Friday, December 28, 2007

"Nashi" hate Britain. But like British education

"Vladimir Putin's controversial youth movement is to send a select group of activists to study at British universities - despite its disdain for Britain and its harassment of the British ambassador in Moscow."

A bunch of future Cambridge students?

A report by the British newspaper Telegraph, which has received attention in the Russian media as well (here an example; here another one at "Nashi are going to study in Britain despite hatred toward that country"). It is not hard to see why a simingly boring sujet about a group of young Russians going abroad to study broke into federation media channels. Two events made "Nashi" (see their Wikipedia entry) famous: their blocade of Estonian Moscow Embassy and harrassing of British Ambassador in Russia. Nashists and their backers see Britain as the nest harboring Russia's enemies, most promiment of whom are Mr Berezovski, Mr Zakayev and now gone Mr Litvinenko. Kremlin, which is behind this youth movement, recently ordered British Council offices in the country shut down like it was done also in Bangladesh, if I remember correctly.

Here you can see Ambassador Antony Brenton's hate-page on Nashi official website.

According to the instructions on Nashists' official page they send their best young activists to universities and colleges in the following countries:

United Kingdom
New Zealand

I don't know how did New Zealand and Ireland make into the list, they aren't known in Russia as "russophobic", but one country which could be there is Estonia, because Estonia has even bigger Nashi hate-page than the UK (I am not overly serious here, though in fact Estonia scores much higher than the UK in Pisa index). But the absence of our country in the Nashi recommended list for education is understandable, because Estonia, as opposed to the UK (see Telegraph's piece) doesn't give visas to known or suspected Nashi members.

One thing, which should be known about Russia - justified or not - is that country considers its own educational facilities, especially universities, among the best in the World with some foreign students from impoverished C.I.S countries, the Middle East and Africa studying in Moscow, St Petersbourg and even lower key local alma maters. Even if this notion isn't true in Russia it is considered comme il ne faut, not patriotic to openly diminish the role of the motherland's education.

Nashi, which proclaim themselves "the best of the best", with the activists promised to receive positions directly in the state related corporations and in the Kremlin administration if they are good enough (the former leader and founder of Nashis has recently been promoted). According to the official website the goal of the movement is "forming new generation of leaders", "taking place as the next ruling class" of the country. Obviously, they aren't as foolish as to believe own state propaganda. The future generation of Russian elite can't be just graduates from some Moscowsransk State Academy. If you know what I mean.

Thursday, December 27, 2007

Award-winning documentary "The Singing Revolution" on WSJ video

The Trailer

Friday, December 21, 2007

Russian editors shoot themselves in the foot, again

Kononov's "breaking news" as reported in Russia, later removed from the front and changed.

Kononov won the case against Latvia
Strasbourg court acquitted Kononov
Red partisan won

These are both the breaking news titles in major Russian media outlets (at the moment Yandex news search engine finds 54 Russian news sources reporting it today) as well as a demonstration of their pitiful failure in objectivity, neutrality and quality. In the news it was an exciting victory. But short lived. Right now, as I am writing these lines, the editors of more decent looking channels across vast Russian web space are hurriedly deleting these titles from their frontpages. Because it is a lie, too shameless to disregard even by the Russian standards.

The news in question is about alleged victory of Soviet WW2 partisan Vasili Kononov over the state of Latvia in the Strasbourg Court. Kononov was convicted for WW2 war crimes he committed in Latvia against civilians. He appealed his conviction in the European Human Rights Court. This story in its original shape can't be found anymore in the English edition of RIA Novosti (the state "news agency") or in the English channel Russia Today (the state TV station), but as of now it is still on the page of at least one English language channel naive enough to use such sources, see a piece here (update: removed). The case is different, however, in Russia proper, where the editors of thousands local online and print media aren't as sensible to actually make any changes. Excerpts of the text from

