RUSSIAN FEDERATION SITREP

By Patrick Armstrong

CORRUPTION: IS ANYTHING REALLY HAPPENING? I recommend reading our discussion. But, if you don’t read the whole thing you must read Anatoly Karlin’s entry: all we ever hear is that Transparency International puts Russia near the bottom. But other ratings contradict its: Karlin names them, gives their scores and discusses about the implications. His conclusion is that Russia is pretty much at the world average. Myself, I don’t take these ratings on Russian corruption, press freedom, human rights or anything else very seriously because they’re all too affected by the prevailing memes and I suspect the motives of most of the raters. But Karlin’s point is that TI’s ratings fit poorly with other indicators. Russia is certainly very corrupt but 133^rd worst? I doubt it. (TI, by the way, rates Georgia at 51; let’s watch that rating under Georgia’s new management.) Meanwhile the investigations roll on. More in the military, which some observers rate as the most corrupt part of the body politic: one of the principals in the OboronServis scandal has been released with movement restrictions; she fully cooperated with the investigation, they say, so we’ll be hearing more. A case about soldiers being left to starve has been opened. And the Audit Chamber says it has uncovered nearly US$4 billion in waste and misappropriation in 2012 (more than 10% of the budget). A former Agriculture Minister is questioned in a fraud case revealed last November. And a brand new embezzlement case at the Skolkovo high-tech centre of which Medvedev was so proud. Come to think of it, you should read Sergei Roy’s entry too. “Appropriation of budgetary resources”; that’s what Russia’s big-time corruption involves: the transformation of public money into private benefit. Too many investigations now to keep track of.

OLYMPICS. And, tomorrow’s corruption news today: it was announced that the Sochi games site has already accounted for $US36 billion! While things have been built starting from a rather decayed base, you could build a small country for that kind of money. Obviously a lot was “appropriated” there too.

NGOs. As everyone knows Moscow imitated Washington and passed a law that NGOs (as they are called – but how “Non G” are they really if some government pays for their existence?) had to state the amount of foreign funding they received. At the time I wondered how these organisations would survive if they had to get their money from actual Russians. Not so well it seems: 11 have lodged a complaint with the European Court of Human Rights about the law. Of the eight named in the reference, a Google search shows six getting US founding (four from USAID). The sad thing is that, before they took Washington’s shilling, Memorial and Moscow Helsinki Group were home-grown. I expect the European Court to make the usual-Russia-has-sinned ruling and Moscow to ignore it. I reiterate: I believe it is a real human right to know whose money and interests are trying to get inside your head. By the way, I regard any group that states “Journalists are killed with impunity in Russia” to be, ipso facto, a political organisation.

LEFT FRONT. The essence of this matter is that the authorities accuse Udaltsov and his confreres of starting riots after an otherwise peaceful anti-Putin demo last May. (For what it’s worth, my contacts agree that the violence was started by a few of the demonstrators). A TV program in October had film purportedly showing him conspiring with Givi Targamadze, at that time chair of the Georgian parliamentary committee for defence and security and one of Saakashvili’s close associates. Udaltsov is now under house arrest as is Konstantin Lebedev; the third accused, Leonid Razvozzhayev, will be returned to Moscow for further questioning. He confessed but says it was forced out of him. All three absolutely deny the charges. I don’t have an opinion: I can imagine either that they’re innocent and a case is being manufactured or that the authorities are genuinely mistaken. On the other hand, Left Front is pretty extremist (rather Bolshevik indeed) and Saakashvili was quite capable of doing anything. But I am interested that the Investigative Committee is going to the length of filing charges against Targamadze who, as a sitting Georgian parliamentarian, is not likely to show up in Moscow to answer them and Tbilisi is very unlikely to extradite him.

LITVINENKO. This could be interesting: British High Court Judge Owen has granted the Russian Investigative Committee status of an interested party in the May 2013 inquest on Litvinenko’s death. I have never wavered in my conviction that Putin and official Russia had nothing to do with it.

