Tuesday, May 23, 2006

The proof of pudding

The proof of pudding is in its eating. The proof of real freedom of press is in the level of knowledge readers have. No matter how much “democrats” yell that in the West the press is absolutely free, it takes only one conversation with a person who regularly reads what Western media writes about Russian politics to realize – the person knowledge is either outright wrong or very distorted. Take, for example, Owen who posted a comment on my blog. Owen writes:

I think that making a law kicking out foreign NGOs and disallowing foreign money is a pretty good step towards tightening down on a country's civil society.

How did she/he come to such ludicrous conclusions? Didn’t “free and unbiased” press write about it?
The law was about making NGO (not only foreign NGOs but all of them) activities transparent. It means stating where your money comes from and on what exactly projects you spend the money. What kind of activities should a foreign NGO lead that the possibility of openly and honestly answering the question, “Who gives you money?” is regarded as “kicking out” of the country. I bet Owen would never find a single newspaper article in the “free” press that simply stated these facts.

Another good example of “free” press objectivity is covering Russian-Ukrainian natural gas conflict. I bet nobody gives me a single link to any article from any “respectable” Western news source that mentioned the following facts:

- Since 1996 Russia stopped supplying natural gas to Ukraine SIX times. Reasons? Bad debts and gas theft. The usual period of no supply was 2-4 days. Ukraine was wriggling but paying. Also it never siphoned off European gas from its pipes. “Free” Western press wasn’t even noticing those conflicts. The last conflict was different because Ukraine started stealing European gas. In the absurd world of “free” press Russia was accused as an unreliable partner and as a blackmailer.
- Ukraine asked Russia to introduce market prices on gas not the other way round.
- Negotiations with Ukraine started in March and first Russia asked for the price 130 (to be bargained down).
- Ukraine sabotaged negotiations. Putin, Medvedev and Miller told about it many times but “free” press didn’t hear them. E.g. Gazprom delegation could come to Ukraine for a PLANNED round of negotiations just to find out that NOT A SINGLE high ranking official is in Kiev by the time – too busy. Gazprom was asked to talk with interns.
- Ukraine passed the 2006 budget based on $65 per 1000 m3 prices. When Gazprom said, “Hey! We didn’t agree on that price!” Ukraine immediately started a PR campaign – “Evil Russia uses gas as a political weapon! It revenges for Orange Revolution!”. I call this “OJ Simpson tactics.”
- And at this point the “well covered” scandal began. Ukraine says, “We have the budget and we won’t change it. Agree to $65 – you have no other choice”. Gazprom, “Our price is $130. This is a subsidized price as Europeans pay $230 for the very same gas.” Ukraine, “Ok, ok. $70 and this is our final proposal. Take it or leave it.” Gazprom, “We will stop gas supply.” Ukraine, “You won’t dare. We’re pro-Western now. Europe and America will punish you if you doing that.” Gazprom (really mad), “Ok. Our previous proposal is nil. If you don’t want privileged price then you should pay market price. $230, that is”. Ukraine, “Bloody murder! Blackmail! Intimidation! Imperialistic pigs! Mr Bush, please defend us from the tyrant!”
- January 1, 2006. Gazprom stopped supplying gas to Ukraine. Ukraine did what it never did before – it started stealing European gas.


yas said...

Could you please also comment upon the prohibition of operation of foreign financial institution on Russian territory. Why banks ought to report anyone with more than 10,000 dollars on the account. Why you cannot freely transfer money abroad in the amounts you like with the frequency you like without being put under invistigation by the tax people? Ok there were exchange controls in Europe as well, but that was at the Bretton Woods time with fixed exchange rate, and as far as I know the rouble is freely floating.
And now concerning the free press; Today a journalist that compared Putin with a "phallic symbol of Russia" is charged with the insult of a political figure. Russian Prosecution has seriously nothing to do but going around and arresting people. What free press are we talking about?
I agree with you upon the Ukranian matter....

Z said...

