Ukraine Predictions

Reprinted from Facebook (2017/12/31):

Geopolitically, 2015 will be crunch time for the Poroshenko regime. Short of massive Western support, a fiscal crisis is virtually certain.

How will Poroshenko deal with it? A new assault against Novorossiya can’t be excluded; military spending is rising to 5% of GDP. That’s higher than any industrialized nation bar Israel. Totally mad for semi-bankrupt country like Ukraine, unless it’s done for a specific, concrete purpose in mind. (The argument that it’sjust for defense against Russia is bogus. The DNR/LNR have no real offensive capability. The decision against invading Ukraine by Russia proper was taken back in April 2014 and since then the conditions for it have vastly deteriorated).

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Islamic State Rises

Reprinted from Facebook (2018/02/15):

Admit I was surprised to see ISIS take over a major Iraqi city as the Iraqi Army fled.

I realize the corruption there is gargantuan, but surely at least some of the $18 billion that it spends yearly on its military must have gone somewhere useful?

Anyhow, while Mosul and Tikrit might have fallen, and Samarra and Fallujah may well soon follow, Baghdad and the south should be safe. Not only is Baghdad a lot more Shi’ite than it was before Saddam, but a large bulk of the regime’s military assets are going to be concentrated there.

As usual in these types of conflicts, the frontlines should quickly align with ethnic/religious borders:

PS. I wonder how much of ISIS (Iraq) money and arms come from Saudi/Turkish/American shipments meant for their “good” counterparts in Syria?

PPS. Iraqi Army: $18bn budget, trained and equipped by Americans. Ukrainian Army: $2bn budget, trained and equipped by Soviets ages ago. Ukrainian Army still less ineffective.

Russia’s Game Plan in Donbass

Reprinted from Facebook (2018/02/14):

Quick piece I scribbled off for RIA:

First off, an elementary observation: Donbass is not Crimea.

Crimea features prominently in Russia’s historical memory, having undergone two epic sieges over two centuries. It was only given over to Ukraine as a pure formality, to mark 300 years since the Treaty of Pereyaslav that was to usher in Russo-Ukrainian unity, and the overwhelming majority of Crimeans have wanted back ever since Ukraine became an independent state. It hosted Russia’s Black Sea Fleet, and Ukraine hadn’t shied from using it as a lever to extract more favorable gas terms from Russia. Finally, though it needs major investments to lift it up to the level of neighboring Krasnodar, once that happens it can be reasonably expected that it will stop being a net drain on the budget and will become the major tourism center for all Russia that it was during the Soviet era.

Donbass has no such significance in the Russian cultural imagination – one doubts that a majority of Russians can find Lugansk, let alone Sloviansk, on a map. It was always part of Ukraine, or to be more precise, Novorossiya – though separatism is not entirely foreign to it (recall the short-lived Donetsk–Krivoy Rog Soviet Republic). Though it is nominally rich, the coal mines – the mainstay of Donetsk’s economy – are antiquated, and unlikely to survive far into the future; and in any case, they are not much use shorn from the neighboring industrial powerhouses of Kharkov, Dnepropetrovsk, and Poltava, where separatist sentiment is much more subdued relative to the Donbass. Though the latter provinces might support a federal Ukraine, they will almost certainly be very much against joining Russia outright. And Russia itself doesn’t need the Donbass, especially by itself.

Now, bearing this in mind, I will draw two conclusions:

1) Any help or coordination that Russia provides to the separatist militias in Donbass and other cities in the east isn’t a prelude any unification, as in Crimea, but is meant to exert pressure on Kiev to agree to wide-ranging federalization. Ukraine was “lost” to the Eurasian Union when the Maidan overthrew Yanukovych in their coup. The plan now is to win at least half of it back.

2) Short of truly massive bloodletting on the part of the Kiev regime – and I do not think it will come to that, though I have learned not to be surprised to the downside by those folks – the Russian Army will NOT intervene. The ball will be in Kiev’s court. It can either leave the separatists in control, and they will proceed to carry out referendums that Russia could then exploit to cajole Kiev into federalization. Or it will – inevitably, violently – try to wipe out the “terrorists,” which will totally alienate eastern populations that are already very much unhappy with it. Given the mass defections to the separatist cause amongst the eastern siloviki, and the fact that Kiev can only truly rely upon Western Ukrainian units, the chances of success are low. If it were to pursue this route, it may well truly get a civil war on its hands, as historical Novorossiya rises up against the regime.

Translation: Russia’s Growth Rate may Plummet in the Next Decade

According to several experts, Russia may be facing a period of protracted low growth rates now that its GDP per capita has recently exceeded $16,000. Vedomosti’s Olga Kuvshinova has the details.

Russia may Experience Minimal Growth in the Next 10 Years

A variety of reasons are brought up to explain the Russian economy’s slowdown to 1.6% growth in the first quarter by experts and officials: A stalling in investment, private consumption, weak external demand. But there is a one factor that is more critical, according to Ivan Chakarov of Renaissance Capital. It is, in fact, quite typical for quickly growing economies to slow down once they exhaust their “advantage of backwardness” – that is, the possibility of obtaining high profits thanks to low costs. After this, countries collide against barriers to growth, falling into a so-called “middle-income trap.” This is precisely what is occurring in Russia now, according to him.

