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%.

On Friday, Secretary of State Hillary Clinton will meet with her Russian counterpart, Sergey Lavrov, in Geneva, Switzerland. The agenda will include talks on arms control and NATO. But in the forefront of everyone’s mind should be the secret letter that President Barack Obama recently sent to Russian President Dmitry Medvedev. The New York Times broke the story this week, reporting that Mr. Obama’s letter proffered a deal for the U.S. to “back off deploying a new missile defense system in Eastern Europe” in exchange for Moscow’s help in stopping Iran from “developing long-range weapons.”

The thinking here is not sound. Russia’s overwrought protest against antimissile systems never sprung from any genuine strategic fear. It was always a ploy and a distraction from its real agenda.

It is not a threat today. As I said before here, given trends and the precedent, that may not be the case tomorrow. AMD technology is improving rapidly and once the work of setting up the ADGE (Air Defense Ground Environment) is completed, rapidly expanding the system becomes cheap and feasible. If NATO were 100% genuine in their claims that its only purpose is to defend against Iran, they would treat Russian proposals to base the system on Russian (or Azeri) soil much more seriously.

Mr. Putin — who is now prime minister of Russia — relies heavily on oil revenues to maintain his grip on power. It is in his interests to increase tensions in the Middle East as a way of driving up global oil prices. There is no deal the U.S. can cut to stop Mr. Putin’s Russia from arming Mideast terrorists and helping Iran’s nuclear program.

This is one of the oldest “liberal” spiels in the book – as soon as oil prices drop, the regime is supposed to fall apart. This is supposedly because the Russian system of government depends on sharing out oil rents amongst warring clans and as such becomes fragile when rents decline. An attractive theory, but one for which I have not encountered any good evidence.

Kasparov has his reputation on the line. Signs are appearing that the worst of the crisis in Russia is already over (topic of my next post). Thus he is now seeking an escape clause – blame a naive Obama for rescuing the Putin regime by “sending out mixed signals”, or blame “Mideast terrorists” for increasing political risks and thus raising oil prices, despite that the end of cheap oil is rooted in fundamental geological factors.

Secret letters aside, there are other troubling signals coming out of the Obama administration. One such sign came last week in Japan, where Mrs. Clinton talked about the “three Ds” of U.S. national security. She listed defense, diplomacy and development. But she left off the vital fourth “D” — democracy. The omission was no doubt welcomed by Mr. Putin.

Because the “democracy agenda” worked out so well for the US under Bush. Hundreds of thousands of Iraqi dead, four thousand US casualties, three trillion dollars and five years later – and the damn country is Not Free even according to “Freedom” House, a notoriously ideological organization.

The reality of the matter is that you cannot have democracy without security and development and thankfully this is now tacitly accepted in Washington. Since this threatens an end to Kasparov’s whoring amongst policymakers of influence, no wonder he is so troubled by these signals.

Another troubling sign came in Munich, Germany, last month, where Vice President Joe Biden talked about the need for “pushing the reset button” on America’s relationship with Russia. But pushing reset won’t pressure Mr. Putin into acting responsibly on the world stage. It will only obscure, for a time, Russia’s malignant and contagious virus of authoritarianism.

While all these deals and olive branches are being extended to the Kremlin, there is ample evidence suggesting that the Putin regime is teetering toward collapse. One sign: Russia is beefing up its federal security forces in order to violently repress public protests. Last month, for example, the regime created the “National Center of Crisis Management,” which will deploy uniformed troops against “disturbances.”

So let me get this straight. The Latvian government collapsed. Every third Ukrainian lacks means for food. California is marching towards bankruptcy, 9 million families are on the verge of losing their homes and manufacturing and housing are all collapsing in the US…oh sorry, I’m succumbing to “whataboutism“. Let’s start over.

The only real “evidence” of unrest I’ve come across were the small, mafia-linked and unauthorized Vladivostok protests by car dealers three months ago. The Western press has been recycling this single event ever since. Kasparov should have been more original and condemned the brutal goons of the Kremlin for dragging away this courageous young protester – or maybe not, since he directed his anger against an opposition rally (which was authorized and want off peacefully). But had he been an “Other Russia” member…there’d have been no end of rhetoric about the Russian totalitarian state.

