RUSSIAN FEDERATION WEEKLY SITREP 7 October 2010

LUZHKOV. The storm clouds gather. There was a great deal of construction in Luzhkov’s Moscow and many contracts were won by companies controlled by his wife, Yelena Baturina, who became very wealthy. On Tuesday Finance Minister Kudrin said a quarter of his decrees, many of them dealing with construction, were signed in secret. One of his deputies has just been charged with bribery. The Russian Audit Chamber says it has numerous documents showing the city government spent budget funds inefficiently. Maybe a prosecution is being prepared. Meanwhile, still defiant, Luzhkov has said he will start his own political movement and he has been given a position at the International University in Moscow.

POLITKOVSKAYA. To recapitulate: she, a reporter who wrote a lot about atrocities in Chechnya committed by the authorities (but much less about jihadist atrocities), was murdered 4 years ago. Three men were charged but were acquitted by a jury in February 2009; a new trial was ordered in August 2009. Her murder has become a standard of the anti-Putin trope (although a bit of thinking would show he had nothing to do with it – senior policemen would hardly have been charged if he were involved). The Investigation Committee of the PGO says the investigation will be prolonged into 2011 and claims to have found new suspects. I have always thought she was murdered because she had learned some dangerous piece of “bizness” information. Contrary to common opinion, that’s the most common motive for murdering reporters in Russia. At any event, we have here the intersection of poor prosecutors and a mob hit with cutouts between the principal and the shooters.

MORTGAGES. I have been watching the gradual spread of mortgages in Russia. In the Communist days one was assigned a dwelling. Most were privatised in the Yeltsin days but to buy something else generally meant assembling hard cash. But mortgages are slowly catching on. Putin just said that the amount of money has better than doubled – from US$2.7 billion in 2009 to US$6.3 billion so far this year. As he said, giving an insight into government policy: “People are ready to invest funds to buy housing… That is why the emphasis of state policies has shifted toward stimulating the housing market.” That’s the right approach: use the government’s power to induce people to freely invest.

WTO. Moscow’s long march to WTO membership continues: the Finance Minister said Washington and Moscow had ironed out their differences. Well, be that as it may, Georgia has a veto and has said that it will use it. It is quite preposterous that Russia, the world’s 15th or so largest economy, and rising, is not a member but Burkina Faso and Zimbabwe are. Perhaps Russians can be forgiven for thinking that it’s all politics, really.

GEORGIY ARBATOV. He died on the 1st. I believe that he played a very important role in creating the intellectual basis for the realisation that the USSR had failed across the board. As a participant in the famous parade in 1941 who actually made it to Berlin, he must have thought that the rest of his life was an improbable gift.

RE-DESIGN. The statue of Columbus Peter the Great may be moved. It is one of Luzhkov’s more peculiar contributions to Moscow, courtesy of his favourite sculptor Zurab Tsereteli. All I can say, having been pretty gobsmacked when I first saw it, is that many Parisians hated the Eiffel Tower at first. But the story is another indication that Luzhkov is yesterday’s flavour.

PEOPLE POWER. SORT OF. Twelve students from MGU have posed wearing lingerie for a calendar to wish Putin a happy birthday (58 today). I doubt he’ll be amused by this publicity stunt.

RUSSIA INC. Finance Minister Kudrin expects capital outflow to be close to zero this year. An annual curse of the Yeltsin period, it hit a record high in 2008 with the twin hits of the financial crisis and Ossetian war.

LATVIA. Hitherto rather anti-Russia (despite the strong presence of Latvians in the history of Bolshevism), the international financial crisis hit it very hard. I watch its change of heart towards its (and who would have guessed it?) more economically successful big neighbour. The reparations commission is gone; President Zatlers is trying to turn the temperature down; the Economy Minister wants better relations. In Sunday’s elections, the Russophone representative coalition ran a strong second. Reality bites.

SAAKASHVILI. Kommersant reports that Georgia’s Labour Party has filed a lawsuit at The Hague against Saakashvili. The specifics of its charge are the suppression of protests and violent takeover of Imedi TV in 2007 and the attack on Tskhinvali in 2008. Bet nothing comes of it. If the report is true that is.

© Patrick Armstrong Analysis, Ottawa, Canada (see http://www.russiaotherpointsofview.com/)