The FINANCIAL -- According to RIA Novosti, the European Court of Human Rights has acquitted a Russian World War II veteran convicted in Latvia of war crimes, a Russian-language newspaper in the Baltic state said on December 21.
Vasily Kononov, 84, who led a guerrilla party during the war, was convicted by Latvian authorities for ordering the killing of nine villagers in 1944, with some reports saying that the dead had included a pregnant woman.
The republic was occupied by German troops at the time. Kononov admitted the killings, but said they were Nazi collaborators, and that they had been caught in cross-fire.
"This is complete victory, one I have sought for eight long years," the Telegraf paper quoted Kononov as saying.
The court found that "Latvia has no grounds for reprisals against me," Kononov said, as quoted by the paper, adding he learned about the verdict on December 20.
The veteran had accused Latvian authorities of treating him in an inhumane and humiliating manner.
A retired police colonel who was born in Latvia, Kononov was arrested in 1998 and sentenced to six years in prison in 2000 on genocide charges. In 2004, after several years of litigation, his sentence was cut to 20 months in prison and the charges changed to "war crimes." Kononov filed an appeal with the court in Strasbourg the same year.
In the fall of 2005, doctors diagnosed Kononov with a life-threatening il
lness, which prompted the European court to speed up the examination of his case. Russia pressurized Latvian and European authorities over the case.
Latvia, along with neighboring Estonia and Lithuania, became part of the Soviet Union in 1940, and the Soviets wrestled control of the three Baltic nations from Nazi Germany in 1944.
While Russia maintains that the Red Army liberated the Baltic states of Latvia, Lithuania and Estonia from Nazi invaders, many local residents fail to distinguish between the Soviet and Nazi periods.

The news in question even in its erroneous way is a much softer version of what the Russians actually say at the moment ridiculously claiming "complete victory" and that the court recognized Latvia as part of USSR (see here 1, 2, 3, subject to change as the editors are dealing with the story).

Not hard to imagine the Strasbourg Court never took that decision, in fact it hasn't taken any meaningful decision, the Estonian Daily Päevaleht reports. My guess is that the poor old fellow was confused. For the Russian papers it was enough proof what 84 years old, probably soft on the head veteran told them by phone. He's already got the decision, 45 pages long, he won on all accounts and Mr Putin was proclaimed European of the Year (just kidding). Was the document, likely some procedural paper, which he received from the court and mistook for the awaited victory even written in a language unsophisticated enough for him to understand?

The European Court of Human Rights publishes press releases of the rulings daily. But for the news makers, however, the absence of the alleged verdict's text on the web page of the court did not seem discouraging. The most characteristic is the fact that the thought about asking for opinion of the second party to "Kononov vs Latvia" case, which is the Latvian state, as good journalism principle would suggest, never crossed the minds of the numerous agencies in Russia. The text they published bears exclusively Mr Kononov's personal excitement.

Kononov "breaking news'" left trail in Google:

Google News in Russian, dozens of articles on "Kononov acquitted by the court" (temporary link)

Clicking on the Google link to Russia Today TV produces following result (below). Did the fools actually air the piece?
(however at given moment you can still enjoy similar pieces by the main Russian TV channel TV1 as it was aired, at this address, as well as similarly inadequate video stories on different TV channels, TVC and O2TV, in Russian)

RIA Novosti changed the story. Instead of "acquittal" as in Google it now tells about "hearing the case". still shows RIA Novosti saying "Strasbourg acquits WWII veteran convicted by Latvia of war crimes" while clicking at the very same link now produces following, different story: "Strasbourg to hear Russian WWII veteran's case vs. Latvia":

For the overview of the true opinion of the court on the Baltic cases see this Wikipedia entry.

Wednesday, December 19, 2007

What lies on the other side

Estonian political scientist Karmo Tüür (here's his unrelated blog in Estonian) once spotted this photo in local Russian newspaper Molodezh Estonii:

Note: I revisited this entry in 2015 and found the link gone as the newspaper in question did not survive the turmoil's years. I replaced the original picture with a random photo of Narva - Ivangorod city-pair, found in Google. The striking feature remains visible enough in those google-able photographs, with self-styled “Energy-Empire’s” city covered in darkness while Narva fortress can still well apply for a title of a "beacon of hope", visually.
The photograph depicts two opposing fortresses on the banks of river Narva, at night. If you look tensely into the darkness you should be able to see the silhouette of a second fortress on the right side of the picture (take a look at the same fortresses in daytime).

Tomorrow the river between these two fortifications will once again become the easternmost border of Europe (outside Scandinavia), this time of its
Shengen area sans frontières, which is the most intimate form of the European integration in which "the friendship between peoples" practically manifests itself, whiout the help of armor divisions. The river between the fortresses will thus assume the role of the border between the free travel zone and Russia, as well as it will continue to serve as the line separating it from Estonia.

As one recent international press
piece rightfully implies Narva (left) on the Estonian side is a troubled, ethnically Russian city, for which the whole Estonian re-independence thing created uneasy feelings. But as time since 1991 passed and the two countries drifted in their development further and further away from each other, the city was increasingly attached to Estonia because of the dark presence of its evil twin, Russian Ivangorod (right). Narva is sometimes described as troubled because in the Soviet period it was almost completely Russified and even today the presence of Estonia proper is bleak and unwilling. But thankfully for the ability of the local Russians to both see and visit the entity across the river, since then gradually Narva has become one of the most loyal predominantly non-Estonian communities.
Because the people are scared. I've been to Ivangorod in 2000 and I was scared too.

