Russia: Stalinesque


January 2, 2009:  The commercial corruption in Russia is among the worst in the world (China being a close second). The companies of both nations are most often trying to use bribes when operating overseas. In Russia, the culture of bribery is seen as a defense against government attempts (often successful) to take over companies. Russia is returning to czarist days in that respect, where the czar (or his chief ministers, in most cases) could override commercial contracts and seize assets almost at will. But the government cannot run these seized firms as well as their managers, so the bureaucrats look about for new temporary owners (who can operate the firms as long as they make a lot of money for the bureaucrats, and themselves.) It's not an efficient system, and now that Russia is competing on world markets, this is becoming a problem.

Many Russians understand that, if you bring back all the apparatus of the communist police state, you also bring back poverty and tyranny. But most Russians believe they need the "strong man" methods to keep order while a truly free and efficient society is built. A tricky business, but that attitude helps most Russians tolerate the growing despotism of the government. In recent opinion polls, Josef Stalin, who played a large role in getting a third of all Russians killed during the communist period, was voted one of the most admired Russian leaders.

Russia (and China) deny they are the center of the Internet crime world, but they are. Both nations tolerate large Internet crime organizations. The ones in Russia specialize in credit card and bank fraud, while those in China concentrate on stealing data. The gangs in both countries are believed to do jobs to the government, in return for their protection. Russia is also trying to control what Russians see on the Internet, with less success. So the police go after news sources inside Russia that report things the government would rather remain unreported. It's all becoming rather Stalinesque.

Faced with its first recession in ten years, the government warned employers to limit firings as much as possible (those who displease the government in this respect can expect to see their firm taken over by the government).  Economic growth, at about 8 percent a year until recently, is suddenly at zero, or worse. Russia gets most of its export revenue, and government income, from oil exports. After 2000, as the booming economies of India and China demanded more oil. The $20 a barrel (average) price (which has been pretty steady since the end of World War II, when adjusted for inflation), skyrocketed to $70 a barrel by 2006, and spiked at $117 in mid-2008. Since then it has tumbled to below $40 a barrel. The last spike, peaking in late 1979 at  $106, declined through the 1980s and played a role in bankrupting the Soviet Union. Some Russian bureaucrats have a déjà vu feeling about this. Thus Russia is cooperating with OPEC in cutting oil shipments, and is considering joining OPEC (which controls 36 percent of world production, with Russia being the largest single producer, at nearly 10 million barrels a day, outside the cartel.) Russian politicians are jealous of their Chinese counterparts, who have created a system that keeps the business community productive, and in line politically, while keeping the communist bureaucrats in power. Russia is having a hard time with its business people, and is suffering more popular unrest than China. The current Russian crackdown on dissent is mainly intended for those protesting legitimate economic grievances.

The government is bracing for a recession, one that could see a million or more people losing their jobs, and many other suffering declines in income. Militarily, this money shortage threatens the government program to revive the strategic nuclear missile program. Currently, Russias ICBM arsenal is dying of old age. New missiles are being built at a rate that will leave Russia with a smaller (a few hundred missile) force of ICBMs in a decade or two. In practical terms, that's adequate. But in terms of pride, it's humiliating.

Iran says it is receiving parts of the S-300 anti-aircraft missile system from Russia. Meanwhile, Russia denies that Iran is getting the S-300, but admits it is shipping unnamed "defensive weapons" to Iran.

January 1, 2009: Russia has cut off natural gas supplies to Ukraine. Russia is demanding that Ukraine pay $2.1 billion in back charges, and higher rates for future shipments. Months of negotiations failed to achieve an agreement, so Russia is playing hardball. Ukraine says it has enough reserves to last until April, and will not divert gas passing through on its way to Western Europe. Russia has threatened war if Ukraine did that.

December 31, 2008:  Russia adopted a six year presidential term, to replace the four year term. The new measure went through the parliament in record time.

December 30, 2008: A rebel attack in Dagestan (which is next to Chechnya) left a police general dead.

December 25, 2008: A police operation in Ingushetia (which is next to Chechnya) left twelve rebels dead. Government corruption, and lack of economic growth, has led to an increase in crime, and outright rebellion, in the Caucasus. This is nothing new, but has been a common pattern in the region for centuries.

December 20, 2008: There was an explosion in an open air market in Moscow, leaving nine injured. Police investigators said it was caused by a fire that reached a stock of holiday fireworks. No terrorist group took credit for the explosion.

December 18, 2008: The government is donating (at a nominal price to cover shipping and training) ten MiG-29 fighters to Lebanon. The MiG-29 is a Cold War era competitor for the U.S. F-16, and is seen as a loser inside Russia (the winner being the Su-27/3x series).

December 15, 2008: The parliament has voted to eliminate juries in treason and terror cases. Anyone the government doesn't like, and wants to punish or intimidate, is usually charged with treason. But juries have seen through this, and defied government threats and acquitted some of the victims. No more. It's easier for the government to order the judges to find treason defendants guilty after a show trial. This sort of thing was big during Soviet times, and now it's back. Another old policy that has been revived is sharp restrictions on public demonstrations. Police are quick to halt any protests that the government finds particularly irksome.

December 10, 2008:  Russian farmers had one of the best crops in history this year, producing 31 percent more grain (112 million tons) than last year. But the rest of the world had a good year as well (up about ten percent over last year), and that brought prices down. So the government is buying up millions of tons of Russian grain, to prevent many Russian farmers from going bankrupt. Russian farming is finally recovering from decades of communist decline, and returning to the pre-World War I era when Russia was one of the major grain exporters. By the time the Soviet Union fell apart in 1991, Russia had become a major grain importer.

December 8, 2008: All MiG-29 fighters were grounded until the cause of a recent crash could be determined. That MiG-29 went down for unknown reasons, and it's believed possible there is a design flaw (common to all MiG-29s) responsible.


Article Archive

Russia: Current 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 



Help Keep Us Soaring

We need your help! Our subscription base has slowly been dwindling. We need your help in reversing that trend. We would like to add 20 new subscribers this month.

Each month we count on your subscriptions or contributions. You can support us in the following ways:

  1. Make sure you spread the word about us. Two ways to do that are to like us on Facebook and follow us on Twitter.
  2. Subscribe to our daily newsletter. We’ll send the news to your email box, and you don’t have to come to the site unless you want to read columns or see photos.
  3. You can contribute to the health of StrategyPage. A contribution is not a donation that you can deduct at tax time, but a form of crowdfunding. We store none of your information when you contribute..
Subscribe   Contribute   Close