The Anti-Magnitsky List

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Here is the list of US citizens publicly barred from Russia in response to the US Magnitsky List. Are you familiar with any of them?

Individuals alleged to be involved in the use and legalization of torture and indefinite confinement of prisoners – the “Guantanamo list”:

1. David Spears Addington – Chief of Staff of the U.S. Vice-President Dick Cheney (2005-2009);
2. John Choon Yoo – Legal adviser at the U.S. Department of Justice (2001-2003);
3. Geoffrey D. Miller – Commander of Joint Task Force Guantanamo, which administers the U.S. military detention centers at the U.S. Guantanamo Naval Base on Cuba (2002-2003)
4. Jeffrey Harbeson – Commander of Joint Task Force Guantanamo (2010-2012)

Individuals alleged to be involved in abuse of Russian citizens’ human rights abroad:

5. Jed Saul Rakoff – U.S. District Judge for Southern District of New York;
6. Preetinder S. Bharara – U.S. Attorney for the Southern District of New York;
7. Michael J. Garcia – Former U.S. Attorney for the Southern District of New York;
8. Brendan R. McGuire – Assistant U.S. Attorney for the Southern District of New York;
9. Anjan S. Sahni – Assistant U.S. Attorney for the Southern District of New York;
10. Christian R. Everdell – Assistant U.S. Attorney for the Southern District of New York;
11. Jenna Minicucci Dabbs – Assistant U.S. Attorney for the Southern District of New York;
12. Christopher L. Lavigne – Assistant U.S. Attorney for the Southern District of New York;
13. Michael Max Rosensaft – Assistant U.S. Attorney for the Southern District of New York;
14. Louis J. Milione – Senior Special Agent of the U.S. Drug Enforcement Administration;
15. Sam Gaye – Senior special Agent of the U.S. Drug Enforcement Administration;
16. Robert F. Zachariasiewicz – Special Agent of the U.S. Drug Enforcement Administration;
17. Derek S. Odney – Special Agent of the U.S. Drug Enforcement Administration;
18. Gregory A. Coleman – Special Agent of the Federal Bureau of Investigation;

I’m familiar with two of them.

John Yoo, of course – the guy who provided much of the “legal” basis for both Guantanamo and the Iraq War. I don’t view him as a war criminal or anything like some of the liberal leftists do. Nonetheless, if Russia is providing a “symmetrical” response to the Magnitsky List, it couldn’t bar a more appropriate person. Yoo himself seems to be taking it in good stride.

The other guy I’m familiar with (too familiar with) is Preet Bharara who was just now the subject of a gushing hagiography from Mark Galeotti. In reality he is a thug who thinks who thinks that going after online poker players’ money is a good use of US investigative resources. Oh, I know full well that he was really blacklisted for his actions against Viktor Bout – a legitimate arms trader who the US only took a disliking to after he started selling weapons to the wrong people. But while I may not care much about Bout, I do care about my money, especially that which was frozen after Black Friday, and the hit to my expected earnings once the biggest online poker vendors pulled out of the US in its aftermath. (How else do you think I blog and write books without a regular day job?). So for this reason I am extremely happy to see Bharara on that list in the knowledge that maybe, just maybe it will cause him some spot of inconvenience one day.

Mark Feygin Treating Pussies Badly

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Everybody in the Western media seems to have forgotten Pussy Riot. Well, not forgotten, they still wheel them out every so often as symbols of the repressiveness of the Putin regime – but news of actual developments in the affair have come to a standstill. Which is a pity, because they undermine the commonly accepted narrative about what it was in the first place.

I am talking, of course, about the estrangement of Pussy Riot from their original trio of lawyers – Mark Feygin, Nikolay Polozov, and Violetta Volkova. This began approximately when they Pussy Riot lost their case and got sent off to jail, which led them to switch lawyers. Their new lawyer, Irina Khrunova, managed to get Samutsevich (one of the Pussies) released by arguing that she was not an active participant in the “performance.” Khrunova continues to represent the other two who are still in jail. Here is pretty much the only article you will find out about this in the Western media. (Funny that it’s in The Independent, and not in the Guardian, which was otherwise Pussy Riot’s most fiery supporter).