For those who prefer analytical approach I'd like to demonstrate this experience numerically by comparing the two countries, using scientific studies by some two dozens different think tanks, institutes, international organizations, loaded with chiefs of departments and Nobel prize winners:

In green color Narva's homeland position in the ratings, in red color Ivangorod's country standing, with smaller number being higher position in the list of countries.

UN Human Development Index (2006) 40 - 65
EIU Quality of Life (2005)
68 - 106

Economic Freedom Index (2006)
12 - 122

Economic Freedom of The World Report (2007)
8 - 112

World Competitiveness Report (2006)
25 - 62

World Competitiveness Yearbook (2007)
22 - 43

Capital Hospitality Index (2006)
7 - 76

Ease of Doing Business (2008)
17 - 106

KOF Globalization Index (2007)
28 - 47

A. T. Kearney Globalization Index (2007)
10 - 55

Travel and Tourism Competitiveness Index (2006) 28 - 68

Corruption Perception Index (2006)
24 - 121

Press Freedom Index (2006)
6 - 147

World Peace Index (2007)
28 - 118

World Democracy Audit (2006)
18 - 124

State of The World Liberty (2006)
1 - 124

Environmental Sustainability Index (2005)
27 - 33

Climate Change Performance Index (2008)
35 - 50

Digital Opportunity Index (2007)
24 - 92

World Information Technology Report (2006)
20 - 70

EIU E-readiness Index (2007)
28 - 57

Mothers Index (2007)
17 - 36

Here are the links to the relevant studies, given in random order because I just copy-pasted them from another blog: 1 2 3 4 5 6 7 8 9 11 12 13 14 15 16 17 18 19 20 21 22 23

Crossing the river bridge into Ivangorod makes those numbers quickly grow in flesh and obtain form in miriad of differences, which set Russia apart from Europe, starting with sickening public toilets and ending with the hopelessness in the people's eyes.
This is why looking again at the crude limestone fortress almost invisible at night with only the howling of wild beasts giving away the presence of life on the other side of the vast body of water I can't help it but recollect the following verse: bring them all and in darkness bind...
in the land of Mordor, where the shadows lie.

I have a feeling that this attitude could be just one of several things uniting myself and many decent Narva inhabitants. And this feeling is good.

Saturday, December 15, 2007

The Indepenent went to Liepaja, ended up in Kremlin

In a surprising move for British press one of the island's publications, the Independent, lashed out at Estonia and Latvia for allegedly bad treatment of their Russian-speaking minorities. The author of this piece, Mr Chris Schüler went to Latvian city of Liepaja, where he made following discoveries about the situation of Baltic states' former Russian colonists:

Non-citizens cannot vote, obtain an EU passport or travel abroad, leaving them effectively stateless – a situation which has drawn sharp criticism from the United Nations, the Council of Europe and Amnesty International.

He also uncovered further truth:

Unemployment is twice as high among Russian speakers as among Estonians, and research by the University of Tartu has found that, for those in work, the pay gap has widened since 1989, to peak at 25 per cent in 2003.

Russian-speakers account for 58 per cent of Estonia's prison population and approximately 80 per cent of HIV-positive cases. They have a higher incidence of respiratory diseases, alcoholism and drug addiction and, according to a paper published in the British Medical Journal in 2004, significantly higher rates of suicide than native Estonians or Russians in Russia.

Even though the numbers-based facts in question are probably correct there are two problems with the picture in the Mr Schüler's piece. First, the particular passages about many ills befallen the Russians in the Baltic states seem as if they came out right of Kremlin PR people's mouth. The issue here is that there's no Estonian point of view provided to present an alternative opinion. There's just Kremlin's babble going on for dozens of kilobytes of text. Unfortunately Mr Schüler here failed the standards of good journalism. We are going to see the results of this failure in a moment. For now we need to remember that this is a piece in the press of the UK, thus the one-sideness is perhaps not surprising because that country holds just 24th place in the World Press Freedom Index, as opposed to Estonia's 3rd. This can explain why there are occasional errors made even in the respectable looking outlets. I have to admit though that the majority of the press in the UK has in fact been covering the situation generally within the frames of adequacy, therefore the conclusions made in this blog entry should not be extrapolated too broadly.

Nashi owe to comrades from the Independent a hug and coupons for free WW2 makaroni soup.