This trap is typical set off when a country’s GDP per capita approaches $16,000. This year, according to Chakarov’s calculations, it will constitute $16,016.

The countries of Western Europe slowed down in a big way in the 1970s, South Korea – in 1995, Singapore and Hong Kong – at the start of the 1980s, Taiwan – at the end of the 1990s. All of these cases, according to Chakarov, were simultaneous with the crossing of the $16,000 per capita mark (in 2005 prices).

Russia is the first of the BRICs to fall into this trap, notes Chakarov. China will hit this problem in 2020, Brazil – in 2024, and India – in 2038.

Countries that fall into this trap typically lose almost two thirds of their previous levels of yearly growth, says Chakarov, citing research from the National Bureau of Economic Research (NBER) in the US. As regards Russia, this could mean that our previous rate of growth of approximately 4.5% (adjusting for the recession in 2009) may fall to 1.6% – that is, exactly the same as the figure for the first quarter.

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The Russian Cross Becomes A Hexagon

One of the standard memes about Russia’s demographic trajectory was the “Russian Cross.” While at the literal level it described the shape of the country’s birth rate and death rate trajectories, a major reason why it entered the discourse was surely because it also evoked the foreboding of the grave.

russian-cross

But this period now appears to have come to a definitive end. Russia’s population ceased falling around at about 2009; in the past year, it has increased by over 400,000 thanks to net immigration.

Meanwhile, against all general expectations, the birth rates and death rates have essentially equalized. Whereas in 2011 natural decrease was still at a substantial 131,000, preliminary figures indicate that it has subsided to a mere 2,573 for this year. It could just as easily turn positive once the figures are revised. For all intents and purposes, the “Russian Cross” has become the “Russian Hexagon.”

russian-hexagon

This is a momentous landmark in many ways.

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Da Russophile’s Predictions For 2013

I just remembered I’d made some in 2012. It’s time to see how they went, plus make predictions for the coming year.

Of course I failed to predict the biggest thing of them all: The hacking that made me throw in the towel on Sublime Oblivion (remember that?), but with the silver lining that I could now split my blog between my interest in Russia and my interest in many other things. After all tying my criticism of the Western media on Russia with topics like climate change and futurism and HBD was never a very good fit. Overall I am very satisfied with the new arrangement.

Predictions For 2013

(1) Russia will see slight positive natural population growth (about 50,000) as well as significant overall population growth (about 400,000). Do bear in mind that this prediction was first made back in 2008 when a Kremlinologist who did the same would have been forced into a mental asylum.

(2) The life expectancy will reach 71.5 years, the total fertility rate will rise to 1.8. The birth rate will reach a local maximum at about 13.3-13.5 (it will then remain steady for a couple of years, and then begin to slowly decline) while the death rate will go down to about 13.0-13.2). Net immigration should remain at about 300,000.

(3) Putin will not be overthrown in a glorious democratic revolution. In fact, things will remain depressingly stable on the political front. As they should!

(4) Currently Russia is one of Europe’s most corrupt countries. While it’s certainly not at the level of Zimbabwe, as claimed in the Corruption Perceptions Index, it’s not like having the Philippines, Romania, or Greece for neighbors on an objective assessment is anything to write home about. I believe that Russia missed a great opportunity to undermine the rotten culture of official impunity that exists there by refraining from prosecuting former Moscow Mayor Luzhkov with his Montenegrin villa, billionaire wife, and his VP Mayor Resin who wore a $500,000 watch following his dismissal in 2010. Today a similar opportunity presents itself with blatant evidence of large-scale corruption on the part of former Defense Minister Anatoly Serdyukov and his female hangers-on (see the comments threads here, here at the Kremlin Stooge for details). There are conflicting signals as to whether charges will extend to the very top, i.e. Serdyukov himself. Having incorrectly anticipated a Luzhkov prosecution, I am now once bitten, twice shy. So I’ll take the lame way out and call it a 50/50.

(5) Needless to say, the economy remains as uncertain as ever, and contingent upon what happens in the EU and the world. In the PIGS the economic contraction is finally starting to slow down, but Greece is something of a disaster zone, and Spain is raiding its pension fund to keep afloat. If this becomes unsustainable this year then the EU member states will have to make some fundamental choices: Fiscal union? Or its division into a “Hanseatic” core and Mediterranean periphery? Which of these three things will happen I find impossible to even begin to foretell… As applied to Russia, under the first two scenarios, it will continue plodding along at a stolid but unremarkable pace of 3-4% or so GDP growth; if things come to a head (as they eventually must) and Germany decides to toss the Latins overboard, then the divorce I assume is going to be very, very messy, and we can expect Russia’s economy to fall into recession.

