Kettle, Meet Pot

This about Politics, tagged , , , , was written by for on February 3, 2014

“Corruption across EU ‘breathtaking’ – EU Commission” says a headline in the BBC. The Commissioner responsible for the report said that she believed the cost of corruption was “probably much higher” than the €120 billion (US$162 billion) the report estimates. And indeed that is probably correct because corruption within EU organs themselves was not included. Given that the auditors have persistently found money missing in the EU accounts (or, as it is quaintly put in Eurospeak: “error rates”) for nearly two decades, 4.8% of €138.6 billion (€6.6 billion or US$8.9 billion) in 2012, there may well be more. Almost half the businesses operating in Europe say they find corruption to be a problem, More than half the people surveyed think the problem is getting worse. 8% claim to have personally experienced something in the past 12 months.

Here’s the actual report.

Now, these are precisely the politicians, followed enthusiastically by a barking pack of reporters, opinioneers and editorial writers, who are always ready to lecture Russia and posture as an paradigm to be emulated. Indeed Ukraine is being torn apart precisely by the pretension that the EU is the only route for it to get out of stagnation and corruption. I do not believe that tu quoque is a particularly effective way of arguing but there are times when outright hypocrisy must be acknowledged. Eurosceptics like myself have always expected that huge uncontrolled bureaucracies producing ever more layers of regulations is a strong precondition for corruption – how else can a company or individual navigate through contradictory and incomprehensible regulations than by the lubrication of a shot of cash in the right place? It is to the credit of the EU that it produced such a harsh report.

And it’s not just hypocrisy that Ukrainians should think about. What if the EU structure is in fact the principle cause of stagnation and corruption just as communism was? There are important similarities after all: faceless, well-paid bureaucrats at the centre conducting experiments on a powerless population.

Who are the faceless gnomes of Brussels to lecture Moscow or Kiev or anyone else?

Who can take anything they say seriously any more?

 

Sochi-Adler Krasnaya Polyana Panorama

This about Society, tagged , , , , was written by for on February 2, 2014

There has been an unceasing campaign to denigrate the construction in the Sochi-Adler area. Incompetence, corruption, double toilets and so on and on. In all of this, few people have been shown what has been built for the total cost of 55 billion or so US Dollars. We have a preview; but first a discussion of cost.

Most Western sources claim that the real cost of the Sochi Olympics is the 55 billion and Putin is assumed to be lying when he says the cost is 6 billion or so. Now that Navalniy has his report out that claims to measure the alleged corruption, the Western media is full of wide-eyed quotations from it. But Western discussions, and Navalniy (not, I suspect, by coincidence) ignore the other stated purpose of the construction which is to create a full-scale sports and holiday complex in Russia’s Riviera. The aim being to attract Russian tourists away from foreign holidays and provide some development and employment opportunities in the chronically depressed North Caucasus.

So what is the real cost of the Olympics? 1) All of the 55 billion or 2) just the proportion that would not have been spent if the Olympics weren’t coming or 3) something in-between? The first question to be answered is how much of the total is definitely Olympics-only spending. Here Navalniy actually agrees with Putin: from his report “Olympstroy spent $6.3 bn to construct 11 sport venues”; that is the number Putin gives.

The disagreement is over what column to put the other expenditures in. Navalniy insists they all be charged to the Olympics, Putin that they be charged to resort complex construction and necessary infrastructure improvement. That’s what the disagreement actually amounts to, not that anyone in the Western media will tell you: Putin says some is Olympics, most is infrastructure, Navalniy says all is Olympics. But they agree on the total that has been spent. Putin wants to play the Olympics costs down, Navalniy wants to play them up; so each picks his favourite split. Each is being disingenuous.

Certainly an immense amount of money has been spent on sports facilities, visitor amusements, transportation facilities, hotels, restaurants and the rest. So, Dear Reader, you decide the split. How do you judge the most expensive single project (the 5-6 billion road-rail connection to the ski resort, replacing the Soviet-era link)? Would it have been built anyway to connect the town of Adler (where, as we have interminably been told, it doesn’t snow much) to the ski resort area where it does? Or do you judge that it was only built because of the Olympics? Or should only some of the cost be assigned to the Olympics and how would you assign it? How about the airport at Adler? The port development at Sochi? The isolation hospital in Lazerevskiy district? The Adler power station? The shopping mall? Putin says none, Navalniy says all but they don’t disagree that 50-plus billion was spent overall. And, when you make your decision, what makes you think the next person would agree? The only correct answer is that, when the Olympics are gone, there will still be a vast complex of modern facilities in a place and situation that ought to be pretty attractive to tourists.

