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Archive for May, 2004

VMROís Power Struggle, and an Arrest on Ice

Balkanalysis.com has learned that the “International Community”- the western embassies, think-tanks and ruling NGOs- is placing enormous pressure on the Macedonian government not to issue an arrest warrant for former PM Ljubco Georgievski and his closest associates, for the time being.The government had allegedly made a secret plan to move on [...]

Putinís Strategy: Optimism, Nationalism and Economic Discipline

Small countries without financial or technological superiority must rely on human ability in order to thrive. Yet when the country in question happens to be rather big and remain some degree of financial power, as is the case with Russia, than intelligent human leadership can have far greater ramifications. Verily, one imagines that the mighty US might reign supreme in all aspects, were Vladimir Putin leading it, and not the ignoramuses currently in charge. Addressing the nation in a televised address this week, President Putin laid out his immediate priorities as easing chronic poverty and improving the economy. In any state, whether a formally communist one such as Russia or raging capitalist one such as the US, such talk from politicians is always well received. “It’s the economy, stupid” the Clinton Administration realized early on. In contrast, their Republican successors, led by President Bush’s unbelievable sense of personal mission, have gotten mired in the rhetoric of patriotism, freedom and national toughness and firmness of resolve, not to mention the chauvinism of underlying cultural greatness. Unfortunately, this sort of emotive speech has a limited temporal appeal and, like the pep talk of some college football coach, runs on sheer adrenaline. Now that American citizens are not only tiring of war but also jaded in light of the administration’s lies, it’s an open question as to whether they can carry on successfully with the same platform as we head into election season.

Indeed, Putin’s speech would be almost impossible to imagine in overblown modern America. By sticking to people’s real concerns, he endeared himself further to a people who re-elected him overwhelmingly in March- even though realizing he was the only choice. According to the San Francisco Chronicle,

“…Putin said his goals were to build a prosperous, ‘mature democracy’ in which families would no longer be cramped into tiny, dilapidated apartments, all citizens would have access to free health care, and children would be able to receive higher education regardless of their means.”

The incredible irony, of course, is that the man vilified in the American media as being an unfeeling strongman ends up sounding like more of a touchy-feely leftist than any Democrat seeking election in America. Eradicating poverty? Free health care? Affordable higher education? One can only imagine the difference implementing even one of these would make for the quality of life in America.

Yet there was more. Putin’s boldest promise this week- to double Russia’s economy within a decade- has been treated with both disbelief and optimism. Since so much depends on oil and gas exports, doubts have emerged over whether the Russian economy can diversify sufficiently as to allow a more balanced economic output- a key goal of the Putin regime. Avers Robert Richards, Credit Officer at Standard & Poor Moscow, “…sustained growth requires a diversified economy. Oil will not carry Russia along for that long.”

While the US hailed Putin’s plans to increase Russia’s oil production in an attempt to combat high prices, some question whether the country can maintain its explosive growth in this sector. “…Russian exports hit a post-Soviet high of 9.01 million barrels per day in April,” reported Reuters yesterday. “But pipeline export capacity has reached ceiling of 4.0 million bpd raising fears that the boom in output will slow down soon.”

Another Reuters report yesterday, however, argued that Putin’s promise “…is no pipe dream if he can push reforms and wean the country off its dependence on oil exports.” Whether or not he can do it, he will be safely out of office by that point (unless he amends the Russian constitution to allow a third term, something which few expect). That said, displays of optimism can have no detrimental effect on the shrewd Putin’s political future. Yet in any case, “…it’s a good rallying cry and points to the main issues facing the government,” an international official told Reuters.

Yet there is solid reason for at least cautious optimism. “…With the economy clocking up eight percent growth in the first four months of 2004,” the analysis continues, “the official government forecasts of 6.6 percent growth this year, revised upwards on Friday, still looks conservative.”

The managers of Russia’s economy are indeed aware of the need to not exaggerate all-around gains on the basis of natural resources alone. “…The economy ministry, perhaps sensing that oil prices must fall sooner or later, is playing it safe and forecasting growth of around six percent in 2005-07. That assumes oil prices at $29 a barrel for Russia’s Urals export blend, below Friday’s $34.60.”

