RUSSIAN FEDERATION SITREP 26 April 2012

CHANGE. More change working away. Last Sitrep I reported about a quarter of Russians had travelled outside the former USSR. Now we find that about 90% have cell phones and about 40% of adults use the Internet daily. ROMIR tells us that 70% of Russians have savings, the overwhelming majority in Rubles, many in banks. And a per-capita GDP is getting on for half that of Japan. I believe that easy communication, travel, access to the New Media and savings accounts are the outward signs of internal change: “middle class” things. I think it’s fair to say that Russia has never been a “middle class country” before: it’s not there yet but getting there.

POLICE. More police outrages: more torture cases revealed; a conviction for same; a conviction for murder. There is some pressure building to have the Interior Minister dismissed.

CORRUPTION. Medvedev admitted his campaign had yielded only modest results. Putin said much the same thing at the end of his second term. For my money it’s Russia’s worst problem.

THE EMPTINESS OF FORMER FLAPS. Lugovoy has passed a lie detector test administered by people from the UK over the Litvinenko death. The standard view, re-typed by thousands of outlets, takes a hit.

PUTIN. Putin is stepping down as head of United Russia, because, “The president should be a non-party figure.” This is a common sentiment in the former USSR where the word “party” still has some bad connotations.

INVESTMENT CLIMATE. Putin and Medvedev have both spoken about Russia’s bad investment climate. It appears that improvements are on the agenda. Putin announced that there would be no export duties for new hydrocarbon projects on the Russian shelf and, lo! a few days later Rosneft and ExxonMobil announced a deal. He then proposed tax holidays for new production facilities in special economic zones.

NONSENSE. SIPRI claims that Russia is the 3rd largest military spender in the world after the USA and China at US$71.9 billion. That kind of money would buy a lot more than 6 Su-35s and 30 Su-30s between now and 2015. NATO used similar PPP cooking in the past to claim Russia was Number 2.

MISSILE DEFENCE. The Chief of the General Staff agreed that there is a potential threat of nuclear weapons acquisition by Iran and North Korea and that it should be jointly defended against. Earlier the Director of the (US) Missile Defense Agency told a US Senate panel that cooperation with Russia could benefit the USA. There is to be a conference on the subject in Moscow next week: maybe something will be done about this unnecessary impasse.

POLITICAL PARTIES. The rules for registering political parties have been relaxed and no fewer than 143 have applied. I’ll bet at least half are parties claiming to unite the liberals under a single leader.

ASSUMPTIONS. A commonplace of comment, inside and outside Russia, is that every time a Western power(s) overthrows a government, Russia loses business there. Doesn’t actually seem to work that way: LUKoil has started work on the West Qurna-2 oilfield in Iraq.

ARROGANCE. The US State Department’s spokesman says that the investigation into the death of Sergey Magnitskiy has been “inadequate”. Maybe it’s time for Moscow to take up Conrad Black’s incarceration. But really, what arrogance: are we to presume that Washington knows the correct answer? there is an investigation in Russia, actually.

ABKHAZIA. There was an assassination attempt against President Ankvab of Abkhazia in February. Arrests have been made and two suspects are reported to have killed themselves. One theory is that it’s connected to corruption. I haven’t heard anyone suggest that it was Tbilisi.

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