Second problem, which derives from the first one, this being the absence of Estonian POV, is the problem of interpretation of the facts provided. I agree that the 25% difference in wages between Russians and Estonians mentioned in the piece is bad. This admitted following question remains: what difference could be seen as "normal" or "common" and what difference is deserving "concern"? Zero per cent, 5 per cent, 15 per cent? Is 25 per cent cut bigger or smaller than the cut in wages between the United Kingdom's aboriginal and immigrant population? What about EU average? World average? If it were discovered, say, that elsewhere such differences are even higher what would it tell us about Estonia?

Let's actually attempt this comparison, albeit on small scale. Entering following keywords "difference in wages", "United Kingdom" and "immigrants" into Google search engine provides, at the top, a study in the UK just about this issue. On the page 46 of this study we discover, that in the 90s, the immigrants in the UK earned overall 10 per cent less than the indigenoius people. However Bangladeshis (283 thousands of them in the UK, Wiki) earned an amazing 48% less. That's virtually two times less! I figure that our Russians earn, of course, less than our Finnish minority (thousands of people, which moved from Finland earn a lot more than indigenous Estonians), but much more than Bangladeshis in the UK compared to indigenous people of the Kingdom of Unity. I wonder what says the Independent on the disturbing situation of the poor - literally - Bangladeshis? Mr Schüler? Anyone? I guess Bangladeshian Pravda is not doing the job of "educating" the schülers of the World.

Similarly, no background is provided to back up the rest of the list of the alleged Estonian minorities' problems, including vodka and drugs. Without having the proper background, studying the relevant facts we can't be sure about anything. Much less can we rely on article, written of Russian FM web page.

But wait! How about the criticism of Estonia by the United Nations, the Council of Europe and Amnesty International, referred in the article? They surely had taken care of all relevant background and statistics in order to be objective, right?

Yes and not. In fact more not than yes. The truth is that background added in the one on one comparison it is the United Kingdom, not Estonia, which would win the competition for the title of the bad boy. Because, as I said, it is easy to say "look, here the UN criticized Estonia", when in fact it may be a good thing because maybe for the UN it is normal to criticize a country twice. Of course, you won't find out about it unless you listen to the other party in the dispute, not just the KGB school graduate lawyers.

Let's analyze the work of the Council of Europe, one of the leaders of which, Mr Van der Linden is famous in my country for both his deep estophobia and his prominence in developing his business project in Russia (what a coincidence!).

The web site of the Council of Europe has built in search option. Let's obtain the list of officially adopted documents using following search criteria: AP Documents, Adopted Texts. Keywords: Estonia, United.
After running the search, which provides an extensive list of references to official documents of the European organization let's then attempt to analyze if the two countries, which are the UK and Estonia, encountered any diffuclties on their quest to freedom and human rights... Since 1996 because this is the year when Estonia became a member, the UK became a member some 30 years earlier. Here I present my list of "unfavorable documents", which are the documents specifically condemning, giving recommendations or describing problems in two countries. You can check the choice yourself by running own search.

The results:

Documents, unfavorable to Estonia:
RECOMMENDATION 1313 (1997) 1 on the honoring of obligations and commitments by Estonia;

Documents, unfavorable to UK:
RESOLUTION 1342 (2003)1 The Office of the Lord Chancellor in the constitutional system of the United Kingdom;
RESOLUTION 1389 (2004)1 The Council of Europe and the conflict in Northern Ireland;

Looking inside the texts reveals that these documents are in every sense comparable. For example in 1997 the Council gives four recommendations to Estonia on the process of Estonia's accession to the Council. And in 2003 it gives three recommendations to the UK on the issue of the Office of the Chancellor. Of course, the resolution of Northern Ireland crisis could be seen as outstanding because of its gravity, but I am willing to scale it down to match the Estonian case.

So, as demonstrated above, the United Kingdom scored twice more reprimands from the Council. The UK gets two resolutions in 2003 and 2004 as opposed to one recommendation from the Council in 1997, when Estonia was entering the organization, six years after becoming independent from under occupation in 1991.

Now let's move on to unofficial documents of the Council, in particular to its Commission Against Racism and Intolerance, which should be particularly relevant to the question raised by the Independent. According to the web site, the (sub)organization is periodically reviewing the situation with regard to minority human rights in all member states of the Council, making recommendations as necessary. So, how many shortcomings have the Commission uncovered in its latest reports on the UK and on Estonia? The web site has all the reports nicely lined up. The reports, in turn, have all the defects outlined.
In Estonia 54 issues were discovered, while in the UK the number was 57! So much about "sharp criticism".

Because of lack of time I am skiping much of the rest of the pasquille leaving out a number of other claims, obviously fed to the journalist by the "benign face of Russian nationalism in the Slavic cultural associations flourishing throughout the region", with the exception of the female taxi driver raising the existential question:

"They can sack you not because you are a bad worker, not because passengers have been complaining, but because you don't know Estonian well. I don't have a job and I cannot pay for Estonian language courses. How am I going to live?"