Meanwhile, the NY Times whimpers impotently about encroaching Sovietization and Putin’s alleged bullying of (enormously wealthy and politically meddlesome) non-governmental organizations. However, the president can afford to ignore them. He has cleverly managed public opinion through understatement and a certain degree of tact. He has refused to fight other people’s battles, allowing George Bush to fall flat on his face in Iraq. Putin was no doubt aware all along that the invasion would fail and a year on, Russia’s bargaining power would be higher.

In any case, as an excellent article in the latest Business Week shows, Putin’s alleged anti-markets tendencies have been stressed only by politicians and their like. As for real American investment, it has only increased:

“‘…we’ve seen an enormous uptick in the number of American blue-chip CEOs coming to Russia in the past six months,’ says Andrew Somers, head of the American Chamber of Commerce in Moscow. Cargill is set to break ground on a new $102 million vegetable oil plant in Voronezh. On May 6, Alcoa Inc. (AA ) announced it was buying two big aluminum plants from Russia’s Rusal. Lennart Dahlgren, country manager for Swedish retailer Ikea, which plans to invest some $1.5 billion in Russia during the coming five years, says companies should think about the long-term prospects . ‘I’m saying to all the big companies: ‘Just come here for a week, visit the shops, and see how people spend.’”

As opposed to the popular perception of Vladimir Putin as a restrictive, anti-markets statist, Business Week argues that

“…not many in the West know how much Putin has already achieved. By combining tight fiscal policy with a managed float of the ruble, his government quickly restored stability after the 1998 crisis. The government kept a lid on expenses, using the gains from high oil prices to pay off debt. Now the trade surplus is $60 billion, the budget is solid
ly in the black, and gross domestic product is growing by 7% a year. Under Putin, the state has paid wages and pensions on time while demanding prompt payment of taxes in cash, killing off the ‘virtual economy’ — a seemingly intractable tangle of debts, arrears, and barter that characterized Russia in the 1990s.”

Surely, however, the surpluses and growth have a lot to do with the natural resource wealth of the world’s second-largest oil exporter? Not merely that, however. “…Russia’s growth is also being driven by a surge in productivity across all sectors… overall, labor productivity is growing by 14% a year.” These gains can be identified according to specific sectors: according to the World Bank, “…productivity grew by 107% in telecommunications, 48% in agriculture, and 42% in construction between 1996 and 2002.” In fact, the article adds, Russia could even ride out any coming fall-off in oil prices, with these sector increases, reserves of $90 billion, and improving national accounts. “…Even a fall to $20 a barrel would leave the economy growing by around 5% a year.”

Not many know that in his academic background, Vladimir Putin penned a thesis devoted to advocating Western free-market reforms. Now he’s also found a way to counteract the “shadow economy” so pervasive in countries in transition. Estimates quoted by Business Week claim that “…between 1998 and 2002, the black market’s share of Russia’s GDP shrank from 45% to 37%.” This decline is attributed to Putin’s decision to reduce personal income tax to a flat 13%:

“…that brought millions of citizens onto the tax rolls. With their taxes lower, many workers now are pressuring employers to report their full income. Why? Because the workers are applying for mortgages, car loans, and retail credit, and want to prove to their banks that they have the income to afford the payments. Bank lending is surging by 30% a year, while ruble deposits rose by 50% last year.”

Putin is often criticized for his alleged authoritarian rule. While there are certainly arguments in favor of this thesis, we may consider that if true it is a.) not so bad and b.) historically validated and required under present circumstances. Whether it be Ivan the Terrible or Peter the Great, Russia for its own idiosyncratic reasons has always flourished under a strong individual leader. The affection Russia’s voters have shown for their president is not coerced, as Saddam Hussein’s citizens were, to cheer on their leader. In Putin’s apparent strength, the people seem to feel stronger themselves. Don’t forget that Russia- and most of the world- don’t share (at least yet) the kind of rampant individualism that characterizes America and the West. So what, if Putin’s populism is just a form of calculated deceit?

