Category Archives: Climate Change

Da Russophile’s Predictions For 2013

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I just remembered I’d made some in 2012. It’s time to see how they went, plus make predictions for the coming year.

Of course I failed to predict the biggest thing of them all: The hacking that made me throw in the towel on Sublime Oblivion (remember that?), but with the silver lining that I could now split my blog between my interest in Russia and my interest in many other things. After all tying my criticism of the Western media on Russia with topics like climate change and futurism and HBD was never a very good fit. Overall I am very satisfied with the new arrangement.

Predictions For 2013

(1) Russia will see slight positive natural population growth (about 50,000) as well as significant overall population growth (about 400,000). Do bear in mind that this prediction was first made back in 2008 when a Kremlinologist who did the same would have been forced into a mental asylum.

(2) The life expectancy will reach 71.5 years, the total fertility rate will rise to 1.8. The birth rate will reach a local maximum at about 13.3-13.5 (it will then remain steady for a couple of years, and then begin to slowly decline) while the death rate will go down to about 13.0-13.2). Net immigration should remain at about 300,000.

(3) Putin will not be overthrown in a glorious democratic revolution. In fact, things will remain depressingly stable on the political front. As they should!

(4) Currently Russia is one of Europe’s most corrupt countries. While it’s certainly not at the level of Zimbabwe, as claimed in the Corruption Perceptions Index, it’s not like having the Philippines, Romania, or Greece for neighbors on an objective assessment is anything to write home about. I believe that Russia missed a great opportunity to undermine the rotten culture of official impunity that exists there by refraining from prosecuting former Moscow Mayor Luzhkov with his Montenegrin villa, billionaire wife, and his VP Mayor Resin who wore a $500,000 watch following his dismissal in 2010. Today a similar opportunity presents itself with blatant evidence of large-scale corruption on the part of former Defense Minister Anatoly Serdyukov and his female hangers-on (see the comments threads here, here at the Kremlin Stooge for details). There are conflicting signals as to whether charges will extend to the very top, i.e. Serdyukov himself. Having incorrectly anticipated a Luzhkov prosecution, I am now once bitten, twice shy. So I’ll take the lame way out and call it a 50/50.

(5) Needless to say, the economy remains as uncertain as ever, and contingent upon what happens in the EU and the world. In the PIGS the economic contraction is finally starting to slow down, but Greece is something of a disaster zone, and Spain is raiding its pension fund to keep afloat. If this becomes unsustainable this year then the EU member states will have to make some fundamental choices: Fiscal union? Or its division into a “Hanseatic” core and Mediterranean periphery? Which of these three things will happen I find impossible to even begin to foretell… As applied to Russia, under the first two scenarios, it will continue plodding along at a stolid but unremarkable pace of 3-4% or so GDP growth; if things come to a head (as they eventually must) and Germany decides to toss the Latins overboard, then the divorce I assume is going to be very, very messy, and we can expect Russia’s economy to fall into recession.

(6) No special insights on foreign policy. Ukraine may join the Customs Union; however, I suspect that’s more likely to happen in 2014 or 2015, as Yanukovych faces re-election and has to make a choice between continued prevarication between it and the EU, and encouraging his Russophone base. The creeping influence of the Eurasian Union will likely keep US-Russian relations cold; whatever the current disagreement that’s talked about (Magnitsky Act; Dima Yakovlev Law; Syria; Libya…) I lean to the “Stratfor”-like position that at heart the US just does not want what it sees as a “re-Sovietization” of the region – which the Eurasian Union is, in geopolitical terms, if under conditions much softer than was previously the case – and will thus be driven, almost by force of instinct, to oppose this trend.

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Interview with Peter Lavelle (Russia Today)

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The next installment of our Watching the Russia Watchers series at S/O features an interview with Peter Lavelle, the main political analyst at the Russia Today TV network, host of its CrossTalk debate show and Untimely Thoughts blogger. (He also has a Wikipedia page!) Peter is opposed to Western media hegemony, considering it neither fair nor useful, and firmly believes that global media should feature a diversity of voices from all cultural traditions; as such, the rise of alternate forums such as Al Jazeera and Russia Today are a boon for media consumers everywhere. Peter Lavelle actualizes this philosophy in his own CrossTalk program, in which controversial topics from France’s burqa ban to the collapse of Soviet Amerika are discussed: agree with him or not, one can certainly never get bored listening. The serious Russia watcher is recommended to join his “Untimely Thoughts” – Expert Discussion Group on Russia.