I agree with you so much, Konstantin. Ukraine played the "I-am-a-good-friend-of-Uncle-Sam-and-the-free-West" game in a very "childish" way. President Putin mentioned that even in Soviet times the Soviet Union was carrying out its obligations and no one complained or talked about "energy threat", blackmailing, and other terms that had suddenly become FACTS during the Russian-Ukraine gas standoff!
I searched, in vain, through the web for anything other than "Russia is punishing Ukraine", "Russia is using its energy weapon"...etc
P.S Ukraine was not stealing European gas, remember?It was "lost" in the pipes somewhere in Ukraine because of Russia!!!!!!! And the hilarious thing is that the "West" bought this story although they knew who was stealing their gas, and they asked Russia to maintain its previous level of gas flow! Ukraine has got itself some really "faithful" friends...he he he he
Yes, it is free media, the one in the UK that was banned from publishing Bush's plan to bomb al Jazeera office in Qatar during the war (they said it was a joke, yet they banned it), and it is free media that calls "roof collapse" in Russia: "Corruption" and the same incident in Germany "tragedy"!

Anonymous said...


There is no prohibition on foreign banks in Russia. They just have to open a bank in the same way Russian banks do and obey Russian laws.

Rouble is not free floating, and there are some kind of controls, which will go away completely mid this year. Transactions over 10K are reported to the authorities everywhere in the world, and practically there is no problem at all with transfering money to/from Russia.

For free press, in case you were paying attention, journalists are routinely harassed by the authorities in the US and West, which does not prevent the West from talking about "free press".

And finally, to this journalist: the story about this journalist itself showed up in many Russian news outlets. Does this sound like free press to you?

Guy is not arrested, but charged with an insult to a public figure by local authorities. In order for the trial to go through (and the maximum penalty is some sort of monetary compensation), independent experts must certify that insult took place and, most important, Putin himself must agree for the case to go through. Both are unlikely to the extreme, so in the end this story itself is just white noise.

Anonymous said...

Firstly there is a prohibition of the foreign banks operation in Russia, and the issue is the major dispute between Russia and the US, in the question of Russia's admission to the WTO. In fact all the financial institutions that bear foreign names are russian limited companies that were created by big banks to trespass the legislation. They are separate entities from their establishers and are not under direct jurisdiction of the paternal companies. The biggest problem with this is that they cannot operate with the capital as freely as the rest of the world does. It is interesting to note that other foreign companies can operate in Russia without creating something like OOO"BP" or ZAO "JP Morgan Chase" (when it was working for the Russian government").
The question here is not about following the national, as it is naive to suppose that if created they would follow legislations of foreign countries (Russia has never expereienced extraterritoriality), the main concern is that the Government would lose control on the financial activities of the population. I don't really udersatnd why they have to mislead the public by saying that foreign institutes will not follow russian legislation and try to sell the idea that russian banks are better as the money is protected by the Government insurance ( again the sums of no larger than 300.000 roubles). The fear that Russian people would to foreign banks is probably justified as I have no doubts of which bank would I trust if foreign banks are allowed.
Secondly, rouble is the free floating currency, oherwise we would not see the exchange rate changes several times a day, therefore the exchange controls are totally unjustified. Everywhere in the world there are messures to prevent criminals from loundering money in foreing banks accounts, however to impose exchange cotrols to beat this is an approach comparable to using ground-air missile to kill a fly. Really, why should I get an authorization from the bank if I want to take with me more than ten thosands dollars in cash?
Everywhere in the world banks are willing to know their clients and it is not the case that deposits of 10K necessarily have to be reported, almost every single household in Western Europe would be under invistigation. This is another attempt by the government to stick their long noses into private affairs of the individuals.
And now the free press. As far as I know there is no single TV channel without the share of the government (it is possibly the largest investor in the world), and hence without control of the government. There was the Komersant publisher that was independent, but Berezovsky was forced to sell his share in the busines and the publisher is undergoing same shadowy change of hands as Uganskneftegaz did before it ended up in the governmentally controlled Rosneft. Have you hear that its tax debts were cut to virtually nothing as soon as it was acquired by Rosneft, hm , one may wonder why did Khodorkovsky got prosecuted if the taxes are no longer significant to the government.
Don't get me wrong here I am not some anti- Russian activist, in fact I am delighted that the country is recovering from deep crisis left by the communism and the idea that we are acquiring international respect and have an increasing say in international politics really make my heart tremble. I am just seriously concerned by with government's actions that try to restrict the activities of individuals and try to control everything and everyone. The most scary thing is that Russians simply take what is happening as perfectly legitimate. There was no a single protest or an article( to the issue of the freedom of press) that critisized the reform of regional elections. This is a separate issue, but for godness sake the guy just decided to take more power to himself (not mentioning his toy party aproval) and no one inside a country deared to challenge this. Really people were electing there local governers and now they gave president the power to remove them as it pleases them. Don't tell me about the neccessity of the candidates approval by local parliament as it is no more real than our federal parliament. Why people should trust him to decide who is a better governer in this or that region. Ok of the people do decide so, fine, but who ever bothered to ask them? Referendum is something unheard of in today's Moscow. There is no legitimacy in this desicion to talk about, but even from the moral point of view before being elected he should have stated was he going to do, and the next president would have to come up with the full list of governers that he is going to appoint as the power to decide who is to govern has now been delegated from the people to the government.


