RUSSIA INC. A growing nervousness about the economy: the Economics Ministry has substantially dropped its forecast of GDP growth to 2.4% from 3.6% and the Minister warns of a possible recession this autumn; the outgoing and incoming heads of the Central Bank of Russia are concerned and so is Putin. Russia is still too dependent on energy exports and, as Europe sags, so do they. Coming over the horizon is North American energy production; dominance, some predict – the USA is close on Russia’s gas output already and, together with Canada, exceeds it. Diversifying its economy will not be easy for Russia Inc – perhaps desperately, Medvedev has offered a state prize to anyone who can solve the conundrum. As one strategy, Russia is more and more looking to China as a customer for energy but, while that gives Russia a growing market, it doesn’t do much for diversification.

CORRUPTION. And still more cases opened, arrests and sentences – too many to keep listing. The Prosecutor General told the Duma that recorded corruption crimes were up nearly 25% to 49,513 and that more than 13,500 individuals had been prosecuted. I imagine the number is up because the pace of investigation has stepped up. Fraud, misappropriation of budget funds (defence contracts especially) and embezzlement involving abuse of office predominate: in short, officials are the greatest thieves. There can be no doubt that an effort much bigger than anything we have seen in twenty years (ever in Russian history?) is under way. One may wonder, however, given the slowness with which these sorts of crimes are investigated and prosecuted, whether the prosecutors have bitten off more than they can digest.

NGOs. Moscow believes many Western-supported (especially Washington) “human rights” NGOs are actually state-sponsored operations to weaken or discredit Putin. I am more and more coming to agree; see this for my reasons. In order to get a grip on this, foreign-funded NGOs engaged in political activities must register as “foreign agents”. Despite the fact that this is simply an imitation of long-standing American legislation, the anti-Russia crowd is in full cry is if this were a world first, but only a simpleton would believe that foreign government funding is disinterested just because it says it is. We will hear much about brave and innocent NGOs being persecuted. Already GOLOS is complaining (but it hasn’t registered, it is political and it does take money from Washington). Washington huffs away, Moscow huffs back. Meanwhile the Russian government is giving money to NGOs which, of course, puts the G into the O. Including this potentially interesting scheme: an online portal to promote public petitions (site).

DUELLING LISTS. The Americans named 18 on their “Magnitskiy List”. Russia responded with its 18, mostly connected with Guantanamo (they’re sooooo yesterday to mention that). Those naïve enough to believe Washington really means human rights when it talks about them should read the last paragraph of this from the Washington Post. “Human rights” are an arrow in the quiver to be fired at some targets and not at others.

Navalniy. He is on trial for embezzlement; he insists he is innocent. Readers of the Western media are told that Putin’s opponents are always innocent, but for those who want a more informed discussion, Karlin summarises what is known and Mercouris analyses it. While the timing is admitted to not be a coincidence (see Markin’s statement), there does appear to be some smoke here.

PUTINOLOGY. A Levada poll finds that, while his approval rate is still very high at 64% and he by far leads all others as a potential President, over half of the respondents do not want him to run again. Perhaps not coincidentally, he earlier said that upon retirement he will take up literature, sports, jurisprudence and public projects. Well, there goes my bet that he would open a fishing camp (presumably not inviting Medvedev to it).

CYPRUS. No doubt weary of years of Western moralistic grandstanding, Putin could not resist pointing out that the confiscations show how risky investments in Western financial institutions can be. By the way, Jon Hellevig reports that in 2002 Putin actually warned of this possibility.

GEORGIA. Ivanishvili says the August 2008 war should be investigated, Saakashvili says he will not cooperate. Perhaps he doesn’t want to remind people how often he changed his story or that “Saakashvili lied 100 percent to all of us”.

