News 14 Jan

President Putin’s visit to Bulgaria to bring pipeline deal, NPP contract

A new company is being created, in which Russia will own a 51% stake, to build a pipeline to carry Russian oil via the Bulgarian Black Sea port of Burgas and Greece’s Alexandroupolis on the Aegean, so as to bypass the congested Bosporus. It will pump 35mn metric tons a year, though capacity can eventually be increased to 50mn.

Atomstroyexport, Russia’s state nuclear equipment monopoly, has also been awarded a contract, estimated at 6bn $, to build two reactors for Bulgaria’s second nuclear power station in the town of Belene. According to Foreign Minister Lavrov, more agreements could be signed on Putin’s visit to the country, timed to coincide with celebrations of the 130th anniversary of the liberation of Bulgaria from Ottoman rule by a force led by Russia’s Tsar Alexander II.

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Annals of Resurgent Russia – It’s the Economy (in 2007), Stupid!

Twice a year the World Bank files a Russian Economy Report. The last one was in November 2007. Let’s look at its first chapter – “Recent Economic Developments”. It does what it says, i.e., condenses Russia’s economic situation in 2007 into a few pages of dense text, stats and charts.

First comes the summary:

RUSSIAN ECONOMIC REPORT – NOVEMBER 2007

Russian economic performance remains robust. Having grown by 7.9% (year on year) in the first half of the year, Russia is likely to post full-year GDP growth of over 7% in 2007. Output growth was driven by rising domestic demand, in particular, buoyant household consumption and business investment. On the supply side, sectors servicing the domestic demand (construction and retail trade) continued to boom. Manufacturing growth remains solid but is tapering off. The negative contribution of net exports to GDP growth is explained by the real appreciation of the ruble, which is making Russia’s exports more expensive abroad and imports less expensive to domestic consumers.
In a context of an economy growing close to potential, with high energy prices and large capital inflows, Russia faces two main challenges: inflationary pressures and rapid appreciation of the exchange rate. The most notable monetary development in 2007 is the surge in inflation. While it remained under control in the first quarter, inflation kept gaining momentum in the remainder of the year. Inflation reached 9.3% over the first ten months of 2007. Most likely, end-of-year inflation will reach 11 percent (Dec/Dec) compared to 9% in 2006 over the same period. The surge in inflation is explained by rising world food prices and by monetary factors. Large capital inflows pushed the balance of payment surplus to record highs and are becoming an important source of reserve accumulation ($450 bn). However, unlike oil revenues, capital inflows are not absorbed by the Stabilization Fund, driving money expansion and exerting upward pressures on the ruble. Given limited monetary instruments for sterilization and the current stance of monetary policy (that limits the pace of nominal exchange appreciation), reducing inflationary pressures is becoming exceedingly a difficult task.

The Russian government continued to enjoy fiscal surpluses. The federal budget surplus reached 7.1% of GDP over the first nine months of 2007. But the approved 3-year budget entails a fiscal relaxation that under the current oil price outlook would reduce the overall budgetary surplus to 0.2 percent of GDP by 2008. The amendments introduced to the budget 2007 law entail an increase in non interest expenditure that would bring the budget surplus down from 4.8% to 2.8% at the end of 2007. These amendments aim at increasing public investments in priority infrastructure and social sectors with a view of boosting growth. However, raising public investments might not be enough to close Russia’s infrastructure gap and drive sustained economic growth. Keeping up private investments and improving the efficiency of investments will be as important. In addition, the pace of fiscal expansion needs to be studied carefully to avoid exacerbating tensions between fiscal and monetary policies.

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Mailbag: Back from a Russian Century?

Four days and 50 reader views into our baby blog’s existence, we have been priveleged to receive a number of letters to our darussophileATyandexDOTru address. All of them deal with our Towards a New Russian Century? core article (which is, in addition, the most popular item on this blog by far – possibly because colleen was kind enough to link his winthrop88 blog to it).

The biggest critique of it, voiced by colleen and the letter writer DP, was my neglect of the topic of peak oil in my analysis of geopolitics in the next 20-30 years.

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Towards a New Russian Century?