Then Mark Feygin, via his wife’s company, tried to register the Pussy Riot brand. Pussy Riot claims that he did not have their permission to do so and that it was an attempt to cash in on the case. Feygin denies this, saying that he did have permission and that his intentions were to prevent OTHERS from unscrupulously profiting off the name. He says the newspapers smeared him. In any case this is a moot point anyway, as Russia’s patent office denied them their trademark anyway; but this was just one of a series of wedges that would alienate the lawyers from the Pussies.

Things moved up into critical mode when Samutsevich asked Russia’s bar association to consider Volkova’s status as a lawyer, and now, to dismiss her. This prompted a furious, vitriolic, and frankly stunning reaction from the lawyers:

Mark Feygin: Samutsevich again requested the Association to disbar Violetta Volkova!

Mark Feygin: Without a doubt, we are dealing with a RAT here!

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The West Made Its Bed, Now Russia Will Lie In China’s

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The latest US-Russia.org Experts Panel discussion was about Russia’s burgeoning partnership with China. I especially recommend Mercouris’ contribution which – although unfortunately titled by VoR’s editorial staff)) – is otherwise quite brilliant. My own effort follows below:

First of all, let me preface that I’m one of the biggest China bulls around. Its economy in real terms will overtake that of the US by the mid-2010’s, if it hasn’t already. It’s already bigger in a range of industries, from traditional heavy industry (steel, coal) to consumption (car sales, e-commerce). Its manufacturing wages have caught up with Mexico’s, which is a quintessential middle-income country. If the average Chinese is now about as prosperous as the average Mexican, then the PRC’s total GDP – taking into account its vast population – is now well ahead of America’s.

Nor is it a house build on sand, as many Sino pessimists would have you believe, but on solid, steel-reinforced concrete. Its economic growth is NOT dependent on cheap exports. And fantasies about its “exploited” cheap labor force, which will become increasingly uncompetitive as it develops, belie the fact that the average Chinese now scores higher in international standardized tests than the OECD rich country average. Given the centrality of human capital to economic growth, China’s rise to the top tables of world power is all but assured.

It would be very worrying if China’s ascent was accompanied by the bellicose rhetoric and militaristic posturing adopted by other rising Powers of the past, like the Kaiser’s Germany. But “yellow peril”-type hysteria aside, this does not seem to be the case. China spends a mere 2% of its GDP on its military, i.e. about twice less in proportional terms than both Russia and the US. This is a most fortunate confluence of events, especially for Russia, as competing with China is unrealistic in the long-term – not when its economy is an order of magnitude bigger. On the other hand, deep engagement with China hold out a number of benefits.

First, China gets access to Russian energy resources, bypassing the vulnerable routes past the Strait of Malacca (either overland via Siberia, or across the top of the world via the thawing Northern Sea Route), while Russia gets access to Chinese capital and technologies – much of the latter purloined from the West, true, but so what? Second, both countries secure their frontiers, allowing them to focus on more troubling security threats: The Islamic south and possibly NATO in Russia’s case, and disputes with Vietnam, Japan, and a USA that is “pivoting” to the Pacific in China’s case. Third, resources can be pooled to invest in Central Asia and root out Islamist militants and the drug trade – an issue that will assume greater pertinence as the US withdraws from Afghanistan.

Frankly, the West is too late to the party. It had an excellent chance to draw Russia into the Western economic and security orbit in the 1990’s, but instead it chose the road of alienation by pointedly welcoming in only the so-called “captive” nations of East-Central Europe. Putin’s reward for his post-9/11 outreach to the US was a series of foreign-sponsored “colored revolutions” in his own backyard. While in rhetoric both he and Medvedev continue to affirm that Russia is a European country, in practice attitudes towards them have come to be based on practicalities, not lofty “values” that they don’t even share. So it is only natural that with time Russia came to be more interested in pursuing a relation with the BRICS (“The Rest”) in general, and China in particular.

The West’s response hasn’t been enthusiastic. The BRICS are written off as a bunch of corrupt posers with divergent geopolitical ambitions that will stymie their ability to act as a coherent bloc. Russia and China come in for special opprobrium. While there’s a nugget of truth in this, it misses the main point: The BRICS might be poorer but by the same token they are growing faster and converging with the West, or at least China and Russia are; and while they don’t see eye to eye on all things, they agree on some fundamentals like multi-polarity, a greater say for developing nations in the IMF and World Bank, and the primacy of state sovereignty.

