State Monopoly

The Moscow Times reports:

The state has rapidly increased its presence in the economy. Together with state-owned companies, its share in GDP rose from 35 percent in 2005 to 70 percent in 2015. The number of state and municipal unitary enterprises has tripled in the last three years alone, and they continue to appear in markets with highly-developed competition where their use of administrative resources and government financing poses a serious threat to other players. Such businesses have mushroomed at the regional and municipal levels, squelching competition in local markets.

The article continues:

The state’s expanded presence in the economy has deepened monopolistic tendencies in the “economic space uncontrolled by the state,” the FAS lamented.

Meanwhile, business people are unhappy with the status quo.

Nearly half — 48% — of respondents in a survey by the Russian Union of Industrialists & Entrepreneurs said that the authorities treat businesses like a “personal piggybank.”

As I have stated numerous times here on the blog, and on Twitter, this is the Russian system. The people complaining know that this is the system they signed up for. They have chosen to operate within it.

The FAS has proposed a plan to help resolve the situation, but it sounds like more state control rather than less:

Artemyev said that to combat monopolies and counterproductive actions by government officials, the FAS recommended focusing on a national plan for developing competition that is being prepared by order of the president. The FAS proposed setting economic indices as performance goals that governors and ministers would have to achieve or lose office.

Former Russian MP Dmitry Gudkov wrote:

What is wrong with the state corporation? First of all, it does not depend on the market. No profit, theft, inefficiency?

Its sole purpose, Gudkov writes, is to take more money from the state budget. The only thing the state corporations are doing is providing jobs for family members of their board members.


Ribbons & Yachts

The World Economic Forum recently placed Russia 43rd in its “Global Competitiveness Index“.


Vladimir Milov wrote on Facebook:

“Russia has improved its position in the rankings of global competitiveness,” rising for the year just two places – from 45th to 43rd, the media tells us happily.

Let’s see what is in this ranking. It can be found here.

There are five positions for which we are in the top 20 in the world ranking of competitiveness:

  • provision of mobile services;
  • provision of air transport infrastructure;
  • higher education;
  • low debt;
  • the large size of the domestic market.

Well, that’s all true.

But, he says, these are the places where Russia is not doing so well:

  • Inflation – 132nd place in the world;
  • Property rights – 123rd;
  • Quality of roads – 123rd;
  • Stability of banks – 121st;
  • Reliability of police services – 109th;
  • Prevalence of AIDS – 106th;
  • Burden of government regulations – 103rd;
  • And so on.

On average we obtained 43rd place in the world.

Alexei Navalny posted a more mocking post on the subject to his blog:

Never mind that by some measures we are below Africa: the incidence of AIDS in the adult population in Russia is at 106th place, TB – 88th, life expectancy – 97th.

But the 70-meter yacht of Russian billionaire Vagit Alekperov [president of Russia’s Lukoil] Galactica Super Nova (the largest aluminum yacht in the world) won the Monaco Yacht Show, received awards in the categories of best new yacht and best interior design!

The boat was built in just 41 months at the Dutch Heesen shipyard and delivered to the billionaire this year, it was among the three winners selected from 13 nominees.

He goes on to note some of the yacht’s more prominent features [photos here], including a helipad that can be transformed into an outdoor dance floor or a cinema.

We will get TB and die at 60, but know that somewhere in a beautiful location floats a winning boat, bought with the money from our mother-oil flowing from our land.

And in whatever form the helipad on the yacht takes – the open-air dance floor or the cinema – somewhere in the corner on one of the designs will certainly be tied an inconspicuous St George Ribbon.

We will survive all hardships and endure any difficulties for the sake of these ribbons.


Russian Apathy 2

Russians living abroad may soon be required to report to the government on their financial activities in other countries.

The Moscow Times reports:

Under current laws, citizens stop being “currency residents” after living abroad for one year or more but the new law will apply to all citizens, regardless of how long they have lived outside of Russia and on what grounds.

Such currency residents must adhere to Russian finance law, including, within a month of moving, informing the tax service of bank accounts opened and providing information annually of funds moving through their foreign accounts, RBC reported.

The law would thus also prohibit Russians living abroad from performing a range of financial transactions, for example, transferring funds from the sale of property anywhere in the world to a foreigner…

Former Russian MP Dmitry Gudkov blamed Russian apathy for this proposed law.

This law will most likely not affect you. It degrades the life of only 2 million Russians – a trifle against the backdrop of our size. But if you happen to live permanently abroad (not necessarily in Europe, just the CIS will suffice), and decide at some point to return to Russia, you will have to report to the tax authorities. About your accounts, large purchases, sales, in general, you will need a little more for the State.