Anonymous said...


All in all your interpretations are rather biased and not exactly how they are seen by Russians.

The difference is in perspective. For whatever reason you are hostile to Putin and all levels of Russian government, whereas Russians are not. To be fair, the Russian government has low approval ratings but those are due to the lack of efficiency and neo-liberal economic policies it conducts. "This guy" is a democratically elected president who enjoys consistently high ratings, morever, traditionally, more people vote for the president than in any other elections and president is held responsible by the people for whatever happens in the country.

Funny that given your views you talk about (more direct) democracy and referendums in Russia. Russia has a socially conservative and economically leftist population. Putin is far more liberal than the moods of the majority. In this light, first of all, population is statist, secondly, all privatizations of the 90ies are illegitimate, sense there that Khodorkovsky, Berezovsky, Yetlsin and their ilk should be in jail, and finally, your distaste for state ownership is not shared by the majority. In public perception Russia is not recovering from the "deep crisis left by the communism", but rather from haphazard neo-liberal reforms of the 90ies imposed on Russia by the West and country looting that followed. Western reforms failed spectaculary and Russia still did not reach the ecomomic output of the late communist era and even in the late 80ies ("zastoy" times) economic growth was at 4-5% per year.

Regional governors: your assertion that there were not a single article about this is plain not true. The same for the assertion that current procedure is somehow undemocratic. In current form the party that got a majority in the region suggests a governor, who then is submitted to the president and then approved by the regional parlament. Compare this to, say, France or Ukraine were governors are directly appointed by the president. And think about poor people of the UK who are deprived of their right to elect a prime minister.

Free press: there are plenty of channels w/o government ownership, including regional, specialized, international -- Euronews, BBC (BTW, another news outlet controled, by your definition, by the government), CNN, etc. It's not direct government ownership, but Gazproms' and does mean government control. Witness Ekho Moskvy as an example. That is one of most anti-Putin and anti-goverment radio stations, yet it also owned by Gazprom. Oh, and Berezovsky was not forced to sell his share in Komersant. He tried to stir anti-Putin sentiment through turning Komersant into propaganda outlet, but this only led to the enterprise bleeding money. Finally he bailed out.

Banks: it would be ill advised to put money to the bank directly owned by the Western country. The West has a long history of politically motivated money confiscations and using economics for political gain. And given the fact that US dominates foreign policy decision making in the Western world, one McCain should be enough to freeze or take over any specific assets in the bank. See Iraq, Belarus, Cuba as cases in point.

Bank issue is not about people or government controlling people, but about fair competition. Foreign banks have more ready access to the capital than Russian banks, and unfetered access of the foreign financial institutions would mean that Russian financial sector will be supressed.

Once again: everythere transactions over 10K are reported, but nowhere (and not in Russia) it means authorization by the authorities or automatic investigation. Russia is not any different in this respect than any other country.

And, as I said before, rouble is not a free floating currency, but will be shortly. Many of the limitations are gone in the last years and the last ones will be gone in the few months. Dollar crisis is definately helping: more and more foreign trade is done w/o intermediary conversion to dollars.

Anonymous said...