Here is a telling anecdote from an online acquaintance of his recent experiences with the European news channel, Euronews: “A feature of this site is that there’s a world map with happy and sad smileys on it to indicate good news and bad news. And there on Moscow I spotted a sad smiley, so I focused on it, thinking there would be a report on the already day-old and forecast to last another day blizzard that is raging right now across the Ukraine and European Russia… And the “bad news” that I read? The meeting between the Russian president and his Chinese counterpart together with a report and an analysis of the increase in trade between those two states. That’s really bad news, it seems, for some folk.”

And this is not so much an isolated incident, but a metaphor for the general state of West – Russia relations: While the former expects a certain degree of respect and even submission from the latter, it doesn’t tend to make reciprocal gestures, and then acts like a jilted lover when Russia gives up and goes to someone else’s bed. But that’s the reality of a globalized world, in which the West isn’t the be all and end all, and countries have choices. It is high time that the West mustered the humility to finally accept that it has been dumped.

Navalny’s Promises To Put Putin In Jail

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In a recent interview with the opposition Dozhd TV channel – which is, incidentally, available for public viewing in Russia as part of the NTV Plus satellite TV package – for the first time openly declared he wants to be President. He also speculated about the motivations behind the Kirovles fraud case being brought against him. (He expects to get a suspended jail sentence that will disbar him from electoral politics).

However, I think other parts of the interview were at least equally interesting and telling about what sort of politician Navalny would be. First, he unequivocally said that he would send Putin and his friends to jail. It is rather ironic that the self-appointed leader of the extra-parliamentary Russian opposition doesn’t bother, unlike Putin, to even pay lip service to the rule of law and judicial impartiality that he supposedly espouses. Second, his tendency to intemperately react to critics – even those who support him – is, once again, on full and inglorious display.

Below is a translation from the relevant part of the interview.

Host: Many people interpreted you as saying, I paraphrase, “I am Alexey Navalny and I will put you in prison, once I become President.”

Navalny: I don’t know about a President Navalny, but one day there will come to power those who will put him in prison. It’s a general feeling, I or we altogether, in another regime we would put him…

Host: [interrupting] [unclear] is it we or I?…

Navalny: Well, I, because I feel myself as part of this process, and I will do everything possible to make sure that he, and Putin, and Timchenko, and the entire list go to prison. To me these are all chains in this odious, kleptocratic regime, from the policeman who breaks your arm to Timchenko who steals oil, it’s all related…

Host: [interrupting] Do you want to become President?

Navalny: I do want to become President. I want to change life in this country, I want to change the system of administration, I want to make it so that the 140 million people of in this country – who are surrounded by oil and gas that flows out of the ground – would no longer have to live in destitution and hopeless squalor, but lived normally, like in any European country. We aren’t any worse than Estonians!

Host: Do you have a clear, well-planned program? Because as we know, and I think we raised the issue a year ago with you, you said that one shouldn’t lie and steal, and we got questions from many people like this on air: ”To not steal and lie is all well and good, but what can we concretely do about it?”

Navalny: These “many people” are all idiots. We don’t need to do anything other not lie and not steal.

Host: So everyone will cease to not lie… will cease lying and will cease stealing…

Navalny: [interrupting] It’s the principles that are important.

Host: … and the Sun will start shining?

Navalny: If the top echelons of government will no longer lie and steal, but will do what is expected of it, and will at the least start to realize those nice programs of Putin such as Strategy 2020… All the reforms we need have already been compiled, down to roadmap detail. But none of them are being fulfilled.

Host: [interrupting] [unclear] … So the plans suit you. At least as they are on paper.

Navalny: No. They don’t exist. The plan for Russia’s development, and reforms, has been reworked multiple times, and overall everybody pretty much understands and agrees… We have this strange situation where we have a consensus between Left and Right as relates to the reforms we have to carry out, but they aren’t getting carried out, because the essence of the current regime is corruption. Everybody more or less understands how to combat this corruption, and we bring very concrete and constructive proposals on how to combat corruption to Medvedev’s anti-corruption conferences…

Host: For example Rospil.

Navalny: Yes Rospil, and our Anti-Corruption Fund, and many other suggestions, and many people there agree with those suggestions, but nothing happens further.

A Demographic Zastoi In Russia?