But again, this will hardly impact any of you: you are not the 1.5 percent, but the 98.5 percent.

You are not affected by the law of scoundrels [referring to the 2012 Dima Yakovlev law that banned foreign adoptions]: you are not an orphan. The Yarovaya package is also not about you: you are not a child, not a missionary, or a cellular company. The fight against extremists – so who saw them? The war with Ukraine? Beat the fascists. The foreign currency residents? F*** them.

And freedom meanwhile [is taken away] piece by piece. At first these, then those, and we are not concerned, except that payment for capital repairs… Only here you cannot go (although we are not the security services)… but then the salary falls… and jobs are cut…

But what are some foreign currency residents?

Trading On Fear

Valery Solovei on the changing social contract with the Regime:

This is the agreement the authorities offer to society.

From 2003 to 2014 there was an “economic” social contract: the rejection of democracy and freedom in exchange for enrichment and the growth of material aspirations.

From 2014-2015 there was the “patriotic” contract: the rejection of well-being in exchange for Crimea and the restoration of past glory. This basically exhausted itself by the turn of 2015/2016.

It is time for a new contract. Support us or it will be much worse! -the authorities explain. What they mean by “worse” is “Maiden”, “the return of the accursed 90s”, “the intervention of the West”, “a civil war in Russia”. In professional jargon, this technique is called the “frightening alternative”.

And so that people will not be tempted to go beyond the alternatives introduced, they expanded the system of punitive sanctions: legal, administrative, political, ideological, cultural, and moral.

Like in the charter of the prison transport service: “step to the left, a step to the right is considered an attempt to escape. Is jumping in place considered a provocation”?


The historian Valery Solovei had this to say about the rumored reforms of the government that are supposedly coming:

Over the past two days I have received several dozen requests to comment on the possible reform of the state administration (the replacement of the presidency by the State Council as a central element of [this plan])….

He then lists four points on the subject. First, he writes:

Projects of drastic constitutional reform and structural renovation have been floating around the political establishment for the past decade. One of them was the idea of the creation of a State Council. The closest historical analogue to such a collective management is the Soviet Politburo.

He continues to his second argument:

The only point of creating a State Council at this moment in time is the inability to provide such personal continuity of the highest authority, which would be acceptable to the major groups of elites and society.

That is, there is nobody who could replace Putin. I do not agree with Solovei’s rationalization here. Vladimir Putin came seemingly out of nowhere to become President of Russia. Granted it took a lot of work to make it happen, but it could be done again. See for example the sales job and transformation that the Regime took on to make Dmitry Medvedev a viable candidate in 2008.

Solovei continues to his third point:

If we begin to politically, informationally, and legally move in this direction in the coming months, it will mean that the succession issue has deteriorated.

And finally, Solovei argues:

Such a radical reform of the higher echelons of the government in our current circumstances will inevitably lead to a sharp weakening of the already inefficient state apparatus, organizational chaos and political disorganization.

Nobody seems to be happy with these proposed “reforms”. But at this point they are mostly still just rumors. In my view, the Regime is putting out feelers to see how society reacts to its propositions.

Milov on the Shifting Cadres

Opposition politician Vladimir Milov had this to say about the games the Kremlin is playing with shifting the cadres around.

Frankly speaking, many have been asking me in the last few days what I think about all of these rearrangements -[former head of the Presidential Administration] Volodin to the Duma, [former Duma Speaker] Naryshkin to the SVR [Foreign Intelligence Service], [former SVR chief] Fradkov to Russian Railways, etc.

I can come up with just one word: MEANINGLESS. It is absolutely meaningless to transplant long well-known speakers’ asses from one chair to another. No matter how much I look, I cannot see in this rotation any forward strategy. It does not really matter that a talking ass from this list will sit in any chair. I do not see any reason to somehow seriously accept these shifts.


Musical Chairs

RBC published a report on Saturday saying that newly-appointed Duma Speaker Vyacheslav Volodin’s former position in the Presidential Administration would be filled by former Yeltsin Prime Minister Sergei Kiriyenko. Kiriyenko is currently chief of Russia’s state-run atomic energy company, Rosatom. The rumor was mostly met with skepticism on the Russian blogosphere.

Damian Kudriavtsev asked on Facebook:

Is the situation at Rosatom so bad that it is necessary to kick out the chief? Or is it the other way around, and everything is great?

Anton Nosik replied:

Everything there is very atomic. But to replace Volodin with Kiriyenko is like something from 1905, and doesn’t keep with the trend of recent appointments.