See above. The vast majority of Russians do not want to participate in protests, view the likelihood of major unrest as low and approval for Medvedev and Putin remains very high. Views of where the country is going and approval for the government remain higher than they were for much of the Putin era, not to even mention Yeltsin.

It probably won’t be enough to quell public anger. Protests are increasing in Russia because many voters didn’t care that their elections were rigged until inflation started squeezing them. Time has run out on the illusion of economic prosperity for the average Russian.

Real wages and pensions have both more than doubled since 2000. Consumerism took off. The “average Russian” believed himself or herself to be much more prosperous in 2008 than in 2001. The sheer presumption of this Bolshevik in saying that this is an “illusion” is difficult to comprehend – certainly far more difficult than to remember the hyperinflations and cronyism of the 1990’s.

Meanwhile, the Russian National Welfare Fund — created to back up the state pension system — is being raided to prop up the monopolistic industries belonging to Mr. Putin’s closest allies. Billions are being handed out to the likes of oligarchs Oleg Deripaska, Sergey Chemezov and Roman Abramovich — money that is going to service debt, not to develop industry.

As a matter of fact these were all subordinated loans, with much stricter conditions attached to them than in the Wall Street bailouts. Kasparov not surprisingly also leaves out the history of how American spendthrifts have been gouging Social Security to plug up budget deficits even in the good old days when the economy was ostensibly healthy…there I go off again. I really hate that Russophobe “whataboutism” argument. In my opinion its the childish squeal of the hypocrite, the kind of thing you hear on a playground. I mean, fucking what about it?

Russian industrial groups all relied on financing from Western banks prior to September 2008. Around that time, the liquidity they relied on dried up but the repayment schedules remained fixed – if anything, all the banks became desperate to cash back in because of their subprime and related losses. This economic crash was unforeseen and they could not be blamed for this dependence, as Russia’s own financial system was underdeveloped. They were propped up to avert debt defaults and the loss of valuable and strategic assets, not to rescue failing industries as it the case with the Wall Street banks or the Mid-West carmakers.

Finally, complaining about how money is going to service debt instead of developing industry is especially retarded. Does Kasparov want Russia’s firm to lose their prize assets, be deprived of cheap Western credit in the future and for the Russian government to spend that money on building car factories themselves?

What kind of fucking “liberal” is he?

When even billionaires are feeling the pinch, this may not be enough to arrest the slide. In the past year, according to the magazine Finans, the number of Russian billionaires was cut in half to 49 from 101. Many of those who remain may be billionaires only on paper; it appears that many of them have debts that exceed assets. This may be why Mr. Putin attended the World Economic Forum in Davos recently to push debt forgiveness.

Or perhaps it’s because the international financial system is insolvent and a global debt jubilee is inevitable – one way or another.

Consider also that the Kremlin just struck a deal with China to send Russian oil to China at rock-bottom prices (under $20/barrel) for 20 years in exchange for $25 billion in loans. Powerful countries don’t cut such deals unless they are desperate for cash. What’s happening in Russia is that we are witnessing the survival gambit of a corrupt regime. The question is whether the West will bail out the Russian dictatorship or let it fall.

Unless someone finds a reputable source confirming this (and I haven’t), then I can only conclude this is 100% fabrication.

Those loans were made to Rosneft at favorable interest rates of 6% a year so as to lock in future supplies for China – i.e. Russia is contractually bound to sell 300,000 barrels of oil a day to China for the next twenty years. The pricing mechanism in such deals are usually tied to market rates with some adjustments for volatility and is independent of the loan.

China is centralized and disciplined enough to realize that resource scarcity is going to become a major issue in the near future and plans and acts accordingly – lock in supplies, as it’s been doing everywhere from Africa to Latin America. It’s state controlled enterprises think as much in terms of geopolitics as markets and are willing to win China guaranteed supplies of strategic resoures, even if it goes against short term economic rationalism.