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Russia’s life expectancy is said to have decreased to 69.70 years, from 69.83 years in 2011 (via Mark Adomanis via Alexei Kovalev via Paul Goble via Izvestia). The figure for 2011 had in its turn been previously lowered from 70.3 years. So what gives? Does this herald a “disturbing trend”? Is Russia entering a period of demographic stagnation, just as it is (allegedly) in economic and political stagnation?

Maybe, but let me clear up the reasons for these revisions. It fell from 70.3 years to 69.83 for 2011 because of new data about the population structure from the results of the 2010 Census. Not a decline per se, just an observation that the LE should have been lower than previously estimated. There’s nothing special about this except insomuch as it is now incorrect to talk about Russian life expectancy finally breaking the symbolic 70 year mark (at least for now).

Now the decline from 2011 to 2012 is extremely unlikely to be due to an actual worsening in the demographic situation. Mortality has fallen, not by a lot but it has fallen (-1.5%), and it has fallen most in the category “deaths from external causes” (-5%) which primarily affect younger people and thus have a disproportionate (negative) effect on life expectancy. So logically LE should have increased, especially if we also take into account that Russia’s population is also steadily aging. What explains the discrepancy? As pointed out by Murray Feshback, Mark Schrad, and the commentator Alexander Matuzkov on Adomanis’ blog, the method of calculating infant mortality had changed in 2012 – the effect of which was to increase it by 25%, by bringing it into line with international norms. (I had already blogged about it here so it’s a bit embarrassing I hadn’t thought of it myself).

Now there’s also some concern that January 2013 saw a big rise in mortality (+9% y/y). Does it presage something catastrophic? Pretty much no, because month to month mortality and fertility is extremely variable in Russia, due to seasonal factors. Below is a graph from Sergey Zhuravlev’s blog that eloquently demonstrates the point.

russia-birth-death-rates-zhuravlev

Now this is why you should ignore wild demographic swings month to month (just as you shouldn’t extrapolate as to the future trend of global warming from the weather last night). Otherwise you may be making unduly pollyannaish or apocalyptic projections that will more likely than not end up making you look foolish.

russia-natural-population-growth-by-region

Some people like to say that Russia has only returned to natural population stability because of high fertility among Caucasus Muslims (who will overrun it and establish a Moskvabad Caliphate, at least in the febrile imaginations of Russian nationalists and Mark Steyn). Well, that is correct in a narrow sense, but in a way that clouds the actual picture.

As we can see from the graphic above, whereas the biggest chunk of positive growth does come from the South and the North Caucasus (in practice, all of it would be from the North Caucasus, as the South still has a marginally negative natural growth), the Urals and Siberian regions – all of them predominantly ethnic Russian – have already returned to positive natural population growth, while the natural population decrease in the older, more settled parts of European Russia are now but a tiny fraction of what it was just a few years ago. On current trends, the non-Slavic Caucasian peoples will add about a million or so in the next decade, but so what? That’s equivalent to less than 1% of the total ethnic Russian population, which itself will remain roughly stagnant during that same period.

And They Say Mark Adomanis Is A Putin Stooge

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Anti-corruption efforts have been significantly stepped up in recent months, both in terms of headline making events (e.g. the dismissal of Serdyukov) and the less heralded progress in the introduction of new laws to combat the source. One of these is a ban on Russian bureaucrats holding foreign bank accounts (this represents a watering down of the original provision, which would have also banned foreign property holdings).

Not everybody is happy with this law, as to be expected. What is not to be expected is who exactly that is. For instance, Mark Adomanis, a liberal anti-Putin blogger who is nonetheless one of the most informed and objective Russia watchers out there (which many of his detractors take as evidence that he is a Putin stooge). Well, judge for yourself, based on his reaction to a press conference with Presidential Chief of Staff Sergey Ivanov, in which he said that bureaucrats would have three months to move their assets back to Russia.

“Forcible asset repatriation”? That’s some strong rhetoric there! I must have missed the part where the Kremlin was holding a gun to the heads of those offshore chinovniki forcing them to continue working for the government. Why is no-one being arrested for extortion??

As an informed observer, Mark Adomanis surely knows that quite a number of Duma deputies and other officials have already resigned their seats because they’d rather keep their foreign nest eggs than continue in political life. Nobody is forcing them to make the latter choice, so how does “forcible” describe anything?

Fortunately, he soon clarifies his position.

