October 21st, 2016

We Can Go Screw Ourselves


Picture by svobodnoslovo.eu

Economic sanctions imposed by the West on Putin’s friends and their enterprises, as well as on the most sensitive sectors of the Russian economy—the oil and gas industries and the capital market—have been in effect for more than two years. These measures, however, have failed to restore Ukraine’s sovereignty over the Donbass and Crimea, or to make the Russian military admit its obvious guilt in the crash of the Malaysian Airlines plane. Russian citizens, intoxicated by Kremlin propaganda, do not seem to be interested in the reasons behind the lack of accessible credits, the rise in prices, and the freezing of pension savings, but continue to largely support the aggressive international policy of their presumptuous rulers. So what is the result of the renowned Western sanctions?

In two and a half years, Russia has lost a considerable amount of foreign investments that the country was supposed to receive, and was forced to suspend indefinitely the exploration of new oil and gas fields due to the ban on the import of technologies and equipment. Both factors will continue to have a negative effect on the revenues of the Russian budget. Putin’s economic advisers—the market-oriented Aleksei Kudrin and the anti-market Sergei Glaziyev — both evaluate Russia’s losses resulting from the annexation of Crimea and the introduction of sanctions at no less than $200 billion. According to other experts, the largest part of these losses amounting to $170 billion was caused by Western sanctions.

Even Putin himself recently admitted that the country needed technologies, the access to which was restricted due to sanctions. However, instead of meeting the West halfway by de-escalating tensions in Ukraine’s southeastern regions, the Russian president signed a decree suspending the weapons-grade plutonium utilization deal, presenting the West with an ultimatum: lift all sanctions and compensate the country for the damage they have caused to the Russian economy, or else face the end of nuclear disarmament and prepare for mutual annihilation, in the style of North Korea.

This is not the first time the Kremlin has founded its foreign policy on the principle of “asymmetrical responses.” Suffice to recall the US Magnitsky Act and the Kremlin’s retaliatory ban on US adoptions of Russian children, or the food embargo prohibiting the import of a whole list of products from Europe and North America introduced by the Kremlin to “punish” Western manufacturers for anti-Russian sanctions imposed by their governments. In both cases, Russian citizens were the first to suffer from such “asymmetrical responses.” No matter how much tame Kremlin economists try to attribute the 45 percent growth in the country’s agricultural production to the food embargo and import substitution, the real reason behind the increase in production is the rise in prices caused by the devaluation of the ruble by the same 45 percent in late 2014. Statistical data show that the food basket has become more expensive: the retail price for beef grew by one third, and the price for buckwheat increased by almost 200 percent. In the absence of competition, domestic products proved to be much more expensive than their European equivalents. Both Putin’s adviser Kudrin and the opposition-minded Sergei Guriyev, chief economist at the European Bank for Reconstruction and Development, emphasize that there is in fact no import substitution either in the agricultural sector or in the country’s economy in general.

Photo by Carlos Garcia Rawlins/Reuters

Photo by Carlos Garcia Rawlins/Reuters

The Russian government has decided to extend the food embargo at least until the end of 2017.  Our audacious Czar, merciless toward Russians, has yet again demonstrated his bravado with regard to Western countries in the Indian city of Goa by retorting that “they could screw themselves” to the question about the possibility of a partial lifting of sanctions. Although by “them” Putin obviously meant Western countries, in reality it will be the other way around: if truth be told, Europe and the United States do not care if life in Russia is the same as in Venezuela or North Korea. Western governments have enough problems of their own. And ultimately we will be the ones to screw ourselves—not the West.

12 Oct 2016

Privatization, Sechin-style

Igor Sechin. Photo by Alexander Demianchuk/Reuters

Igor Sechin. Photo by Alexander Demianchuk/Reuters

As it often happens in movies, a multi-episode crime thriller entitled Bashneft that began in September 2014 with the arrest of the once-mighty Vladimir Yevtushenkov, head of the Sistema corporation, has ended in a prosaic finale that we had predicted from the very beginning: Bashneft has been expropriated from private owners and is being transferred to the state-run Rosneft. Despite public protests by ministers and even the deputy prime minister of Russia, the all-powerful Rosneft chairman Igor Sechin got what he wanted: Prime Minister Medvedev signed an ordinance providing for the sale of the controlling stake in Bashneft to Sechin’s oil empire for $5 billion — without any tender. This is $300 million above the minimum price that the government was prepared to accept for the privatization of its shares in Bashneft, which prompted Putin to observe that Russia’s deficit-ridden budget is in dire need of this money. The federal budget will now undoubtedly receive it, but this leaves the question of where Rosneft had gotten it from, since almost 70 percent of its own shares belong to the Russian state.

As the result of sanctions imposed by Western countries in response to the annexation of Crimea and the shooting down of the Boeing by a Russian missile, Rosneft is practically unable to borrow on the international capital markets. Consequently, just as with the purchase of assets of the Yukos Oil Company that had been forcibly expropriated from private investors and bankrupted, Sechin went to look for money in the East — and found it there in exchange for oil. The only difference is that Chinese companies got guaranteed oil supplies from Rosneft for a fixed low price for several years in exchange for the billions of dollars used for >> Read more

5 Oct 2016

Putinary Geology

mxqfrany89Everyone knows from school textbooks that Russia is extremely rich in mineral resources with the most valuable of them being oil and gas of course. Had Siberia not been rich in oil and gas, Putin could have probably been unable to stay in power that long, since without the “oil needle” hungry Russians would have told the usurper from the KGB to get lost a long time ago. However, he has been fortunate so far, and despite the fact that the importance of hydrocarbons as a source of energy has been slowly but steadily decreasing worldwide, the current Russian tsar still has enough oil revenues to provide for himself and his friends and to silence his electorate that has grown stupid from watching government-owned TV channels broadcasting state propaganda. Russia still has enough available stocks of mineral resources to maintain the status quo in the immediate and medium-term. As for the distant future, the Kremlin does not seem concerned about that at all. It is no surprise then that exploration activity is hardly being carried out in Russia, and geology as a science is slowly dying.

In April 2016, on Minister of Education and Science Dmitri Livanov’s orders, the Russian State Geological Prospecting University >> Read more

28 Sep 2016

From The Cherry Orchard to the Khimki Forest


 “You have no mercy on the woods, or the birds, or on women, or on one another…”

Uncle Vanya, А.P. Chekhov, 1896

photo by etosibir.ru

Photo by etosibir.ru

Chekhov’s Uncle Vanya and The Cherry Orchard were written more than a century ago, but they remain a brilliant portrait of Russian society and its attitude toward the world around, woods included.

Forests cover around 45 percent of Russia’s territory, and the country accounts for 24 percent of the world’s timber resources. The Siberian taiga and its cedar trees are as much a symbol of Russia as the Kremlin and Sputnik. It would seem that Russian forests should be valued and protected as a national treasure. However, just like the people of Russia, Russian forests have their own peculiar fate full of suffering and tragic mistakes.

Back in 2013, an international team of scientists calculated that from 2000 to 2012, Russia had lost more forest area than any other country in the world. Such forest cover loss was caused by different reasons including forest fires, storms and insect pests. However, this was also due in no small part to human activity. According to World Wildlife Fund’s estimates, Russia annually loses around $1 billion due to illegal logging.

According to First Deputy Prosecutor General Aleksander Buksman, illegal logging is responsible for more than 800,000 hectares of Russia’s forest loss annually, which is more than half of the total wood harvest in the country. >> Read more