For me personally her solution could be moving back to Russia, where she should be a citizen in accordance with the 1947 international convention on warfare, which forbids civilian colonization of the occupied territories and 2005 Putin's decree calling on the abroad-living Russians to return to Motherland (50 thousands returnees from across the globe were planned for 2007, 400 agreed to return). At the same time I understand that she personally would prefer the regime in Estonia (or in the UK for that matter, after all the racism in the UK doesn't seem much more problematic). But if she stays why not take free language courses provided in Estonia for years en masse. It is even hard to imagine a bona fide Russian interviewee who wouldn't know about the free language courses, because as I said they are massive and popular among the locals.

But for Mr Schüler from the Independent I have different advise: use the time in the Baltic states wisely, learn about freedom, democracy and tolerance from Estonia.

Thursday, December 13, 2007

Kremlin considering another crushing blow to business

Citing unfair privatization and profit loss to the state budget the newly elected Kremlin-friendly Russian parliament is considering confiscating 20% of 10 years profit of big Russian business, which was part of privatization of former communist state assets in the middle 90s.

There are two reasons given for the decision which would transfer some 62,5 billion dollars from private firms to state budget: unfair privatization in the 90s and, read between the lines, alledged superprofits enjoyed by the private entities in the eyes of the MPs and their backers (see this story in Russian).

"All pover to capitalists, to workers and peasants - death" (

Is Russian business uncommonly profitable?

But is it a fact that Russian business actually has accountable "unfair profits"? What would happen if the situation in Russia's economy in the 90s wasn't as corrupt and unfair as it in fact was?

Let's compare the results of Russian undertakings to the undertakings in the least corrupt country of the former Soviet block, Estonia, from where your author is writing this piece. In 2006 Estonia had been estimated by international anticorruption body Transparency International to hold 24th place in the World corruption index, surpassing some of the Western countries, while Russia enjoyed a place among or near some of the most corrupt - somewhere around 140. Even though the particular figures are from this century, Estonia has been considered one of of the least corrupt former Soviet countries in fact since re-appearance in 1991. Privatization in Estonia, happened roughly at the same time as it happened in Russia has also been perceived as generally fair. This fact established, let's see how much money private players earn in two countries.

In the 1990s post-Soviet private business was in the beginning of its formation and operation. Since the second half of the decade working market economies with varying level of freedom emerged in two countries.

According to the latest available consolidated statistical data on the year 2005, Russian private undertakings produced about 105 billion dollars in pure profits (I used data from this piece in Russian, which says that Russian firms earned 85 billion dollars in 10 months of the year 2005). Estonian private operators succeeded in the same year in earning 3,02 billion dollars (1 USD = 13,2 EEK) of profits, according to statistical database Again, this is the latest year on which consolidated statistics are available (free access).

What do these numbers demonstrate? Estonian undertakings earned 3 billion dollars in profits, while Russian firms earned only 105 billion dollars in profits. Because Estonia has approximately 100 times smaller population (1,35 million vs 143 million), per one inhabitant Estonian businessmen achieved more than 3 times more profits than Russian businessmen.

Of course, this is very rough estimate, and it misses many different variables, but at the same time it is clear that Russian business is not unusually profitable, at least in the part which is visible and accountable. But it is the visible and accountable part of the business the government can tax, right? Perhaps things changed to the better for Russia since 2005, given the spike in energy prices. But so far I am claiming that the earnings in Russia have been a mere 1/3 of what they would have been had the environment worked as in Estonia.

Taking out a very large part of the private earnings - 20% of the profits earned in 10 years - is undoubtfully going to hurt. A lot. And, going further with the Estonian analogy, participation in unfair privatization has not made the difference on the account sheets. Instead, any Russian superprofits must have gone into grey accounts on Cyprus, where the authorities aren't going to get them anyhow. That's why the honest enterpreneurs are worried and those in the black exonomy, both criminal and FSB-related, aren't. And if you have shares in transparently traded Russian funds you should too.

Tuesday, December 11, 2007

Russia reinvented the solution for low election turnover problem

It seems I might have discovered workable solution for a problem, which has been one of the most troubling for the politicians and election officials in Russia: low voters' turnover at the elections.

Indeed, although the turnover in Russia's latest parliament elections was an improvement over the previous record with some 63% of people showing at the poll stations, the overall worry remains and the optimistic remarks by the election officials don't sound convincing.

