By Patrick Armstrong
Russia Inc. The Finance
Ministry announced
that the budget deficit in 2009 was 2.3 trillion Rubles (US$78 billion – about
25% less than anticipated); GDP declined nearly 8%; the Reserve Fund holds
about US$60 billion and the National Welfare Fund about US$95 billion. The IMF
has raised
its estimate for Russia’s GDP growth in 2010 to 4.25% from 4% and estimates that
inflation will be 6%. Rumours of Russia’s economic death have been exaggerated:
indeed these numbers look rather better than the IMF’s estimates for either the
Euro
Area or the USA.
Medvedev’s calls for Russia to be treated as a major player in the world financial
system don’t look so implausible today.
Foreign weapons. It would appear
that Moscow has seriously broken with the Soviet (but not Imperial) tradition
that almost all weapons should be made domestically. RosOboronEksport has begun
negotiations with France over buying a Mistral-class ship and possibly making more
under licence. Moscow may go to foreign sources to obtain light armour or infantry equipment and
it will be manufacturing French thermal sights
under licence. The decision has already been made that it must import UAVs. A Russian newspaper reports that
up to €10 billion may be spent in Europe and Israel by 2016. There is nothing
especially unusual – very few countries make all their own weapons – but it is
interesting as another indication that Russia (unlike the USSR) does not
foresee having to go it alone in a serious war. But there must have been some
nasty scenes in the background with Soviet-era industries insisting that they could
make everything. The fact is that in many areas Russian Armed Forces equipment
is far behind current standards. As a reminder of past certainties about the
excellence of domestic production (and doctrine), I remember that at least one Soviet
general was so dumbfounded by the US performance in the 1991 Gulf War that he
claimed the whole thing had been a fake.
Arctic Sea. At his trial, one
of the hijackers made a plea bargain accusing an Estonian businessman of being
behind it: according
to him, it was a simple ransom operation to raise money for a failing
business. A much more mundane explanation than the many conspiracy
theories and rushes to judgement about Russia’s malign intentions current
at the time.
Trifonova. It has been announced that Vera
Trifonova actually died as the result of surgical error. This does not change
the fact that, under the new rules, she should have been out on bail and not in
the prison hospital.
Small business. The Head of
Russia’s Labour Service says
that 36,000 jobless Russians established their own small businesses in the
first quarter of 2010. There is a scheme in Russia to advance small loans for
such purposes.
Kyrgyz Republic. A week ago rioting
broke out in Osh in the Ferghana
Valley with most reports agreeing that it was between Uzbeks and Kyrgyz.
The government in Bishkek claims that the situation
is calming down which may or may not prove to be true (it certainly didn’t see
it coming two weeks ago). Current reports (estimates)
are that nearly 200 have been killed and one to two thousand injured. Tens of
thousands of Uzbeks have fled to Uzbekistan which has closed
its border claiming it can’t handle any more. Twenty years ago there were very
similar riots
in Osh. The Valley, one of the very few “green” areas of Central Asia, was
extensively gerrymandered by Stalin so that it is today a patchwork of borders
and jurisdictions. But the historical reality, as elsewhere in Central Asia, is
that the cities are very multi-ethnic; there are even those who argue that
Central Asian city-dwellers should be considered a separate ethnos; but Soviet ethnographers,
who defined or even created “nationalities” to suit Stalin’s purposes, would
have none of that. Access for traders throughout the Valley was comparatively
easy and so it remained through the Imperial and Soviet periods. It was the
creation of separate countries after the collapse of the USSR, with their
borders and customs guards blocking this formerly easy and natural movement,
which laid the grounds for a semi-permanent resentment in the Valley. Added to
which people suddenly found themselves the wrong nationality in their ancestral
homes. Thus there is a good deal of underlying tension and resentment which is
kept bubbling. Just what sparked off this latest trouble is unclear: certainly
the new regime in Bishkek blames Bakiyev (more precisely his son) for inciting
the riots. There are many theories (see JRL/2010/116 & 117) and perhaps we
will know some day.
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