Russians love chess. And they also know how tough and even dangerous it is to succeed, not to mention live, in their country. When they show affection for their president it is partially an expression of their admiration for his ability to stay alive and a step ahead of the competition. Like the way red-blooded Americans approve of their own president because he seems like the kind of guy who can work a charcoal grill and talk about baseball.

When criticizing Putin’s alleged authoritarianism, Western critics should indeed keep in mind the peculiar characteristics of his people, as expressed perfectly here. Like the bizarre adaptations of traditional pastoral woodcuttings made to depict scenes from mafia life, there something uniquely Russian about Putin’s latest incarnation:

“…visitors to an exhibition in Saint Petersburg are likely in for a shock when they shake hands with a gilded statue of Russian President Vladimir Putin, as it says in a robotic voice: I Love You.

The exhibit is one of several dedicated to the Russian leader in an art show entitled Thoughts for the Fatherland, which is meant to be thought-provoking rather than promote a personality cult, according to its organisers. The gilded statue by artist Yevgeny Kuznetsov, which shows Putin in a suit and tie and with blue eyes, is accompanied by instructions to manipulate the president.

Press on the pedal and Putin holds out his hand. Press the button on his hand and ‘you will discover what he thinks of you.’ In other works of art, he is depicted as a muscled Roman emperor or a saint on an icon.”

Putin has also been criticized for his strong-arming of powerful oligarchs, such as Yukos president Mikhail Khodorkovsky. However, the corrupt, mafia-connected oligarchs did have to be reined in. Anyway, some of the disrepute Putin has suffered from the West has to be considered in light of the specific accusers. For example, Richard Perle and his neocon chorus have been big backers of the richest man in Russia (Khodorkovsky), claiming him to be the champion of the free market and not a political intriguer who got rich during the corrupt and uncontrolled wave of privatizations during the Yeltsin era. The neocons like him so much, in fact, that they even took out newspaper advertisements in his defense last year.

However, now that Perle’s posse members are in the sights of the FBI regarding their close contact with Ahmad Chalabi- allegedly, practically in the service of Iranian intelligence- a lot of clout will be taken away from these detractors of Putin. He can sit just back and smirk.

Another improvement is that under Putin’s tenure the mafia has been restricted to some extent, and forced to seek greener pastures in Australia and elsewhere. Today, “…businesses are far less exposed to the mob violence that once marred and often ended the lives of Russian entrepreneurs”:

“…according to the Internal Affairs Ministry, there were 70 contract killings in Russia in 2002, compared with 600 to 800 annually a few years earlier. ‘Under Yeltsin we were freer, but under Putin it is more civilized,’ says Gennady Klimov, editor of Karavan, a local newspaper in Tver, a city 100 km from Moscow.”

Most Russians seem to be happy with the trade-off. So long as the economy continues to expand, the president will remain popular. Putin’s only potential trouble spot is in the area of defense. Although he received a “roaring ovation” on Wednesday when pledging to enhance Russia’s nuclear arsenal with “the most modern systems of strategic weapons,” Putin has also to face the reality of a declining and decrepit army. Recent months have seen embarrassments like a failed missile launch, and most recently the “mothballing” of the navy’s Typhoon-class submarines, “…depriving Russia of one of its most powerful nuclear delivery systems.” Even worse, the admiral fired over the loss of a nuclear submarine last summer in the Arctic Ocean claimed that the entire fleet may be finished by 2008.

A further potential headache is the intractable war in Che
chnya, made more acute by the recent assassination of the republic’s president. And, despite emotive public response to Putin’s overtures for control of the renegade province, reports of chronic low morale in the army don’t help.

Yet these are problems that if not surmountable can at least be put out of public view. Since being appointed with the blessings of former President Yeltsin in 1999, Vladimir Putin has stuck to a rigorous and disciplined course of action for restoring Russia’s battered reputation in the world as well as its economic clout. So far, in the voices of his many detractors can be heard not a few traces of wistful jealousy.

