July 13th, 2016

The Russian Orthodox Church during the Tsar (President) Putin’s era

Photo by asianews.it

Photo by asianews.it

The newly established authoritarian regime in Russia has chosen to make the promotion of spirituality that is being served up as an intrinsic part of Russian culture and self-identification of the Russian nation as one of its priorities. It is obvious however that the regime’s real purpose consists in using this simple method to force its nationalist and patriotic rhetoric onto the population by glorifying the county’s past successes and inspiring pride in the “centuries-long history of the Russian empire” which in its turn allows the regime to draw the population’s attention away from the authorities’ lack of competence in governing the country and to cover up the most flagrant corruption by top Russian officials.

Responsible for spirituality, the Russian Orthodox Church (ROC) is formally separated from state institutions that, according to the law, are supposed to be secular by nature. However, ROC enjoys a number of economic advantages that have been granted to the Church during the Putin’s era. Thus, for example, it is impossible to use standards methods to calculate its “market capitalization” because legally, ROC is divided into more than 30,000 different organizations and since the mid-1990s it has not been disclosing either its gross budget or expenses. According to certain estimates, ROC’s income possibly reaches 5.6 billion rubles (or around $87 million) a year, without including federal funds that are being allocated annually to ROC and structures close to it which amount to another 3.5 billion rubles (or about $54 million). This does not seem such a large sum for a Church with more than 50 million faithful, does it?

However, this is only a part of the Church’s budget that different sources or ROC representatives themselves disclose from time to time in their statements. Meanwhile, it is hardly possible to estimate the Church’s real income generated through donations that are mostly made in cash. The alleged bribe in the amount of €150,000 received by Kirov Governor Nikita Belykh that, according to Novoya Gazeta’s sources, was supposed to be used to restore an Orthodox church can serve as a recent example illustrating this practice.

An article published by sociologist Nikolai Mitrokhin fifteen years ago sheds some light on the extent of discrepancies. In his article, Mitrokhin then estimated ROC’s annual income at around half a billion dollars. It is rather obvious that ROC’s income could hardly be lower during the 2000s when oil prices soared. It is also worth mentioning that ROC and structures close to it are the country’s major real estate owners and as religious associations are exempt from land tax and tax on property they use for religious purposes. It is not a secret that ROC’s properties including the Cathedral of Christ the Savior, a colossal modern replica of the original church built, among other, with “voluntary” donations collected from Moscow commercial structures, are being widely used for commercial purposes.

We have until now been talking about the revenue part of ROC’s budget. Even less is known about ROC’s expenditures. Indirect indications help establishing on what exactly church funds are being spent besides construction and restoration of churches. Thus, ROC’s expenditures include for example Patriarch Kirill’s recent Latin America tour on board an aircraft of the special air squadron Rossiya that comes under the jurisdiction of the tsar’s court that is the Executive Office of the President (pardon the slip of the tongue) or Patriarch’s trip to a penguin rookery in Antarctica. The combined cost of air travel only during these two trips probably reached about one-third of a million dollars. It is fair to say that it is unclear whether the Russian Orthodox Church paid for these trips or the lonely Patriarch treated himself to a nice holiday at the expense of Russian taxpayers.

Other infamous stories featuring the head of the Russian Orthodox Church include his Breguet watch; his lavish apartment located in one of Moscow’s most prestigious buildings, House on the Embankment, across the Moscow River from the Kremlin; his mansion-like dacha situated in a nature reserve on the Black sea coast; his $4 million yacht allegedly presented to him by Putin; and his luxury cars. The list can obviously go on, and this is only one hierarch at the ROC’s helm.  How many more of his colleagues are not willing to content themselves with an ascetic life? “There is no need to disclose the Russian Orthodox Church’s expenditures insofar as it is absolutely clear that the Church spends its money on church needs”, such was chairman of the Synodal Department for the Cooperation of the Church and Society of the Moscow Patriarchate, Vladimir Legoida’s laconic answer to this rhetorical question.

1455793033-e01299bd04a9d06cf76e5f1b53c2bd7cThere is no doubt that this answer satisfies the tsar, otherwise new criminal cases on corruption charges against top-ranking representatives of the Russian Orthodox Church would be initiated daily by the dozen. The only people who are not happy about this situation are those few civil activists who understand how many hospitals, rehabilitation centers and day care centers could be built or renovated with the federal funds spent on church “needs” and the profit tax ROC fails to pay.