And as I said earlier rouble is a freely floating currency, even though the government tries to conrol it through monetary policy.
I don't really understand are you speaking with such confidence that transactions of more than 10K are reported everuwhere in the world. Are you an expert on international financial transaction legislation? Well I can tell you with certainty that at least in the UK, even the anti money loundering legislation does not set an automatic threshhold after which the transaction is reported as suspicious. Instead banks try to get known their customers before knocking them out to the police. And it is clearly stated in the customs declaration that if you are exporting more than 10K in cash you have to provide an authorization from the central bank (this is fact).
Its true that in the UK the prme minister is not directly elected, but it is ridiculous to suppose that when voting for this or that party people don't know who is going to take the office. The leader of the party is decided prior to the election. Victory of New Labour in the past years was due to the popularity of Blair and not of the party itself. If the leadership of a party is changed during office, this will shortly be followed by the general election, so people in fact know who are they voting for.
"Compare this to, say, France or Ukraine were governors are directly appointed by the president"-- you can't be serious in giving Ukraine as an example of political structure, due to the complete abscense of the leter especially after the orange revolution.
And I would like to remind that France is a utilitarian state that is built around the central government whereas Russia is a federative republic ( Russian Federtion), which is suppose to mean a greater degree of self governance of regions.
Before the 2004 election Putin did not mention that it was in his intention to strip Russian people of power to elect local governers. Now in my personal opinion it was an abuse of trust given to him by the people as he should have called for a referendum in such important matter. WellI know you can say that these are all the short commigs of the representative democracy, but the imortance of the issue clearly requires a call for peoples opinion.
Well ok, the privatisation of the nineties is a tricky issue and maybe the tycoons such as Berezovsky and Khodorkovsky do indeed deserve to be "seated" but then why not such people as Abramovich or Friedman? Strangely Russian prosecution service seems to be very selective in its targets. Does it mean that if people cooperate with the government one can never suspect them in doing something illegal while those who directly oppose the government must, must have cheated?
Now, the banks. Banks are private entities with diverse ownership and by no means they are owned by foreign countries. Only if funds are on the territory of a certain country they can be frozen by the governemnt of this country, so I assure you it is quite impossible for US to freeze funds in foreing banks which are operating on russian territory (as I mentioned earlier they are all subjects to local laws). If US was so allmighty as you describe it I guess Switzerland would experience the coldest financial winter of all. And what Russian financial sector really lacks is some healthy competition from abroad. In Russia there are around thousands banks of various sizes and all over the world the figure doesnt usually exceed twenty including regional banks. Such concentrated market provides stability which Russian financial sector really requires.
If the majority of Russians support Putin it doesnt justify his poliics as neglecting wishes of the minotity is way too dangerous ( John Stuart Mill). Russian revolution is an example when the wishes of the majority ended up in a catastrophie.......yas

Anonymous said...


Till I can have an account in roubles while being in US or Russia can sell oil and gas in roubles, it isnt't.

No, I'm not an expert (not that it prevents me from having an opinion), just talking from Russia and US experience. Guidelines are the same across the world, but actual implementation is different you are interested in this, you can check wiki page on money laundering. Quick googling reveals that UK has at a tune of 200K/year suspicious activity reports on financial transactions. I don't see principal difference in UK's wink-wink-nudge-nudge style of "banks try to get known their customers" or Russian and US rule of reporting transactions over certain threshold. Does it matter who exactly the Big Brother is?

For political systems, point is that, say, EU countries have different setups and the current system in Russia is no way unique nor inherently undemocratic. Russia as a federative republic is something imposed on the country by Yeltsin, however, even this system does not imply _direct_ elections of the governors. Ideal organization for Russia in my view is unitary state of the Russian regions plus 4-5 national autonomous republics.

Did Blair mention Iraq war when he was elected? Do British people deserve a referendum on such important matter? As for Russian referendum on governors, as you rightly noted, there were no protests and Putin approval ratings did not suffer. Sounds to me like people were fine with this decision. BTW, do you also think that Russians should be given a chance to a referendum on such important matter as direct access of foreign banks to the Russian financial system?

On Khodorkovsky: the guy has illegitimate property, gets to extract _public_ oil and reap _private_ profits and has this arrangement only because the government handed this property out to him, suddenly opposes the government that is the only entity that protects him from the people? Very wise. I'm guessing that Haliburton would also got all those no-bid contracts if only it opposed the government. Or not. After Yeltsin 20 or so people got to own 60% of Russia's economy. I fully agree with you that Abramovich and Friedman should go to jail, too, but calculation seemed to be that it will have too destabilizing effect on the entire economy. Politics is the art of the possible, you know.