Igor Ryabov completely dismissed the rumors as “unrealistic”, citing the fact that the story came from RBC, which he says is connected to Putin crony Kovalchuk.

Kiriyenko lives for the corporate development of “Rosatom”, has huge plans, the role of nuclear energy continues to grow around the world, and he finds it very interesting, as I know.

“On the other hand,” he continues, it’s not just Volodin’s chair that needs to be filled.

The Presidential Administration was charged with the task of rethinking the role of the “curator of domestic policy” (and clearly it has still not been formed). I think that Volodin will take with him [into his new role as Duma Speaker] a significant piece of authority to manage the political process. The PA is likely to retain the areas of functional and operational control of the regions.

Accordingly, the new “VP [Vladimir Putin] curator” is likely to be more of a technical person, and less of an “architect”, an individual like Vaino [the recently appointed Chief of Staff of the PA]. Most likely a promising individual who is young and has considerable experience with the regions. For example, someone from active in the ONF [All-Russia People’s Front].

The first person I thought of when reading Ryabov’s description was ONF’s Alexander Brechalov, who is on a path to more prominent positions. Brechalov was most recently appointed (along with former Chief of Staff Sergei Ivanov) to the newly formed Presidential Council on Strategic Development and Priority Projects. He is also a member of the Presidential Council on Anti-Corruption.

Alexander Brechalov

This is a very complicated process, as someone recently pointed out. Every time you transfer one person, another person must be moved to replace him, which then leaves another empty seat that must be filled. And so there’s a cycle, and the decisions must be made ahead of time. It’s a bit like musical chairs. But people are not really being removed from the game in this version. There are enough seats to go around. The goal here is finding the right fit. And the confusion that it generates is an added bonus.

For another view, see my next post.

Let’s Go, Girls

Kirill Martynov had this to say about Russians’ active participation in the perpetuation of the system that governs their country:

The videos of ballot box stuffing are distinguished by some very typical, repetitive, and awful anthropology.

Poorly dressed, beaten down by life, full of women with their bodies blocking the camera. Somebody shouts, “let’s go, girls!” Another woman carries, hidden by her back and hips, stacks of paper. These people are fighting in order to live always as today, in the dirt, in theft and with mutual aggression. They want to convey this way of life for their children – “let’s go, girls”. And the dirty work to promote stability, just like the work of cleaners and nurses, is done by women.

As more time has passed, the more the question amazed me, what is the motivation here? Why do people go for it? Why not give up? How do they adapt to this system? Like the bleached-blonde prosecutors with their eye-shadow the same color as their uniforms, who require “girls” for reporting purposes? Again – “let’s go, girls”. But this story is not for me, but for Hannah Arendt.

The Russian people – and when I say this I mean… we are all part of it, this is not criticism, but self-criticism – and so the Russian people are similar to the customs officer-thief who robs the authorities, and who is trying to grab for himself what he can where he can in order to be a normal person.

At night he dreams that he is Vereshchagin, who did not leave the longboat [this is a reference to the 1970 film White Sun of the Desert. Vereshchagin is a hero who dies tragically when the boat he is on explodes.]. And he cries with self-pity, from the sensation of his simple grandeur of eternal righteousness.

One reader replied:

One part of peoples’ motivation is the carrot, to receive an award, the other – the whip, to avoid possible sanctions from coercive individuals. I do not understand your surprise – this is typical of our national culture of behavior, it did not emerge yesterday.

Collective Consequences

I want to present this without too much commentary (though I have added a bit for clarity). This was published yesterday by the journalist, Dmitry Gubin. He writes:

One of the most significant topics discussed this summer has been our collective responsibility for the affairs of state. Or if you prefer, collective retribution.

The key word is “collective” because many people are thinking about personal responsibility in Russia, and the more the TV repeats the word “stability” the more alarming it is. It’s like melting ice, one day the river will be revealed, but nobody knows when.

And when the break-up happens, many will be charged, from the Church hierarchy to the major tv programs.

Russians have seen and experienced this before, he writes,

“…in the early 1990s. But then the question was only about personal responsibility. Yesterday’s teacher of Marxism-Leninism were without work, selling pastries in the metro, but the collective responsibility of all of the members of the Communist Party was not discussed. We did not have decommunization similar to the denazification of Germany, where every German was forced to face Auschwitz and had to admit that the war and the Holocaust was not only [the responsibility of] Hitler, Himmler, and Eichmann, but himself. Just because he lived in Germany, where it happened, and was silent.

For us, I repeat, this is a new thing. The idea of collective responsibility looks wild.