The truth is that a large high quality resort complex has been constructed, together with a great deal of infrastructure created or improved; some of this was built only because the Olympics were coming. So what is the cost of the Olympics? I don’t know either. 6 billion seems too narrow a definition but 55 billion is far too high. Can we pick a number out of the sky and say 7 or 8? Certainly a ludicrous amount of money to shell out for a few weeks of sports; probably an argument for having a permanent facility but, given that there wasn’t much there in the beginning except Nature, not absurdly high as these things are priced.

These panoramic photos show what has been done. And don’t forget, Dear Reader, Navalniy and others would like us to believe that a third of the money was stolen: look at all this stuff and decide whether that sounds right.

Russian language only, but you’ll get the idea.

PS. The toilet story isn’t true.

Shredding Sochi… in a Good Way

This about Society, tagged , , , was written by for , on January 31, 2014

After a long break, a new contribution to the Experts Panel:

Shredding Sochi… in a Good Way

Western journalists have been in the business of dismissing Russian achievements and magnifying Russian failures ever since Putin drove them into a collective derangement syndrome – he even haunts their dreams, as recently revealed by the Guardian’s Shaun Walker – so the preemptive besmirching of the Sochi Olympics can’t have surprised anyone.

What is startling, though, is the unusually low competence of the effort, even by the standards of these people that are sarcastically referred to as “democratic journalists” in Russia.

The first and foremost attack revolved around the supposed corruption surrounding the Sochi Olympics. In 2010, the Russian magazine Esquire estimated that 48km of roads around Sochi consumed a cool $8 billion of taxpayer money, a sum that implied the asphalt might as well have been made of elite beluga caviar. Julia Ioffe cheerily transmitted these sophomoric calculations to the Anglosphere. The only problem with these actuarial wisecracks? Said road also included a railway, 50 bridges, and 27km worth of tunnels over mountainous terrain… which presumably made it something more than just a road. What was intended as a metaphor for Sochi corruption turned out to be, ironically, a metaphor for unfounded attacks against it.

There are incessant comparisons to the $8 billion spent during the 2010 Olympics in Canada. But this sidesteps the fact that Whistler was already a world-class ski resort, whereas Sochi’s infrastructure had to be built from scratch and at relatively short notice. The actual event-related costs of the Sochi Olympics are $7 billion, of which only half was directly drawn from the state budget. This is not to say that there was no stealing – of course there was, as corruption is a real problem in Russia, and is especially endemic in the construction industry. Navalny has created an entire website about it, and coordinated a campaign against Sochi with Buzzfeed and The New York Times. But what’s striking is that far from the pharaonic levels of misappropriation we might expected from the tone of the coverage, in most cases the markup was in the order of 50%-100% relative to “comparable” Western projects (and that’s after selecting the most egregious cases). This isn’t “good,” needless to say, but it’s hardly unprecedented in Western experience. In any case, a number of criminal cases have been opened up, so impunity is not guaranteed. (The most prominent “victim,” Akhmed Bilalov, has fled the country and claimed he was poisoned – all true to the form of emigre oligarch thieves from the ex-Sovie Union).

The lion’s share of the $50 billion investment in Sochi – some 80% of it or so – consists of infrastructure projects to make Sochi into a world-class ski resort that will provide employment in the restive North Caucasus, kickstart the development of a Russian snowsports culture, and draw at least some of the more patriotic elites away from Courcheval.

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Serdyukov is Charged

This about Society, tagged , , , was written by for on November 29, 2013

Here is the discussion at this on The Russia Debate.

My friend and DR commentator Alexander Mercouris correctly predicted this outcome – that Serdyukov would be charged, but that it is a complex case that will take a long time and likely avoid more the more serious allegations in favor of those that can be more easily proved in a court of law. So I’ll just quote his analysis:

As people who followed my opinions about this case will know, I have always thought it more likely than not that Serdyukov would eventually face a charge but I have also thought it more likely than not that it would not be a charge that reflected the seriousness of what he had done. I have also always thought and I still think (as does Anatoly Karlin) that this case is very likely to end in a plea bargain.

The reason I have always thought these things is not because I have any real doubt about Serdyukov’s corruption and of his personal involvement in the corrupt schemes that have wracked the Defence Ministry under his watch (see my very first comment on this thread) or because I thought he was being protected by someone (see my second comment) but because personal experience tells me how difficult it is in these cases of high level corruption and embezzlement to secure a conviction. Again I would repeat what I have said previously, which is that the mere fact that Serdyukov’s brother is rich or that Vasilieva has a stash in her multiroom apartment, is not in itself evidence against Serdyukov that can be used in a Court of law. There has to be witness evidence and/or a paper trail directly linking Serdyukov to some or all of these corrupt activities, which the prosecution is in a position to say cannot be interpreted in any way other than as evidence of his guilt. Given that Serdyukov was presumably taking steps to conceal what he was up to, that sort of evidence almost by definition is going to be difficult to find.