Some may doubt the fragility of the Putin government. But there are plenty of examples in history of supposedly entrenched regimes falling quickly. In late 1989, many in the West were surprised to see the Velvet Revolution in Czechoslovakia. Others didn’t foresee the sweeping away of totalitarian regimes in Poland and Hungary.

Mr. Putin and his allies live in fear of a popular uprising because it would likely force them into bankruptcy, exile and even prison. They cannot be expected to operate Russia as a rational state actor. Indeed, they may relish a violent clash with a contrived enemy in hopes of building nationalistic support — the war with Georgia this past summer may just be a prelude.

I’ll just quote Putin – “I’m amazed by their skills at seeing black as white, of portraying aggressors as victims and of blamimg the real victims for the consequences of the conflict”.

The West must not be tempted by a desire to maintain comfortable relations with the current government in charge of Russia. After years of criminal mismanagement, the Russian economy is falling apart more rapidly than those of other industrialized nations. The popular outrage that will lead to regime change will stem from the public realization that the Russian economy is in worse shape than other leading nations.

Japan, Korea and Germany are certainly in worse straits – their contractions have been comparable and their economies, reliant as they are on collapsed world demand, are not recovering any time soon. I would also argue that the relatively good American performance is dependent on a one-off “flight to quality” and that a 10% peak-to-trough fall in GDP predicted by Nouriel Roubini is inevitable – even making the questionable assumption that the dollar survives.

There was a bout of overproduction in first half of 2008 and since the onset of the crisis Russian inventories have been falling, for as Eric Kraus points out, the Russian economy is more flexible than those of industrialized countries – “downward adjustment of wages and staffing levels can occur virtually overnight, with production simply halted until inventories are reduced to the desired level”. The repayments crisis has subsided and the ruble fell, which will engender an economic recovery that I predicted three months ago. Indeed, as of February Russia’s VTB manufacturing PMI rose to 40.6 from around 34 in the prior two months, indicating that the rate of decline is falling. This is, incidentally, better than the global manufacturing PMI which was at 35.8 as of February, giving the lie to the charlatan’s claims that Russia is in “worse shape than other leading nations”.

Again, much more on the economy in a post soon to come.

In fact, it is no longer taboo in Russia to speak openly of the post-Putin era — even among regime loyalists. The foreign businessmen and politicians eager to play ball with Mr. Putin should bear in mind that in all likelihood Mr. Putin will not be around that much longer. Nor will the dubious deals that he and his friends are making in Russia’s name for their own profit go unexamined after they are gone.

I suspect Kasparov will be increasingly exposed for the charlatan he is and Russians will go from reading and making fun of translations of his writings on Inosmi to completely ignoring him.

This kind of attitude – at once arrogant, wrongheaded and authoritarian – explains the antipathy or indifference all Russians have for the “liberals” (I use the quotation marks very deliberately). He is certainly not a liberal – he is either a charlatan or a Bolshevik, or some unholy mix of the two.

The argument for the former is obvious. He is a Bolshevik in the sense that he puts the interests of neocon and anti-Putin ideology above that of Russia as a country, just as Lenin considered it fit to call for the enemy’s victory during the Russo-Japanese War to further his own goals of revolution. It is alright and healthy to have vocal disagreements on matters of national policy; it is quite another to denounce the country as a dictatorship to foreigners and repeatedly call for its ostracization from the international community (unlike the Communists, for example, who ironically make up the country’s primary loyal opposition today). This is why, except for a small percentage of fifth-columnists and saboteurs, all Russians would much rather Kasparov had stuck to his original calling – chess.

In his previous career as chess grandmaster, he was well known as insufferably arrogant and self-centered (I think its somewhat telling that his major work on the game was entitled My Great Predecessors). That said, at least consigned to that absurd and aloof world, he would not have done so much damage in poisoning America’s image in Russia and tainting the cause of patriotic dissent.

There, I’ve done it. The grenade’s gone off and the dead fish are bobbing up to the surface. Except that whereas you have to wait five seconds for the grenade, here I’ve spent two hours debunking an article that was probably wrapped up in twenty minutes. Why can’t they make a machine that would do this quickly and automatically? It’s so simple and formulaic, I doubt it will even have to be able to pass the Turing test.

Damn, I feel bad now.

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