© Patrick Armstrong Analysis, Ottawa, Canada (http://www.russiaotherpointsofview.com/ http://us-russia.org/)

BEREZOVSKIY. Suicide after the loss of the rest of his money seems the most likely theory although his “friends” are being as suggestive as possible (See Dunkerley on these nebulous suggestions). But I notice that this time, the Western MSM, ever ready in the past to uncritically re-type an anti-Putin handout, is holding back: maybe the judge’s opinion of Berezovskiy’s veracity has persuaded them not to be so credulous. And so the Western media has lost one of its favourite sources for anti-Putin stories. Perhaps we will now learn more about the many mysteries surrounding Berezovskiy. The murder of Paul Khlebnikov (the ur-source of the “journalists murdered in Russia” theme), connections with Chechen slavers and kidnappers between the wars, funding for Shamil Basayev, the apartment bombings, the shaping of the Litvinenko story (every character in it worked for, or had worked for, him), the murder of Anna Politkovskaya, the shaping of the Pussy Riot story. Then there’s the story that he wanted to go back to Russia. Lots of rumours, few facts. I am amused that this obit by Masha Lipman manages to avoid all these questions.

LITVINENKO INQUEST. Postponed until October – that will be about the seventh anniversary of his death and still no official finding on what happened! They say that MI6 was paying him. Not the open and shut story we were sold and getting less so by the moment.

MAGNITSKIY INQUIRY. This investigation lumbers on (as far as I can see the Russian words used do not have to be translated as “trial”; as in “outrageous trial of a dead man”). It is also looking at Browder, who is not dead. One would think that the opportunity to investigate the whole matter would be welcomed but the West has already decided, on nothing much more than Browder’s assertion, that the charges are utterly false. Here’s the essence of the charges of tax evasion and an interesting side case (Karpov) that may surprise conventional views.

INTERNET. Russian use continues to grow: the latest finding by the Public Opinion Foundation poll is that 43% of Russian adults go on it every day and 55% monthly. And the Russian Internet is the same as ours: including a site that translates selected Western news outlet products into Russian. So they know what’s going on.

CHINA. A happy meeting between Putin and the President of China and then onto the BRICS meeting in South Africa. Some frisson in the USA about the possibilities of Moscow and Beijing getting closer. Well, what can I say? It was fun to kick Russia around over the past few years, but could it really last forever?

IT’S THAT TIME OF YEAR. Latvian SS veterans march in Riga; Moscow hyperventilates. I wish Moscow would stop falling for this every year: it’s part of Latvia’s neuralgic past (Lenin’s bayonets in the Bolshevik coup as well as two SS divisions), and, in a few years, it will be gone.

GEORGIA. An interesting war of letters. Some European Parliament members wrote a letter to Ivanishvili claiming a “democratic backslide” by the new government and intimating that this would “close European doors for Georgia”. It is probably not a coincidence that Saakashvili was speaking to MEPs about the time they wrote the letter. Ivanishvili replied that they were praising a “façade democracy” and the Parliament Chairman warned them not to take the “former regime” as their “standard” (“police regime”, said he). The Swiss Ambassador has weighed in on Ivanishvili’s side. A lot of people placed a lot of bets on Saakashvili and it’s hard to lose and be made a fool. But this attempt by Saakashvili to work the old magic has failed: see below.

GEORGIA DUAL POWER. As readers have known, I have been apprehensive that Saakashvili would attempt a coup rather than depart the scene; perhaps fearing this too, former President Shevardnadze urged him to resign early for the good of the country: “That’s enough, you’ve turned the country upside down”. But perhaps I can relax: the Georgian Parliament unanimously (ie including his party) passed a Constitutional amendment stripping him of the power to appoint a new government without Parliament’s approval. He, to his credit, (or is it Washington’s?) signed it yesterday. So, dual power tensions between now and the end of his term in October are much reduced and we get closer to the miserable, failed terminus of this last “Colour Revolution”.

CYPRUS. It’s evidently OK to steal depositors’ money if they are Russians. But maybe (very likely – let’s face it) the big guys got out in time.

© Patrick Armstrong Analysis, Ottawa, Canada (http://www.russiaotherpointsofview.com/ http://us-russia.org/)

ELECTORAL SYSTEM. In the beginning, the Duma’s 450 seats were chosen half by party list and half by single mandate with a 5% threshold. Then Putin I changed it to all party list and 7% threshold. Putin II has just sent a bill to the Duma to change it back to the original. So what was the point of all that? The new law forbids electoral alliances – obviously another attempt to force like-minded people to unite. But we have 20 years of observational experience that Russian liberals refuse to sink their (small policy but large personality) differences. On a personal note, I was an observer in the 1995 election when 40-some parties ran. The party vote ballot was the size of a newspaper sheet and few voters had a clue. Are we going back to that?