It has not helped matters in this case that judging from media reports Serdyukov is being investigated by two rival teams of investigators – one from the Investigative Committee and one from the military Procurator’s Office – who appear much of the time to be in bitter rivalry and disagreement with each other. Conflicts of this sort invariably complicate investigations and can even wreck them completely.

What I would say about this case at the moment is this:

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Translation: Going on the Campaign Trail with Navalny

This about Politics, tagged , , , , was written by for on August 25, 2013

According to gazeta.ru’s Olga Kuzmenkova tagging him, Navalny has a popular style and likes asking resonant questions, such as why Russia, despite its petrodollars, only builds as many railways in a year as China does in a week.

“Where are my factories? Where is my Cosmos?”

“Gazeta.Ru” observed Alexei Navalny as he went about meeting Zelenograd voters.

“Gazeta.Ru” continues a series of reports, “One day with a candidate for mayor of Moscow”. On Thursday, the correspondent of the publication, along with the candidate Alexei Navalny, underwent three meetings with voters in Zelenograd. If the opposition does not withdraw from the elections by September 8, he will have spent more than a hundred meetings with supporters. The “Gazeta.Ru” correspondent explains how Navalny campaigns.

“I thought that after a 25 minute delay, the maximum I could expect would be rotten tomatoes … And you applaud me”, said Alexei Navalny when he turned up in front of those who attended the next voter meeting with. In the whole campaign, this was the first time that he had been late. The candidate for mayor of Moscow had been a victim of traffic problems: on the way to Zelenograd his car had got stuck in a “grandiose traffic jam.” “A bus crashed into a trolley bus”, said Navalny, who was clearly uncomfortable about having been forced to wait. “And then there was no trolleybus to Pyatnitskoy”, said one of the standing women, good-naturedly.

Navalny started his election speech with saying that for him Zelenograd is a special place. “Here, my mother was born; my grandfather is buried here; as a child, I regularly went to my relatives here and spent a lot of time”, said the candidate. Having achieved the first of approving nods from the audience, Navalny went set to work.

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An Examination of Navalny’s Trial and Conviction

This about Society, tagged , , , was written by for on July 31, 2013

The Western narrative on the Navalny case is that it was a selective and political prosecution on trumped up charges. I think that to a significant (but NOT full) extent that this interpretation is basically correct.

So given the paucity of convincing counter-narratives, I was extremely pleased to see that Alexander Mercouris, a British lawyer who closely follows Russian affairs, make a comprehensive case for why the prosecution’s case was actually quite a solid one in Alexey Navalny – An Examination of His Trial and Conviction.

I strongly believe everyone should read it, even – especially – those who are strong Navalny supporters and convinced of his absolute and unambiguous innocence. At the very least, it would make you think twice before making blanket statements such as that there was “no case” for theft. I’m afraid there was. There was also a clear legal-technical basis for charging him under Article 160 – a notion that I had mistakenly ridiculed in the past. That Mercouris managed to make me change my mind on this is a testament to his essay’s lucidity and legalistic virtuosity. He also argues that were this trial held under British laws, Navalny would have likewise been convicted.

This is not, however, to say that I agree with all the conclusions and reasoning in it; to the contrary, I remain at odds on the two most important points, namely that (1) the preponderance of the evidence wasn’t such that it could have been used to secure what was an incredibly harsh sentence by typical Russian jurisprudence; and (2) of its overall political wisdom. But there are good arguments to the contrary that Mercouris lays out and which are well worth considering and pondering over. Here is not the time to get into an extended debate – my own views and analysis I will further expound upon in a subsequent post. For now, Alexander Mercouris’ essay is reprinted without further commentary so that you can engage with it yourselves and draw your own conclusions.

Please comment at Mercouris’ blog.

***

ALEKSEI NAVALNY – AN EXAMINATION OF HIS TRIAL AND CONVICTION

On 8th December 2008 following a private meeting the Russian President Dmitri Medvedev nominated Nikita Belykh, a well known Russian liberal politician and former leader of the Russian liberal party the Union of Right Forces for the post of Governor of the Kirov Region in central Russia.  Belykh’s subsequent appointment set in train a sequence of events which on 18th July 2013 led to the conviction by the Kirov Regional Court of Aleksei Navalny, the well known Russian opposition politician and blogger, for conspiracy to commit embezzlement contrary to Article 160 of the Criminal Code of the Russian Federation.