Gubin moves to the doping scandal that played out in the lead-up to the Olympics in Rio this summer. Some Russian athletes who had been caught using banned steroids were barred from competing in the games. And the International Paralympic Committee banned the entire Russian team from participating in the Paralympics.

Therefore when the Paralympians (and to some extent the Olympians) experienced collective responsibility, there arose sincere indignation, why?!

The obvious answer is: but precisely because you – the citizens of a country where the falsification of doping tests has been put on the State tap [the government allegedly conducted the doping program]; it is for this reason that you are in this situation of blaming the West, but not your leaders, and it is precisely for that reason that nobody wondered whether Putin was aware of [the situation]… – but very few people gave this answer.

There is some good news, though, Gubin notes. This subject is finally being discussed in the media.

Read, for example, in “Slon” the text of the journalist Andrei Arkhangelsk. He writes that the collective punishment applied to the Russian athletes is the logical continuation of the process where Russian athletes (and fans) have rejected the individual in favor of the collective. For a long time, it has been “Russia won” and not “Imyarek [a formal or ironic substitute of someone’s name] won”. So not “Imyarek was doping” but “Russia was doping”. But Arkhangelsk comes to a frightening conclusion: if people reject the “I” in favor of “we” then they perceive collective responsibility not as punishment for abandoning individuality, but as a humiliating mockery. We have arrived at a dead end.

Gubin then brings up another recent article on collective responsibility:

Another conceptual text can be found on LJ by the researcher of this hybrid regime Vladimir Gelman. He, responding to the question: “Why do good people have to pay because of their affiliation with poor institutions,” recalls the long (even in the 1970s) schematic of the American economist Albert Hirschman, in which the behavior of an individual in a “bad organization” is confined to three possibilities: voice, exit, loyalty. These are your choices – either protest (voice), or withdrawal (exit), or silence, which means consent (loyalty). Most choose silence because the costs of shift work (not to mention changing the country), as well as the costs of the fight, exceed the cost of silence. It is reasonable to minimize the risks: we quietly sit, and they won’t bother us.

However, to start a conversation about collective responsibility means that now the cost of silence for whole groups (e.g. for athletes participating in international competitions) can exceed the costs against, for example, struggle. Refusing entry to the Olympics for a person who has been preparing her whole life, and therefore shut her eyes to everything – is the highest possible price for an athlete.

He then moves from the Olympic doping scandal to the everyday lives of Russians:

I draw attention to this important change in the assessment of costs precisely because every day in all Russian classes this anxiety increases. A year ago, I was asked in the province, “What do you think, how is it all going to end?” But this year it is “What do you think, will there be war?” The war is seen as the culmination of collective responsibility for belonging to Russia today. It is clear who will lose. Russia is for the first time in history on its own against all, with no allies – and for the first time since the collapse of the Soviet Union is not a country with a powerful economy.

The suspense of the war – the total anxious anticipation, is collective retribution. This means that the potential costs of silence increase many times, especially for those whose profession is to speak.

Gubin concludes:

Our shared anxiety grows because we – individually and collectively – again, as in the late 1980s and early 1990s, find ourselves at a crossroads, in a situation to review and reassess strategies.

But this means that it is time to reconsider and reevaluate.



Russian Apathy

The record-low turnout in Sunday’s parliamentary election came after a publicity stunt pulled by Alexei Navalny just days before the election. Navalny posted a video [with English subtitles] on his blog showing a palatial estate regularly used by Russia’s Prime Minister, Dmitry Medvedev, that is reportedly worth upwards of $500M.

But the self-proclaimed anti-corruption activists like Alexei Navalny and others are only confirming what people already know. Russians regularly come into contact with corruption in their daily lives. It is normal for them. They expect it. What they do not anticipate is that it will change.

The head of the polling agency Levada Centre, Lev Gudkov, had this to say:

More than 80% of participants of various surveys are aware of the corruption in the government, but they believe that it is impossible to change anything….

“Everybody knows that everyone steals and that this is part of our reality.” he said, adding that some people openly say that if they were in the position of local officials, they would behave the same way.

“Honesty arises not because of an awareness of the inevitability of punishment, but out of a sense of dignity. And if you have been humiliated all your life, there arises the direct opposite thing – to act out of spite and behave in a way that benefits me. This reciprocal selfishness blocks matters of morality and honesty. This is important from the point of view of the sociology of communication.”

“The current government is perceived as corrupt, dishonest, arrogant. These are characteristics which are written by people in the opinion polls. But they voted for the government because they don’t know any different.” he concluded.