The problem with low turnover is a serious one. In Russia low turnover is generally considered a form of opposition or at least a sign of lack of support for the system, for the ruling elite or for the state as whole (for example see this opinion in Russian language). Non-showing voter is considered a voter not simply uninterested, but potentially not trusting the system. That's why enourmous measures to attract voters are normally applied. The December 2007 parliament elections were perhaps outstanding in the amount of measures they demanded.

This year measures included following activities at and around polling stations (see for example this overview in Russian):
  • opening full size grocery shops with state-subsidized goods, at the locations;
  • "free presentations" of food stuffs, such as sausages, breads and dairy products, right there;
  • lotteries with main prizes, including new cars. The particular approach is reported in Tyumen region. You probably never heard of this county and frankly I am not sure about spelling it correctly, but I've got a reasonable feeling it is likely to be at least the size of France.
The most thorough are the former mining region of Kuzbas and the city of Kemerovo, where medical doctors, lawyers, hair dressers, free nightclub tickets and even.. circus and gynecologists were offered free of charge (see this news in Russian). Some of the doctors listed are reported to have been stationed, with their medical equipment, right at the spot where the people express their will; while the others were placed on hold in the local clinics, including those to examine female intimate body parts, provided they have voting receipt intact.

Even the homeless were cared for by the local administration with an unseen warmth as they were fed and transported to the polls in Moscow, the sources tell.

The media, including says that city of Kemerovo (520 thousand inhabitants) in central Russia beat the competition as the local administration managed to administer to the people about 3000 different mass events, starting with local professional and amateur theater performers and ending with free passes to the parties in karaoke, sport, night and other clubs in the city.

Historically, however, Russia has not always been so troubled by the low voting activity problem. Let's take a look at the experience of the Soviet Baltic republics, in particular the success of the 1940 elections in Estonia, Latvia and Lithuania (see this Wikipedia source in English), in particular in Latvia:

# July 5, 1940 - Decree issued announcing new elections; the Latvian democratic parties organize under the National Committee and attempt to participate.
# July 9, 1940 - Vilis Lācis, the Soviet-appointed Minister of Internal Affairs, orders the National Committee shut down, its most prominent members deported. Deportations are already taking place from territory not (yet) part of the Soviet Union.
# July 14-15, 1940 - Rigged elections held in Latvia and the other Baltic states. Only one pre-approved list of candidates was allowed for elections for the Latvian parliament, the Saeima.[5] The ballots held following instructions: "Only the list of the Latvian Working People's Bloc must be deposited in the ballot box. The ballot must be deposited without any changes." The alleged voter activity index was 97.6%. Most notably, the complete election results were published in Moscow 12 hours before the election closed. Soviet electoral documents found later substantiated that the results were completely fabricated.

This example is applicable today not only because official Russia still considers the 1940 "elections", including 9 days of "campaigning" under the guns of tens of thousands of Red Army fanatics valid, but, in fact, similar techniques are applied today. The "surprise" of this years' election was not Lartvia, but the Chechen Republic in Southern Russia, where 98,2% participation was achieved (this is official, see here or in English here). Indeed, only 0,8% of the registered electors were not able to participate, perhaps mortally ill. This particular number is better than even in the Baltics in 1940, when Stalin was el presidento, though in Russia as whole the turnover was only 63%. Chechnya, however, is the republic where members of Russian military personnel are killed almost daily. Chechen Kremlin-appointed leader Roman the Executioner (also known as Kadyrov the Younger) explained this miracle simply by existence of "strong civic position" among those subjected to his rule, without blinking an eye.

Have their family members gone "voting" too? Human Rights Watch protograph.

So what is the recipe for high electoral activity in Russia? The turnover seems stronger in proportion of the number of troops stationed in the country as well as in proportion to the European Courts rulings on the cases of murder, rape and robbery, add "mass" where necessary. Chechnya has hundreds if not thousands of cases pending before the Strasbourg court, on war crimes perpetrated by the Kremlin troops and paramilitaries in that tiny republic. So far only about a dozen of such cases reached a formal verdict, but the share of upheld complaints has, to my knowledge, so far been 100%. So when I say "murder", "rape" or "robbery" it is in fact quite motionless and as close to a mere legal assessment as it can get.

In the light of Kremlin plans to set up "a body to monitor human rights abuses" in the Western Europe (it is serious, see here), I dare to speculate that Russia is increasingly getting ready to export "democracy", so well working in parts of her own territory. Just in case. Already Russians seem to be implementing similar plans in the stubbornly independent former USSR Republic of Georgia, where Kremlin oligarchs are financing the opposition to the government of that country. If or when the time is right, this re-born Russia-Soviet democracy can be offered to other countries, including yours and mine, with the successes of 1940 in mind.