EDIT 11/27/08: Since writing this, I have come to realize that peak oil is real and will play a major role in any future scenario, and far sooner than the other three themes I highlight here.

The twentieth century was, above all, a Russian century. Granted, Germany was the most important challenger Great Power in the first half of the century, while in the second the United States begun to assert itself on the world stage. Nonetheless, Russia, under its Soviet incarnation, was the key focal point of world history. It is hard to imagine a movement like Nazism arising in Germany, or indeed fascism in general, without the spectre of communism hanging over a country. Similarly, the US was only brought permanently out of its traditional isolationism by the Truman Doctrine – their pledge to “support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures”, or, in other words, to contain communism.

This article will be about Russia’s place in the world in around 30 years time. In particular, will it be able to reclaim its former mantle as a superpower? Does it have the potential to usher in a new Russian century?

Firstly, we must define what a superpower is. Let us assume that it is a state with a leading position in the international system and the ability to influence events and project power on a worldwide scale. Furthermore, it must be strong on multiple planes of power – not only in the military sphere, but also in ‘softer’ areas like the economic base and cultural influence.

(Chinese political scientists have developed a metric for state power called Comprehensive National Power. There is no generally agreed-upon method by which different components of power are weighted and totalled. Nonetheless, virtually all of them have the US leading the pack, with Russia, Japan, China, France, the UK and Germany following behind in a cluster.)

Today, the world’s only country with the whole plethora of attributes – economic, technological, political, military and strategic – that make a state a superpower is the United States. Nonetheless, there are important trends at work that threaten to undermine this full-spectrum dominance. We have identified the three most important of these as economic (re)convergence, exponential growth in IT and global climate change.

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News 10 Jan

Russian moves to ban tobacco advertising

MOSCOW, January 10 (RIA Novosti) – The Russian government has decided to completely ban tobacco advertizing, by signing up to a World Health Organization anti-smoking convention.

In its first session of the year, the government approved a draft law on joining the WHO Framework Convention on Tobacco Control (FCTC), which stipulates a ban on advertizing tobacco products.

The FCTC requires parties “in accordance with their respective constitution and constitutional principles, to undertake a comprehensive ban on all tobacco advertising, promotion and sponsorship within five years of the WHO FCTC’s entry into force for that Party.”

About time, considering that 70% of men and 30% of women smoke in Russia, one of the highest rates in the world, and that 300,000 people die from smoking every year in Russia.

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Welcome to Da Russophile

Da Russophile offers original analysis in our Core Articles and Editorials, records Russia-related News from an eclectic mix of media outlets with commentary and throws in some Flotsam and Jetsam (funny photos, videos or other light relief).

This is a response to what we see as the consistent and almost systematic defamation of Russia in the Western media. Is this because of unpleasant memories of the Soviet Union? A search for new enemies? A barely repressed fear of the East and the barbaric hordes that its vast plains harbor, buried deep within the Western psyche?

Whatever it is, we believe that truth will vanquish lies – no matter how hard liars try to supress, ignore or simulate truth. Hence this blog will go like a burning match into the darkness of fear and ignorance. It might not do much at first, but a match can ignite forests.

Is Russia’s economy nothing more than an oil bubble? No. The economy is driven above all by retail, construction and manufacturing. Is Russia blighted by endemic corruption on a scale comparable to Zaire under Mobutu? No. Russia’s level of corruption is comparable to that of the Czech Republic. Has Putin clamped down on democracy and human rights? Only a negligibly small percentage of Russians would agree.

Do you have a hard time coming to terms with the above claims? Yes? I’m not surprised, given the Western media’s embedded Russophobia. However, they are all well-documented. Consult my Top 10 Russophobe Myths.

Finally about the title. We consider ourselves as the polar opposite to La Russophobe, which is why we’ve called ourselves Da Russophile. La Russophobe hates Russia and Russians, which can be deduced from even a cursory glance at the crude and racist stereotyping that goes on in that blog (she even has the gall to argue Russia should have surrendered to the Nazis, who planned to exterminate 75% of them and helotize the rest). Da Russophile loves Russia and is committed to spreading an objective picture of it in the wider world.

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