Peter Lavelle: In His Own Words…

What first sparked your interest in journalism and Russia, and how did the twain meet?

The reason I started to write about Russia – circa 1999 – came about for two reasons. First, having an education in Eastern European and Russian history gave me a reason to write about where I lived. I didn’t like much of what the commentariat was writing on contemporary Russia. The second reason was to earn some money, which later led to needing to make a living.

I came to Russia to live in late 1997. I was employed as an equity analyst at what was then called Alfa Capital. I was lured to Russia by my former boss (an American) I worked with in Poland. I never wanted to move to Russia – actually I must say I was rather adverse to Russia, having lived in eastern Europe for about 12 years. As a result of the financial crisis of 1998, I was given a generous severance package. This allowed me to stay in Russia for a while without worrying too much about money. In spring of 2000 I started to work for a small Russian bank. The money wasn’t great, but at least the bank organized and paid for my visa. Plus, I had time to write now and then. It was at this time I discovered the JRL – Johnson’s Russia List. I have been hooked on (even an addict to) Russia watching ever since.

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Russia Burning: Not Apocalypse, but its Prelude

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This post is a meta-commentary on media coverage of Russia’s drought and wildfires. Now make no mistake, I admire the yeoman work of some journalists in covering Russia burning: no doubt a few will even make their way into the classical cannon such as The Saga of the Burned Foot (Miriam Elder) or The Tale of How Aleksandr Pochkov Quarreled with Vladimir Vladimirovich (A Good Treaty). :) But in my opinion, they almost all fail to consider the key facts that render their Kremlin criticism moot and fail to grasp the “big picture”: the Great Russian Heatwave of 2010 as a mere herald of things to come.

In summary: 1) There is nothing the Russian government could have done to contain a natural disaster of such magnitude, 2) many of the lectures about how Russia could have done better to prepare itself would have been counter-productive had they actually been implemented, 3) the hysteria about Moscow turning into a giant morgue from heat stress and smog or radioactive ash clouds is overblown, and 4) the real problem, or rather predicament, is global warming, the effects of which are expected to transform Russia’s heartlands into Central Asia within the next few decades.

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Defending the Loop

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Following my posting of Russia’s Sisyphean Loop, the influential East-Central Europe expert, Vlad Sobell, wrote up an interesting critique at the Untimely Thoughts Russia Discussion Group. It addresses what may be considered some weak, or at least not thoroughly explained, points from the original article, so I thought it would be useful to reproduce it in full along with the ensuing e-mail conversation.

I first give a very condensed version (inevitably a caricature) of what he has written, and then proceed to inform him what is wrong with it.

His thesis goes as follows:

In its effort to modernise and catch up with the West (mainly for reasons of defence) Russia has been going in circles, or historical cycles – a Sisyphean Loop. Anatoly has developed a useful model (his Belief Matrix TM) which illustrates the parameters in which this cycle is set.

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Kremlin Dreams Sometimes Come True

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This April, Michael Bohm, editor at the Moscow Times, published the article New Kremlin Dreamers, which questioned Russia’s stated intention of becoming an advanced industrial nation by 2020. I wasn’t much impressed by its pessimistic assertions – for instance, regarding Russia’s hopes of becoming the world’s fifth largest economy by 2020, he falls into the frequent Kremlinologist fallacy of applying standard GDP growth rates to nominal GDP (as opposed to purchasing-power parity GDP, which corrects for exchange rate fluctuations). He similarly passes over that countries in the process of economic catch-up typically grow much faster than the leader nations, because they have greater returns to investment. Soon after Yevgeny Kiselyov wrote Dreaming of Modernization and Innovation on a similar theme.

I disagree with them on two fundamental points. First, I don’t share in their pessimism and I believe that on purely objective factors, Russia – and much of the rest of East-Central Europe for that matter – is well set to converge to Western living standards by 2020 (which will by then probably be stagnating in light of peak oil and intensifying competition for energy resources from other emerging-markets). This is a point I made a long time back in Towards a New Russian Century? and Education as the Elixir of Growth. Second, even if that were not the case there is still a lot to be said of the power and utility of positive, optimistic thinking – ambition is no sin in my eyes, and in the case of government a moral duty to their citizens. Hence this rebuttal. ;)

Two recent articles in the Moscow Times took issue with the “Kremlin dreamers” for their rose-tinted views of Russia’s destiny, alleging that the main goals of “Strategy 2020”, like becoming the world’s fifth largest economy or doubling GDP per capita, are nothing more than utopian pipe-dreams. Yet an objective look at key current trends – in educational attainment, economic growth, resource depletion and climate change – suggests that these “fairy tales” have the potential to become reality.

