RUSSIAN FEDERATION WEEKLY SITREP

by Patrick Armstrong

Then and now. The 20^th anniversary of the 1991 coup attempt and its sequella is upon us and I agree with Gorbachev’s comment that the coup planners “were truly idiots, and they destroyed everything. And we proved ourselves to be semi-idiots, myself included.” The 17 March referendum  showed, with important exceptions, that the bulk of the population wanted to remain united. (The results foretold much of the coming fighting and secessions too). But it didn’t happen and there was no small misery in consequence of the breakup. However there is an interesting piece comparing ordinary life in Russia then and now in terms of purchasing power. In essence, despite much remaining poverty (20% or so), per capita income is up about 45% since 20 years ago. 45% is not that much perhaps over two decades, but the growth comes post-Putin after the seemingly unending fall throughout most of the 1990s. No wonder most Russians support Putin/Medvedev. It would be interesting to see a similar calculation in the other 14 former SSRs. In that connection, I leave you with this quotation from Ukraine’s then-PM Kuchma in 1993: “…like everyone else, I believed that Ukraine is so rich that it provided for the entire [Soviet] Union. It turned out that it is, in fact, rich. However, was it really a provider?” I believe many SSRs thought that they put in and the RSFSR took out and the moment Moscow was gone they would be better off. Not true, as they have had opportunity to learn and reflect on.

Demographics. The government program continues to improve the situation at both ends. Tatyana Golikova reported that the mortality rate had decreased 2.8% in the first half of the year – the reduction was driven by declines in deaths from cardiovascular causes (-4.5%), road accidents (-5.7%) and tuberculosis (-6.3%). These are comparatively easy to reduce – at first anyway – but cancer deaths were also down 1.1%. Infant mortality has also been improving: it was 11 per 1000 births in 2005 and is now 7.1/1000. Still high – she said the European rate was 3.5 – but an undeniable improvement. A lot has been invested in improving medical centres – here’s a new neo-natal one – and the effects are showing. (BTW they’re not painting the grass green, as some thought: it’s this stuff).

Warning. The Deputy chair of the Audit Chamber, has warned that the government is spending too much: “The structure of the Russian budget is such that it can only be balanced given extraordinarily high oil prices”. They are at the moment but…

Magnitskiy case. Adding to other charges laid as the investigation grinds forward, a charge of manslaughter against a laboratory doctor has been laid. Washington has produced a “Magnitskiy list” and Moscow, of course, has retaliated. And away we go. I don’t get it: what’s the issue that’s offended the Americans again? Russia isn’t investigating the death? Russians are all liars so go ahead and punish them anyway? More unnecessary bad relations created.

Police reform. A VTsIOM poll shows deep scepticism about the effects of police reforms; 57% expect no difference and only 28% think the police force will improve. I guess after all the “campaigns” Russians have lived through, they can’t be blamed for expecting little from another. We’ll just have to watch.

Jihadism in the North Caucasus. Much activity (mostly to the benefit of the authorities) last week. But I leave coverage of this to my colleague Gordon Hahn who watches it in much greater detail than I do.

Ukraine. Former PM Tymoshenko is on trial in Ukraine. The formal charge is that she exceeded her power in signing the gas price deal of 2009 which tied the price to a percentage of the European price. Other motives are, of course, easily imagined. Discussions here and here. She, in return is accusing former President Yushchenko of having been in cahoots with the extremely murky RosUkrEnergo. Which he denies. At the time, of course, Western reports were full of Russia’s “gas weapon” and said little about internal Ukrainian motives. As the trial proceeds we will learn more.

Gas wars. The fact is that neither Ukraine nor Belarus can afford to pay even the discounted price Russia charges and neither country took advantage of the long period of very cheap gas to take energy conservation measures. It seems that Putin is now offering Belarus a further discount but in exchange for Gazprom ownership of the rest of the company that owns the pipelines carrying it west. Shale gas may save them in the end but that’s some time away.

Comments

[Sublime Oblivion]

Worrying too much over oil prices at this stage in history would be a strategic mistake.

Production is flat-lining at the global level since 2005. Demand is continuously growing, and will continue to do so from China and co.

Prices are high and, albeit with a high variation, will only go higher.

[Patrick Armstrong]

Not if the USA and the EU thunder in. Then where will China be? How much of China's GDP is bought by Walmart?

[Sublime Oblivion]

How much of China's GDP is bought by Walmart?

Very little. Its total net exports are only about 5% of GDP.