Navalny’s conviction and his sentence of 5 years imprisonment, has provoked angry reactions.  In Moscow several thousand of his supporters protested near the Kremlin.  Scattered protests also took place in some other Russian cities.  The United States government has expressed its “disappointment” with the verdict.  The European Union has said the case highlights concerns about the rule of law in Russia.  The rapporteurs of the Parliamentary Assembly of the Council of Europe have condemned his 5 year sentence as disproportionate and have claimed that his prosecution is political.

Media comment at least in Britain has been equally harsh.  In an editorial suggestively titled “misrule of law” published on 11th July 2013, a week before the verdict, the Guardian claimed that Navalny’s prosecution was a device to silence a prominent critic of the Russian government saying that “….it goes without saying that the charges are bogus”.

Similar comments have appeared in the Times and in the Financial Times.

Navalny himself has claimed that the prosecution against him is politically motivated.  He has claimed that the prosecution against him betrays a fundamental ignorance of how business is conducted in a free market economy.  He has also claimed that the prosecution is entirely based on the evidence of three persons who have a personal grudge against him and whose evidence is unreliable.

Navalny’s criticisms have been taken up by others.  The charge against him is said to make no sense.  Yegvenya Albats, the editor of the Russian liberal magazine New Times, says his conviction spells the end of capitalism in Russia.  It is repeatedly pointed out that the case against Navalny was investigated previously but was then dropped.  That it was later resurrected is seen as proof that it is without merit and that the motive behind it is political.

It has also been pointed out that the case against Navalny was only resurrected by the Russian Investigative Committee at the personal insistence of Bastrykhin its chief whom Navalny has accused of illegally owning property in the Czech Republic.  Navalny’s prosecution is said to Bastrykhin’s revenge.

Support for these claims is said to be provided by certain comments made shortly before the trial by Vladimir Markin the spokesman of the Investigative Committee.

The purpose of this essay is to examine in detail the facts of the case and the conduct of the trial to determine whether any of these claims and criticisms are true.

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Translation: Why Didn’t Transparency International Reveal Russia’s Bribery Data?

This , about Society, tagged , , , , was written by for on July 28, 2013

Why was there no bribery incidence data for Russia in Transparency International’s international survey of 2013? Andrey Kamenetsky at Odnako connects the dots to argue that it was simply because the results were too inconvenient to serve as propaganda.

A Crisis of Zombification: How Transparency International failed on The Russia Corruption Rating

Dear Readers! In July there took place two major crashes in Russia. Both of them were very revealing, but only one carried a wide resonance: the “Proton-M”rocket accident. We shall now have a talk about the second crash, which was in its own way also catastrophic.

The puzzle hasn’t been solved

I’m talking about the unexpected failure of the now traditional fun and games ratings that annually “equates Russia with Zimbabwe”. One of the leading international human rights organizations that regularly publishes its corruption ratings, Transparency International, has this time not included Russia in its bribe-taking rating because of a “technical fault” caused by the receipt of research information that had not been verified for its authenticity. Because of this, a whole row of data has been removed from the process, and instead of the usual solid news about how everything is terrible in Russia, there has spilled out into the media a whole pile of claims made against one another by the organizers.

What makes this story piquant is the fact that all the interested parties are organizations of word-wide renown. The research data customer, Transparency International, has come down on its research agent, the international sociological corporation Gallup. Even more interesting is that as the conflict widens, their representatives are beginning to remember things amongst themselves and have even started to talk, which used to be considered quite indecent.

“Judging by the received data, the question was either misunderstood or incorrectly set by the company that undertook the research”, pointed out Transparency International Research Director, Finn Heinrich.

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Bribery in Russia has Either Recently Soared… or Plummeted

This about Society, tagged , , was written by for on July 24, 2013

Or neither. Well, isn’t this a useless post?

I am referring to the Global Corruption Barometer released by Transparency International a couple of weeks ago, which I covered at my other blog. For the most part, there were no surprises; the only really strange figures came from Taiwan, where 36% of people claimed to have paid a bribe in the past year. Otherwise, the results largely cut to popular perceptions and stereotypes of corruption in various countries.

The really bad thing is that this time round there was no bribery incidence data for Russia, not to mention eleven other countries – and China wasn’t included in the survey at all. I investigated this further, and was told that Russia’s results along with those of the eleven other countries didn’t pass Transparency International’s validity and reliability tests.

Enquiring further, I got the following answers from the GCB research team:

(1) Why didn’t Russia’s incidence of bribery data (as well as several other major countries like Brazil, France, and Germany) pass TI’s validity and reliability tests for inclusion?