First, Russia’s educational profile resembles that of a First World country, unlike most of its emerging-market competitors. Around 70% of Russians go into higher education, compared with just 20-25% of Brazilians or Chinese. The quality of its primary education is substantially higher than in developing nations, as attested to by the results of international student assessments like PISA or TIMSS. For instance, in the 2006 PISA science assessment, only 15.2% of Brazilians possessed skills beyond those needed for purely linear problem-solving, compared with 47.6% of Russian and 51.3% of American students. A country needs to have sizable cadres of skilled workers to move into added-value manufacturing or complex services. Brainier nations will also assimilate technology more easily and thus their economic “rate of convergence” to developed-world status will be that much faster. In this respect, Russia and east-central Europe are in a different league from East Asia, let alone Latin America or the Middle East.

Second, while there’s no denying Russia is plagued by corruption, to suggest it is endemic like in a failed state, as suggested by Transparency International’s Corruption Perceptions Index, is ludicrous – and would frankly be obvious to anyone who has visited both Russia and some of its neighbors on the list. Its problem is that it’s a survey of outsider businesspeople and their subjective perception of the situation, which differs markedly from the experiences of ordinary people. When asked, only 17% of Russians admitted to paying a bribe to obtain a service in 2007, according to TI’s Global Corruption Barometer – putting them in the same quintile as Turkey or the Czech Republics, i.e. slap bang in the middle of world corruption, not the end. The effects of corruption must also be set in context against a panoply of other, equally important growth factors. Goldman Sachs compiled an index called the Growth Environment Score, which aggregates a wide range of stats on macroeconomic, institutional, educational and technological conditions to assess a nation’s potential for economic “catch-up”. In 2007, Russia came in at 66th out of 181 countries, tied with China and ahead of Brazil and India.

Third, to fulfill one of the main goals of “Strategy 2020” – to become the world’s fifth largest economy, all Russia has to do is surpass Germany in purchasing-power parity GDP. Since according to the IMF Russia’s GDP was 2.26bn $ and Germany’s was 2.91bn $ in 2008, this can be achieved merely by maintaining an average growth rate of 2% points higher than Germany to 2020 – which seems entirely feasible considering that from 1999-2008 this difference was more than 4%. Doubling the GDP per capita over the next 11 years is trickier and requires continuing the average 1999-2008 growth rate of 6%. Though complicated by the current economic crisis, coming close is still entirely possible.

Fourth, Russia’s economy is not overly dependent on natural resource exports – they have stagnated since 2003 and the bulk of growth came from retail, construction and manufacturing. They are however crucial to replenishing government coffers, allowing the Kremlin to spend lavishly on things like military modernization, infrastructure expansion and prospective sunrise industries like nanotechnology – thus turbo-charging its plans for an “innovation economy”. (Granted, some is wasted like the 1bn $ project on the bridge to Russki Island, i.e. to nowhere). Fortunately for Russia, there’s no reason to believe oil prices will remain low. Even now, in the depth of the biggest global economic crisis since the Great Depression, prices never fell below $40 a barrel and have now rebounded to over $60. With oil production close to or already past its peak and Chinese voraciousness unquenched, a second oil price spike is only a few years away.

Finally, according to researcher Trausti Valsson, further in the future global warming will unfreeze remote energy resources in the Far North to exploitation, open up the Arctic to shipping, bolster Russian crop yields and increase the carrying capacity of Siberia and the Far North. Russia could literally end up on top of the world.

Wells may have ridiculed Lenin as a “Kremlin dreamer” in 1920, yet precisely a decade or so later the Soviet Union began to produce aircraft, tanks, trucks, machine tools and chemicals, boasting growth rates far higher than that of any other industrial nation. And though the USSR did set over-ambitious goals for the Five Year Plans, the achievements were impressive nonetheless.

By 2020, Russia will experience increasing problems due to adverse demographic trends, slowing growth due to (paradoxically) successful “catch-up”, and perhaps waning European demand for its natural gas and dissatisfaction with an increasingly atrophied and unresponsive descendant of the “Putin system”. As such, far from being a fairy tale, the “Kremlin dream” is a strategy for maintaining Russia’s geopolitical relevance well into a troubled 21st century.