The following assumption may seem to be too far going, but looking at the results of Chechnya I can't honestly make go away the thought that murder, rape and robbery are the Russian recipe for "democracy".

Who the hell are former communist countries?

In my opinion the term "former communist countries" frequently used to refer to the countries of the former USSR and its allies is controversial. Even without going into the Baltic states' legal countinuity doctrine. Instead the term "former socialist countries" should be used. Of course, such term could be understood as referring to Germany or any other EU memberstate where the socialists recently lost seats in national parliaments. But the vast majority of people would have no problem figuring it out correctly.

Let's consider the self-definition of the pre-1989, 1990 and 1991 Easter Block countries. Indeed, according to the constitution of the USSR, 1977 edition (see here in Russian), the most important part under the title "Basis of the state order and politics of the Union of the Soviet Socialist Republics", USSR was in fact Socialist country, exactly as his acronym "USSR" reads. First chapter of the basic law gives following definition:

The Union of the Soviet Socialist Republics is a socialist all-people state, which expresses the will and the interests of the workers, peasants and intelligentsia, the working people of all nationalities and peoples of the country.

In fact, the USSR and most likely all of the coutries now known as "former communist", while embrasing communist ideology, both called by the name and proclaimed itself socialist in every official document, statement and ideology textbook. While it would be correct to call these countries "formerly with communist ideology", they never actually considered themselves communist, but socialist. Many of them - though by far not all - had communist party as the ruling as well as single party, for them it was not as significant.

And it remains insignificant even today when we see the neo-communist, neo-KGB Russia where the by-the-book communist party remains the only real, though weak opposition in the parliament filled with Kremlin "technical MPs". Whatever term we use the reality will not change - the entity was called USSR then, it had a number of satellite and dependent countries. Now it is alone and it is called Russian Federation. Par countre, Hungary was looking to the West and freedom even during the formally ideologically communist period, the evidence of this fact abundantly present in the events of 1956.

The following Russian proverb should be remembered "it is not the clothes which make the man beautiful, but the man makes beautiful the clothes".

Tuesday, December 4, 2007

World business is cutting ties with Russia's FSB "investment fund"

European Bank for Reconstruction and Development has issued official statement in which on behalf of itself and its partners announced the end of co-operation with Russian investment fund Fanansgroup, whose CEO Oleg Shvartsman, in an interview several days ago in his capacity of one of the business leaders receiving orders from Kremlin, revealed existence of far-reaching plan to redistribute property in Russia, from the current private owners to Kremlin and its security services.
In the interview given to business daily Kommersant, 3,5 billion dollar fund's manager claimed to work within the framework of former security service association numbering 600 thousand personnel with the goal of "re-privatization" of large part of private assets in Russia.
According to the interviewee the so called re-privatization constituted takeover of businesses from their current owners using administrative pressure to draw the market value of the undertakings down and then, after their the price of the acquisition drops, purchase them for select people in FSB and presidential administration.

Today Russian media reported (see this piece in Russian language) that foreign partners, including EBRD, which previously had plans to invest in the fund, which in addition to the financial sources in the West also received money form Russia's state, withdrew their participation amid scandal which erupted after the publication.
Obviously, there were voices denying involvement, in particular some of the high ranking officials mentioned by Mr Shvartsman as being behind the operation denied everything, though they obviously could not deny knowing Shvartsman as he is clearly not the last man in Russia. But in the end, after several days, even Mr Shvartsman himself changed his mind and started to deny his own revelations as "misinterpreted". The interview, however, was both signed by Mr Shvartsman with own hand on every page of the script as well as audio-recorded by the newspaper (all those materials in Russian language are accessible at the following address on the Kommersant website). It is understandable that before publishing something like this the newspaper took measures to fortify its position in order to avoid the fate of less thorough Russian news channels, such as NTV television station in 2000. Despite these efforts there are reasons to believe that by publishing such stories Kommersant puts its relative editorial independence in danger.
Not without significance is also the fact that before Mr Shvartsman started to deny his own words Mr Shvartsman's wife Mrs Olga Heifits (Ольгa Хейфиц), answering to a phone call from Russian newspaper New Times claimed her husband unavailable because "he is currently in the administration of the president" (see following piece in Russian language). Not surprisingly, Mr Shartsman also denied this meeting taken place, too (told to deny everything?). But if this topic is so inconvenient why then did Mr Shvartsman say what he said in the first place? It seems to me that he is just the kind of person, one of the so called noveaux russes, the other example being famous oligarch, billionaire Mr Berezovski, who just can't resist the temptation. Unlike Berezovski, however, Shvartsman is the real deal and (although this could change quickly) he is connected to Kremlin. More importantly, the business says he is right.