CORRUPTION. Investigations all over the place. Phoney academic degrees; embezzlement at RusHydro; two frauds in the Penitentiary Service; tax evasion at RUSAL; a former Duma Deputy. And not to forget OboronServis: Prosecutor General Chayka says 25 separate cases have been combined, the total cost of which is now said to be over US$400 million. The MoD is target-rich: a general is suspended, a former financial administrator jailed, a possible rotten rations scandal, and a supplier case. And the Olympics appear on the horizon: cost inflations. Sergey Ivanov has said that no one is immune. The Central Bank has weighed in with a statement that illegal money transfers amounted to US$49 billion in 2012 and that every tenth company making settlements through its payment system dodged tax payments in 2012. Obviously these cases have been in preparation for some time and investigators are digging. Definitely a serious campaign.

DEMONSTRATIONS. The Constitutional Court ruled that the minimum level of fines for violations of laws governing protests should be lowered and the Duma promised to do so soon. A couple of demos on Saturday: a Udaltsov-sponsored one pulled a couple of thousand and a pro-government one two to three times as many although there was a strong smell of fakery about it.

DEMOGRAPHICS. The Health Ministry tells us that infant mortality was 8.7/1000 in 2012 which is a very considerable increase from the 7.1/1000 claimed for 2011. The true reason for the increase is that Russia has now adopted the WHO standard of definition. See Adomanis.

SECURITY CONCEPT. A new one is out but I haven’t read it – I’ve read so many of these impenetrable, repetitive, long-winded and curiously pointless documents in my career that I really have to nerve myself up to tackle another one. Judging from what Vlad Sobell tells me (he has read it) the major changes are a more pessimistic world view (and who would contradict that?) and much smaller expectations of cooperation with the USA (ditto). The main themes of multi-polar, UN, international norms, that have been repeated over and over, remain. I have never understood why Moscow produces these things – Western commentators typically go through them to find a sentence to spin to keep the anti-Russia fire burning. I suppose they are thought to serve some bureaucratic function, but, having laboured in a bureaucracy, my guess is that they are filed, unread.

ASSETS, REAL AND OTHERWISE. Moscow and Havana are a bit closer to dealing with the US $30 billion or so that Havana owes. They say part will be written off and part restructured. I expect Moscow will be lucky to get a kopek on the ruble. This should remind us of a post-Soviet reality. When the Russian Federation took over the USSR’s debits and credits, it took responsibility for debts to groups like the Paris Club that expected to be paid in full and acquired “assets” like Cuba’s debt. Indeed, when we add to these real obligations and worthless credits the capital flight from Russia and the supply of underpriced energy to its neighbours, it’s clear that Russia was actually subsidising people to its west in the 1990s.

MORES. It is often forgotten in the West that Russians are somewhat old-fashioned in their attitudes. We are reminded of this truth when prosecutors issue a warning to a department store decorating its windows with mannequins having sex. What would have happened in London, New York or Toronto in the early 1960s?

GEORGIA-RUSSIA. More progress. Russian inspectors have cleared the way for the resumption of wine and mineral water exports. The two are holding regular meetings about improving relations where they can. Saakashvili, as usual, is spreading disinformation: his latest fable is that his defeat was a made-in-Russia operation. (Will his American flacks pick this up?) But, fortunately, he doesn’t seem to be getting any traction: the Georgian parliament today issued a unanimous statement on the course of Georgia’s foreign policy which greatly toned down the anti-Russia stuff.

© Patrick Armstrong Analysis, Ottawa, Canada (http://www.russiaotherpointsofview.com/ http://us-russia.org/)

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 133rd 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”.