Now in its 8th edition, we have several years of past data on these questions and have data from other surveys which ask similar questions of people’s experience with bribery. We can therefore use this data to identify where the results for a particular country are volatile over time and across surveys and therefore less reliable as a data point for that country. For 12 countries including Russia, the data gathered in this years GCB for the bribery question can be identified as an outlier when compared with other available data and was therefore excluded from the final report

(2) Would it be possible to get access to Russia’s bribery data anyway, with the caveat that those figures would have a lower degree of reliability and should not therefore be counted as part of Transparency’s official records?

I am afraid not. We take the findings of this survey very seriously as a reflection of people’s views and experiences of corruption. Given the importance of this data and how it can be used to inform the fight against corruption, we will not making available data that does not pass our validity and reliability tests.

Would it be possible for you to at least indicate whether Russia’s outlier this year was above or below the trend? It would at least give me some sense of comparative perspective should Russian polling agencies come out with their own bribery polls this year.

As we do not have confidence in the reliability of the data I can not provide further information on this to you.

Well, I tried. But the results for this year must remain a total blank. You are free to speculate whether there could have been any political motivations to that.

For my part, I will just say that this is a real shame since at this rate the next time we’ll get data for Russia from the GCB – assuming its data passes their validity and reliability filters next time round – will be in 2015.

So for now DR readers will have to be satisfied with a bribery incidence graph that only stretches to 2012. Let us hope that Russian pollsters move in to fill the gap left by the GCB sooner rather later.

UPDATE: Thanks to Fedia Kriukov (for digging up the article) and Moscow Exile (for translating it at The Russian Spectrum): A Crisis of Zombification: How Transparency International failed on The Russia Corruption Rating.

Please read it.  The author, Andrey Kamenetsky, pretty much conclusively demonstrates that the reason Transparency International didn’t include Russia’s bribery incidence data in their 2013 report was because it was lower than expected.

Corruption, The American Way

This about Society, tagged , , , was written by for on July 13, 2013

So apparently an Ambassadorship costs $1.8 million per post in the US.

In virtually any other country, even where the situation with corruption is quite dismal, such arrangements would be seen as unquestionably corrupt. And yet the US scores an entirely respectable 73/100 in Transparency International’s Corruption Perceptions Index (CPI), leagues above say Italy which gets 42/100.

The reason I mention Italy is that I was once discussing the question of corruption in different countries with an Italian. He said that what in the US is known as “political lobbying” would be treated as a criminal activity in Italy, and indeed in most of the rest of Europe. Hence why in the Med countries you get far more cases of corruption in the form of cash in envelopes. In the US that’s against the law, but that’s not such a big deal, because the law – or rather the absence of it – allows for the same thing, just in indirect formats (expensive dinners, contributions, astronomic speaking fees, stock performances superior to those of corporate insiders, etc). But that kind of corruption is “deniable” and hence respectable, whereas the direct kind is crude and distasteful, a defining feature of disorganized Third World countries.

In Italy, regulations against corruption and weaselly dealings in general are stringent. Now because Italians tend to corruption in general, either by nature or nurture, this means that the high incidence of such endlessly knocks against their corruption ratings. In the US, however, the factual “legalization” of much of what passes for corruption in Europe allows it to remain relatively unscathed in such international assessments.

There are many other such examples. Saudi Arabia, for instance, is insanely corrupt if you think rulers siphoning off billions of dollars off the oil budget is fundamentally illegitimate (as is alleged but never evidenced for Russia’s “mafia state” and Putin’s Swiss bank accounts). But it’s all quite legal there, which is why – hard as it is to believe – Saudi Arabia scores higher than not only Russia, but even Italy in the CPI.

So the solution is simple. Just legalize your corruption, and move up to the top in both the World Bank’s Doing Business ratings and soon enough in the Corruption Perceptions Index. Don’t forget to be slavishly pro-American in your foreign policy. Investors will love you for it. Well, maybe not, at least once said investors get to know you a bit better, but at least you’ll get glowing reviews from the Wall Street Journal and Transparency International. That’s how you become a made country in Davos World.

GCB2013 Released

This about Society, tagged , was written by for on July 10, 2013

Here it is. Or just skip the graphics and download the data in Excel here.

I can’t say I care much about most of it. Of course most people everything think corruption is “increasing,” because they are a grumpy lot.

What does matter is the number of people who report paying a bribe in the past 12 months. It is as close to objective measurement as you can get in a sphere of life as indefinite and necessarily opaque as “corruption.”

Below is a quick table summarizing the results from the most notable countries (no comment where it’s pretty much “as expected”).

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