The US government is known for inventing and changing the rules as it sees fit, so suspicion given the current propaganda campaign against Russia is not far off. Did you notice that YUKOS (entirely Russian company) tried to file for bankruptcy in the US courts?

On banks I tend to believe Russian experts. If even the free marketeer minister of economy says that it is too early to directly open up financial markets to the foreign banks, so be it.

Once again, we have a different perspective. Russian revolution is an example how not listening to the wishes of the majority ended up in the catastrophe. Majority did pretty well afterwards, while "minority" ended up in the dustbin of history.

Anonymous said...

On money again:
Well, obviously there is control for the financial activity of the population everywhere especially following the recent war on terrotrism, I am only sayin that in Russia the control is in hands of too enthusiastic people, who really are willing to know everything about your money matters, and often this private details of yours can later be used to demand a bribe from you. Don't tell me that you have nothing to fear if you didn't do anthing wrong, unfourtunately in Russia it is not the case, as a prosecution can come up with a charge against you in a split of a second. So, really, even a you are saying US has simlar 10K threshhold, the actual law enforcement cannot be compared.
When I see a polceman in UK I generally tend to feel safer, when I see one in Russia I am starting to worry of what can he come up with to get something out of me( I mean something tangible fnar-fnar).
The Iraq war is a part of foreign policy of Blair's cabinet. He maybe desliked for this but the population has never in history participated in the foreing policy of the country. Unlike Putin, Blair is following the rules of the game and doesn't try to change them. I don't think that in UK Blair in fact could change the way the MPs are elected even if he wanted to. But russian presidents is changing the rules of the game while he is playing, and the major rules guide is the Russian constitution. I don't think it is a fair thing to do. UK there were some corrupt governers that Putin wanted to replace, but I am sure there must be some legal procedures to this without changing the entire system.
For what you say about the unitary state as an ideal model for Russia, I think russia is way to big to follow this model. A lot of regional backwardness is due to the Moscow- oriented system, and it would be much more efficient for every region to pursue their own model of development.
The Yukos that was suing for bankruptcy in the US court was a US registered company. Why would it need to sue for bankrupcy in Russia if it was the major goal of Russian Government? And after Uganskneftegaz was sold with huge debts to a certain ooo Baikal something,,,, the next day this ooo was taken over by rosneft, and soon courts voided all the tax debts.
Ok the politics is the art of possible, but when a guy buys a football club and invests there hundreds of millions (everyone knows this money belong to Russian people)something is really going wrong. The Abromonich's arrogance indicates clearly state's dependence on him ( particularly at times of elections).
The major problem in Russia today is the population's reluctance to participate in the political life of the country. People just tend to accept everything that happens to them. And this is a really dangerous syndrome as many revolutions indicate that Russians' patience tends to run out one day, with quite disastrous consequences. When regional elections were abolished there was no single protest, noon bothered to go out and protest. Cinsider recent events in France, some minor alteration of the labour law caused demonstrations nationwide.
You must really be an optimist to argue that the majority did pretty well after Russian revolution. Really following Putins argument that the dissolution of the USSR was the major geopolitical catastroph of the twentieth century I would rather say that it was not a dissolution but its creation that was a catastrophe.

Anonymous said...


You consistently point issues that are pretty low on importance pole for Russians but are touted by Western media in the worst possible spin, Tsotne Bakuria style, KGB officers in leather and Kalashnikovs. I think the problem is that reporting on Russia is done from Western big business or geopolitical perspective and real people's story is lost.

Really, the government has better things to do than control everything. Realistically, it's not a problem. Problem is corruption (thanks to Boris) and private entities using the system against other businesses. Unfortunately, there seem to be no quick fix.

Note that Putin's version of regional governors election does not contradict the constitution, and Putin did not break any rules. There were no protests exactly because the issue was not important to the population and consensus between elites had been reached, as opposed to the media's "authoritarian" spin.

Federal organization did not solve the Moscow problem nor reasonable unitary system would hinder regions' development.