6 Jul 2016

A Lesson in Political Science: On Merging Black Cashboxes into the Kremlin’s Common Cash Funds

Nikita Belykh / Photo by TASS/Getty

Nikita Belykh / Photo by TASS/Getty

In political science, the term “democratic transition” is used to describe a transition period in the history of a country that has recently gotten rid of a totalitarian regime and is “in transit” toward the formation of democratic institutions, that is a regime that is neither totalitarian nor yet democratic. There probably should be another term to describe the reverse process from half-established democracy to a dictatorship. This is the totalitarian transition we are witnessing in today’s Russia, and the authorities have not yet tightened screws enough to prevent the information about different aspects of this process from reaching the population. Thus, the much-publicized arrest of former leader of the Union of Right Forces opposition political party and Kirov Region governor Nikita Belykh brought to light a sensitive topic of “black cashboxes” controlled by government structures.

What exactly is a “black cashbox” of a Russian governor? First, it is worth noting that according to official estimates, 40 percent of monetary assets in Russia are circulating in the shadow sector of the economy. Unofficially, this number is much higher. According to Russia’s Central Bank, in 2015, the volume of cash in open circulation reached 400 billion rubles. It has to be said, however, that in 2014, it amounted to 1.8 trillion rubles. Russia is a recognized leader in illicit financial flows. A report released by Global Financial Integrity (GFI) examines Russia alongside India, Brazil, Mexico and Philippines. More than 40 percent >> Read more

28 Jun 2016

Greedy Insurers and Bloodthirsty Collectors

Picture: ubu.ru

Picture by ubu.ru

Like many other sectors of the economy, Russia’s insurance market is going through bad times: the extent of insurance is declining, and, even according to the most optimistic forecasts, the nominal growth in insurance contributions in 2016 will not exceed 5 percent, which will be easily lost to inflation. This is hardly surprising, given the decline in car sales, decline in loans issued to the population (which results in the fall of revenues from life insurance,) and the general decline in business activity.

Given this context, the issue of lowering insurance compensations is coming on the agenda. In order to do this, insurance companies are resorting to analysis by “their own” experts who undervalue damages; deliberate slowness with insurance payments, especially with regard to health insurance and life insurance on trips abroad; as well as traditional Russian formalism that demands every document to be printed on a letterhead and to bear a seal. Car owners almost always have to argue with their insurance companies about the amount of compensation for the physical damage to their car, and hire an independent expert to evaluate the cost of repair. Such a situation would be unthinkable in a civilized market: for instance, in the US any repair to an insured vehicle damaged in a car accident would be reimbursed to a maximum estimate, and the only thing the insured has to worry about is whether his or her insurance limits cover the medical costs of the injured party. But even with the exaggerated costs of healthcare in the US, insurance payments in most cases are enough to cover all the costs of the injured.

Apart from manipulations with insurance payments, insurers are increasingly resorting to recourse and subrogation–that is, demanding compensation of their expenses from the guilty party. >> Read more

23 Jun 2016

Putin, Roldugin, Shamalov, Patrushev and the Rest of Homeowners

Apartment building in Moscow / Photo by apb1.ru

Apartment building in Moscow / Photo by apb1.ru

The widely known problems in Russia’s housing and communal services sector are not new. The entire sector is slowly but steadily deteriorating. This is no surprise since the average age of the Russian housing stock exceeds 40 years. Several tragedies happened over the last year. A residential building partially collapsed in Mezhdurechensk; household gas explosions occurred in Omsk, Perm, Yaroslavl and Volgograd; a bridge collapsed in Vladivostok; cars regularly get stuck in potholes as pavement collapses. Well-known Russian blogger Ilya Varlamov has repeatedly supplied evidence of dire housing conditions of ordinary Russians.

The federal authorities do not at all seem concerned about this situation. In 2016, federal allocations for the repair and replacement of utility lines as well as for the upgrading of the housing stock will amount to around 75 billion rubles or about half of the obviously ill-gotten $2 billion belonging to Putin’s close friend violinist Roldugin. There are plans to further cut federal spending on the housing and communal services sector in 2017 to more than half its 2016 amount.

In fact, why should Russia’s budget be spent on housing around 85 percent of which is privately owned? On the other hand, despite the mass privatization of apartments in the 1990s, public spaces and communal services of most apartment buildings such as entrance halls, courtyards, stairs, gas, electrical and plumbing have not been privatized and remain the responsibility of municipalities. The budget situation on the local level is obviously much worse than on the federal one. >> Read more