(6) No special insights on foreign policy. Ukraine may join the Customs Union; however, I suspect that’s more likely to happen in 2014 or 2015, as Yanukovych faces re-election and has to make a choice between continued prevarication between it and the EU, and encouraging his Russophone base. The creeping influence of the Eurasian Union will likely keep US-Russian relations cold; whatever the current disagreement that’s talked about (Magnitsky Act; Dima Yakovlev Law; Syria; Libya…) I lean to the “Stratfor”-like position that at heart the US just does not want what it sees as a “re-Sovietization” of the region – which the Eurasian Union is, in geopolitical terms, if under conditions much softer than was previously the case – and will thus be driven, almost by force of instinct, to oppose this trend.

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Blast From The Past: What Jim Rogers Said About Russia In 2003

This guy isn’t as clear-headed as Eric Kraus, is he? But does have company in the form of Andrew Miller, Jeffrey Tailer, “Streetwise Professor”, and Ed Lucas. H/t Mark Adomanis.

—– Original Message —– 
From:
 Dmitry Alimov 
To:
 [email protected] 
Sent:
 Friday, September 12, 2003 11:28 PM 
Subject:
 Conversation with Jim Rogers – HILARIOUS

Jim Rogers, a famous international investor and writer attended HBS this Wednesday. In his speech, he badmouthed Russia (in his usual style) and quoted several “facts” that were completely bogus. As you would expect, I could not let him get away with lying about our country and publicly disputed his factual claims. He basically told me I was a moron and left. In response, I sent an email to him with facts and references disputing his claims (sending a copy to my HBS classmates). What ensued is quite amazing – read attached emails. Start with the first email and read from the end (my original email), then read his response and finally my rebuttal in the second email. This will be worth your time I promise. This has already been circulated all over HBS, several other universities and in the investment community in New York. Since this is already in public domain, feel free to forward on.

Dima
__________________________________________________

Dear Mr. Rogers: I am the “lad” who disputed your factual claims with regard to Russia today. First of all, I would like to thank you for speaking to us at the Harvard Business School.  I think I speak for my fellow HBS students when I say that we enjoyed your original views and interesting stories today. However, I must address the unfortunate reality that your facts about Russia are plain wrong. You made three principal inaccurate claims today – I will deal with all of them in sequence.

Claim #1.  People are leaving Russia

Wrong.  In fact, according to Financial Times, your favorite newspaper, Russia turns out to be the second largest recipient of immigrants after the US (see attached FT article). Oops. While it is true that Russia’s population is declining but the reasons for that have nothing to do with people leaving the country, it is things like low birth rate (only 1.2 per woman), which is an issue that confronts many European states.

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Why Obama Will Sooner Win

Ten months ago I bet a symbolic $10 on a Republican win. According to elections models and the bookies, it’s more likely than not that I’ve lost it.

Not that I’m saddened by this development of course. (That said, if the economy slumps sharply in Q3, then a Romney win becomes entirely possible).

Blast From The Past: What Andrew Miller Predicted About Russia In 2000

This guy Andrew Miller used to be The Economist’s Moscow correspondent. This is his prediction from 2000. I also imagine he’d get on splendidly with K.F./Keif. No further comment is necessary. (h/t Patrick Armstrong)

JRL 4331
#9
From: “andrew miller”
Subject: The Gathering Storm
Date: Sun, 28 May 2000

Topic: The Gathering Storm

Title: The Oblast of Russia?

… New predictions: Vladimir Putin will not leave power in 2004 or 2008 no matter the results of any election. He will die in office like Brezhnev unless he is ousted like Krushchev in favor of someone like Brezhnev. Within five years, there will be no independent media in Russia (as if there is any now, but according to a recent New York Times editorial in the JRL, there is, so I guess there must be; just wish The Times had told me which kiosk to look in…) Within five years, Russia will absorb Belarus and Georgia (a revised constitution will eliminate the two-term limit for presidents; even if this is not done, Russians will reelect, as that term will come to be defined, Putin as many times as he likes notwithstanding the constitution). Russia will not allow Ukraine to join NATO or the EU and may, within 10 years, forcibly reincorporate Ukraine into the Russia fold if it can substantially improve its military during that time, which it will be able to do only should Western or Asian nations resume lending it piles of cash. In any case, it will do anything it can to prevent such a thing.

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List Of Estimates On Fraud In Russia’s 2012 Presidential Elections

This post is a follow-up to a similar one for the 2011 Duma elections. It contains an extensive list of blogger, pundit and “expert” opinions on the extent of fraud in the 2011 Duma elections. Interspersed among these opinions and analyses are results from federal opinion polls, election monitors, and other evidence.

In general, it seems we can identify three “theses” or “clubs.” The 0% Club holds the idea that falsifications were non-existent or minimal; it is advanced by Kremlin officials and supported by many opinion polls. Its polar opposite is the 15% Club, which is – unlike in the Duma elections – now only claimed by opposition forces and some liberal and  Western media outlets. The 5% Club tends to arguee that Putin got a solid majority with some 56%-60% of the vote; almost all evidence converges to this figure. Most of the systemic opposition and arguably most Russians belong to this club.

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