You are arguing against any money export controls and now outraged by Abramovich investing money in UK. A bit contradictory isnt' it? Abramovich in all likelyhood is a front man for Yeltsin and his family and as I understand, democrat Yeltsin bargained with Putin for immunity for him and his family when he started propping Putin.

Russians understandingly reluctant to be involved in politics after Yetlsin used tanks against them with and rigged presidential elections with West blessings. Nevertheless for the issues that are important, namely: social benefits, pensions, elites priviledges, etc there are often pretty big protests. Unfortunately, those protests are of the wrong kind from Western POV and are not reported in the media.

Russians (who supposedly suffered from the revolution) view it 57% positively, 16% think that it slowed country's development and only 15% view it as a catastrophe.

I'm sure that overwhelming majority would agree with Putin perestroyka/privatization as catastrophe (otherwise he would not have said it in his speach).

Anonymous said...

Yes indee i am arguing against exchange controls and I find A's arrogance as overwhelming, but I really dont find it contradictory. The bank issue problems prevents russian emerging middle from seeking stable and safe means of investment of capital whereas tyccons like Mr. A. I am sure can find the way around the legislation no matter how strict it is, especially as you are saying he is virtually imune from the prosecution.
I am not saying that Russians shouldn't buy football clubs, I would be happy if they did so, I am just saying that Putin is fighting against corruption, wants desperately to prosecute Berezovski ( I wonder why the later did not get the same immunity even though he was sponsoring the 2000 electio campaign), jails Khodorkovski, and does nothing when Mr. A spends an X amount of money on a Chelsea football club. I'd think that makes the government look rather ridiculous.
Again, I am not arguing against investing money into foreign markets on the contrary I would support such trend, but you have to be terribly naive to think that A got his money from legitimate sources while others didn't( the was such review in the press on the issue).
You are saying that the issues I am stressing here are little importance to Russians, but I think this is exactly the real problem. you know that Hitler's government brought prosperity to Germans, people adored him for all the material gains of his regime and noone really cared about what is really going on ( He was legitimately elected as a chancellor), and well history shows what may happen to governments that are not controlled by the people. What can seriously be more important than the way you organise your own land? I am not defending Boris reforms, (in fact I am horrified how a man with alcohol problems could be in charge of the nuclear superpower), but I am seriously concerned current government is not on the right track of development( Note it doesn't imply a blind submission to Western values), and Russians are totally indiferent to their fate.
You are saying that the Unitary system
(which is de facto applied) would not prevent regional development. Now I can say with certainty that it may and in fact it is doint so. Today Moscow seems as a different country and the social divide with "Mainland" Russia is huge. I think that people of far East know better how to deelop their own region than some planners in moscow who didn't go outside the MKAD in the past few years.
And due to that lack of concern for the political life there is no subsrtantial opposition to the government. I am stressing the importance of the oposition not because I do not like current government, but a form of control from "the inside" has huge positive effects on any government.
Now, Revolution did nothing but either killed or forced into excile most able individuals of each and every social stratum. Lenin had plunged the Empire into a turmoil which still cannot be overpowered. Now this 57 percent who think that revolution was good for the country, certainly belong to the majority of those who due to envy laziness and stupidity decided that the best way to become reach is to make everybody poor.
I dont know how long it will take Russia to regain the trust it lost due to Lenin, well I hope I live long enough to witness it.

Anonymous said...

I think the guy, who wrote the above message knows situation in Russia a bit better, than his opponent.

I would also like to say that IMHO, Foreign banks are not welcome in Russia for the obvious reasons - it's corruption and lack of transparency in the Russian banking sector. What is more, Russian banks are enjoying extra-profits by offering unhuman conditions for credits (no matter business or individual) and interests, for those wishing to keep their money in the bank, that hardly (if at all) cover inflation. They wouldn't want to loose these profits, cause I am sure that, should foreign banks enter Russia, would be able to offer better conditions for clients.

Anonymous said...

Seven ways of stealing from budget

3. "Layer".
Nobody writes and talks about it, but such things happen. Some big state company ordered the equipment abroad. It was bought not at the manufacturer, but at a foreign firm that purchases the necessary equipment, and resells it gaining 10-20 %. But if you would call there you would hear Russian voice. And as the equipment - boring, costs over $1 billions you would tell, who the customer is. By the way, RosUkrEnergo is a kind of such pattern.

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