Some Thoughts on the Financial Crisis

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What with all the noise about the ongoing credit crunch, all around financial apocalypse and burgeoning signs that it is beginning to spill over into Main Street like a torrent of water from a collapsing dam, I thought it’s about time we take a look at this “sucker” (to use Bush’s blunt term) and it’s likely effect on Russia.

The MSM highlights the problems of Russian banks in attaining credit, which has lead to a drastic slowdown in construction, much harder access to credit and the near collapse of Russia’s major stock market, the RTS. Moscow house prices fell by around 25% from their peak, to my personal consternation.

Nonetheless, despite the torrent of sad tidings, I remain bullish on the Russian economy. Its strong fundamentals and relatively low level of integration into the world financial system mean that it will weather the storm much better than either the insolvent financial systems of the Anglo-Saxon sphere or the many catastrophically over-leveraged, deficit-wracked economies of East-Central Europe.

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News 2 May: Russia’s Second Oil Peak

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For all the noise being made this month about Georgia, about NATO, about Tibet, etc, possibly the most portentous is that it seems Russia hit its oil peak (strictly speaking, its second – the first happened in 1987), well in line with peakist predictions. Production increases via application of new technology, as seen in the late 90′s and early 2000′s have been mostly exhausted; there are no megaprojects to bridge the gap beyond 2010. (There has been some noise about new oil field discoveries off Brazil’s coast which could contain as many as 33bn barrels, which has our dear Economist rejoicing: “the discoveries do suggest that the gloomiest pundits are wrong to predict that the world will soon run out of oil”. Just two problems. The issue is not about the world running our of oil – it’s about economically damaging declines in production which will, and are, hitting crucial sectors like transport and agriculture. Secondly, and more to the point, even the high estimate of 33bn barrels is enough for less than half a year of today’s demand of 85bn barrels.) Massive expansion in Russia has been the main reason while oil is peaking now, rather than five years ago. This, coupled with stagnant Saudi Arabia ‘refusing’ to increase oil production so as to leave more for future generations and oil prices rising to 120$, looks set to vindicate the Oil Drum predictions below.

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News 14 Jan

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President Putin’s visit to Bulgaria to bring pipeline deal, NPP contract

A new company is being created, in which Russia will own a 51% stake, to build a pipeline to carry Russian oil via the Bulgarian Black Sea port of Burgas and Greece’s Alexandroupolis on the Aegean, so as to bypass the congested Bosporus. It will pump 35mn metric tons a year, though capacity can eventually be increased to 50mn.

Atomstroyexport, Russia’s state nuclear equipment monopoly, has also been awarded a contract, estimated at 6bn $, to build two reactors for Bulgaria’s second nuclear power station in the town of Belene. According to Foreign Minister Lavrov, more agreements could be signed on Putin’s visit to the country, timed to coincide with celebrations of the 130th anniversary of the liberation of Bulgaria from Ottoman rule by a force led by Russia’s Tsar Alexander II.

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Towards a New Russian Century?

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EDIT 11/27/08: Since writing this, I have come to realize that peak oil is real and will play a major role in any future scenario, and far sooner than the other three themes I highlight here.

The twentieth century was, above all, a Russian century. Granted, Germany was the most important challenger Great Power in the first half of the century, while in the second the United States begun to assert itself on the world stage. Nonetheless, Russia, under its Soviet incarnation, was the key focal point of world history. It is hard to imagine a movement like Nazism arising in Germany, or indeed fascism in general, without the spectre of communism hanging over a country. Similarly, the US was only brought permanently out of its traditional isolationism by the Truman Doctrine – their pledge to “support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures”, or, in other words, to contain communism.

This article will be about Russia’s place in the world in around 30 years time. In particular, will it be able to reclaim its former mantle as a superpower? Does it have the potential to usher in a new Russian century?

Firstly, we must define what a superpower is. Let us assume that it is a state with a leading position in the international system and the ability to influence events and project power on a worldwide scale. Furthermore, it must be strong on multiple planes of power – not only in the military sphere, but also in ‘softer’ areas like the economic base and cultural influence.

(Chinese political scientists have developed a metric for state power called Comprehensive National Power. There is no generally agreed-upon method by which different components of power are weighted and totalled. Nonetheless, virtually all of them have the US leading the pack, with Russia, Japan, China, France, the UK and Germany following behind in a cluster.)

Today, the world’s only country with the whole plethora of attributes – economic, technological, political, military and strategic – that make a state a superpower is the United States. Nonetheless, there are important trends at work that threaten to undermine this full-spectrum dominance. We have identified the three most important of these as economic (re)convergence, exponential growth in IT and global climate change.

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