© Patrick Armstrong Analysis, Ottawa, Canada (http://www.russiaotherpointsofview.com/ http://us-russia.org/)

MAGNITSKIY. Yet another one-sided piece of re-typing has hit the West. The posthumous “trial” of Magnitskiy is being described as bizarre, Kafkaesque, absurd and so on without any background Here is some. A couple of years ago the Russian Constitutional Court ruled that, in cases where the defendant died before the verdict, a trial could/should be held so that the defendant’s name could be cleared (or not, as the case might be). Unusual perhaps, but there is a certain amount of sense. (For example, many of the people condemned by Stalin have been re-tried and exonerated; see here, for example, from 1988). The process in the case of Magnitskiy began about a year ago. For whatever reason, his family does not like the idea. The trial was immediately postponed at the objection of the family, so maybe that’s the end of it. I am informed that British law has a similar procedure which is called a “judicial inquiry” but otherwise proceeds very like a trial. Given all the accusations that have been slung around in the Magnitskiy case, one would think that an inquiry would be welcomed. Or are there parties who only want one verdict? Where is RT in all this, by the way? Isn’t it supposed to give the Russian point of view? But the shape of the story has now been set and it will be added to the indictment.

NOT WASTING THE MONEY. We hear little about how Russia spends all the money it pulls in because, I suppose, it wouldn’t fit the easy meme of corruption and anti-democracy. In Ottawa we take snow removal seriously (230 cms a year) and I was interested in this film of snow removal in Moscow showing an equally serious and capital-intensive operation. Note how much of the equipment is foreign-made.

CORRUPTION. And yet another scandal in the Ministry of Defence has appeared – embezzlement involving contracts in the Missile Forces. In an interview Medvedev said that about 50,000 corruption cases were currently being investigated. I think we can conclude that something is happening.

TIT FOR TAT. The Russians have created a “Guantanamo list” to counter the “Magnitskiy Bill”. How much longer will this nonsense go on?

ADOPTIONS. The Supreme Court ruled that US adoptions with court approval before 1 January will go ahead.

BEREZOVSKIY. More financial troubles: after losing his last case, a British court has frozen some of his assets in a case brought by his former girlfriend. Less money to fund anti-Putin stories.

STRATFOR AGREES WITH MOSCOW (FOR ONCE!). Western activities in Syria are pretty short-sighted.

US-RUSSIA. The new US Secretary of State, John Kerry said he hoped the US and Russia “can find some way to cooperate”. I hope so too, but given observation over the last decade or so, “cooperation” seems to be Washington’s way of saying “complete agreement with us”.

GAS WARS. The essential facts are that in 2009 then-PM Tymoshenko made an agreement on Russian gas that had a “take or pay” clause in it and the price of the gas was tied to oil prices. Prices are up, Ukrainian consumption down and Gazprom is billing US$7 billion for the gas not consumed. Or did Ukraine activate a clause that allowed it, with advance warning, to cut the volume? As always in these things, two stories and, as always, there are claims that it’s political pressure from Moscow. So, how will this be spun? I believe that, the last time around, Ukraine lost a lot of the credibility that it had formerly been awarded but the anti-Russian lobby is always ready. But the other fact is that Ukraine can’t pay – it’s already trying to get loans from the IMF – and Gazprom is not likely to get much for its claims.

INTERESTING. The head of Israel’s Security Council is in Moscow. Connection perhaps with this? The two countries have quite good relations and many common interests.

GEORGIA-RUSSIA. Catholicos-Patriarch Ilia II was in Moscow, meeting with Putin, among others. An obvious sounding-out of chances to improve relations. A Georgian delegation will be there next week to talk about lifting the import bans; successfully I expect. Things are thawing.

BUYER’S REMORSE. One of the principal ambitions of Latvia upon independence was to get into the EU. It did in 2004. President Berzins says adherence to the EU’s directives may threaten its independence.

TYMOSHENKO. The Ukrainian Prosecutor General has accused her of ordering the murder of Yevhen Shcherban in 1996 during Ukraine’s gas wars. Always been rumours of her activities as Ukraine’s “gas princess”.