Despite the efforts to cover up the leak, the business elite confirmed everything Shvartsman said. Russian media outlets asked several key business leaders, including powerful CEO of Russian energy monopoly RAO EES Anatoly Chubais about Shvartsman's claims and he too confirmed the information. Other interviewees include Russian bankers and non-exiled oligarchs. They all said Shvartsman is telling the truth (see this piece in Russian language).
The statement of the European Development bank reads:

EBRD, RVK and Tamir Fishman decide not to proceed with Russian venture capital investment
The Russian Venture Company, the Tamir Fishman Group and the European Bank for Reconstruction and Development have decided not to proceed with the creation of the proposed Tamir Fishman Russian Venture Capital Fund, following statements by a minority shareholder in the Fund’s management company. All three were investors in what was to be a fund to invest in high-technology in Russia, remain actively committed to supporting the Russian market and the goal of developing advanced technologies. The Russian state investor in the Fund, the Russian Venture Company (RVK), the Tamir Fishman group, an Israeli merchant bank and venture capital specialist, which is the majority owner of the Fund’s management company were to be partners in the Fund, along with the EBRD as an important investor. The EBRD looks forward to the opportunity of working with high quality fund managers such as Tamir Fishman in future investment vehicles to promote Russia’s fledgling venture capital industry and provide support for the country’s high-technology sector. The Russian Ministry of Economic Development & Trade organised a public tender which was won in May 2007 by the Finance Trust, a Russian company originally designated to manage the Tamir Fishman Russian Venture Capital Fund.
Press contact: Richard Wallis, Moscow - Tel: +7495 787 1111; E-mail:

The move of EBRD shows that Kremlin's operatives have nearly exhausted even seemingly bottomless European tolerance. After the hit at foreign investors in 2003 when Yukos shares value plummeted due to criminal charges (bankruptcy and suspicious acquisition of assets followed) the revelations by Shvartsman ought to become the next big hit at Western trust in doing business in Russia. Because Western interpreters probably have involvement as partners in many of the undertakings, connected to the privatizations of the state assets, which in this capacity can become target.
The picture is obscure, but in my view Western investments inside Russia have slim legal protection. I believe there are some, most likely sufficiently vague clauses in PCA agreement between EU in Russia, which can theoretically be relied upon by the Europeans doing business in Russia to protect their business from "re-privatizers", but even the fate of that agreement remains unclear as it is expected to expire in 2008 without clear perspective of extension due to recent worsening of relations, induced by Russia.
Russia is not a party in WTO and unlikely to have investment protection agreements with many countries, apart from those which remain from the USSR times (about dozen). For example, such agreement has been concluded with the US in 1990 and most likely it remains in force today. However, the agreements in question normally stipulate an obligation of "equal treatment", which in practice means that if Moscow harms an entity with both Russian and foreign shareholders, it does not infringe the equal treatment condition. Kremlin never had any problem harming Russian investors, unless they were from Kremlin itself. Of course, this is just an opinion and provides no proper legal analysis of the situation. On the other hand even the proper legal analysis would be a mere indicator of the environment, as legal system in Russia is managed from above according to current priorities. But the events of recent years continue to serve as a warning to everyone doing business in Russia about the risks of dealing with criminals.

Additional Background. Financial Times on the scandal (read the full text on the page):

"Bank drops Russia venture fund plan" (By Catherine Belton in Moscow)

The European Bank for Reconstruction and Development dropped plans to create a Russian venture capital fund after a shareholder in the fund's management company claimed he was leading a "velvet reprivatisation" drive for the state.
The EBRD and the Israeli Tamir Fishman group, which was also to be a major shareholder in the fund, made the announcement just three days after Russian daily Kommersant published an interview with fund manager Oleg Shvartsman in which he claimed he was managing industrial assets on behalf of members of the Kremlin administration.
The interview, published two days before parliamentary elections last weekend, provoked controversy in Moscow.

Mr Shvartsman told the newspaper he was setting up a company called Social Investments that would "hoover" up strategic assets in the regions through "voluntary-coercive" methods. He said he co-owned a company, Finans-Group, that managed $3.2bn (£1.6bn) in assets and was "closely connected to several political figures". "We manage their assets. We have ties with the presidential administration, and with its power bloc," he told Kommersant. Finans-Group, he said, had formed an alliance with law enforcement structures incl-uding the interior ministry and the Federal Security Service to gather oil assets and other mineral wealth. Adding that he reported indirectly to Igor Sechin, the deputy chief of the Kremlin administration and chairman of state-controlled oil major Rosneft, he said the aim was to take over assets that were not following the "correct" tax regimes. Finans-Group is registered at the same Red Square address as the Kremlin's property department.