Learn more about the mysterious President Putin, his background and the changes he’s brought to Russia over the past four years- with books like Putin’s Russia by the award-winning journalist Lilia Shevtsova, Vladimir Putin and the Evolution of Russian Foreign Policy or the evolution of Russia’s feared secret service following the collapse of Communism in KGB: Death and Rebirth or, more generally, Jeffrey T. Richelsen’s comprehensive account of the great international intelligence programs of the 20^th century, A Century of Spies: Intelligence in the Twentieth Century.

Troy, the Olympic Games and Elias (Part 2)

The film ‘Troy,’ which we discussed in the first part of this article, revels in its moments of passion and bloodshed, ostensibly revealing something fundamental about the spirit of the ancient Greek world. Yet the film did not and could not have adequately conveyed a mindset and attitude to civilization fundamentally at odds [...]

Troy, the Olympic Games and Elias (Part 1)

The mixed reception Wolfgang Petersen’s new film, ‘Troy,’ has received from the critics is indicative of the ambivalent relationship the film starring Brad Pitt has with both itself and with the written version of the ancient epic that has come down to us as one of the most important parts of [...]

Holkeri Flees Kosovo, Just in Time

Harri Holkeri, the 4th UNMIK chief to serve over the past 5 years in Kosovo, resigned after “only” 10 months on the job yesterday. He cited “health reasons” as the reason for his departure.
You can say that again.Like all of the foreign workers on the job now in Kosovo, Holkeri had [...]

Goshev Elected as New Governor of National Bank

On Friday the Macedonian Parliament elected Petar Goshev to be the new governor of the country’s National Bank. The ill-attended session saw a total of 56 votes in favor and 6 against. A former minister of finance from November 1, 2002 to November 5, 2003, Goshev was dismissed prematurely out [...]

Land Mines, Leftover NATO Bombs Endanger the Balkans

“The truth is out there,” the X-Files’ David Duchovny used to say when pondering paranormal phenomena. Last week, Mexican military officials had a similar reaction to their own UFO sighting. However, for their counterparts in far-off Kosovo, a different kind of sighting has been taking precedence: UXOs, or “unexploded [...]

Balkan Countries Surprise at Eurovision Love-in

While they didn’t win, some came very close and all in all it was a marvelous showing for the Balkan countries at this year’s Eurovision song contest in Istanbul. Turkey, last year’s winner, did an excellent job of hosting the event, displaying between acts montage after montage of the country’s [...]

Whatís Bouncing Around in Bushís Head? Explaining More Idiotic Policies

As the savagely funny “Get Your War On” comic described George W. Bush last month,
“…his mind is like one of those spinning cages where you pull out the winning lottery numbers- but there’s only four goddamn little balls in his cage: ‘freedom,’ ‘democracy,’ ‘terror,’ and ’stay the course.’ He opens [...]

Can Turkey Salvage Sabotaged Relations with Armenia?

Armenia’s president, Robert Kocharian, will not appear at the NATO summit of 27-29 June to be held in Istanbul, owing to the continued political alienation between his country and its historic nemesis to the west.
While signs seemed encouraging not long ago that Turkey might end its 11-year blockade and open the border [...]

Boskovski Case Just Keeps Getting Weirder

Lending an appropriately Balkan twist to a week of intrigue, Macedonia’s former interior minister, Ljube Boskovski, resurfaced in Croatia yesterday, ending a week of speculation as to his whereabouts. His successor and probably soon to be prime minister Hari Kostov was dismayed to find that Boskovski was not laying low in [...]

A Summer of Trouble for the Balkans?

2004 is supposed to be a year of joyous celebrations and commemorations in Europe. From the induction of 10 new countries into the European Union, to Turkey’s sponsorship of a June NATO summit and Eurovision Song Contest in May, in addition to the Olympic Games in Greece, 2004 is [...]

Reader’s Choice: April’s Most Popular Books

Once again, tell-all books about Bush, Iraq, and the war on terror topped April’s most popular list: Bob Woodward’s Plan of Attack, Richard Clarke’s inside account of deception in George W. Bush’s war on terror, and the brand new memoir from Joseph C. Wilson, about the treasonous “outing” of his wife, CIA employee [...]