer imports. It sits next to Chinese Manchuria (the provinces of Heilongjiang, Liaoning and Jilin), an environmentally-strained rust belt of 108mn souls. Thus it is not surprising to see American geopolitical jockeys, Russian xenophobes and anti-Putin “liberals” alike (Golts, Latynina, etc) claiming that a stealth demographic invasion of Russia is under way which will in a few years result in a Chinese Far East.

As regular readers of this blog will know I prefer facts and statistics to rhetoric and hyperbole, and fortunately for us the excellent Russian demographic publication had this subject as its main theme in October 2008 – Life in Russia from Chinese Eyes. I will translate its main findings and conclusions to an English-speaking audience and then muse on the implications for future geopolitics.

The issue of Chinese migration to Russia and its political consequences starts with one main question – how many of them are there? All reputable estimates are in the range of 200,000 to 400,000, with 500.000 as the absolute maximum, most of them shuttle traders or seasonal laborers. The academic Gel’bras first came with these figures in 2001, based on adding up numbers from separate towns and regions. Foreign policy heavyweight and government official Sergei Prikhodko estimated a range of 150,000 to 200,000. According to the Federal Migration Service, in 2006 a total of 202,000 Chinese got registered as temporary workers in Russia, or 20% of all Gastarbeiters; although their numbers increased to 331,000 in 2007, they made up only 17% of all immigrant labor.

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Myth of the Russian AIDS Apocalypse

Many analysts of an unreasonably gloomy (or Russophobic) bent delight in raising the specter of an AIDS mortality crisis sometime in the next few years, indulging in fantasies of Russia as a dying, blighted wasteland populated by nihilistic, promiscuous druggies. In 2002 Vadim Pokrovsky, well known government anti-AIDS crusader, predicted the number of infected would rise to 3-5mn in “a few years“; by 2005, “we could be talking about five-million being infected, and these are realistic, even conservative figures” and tens of thousands would be dying by 2007. Prominent doomer demographer Nick Eberstadt modeled a 10% HIV prevalence rate by 2025 under a “severe scenario” and 2% under the lowest “mild scenario”. The World Bank (Ruhl et al) predicted a range of 3.21% (3.2mn cases) to 7.26% (5.3mn cases) by 2010, which is still much lower than US governmental National Intelligence Council estimates which project truly apocalyptic figures from 7.0% (5mn cases) to 11.2% (8mn cases). In other words the demographic, economic and geopolitical collapse of Russia is imminent.

To be fair a few years back I too was very concerned about these trends and apparent apathy of the Russian government. Then I became a bit more relaxed as the exponential tidal wave of new infections promised by Pokrovsky and the other prophets of doom failed to materialize and overall anti-AIDS spending ratcheted up to 300mn $ in 2006 and more than 500mn $ in 2007. Furthermore, a bit more research showed that these scenarios of African-style STD oblivion simply don’t stack up neither in theory nor in practice.

In 2007 Pokrovsky believed that there were “as many as 1.3mn” people infected with AIDS, very far from the multi-million rates he was predicting just five years ago, and not a catastrophic increase from “expert estimates” of 0.8mn in 2000. Russian government data shows that the percentage of pregnant women testing HIV positive reached a plateau in 2002 and tended down ever since. The models used by Eberstadt and co. are themselves critically flawed, because according to the international research program Knowledge for Action in HIV/AIDS in Russia, they assume that “the epidemic would be essentially heterosexual in nature and follow trends observed in sub-Saharan Africa”, which is “not borne out by current surveillance data from Russia”. (They are also not borne out by the slightest acquaintance with comparative development and sociology. Few Russians are malnourished and hence have greater immune resistance, their medical equipment tends to be sterilized and it is socially unacceptable for them to have many partners or engage in anal sex; all this cannot be said for sub-Saharan Africans).

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