© Patrick Armstrong Analysis, Ottawa, Canada (http://www.russiaotherpointsofview.com/ http://us-russia.org/)

ADOPTIONS. Putin would have been wiser to have vetoed the adoption ban and forced parliament to overturn it (Art 107.3): it has become the latest leitmotif of anti-Russia propagandists and has taken attention away from the equally absurd Magnitskiy Bill. But here we are. Protests in Moscow, St Petersburg and some other cities against it on Sunday attracted maybe 20K in total and have given the opposition something new to object to. There is said to be a petition calling for its ban and some opposition deputies are going to attempt to have it overturned in the Duma. And, as always in Russia, it’s far from clear exactly what the ban affects. However it wasn’t just a reaction to the Magnitskiy Bill: 19 adopted Russian children (out of about 40,000) have been done to death by their adopters in the USA (here’s one, another and an abuse trial) and there have been misgivings in Russia for years. (The usual “news” sources pretend the 19 are the total number of adoptees who have died). Putin complained that existing treaties are useless for allowing access by consular officials (federal-state jurisdictions are apparently the problem). So there is some background here.

MALFEASANCE. The OboronServis case continues with another arrest of a senior official and probably another one to come. Meanwhile the former Defence Minister refused to testify to the Investigative Committee, giving a written response instead. So this case is neither over nor is it being swept under the rug and nor is Serdyukov out of it. The St Petersburg corruption case has seen another arrest. Defence Minister Shoygu dismissed a senior military doctor following the deaths of some soldiers from pneumonia. Another police crime.

READING. Generally speaking, English-language MSM coverage of Russia is a pastiche of clichés, distortions (see the 19 above for a recent example), outright falsehoods and the lazy re-typing of hostile news stories. The economy is perennially about to collapse, Putin is widely hated, Moscow is ever trying to take over its neighbours and schmoozing with nasty dictators. Allow me to recommend an exception: Mark Adomanis who writes for Forbes. He adopts the unusual technique of actually looking at the facts: here for example on how the Russian economy is not, actually, about to collapse. Lots of people do this sort of thing in the blogosphere, but few in the MSM. By reading his stuff you will be less surprised by reality.

RUSSIAN PERCEPTIONS. Speaking of mere data, it is not uncommon these days to read that there is growing opposition to Putin, Russians chafe under his yoke or something like that. However, reality is quite different. Last Sitrep I mentioned a Gallup poll showing Russians at the average in happiness among their neighbours; here is more long-term data from VTsIOM. Running from the first quarter of 2005, apart from a severe dip in 2009 when the world-wide financial crisis hit, we see a relatively steady gentle improvement in feelings and expectations all round. Russia is not a country trembling on the edge of despair. One should maybe look elsewhere: for the past 12 months more than 50% of Russians have felt their country was heading in the right direction; the comparable US figure is somewhat lower.

“SPEAKERS’ CORNER”. Two reasonably central locations in Moscow have been made available for demonstrations. No permit is required, just tell the City that you’ll be using it. Will Limonov, who still likes the street theatre of unauthorised demonstrations and attendant Western coverage, go there? Bet he doesn’t.

GEORGIA. Saakashvili was re-elected – if that’s the right word: even the normally complaisant OSCE had some reservations – in January 2007 for a five-year term. Last year he quietly got parliament to extend his term to October. A million Georgians are said to have signed a petition calling on him to resign next week when the five years is up. Last year’s election was the first change of power in Georgia in the post Soviet period that was not the consequence of a coup and thus far has remained free of street theatre. We will see what happens; Saakashvili’s rhetoric is getting pretty hot: “destructive political goals” The other interesting development was the release of 190 “political prisoners” (the Georgian parliament’s term, not mine). More prisoners are to be released (Georgia under Saakashvili had one of the highest incarceration rates in the world). And finally, former Defence Minister Okruashvili is likely to have the charges manufactured when he turned against Saakashvili dropped. I can’t help wondering how Saakashvili’s flacks are reacting to all this: certainly the sort of things Putin and Medvedev said about him are acquiring some legs, aren’t they? (Why do I go on about Georgia all the time? Well, dear readers, Georgia has been The Stick with which to beat Russia for 20 years: a “democracy” bravely resisting “imperialistic Russia”. A largely fanciful trope but an influential one).

© Patrick Armstrong Analysis, Ottawa, Canada (http://www.russiaotherpointsofview.com/ http://us-russia.org/)