GOLD. Russia’s been buying quite a bit of it lately, they say. Not so trusting of Western currencies perhaps. Russia holds more than half a trillion USD in various currencies. Some concern about “currency wars”.

Comments

[David Habakkuk]

The US-Russia.org discussion of corruption is most illuminating. Among other things, it is very good to be hearing from Sergei Roy again.

His distinction between different forms of corruption actually meshes with arguments made by some historically informed work on economic development. A professor at the School of Oriental and African Studies here in London, Mushtaq Khan, has argued that the empirical evidence simply does not support the conventional wisdom that the achievement of ‘good governance’ should be a critical objective for states seeking to develop.

Obviously, ‘good governance’ is desirable. It has not, however, proved critical to development in the way it is generally believed to have been, Mushtaq Khan argues. The evidence he produces meshes well with Roy’s arguments about Russian history.

Moreover, the fact that 'good governance' is the ‘dominant consensus’, in Mushtaq Khan’s view ‘sets poor countries infeasible and unachievable agendas, creating dismay and disillusion, and takes our attention away from achievable and critical governance agendas.’

(He can be seen presenting his argument at http://www.diis.dk/sw94747.asp )

Meanwhile, a noted expert on China, Michael Pettis, has produced a fascinating discussion of the problems of the Chinese economy. It starts:

‘As regular readers know I have often argued that the Chinese development model is an old one, and can trace its roots at least as far back as the “American System” of the 1820s and 1830s. This “system” was itself based primarily on the works of the brilliant first US Secretary of the Treasury Alexander Hamilton (see especially his report to the Congress on manufacturing and his two reports on public credit and banks).’

(See http://www.nakedcapitalism.com/2013/02/pettis-china-and-the-history-of-us-growth-models.html )

One critical point that Pettis stresses is that the success of this American version of ‘national socialism’ was critically to do with the avoidance of a situation where a great deal of – perfectly ‘rational’ – economic activity ends up being primarily concerned with, as it were, sucking at the teat of the state. This is what Roy points out tends to happen in Russia.

The arguments of both these writers, incidentally, bring into sharp focus the utter ignorance of the relevant economic history displayed by those Western advocates of ‘shock therapy’ who had such a calamitous influence in Russia in the 1990s. Rarely can a group of so-called ‘experts’ have combined such utter intellectual arrogance with such ignorance of so much of the relevant evidence about the questions on which they were so convinced they had a monopoly of truth.

[Da Russophile]

Thanks for the shout-out Patrick. For those who are interested in Russia corruption, I have a further set of graphs comparing it to the BRIC's and East-Central Europe here: http://darussophile.com/2013/02/17/russias-corruption-in-comparative-international-perspective/

[Alexander Mercouris]

Dear Patrick,

I would just make one short comment to your excellent summary.

The European Court of Human Rights does not normally entertain applications unless it is satisfied that domestic remedies have been exhausted. It is possible in Russia to challenge a law on the basis that it violates human rights that are safeguarded by the Russian Constitution. The way to do this is by challenging the law in the Constitutional Court.

A good recent example of this is the recent (and very controversial) law on rallies. This was challenged in the Constitutional Court which recently delivered a Judgment which significantly watered the law down. This has attracted little attention but many of the provisions of this law that many found most offensive (including the high fines and the blanket liability on rally organisers for criminal violations during rallies)have either been heavily modified or done away with.

It may be that I have overlooked it but I have not heard of any challenge of the NGO law being made to the Russian Constitutional Court. If no such challenge has been made then it may be difficult to get the European Court of Human Rights to entertain this application.

Incidentally I would not go so far as to say that the European Court of Human Rights regularly decides against Russia. It has often done so, usually with good cause, but in the more high profile cases I would say that it has tended to find in Russia's favour. The four judgments the European Court of Human Rights has delivered in the Khodorkovsky case are an example. Nor have I ever heard of a case of Russia refused to comply with a final judgment of the European Court of Human Rights.