Oh, I see. Less corrupt bureaucrats equals a more powerful Putin. And because Putin is the Dark Lord of the Kremlin, it’s for the best if bureaucrats were to remain just as corrupt and apatride as they are now. Essentially he would have Russia cut off its nose to spite Putin’s face.

Note also the overt double standards.

Now just to make things absolutely clear, I don’t have an issue with that. Mark Adomanis has a perfect right to his own political views on Russia and to air them on his blog and Twitter account. What I do however want to point out is that many people, including some fairly high profile ones, seriously consider him to be a “Russophile” or even a paid-up stooge of the “Putin regime.” (Some of the more conspiratorial-minded even consider Masha Gessen, who wrote a biography of Putin called “The Man without a Face,” to be a Kremlin flunky). In reality, as far as his priorities go, cleaner and more effective government in Russia takes a clear second place to the prime imperative of politically undermining Putin. All this just serves to illustrate how utterly divorced from reality the mainstream commentary is when it comes to Russia and Putin.

PS. Since I scheduled this to be published, Adomanis has written an entire blog post about it, where he in addition also takes exception to the Russian government not bailing out Russian deposit holders in Cypriot, in addition to expounding on the points he already made on Twitter.

The fact that many Russian officials had accounts in foreign banks acted as a (very!) crude check on Putin and the center’s ability to control things: true autocracy is impossible in a situation in which any mid or high level official can, at a moment’s notice, go abroad and live off the accumulated assets in their foreign bank accounts. … Assuming the Kremlin actually can get officials to “repatriate” their foreign holdings (a very big if, I grant you) they will be in a much weaker position to question or resist anything the President demands. Basically, completely banning the holding of foreign accounts would make the Russian government even more unaccountable, unpredictable, and arbitrary.

The evidence for these assertions that Adomanis brings to the table are precisely zilch. This is especially disappointing coming from a pundit who has based a substantial part of his blogging career on expounding the extremely tenuous nature of the ties between autocracy/democracy, and things like economic performance and demographic health. So why now this supposed link between corruption and democracy? Aside from the general lack of data and incoherence, for a man so concerned with “autocracy” in Russia, I wonder if Adomanis realizes that simply translating his article would make for excellent propaganda for Putin (e.g. by feeding “the good Tsar stymied by his bad boyars” trope).

PPS. And it’s been translated at Inosmi, with most of the reactions as predicted above. E.g. the commentator AndrewGur: “Did I get this right? This journalist is suggesting that one component of democracy – is the possibility not to obey the orders of the President while under the control of a foreign enemy who controls them by dint of them having their money there?”

Why De-Russification Isn’t On The Cards

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My post last week on the increasing visibility of the Russian language on the Internet provoked a heated counter-attack from commentator Ildar Adi, who asserted (without much in the way of proof) that it is actually in significant retreat in Europe, the Near Abroad, and even Russia itself.

He believes that whereas there were almost 500 million Russian speakers in 1990, there will be just 150 million of them in 2030. If that were to be true, it would imply that practically nobody outside Russia would still speak Russian in 20 years time. Does this sound like a very likely prospect?

languages-on-twitter-europe

Not if the above map, linked to by commentator Glossy, is anything to go by. In this case, one image really is worth a thousand words. Quoting Glossy:

It seems that the only languages of the former Soviet Union that are used enough on Twitter to have merited their own colors on that map are Russian, Latvian and Lithuanian. It looks like Estonia isn’t tweeting much in Russian either though. The rest of the post-Soviet space is. On the map Catalans are tweeting in Catalan, but Ukrainians are tweeting in Russian. And that’s the young generation, the future. Who else is going to use Twitter? Kiev looks like the third-brightest Russian-tweeting city in the world, right after Moscow and St. Petersburg. Slovenian, Slovak and Albanian have their own colors, but Ukrainian doesn’t.

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Explaining Russia’s Economic Slowdown

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The Russian economy is steadily converging on stagnation in the past few months. For real, this time. Businesses are becoming more pessimistic, and industrial production in the first two months of this year is 1.5% lower than for the corresponding period last year. What explains this? Alexander Mercouris explains:

Might this not be a good moment to discuss economic questions? … The reason growth has been so subdued is because monetary and fiscal policy is so tight.  This in turn is because ever since Russia came out of the post financial crash slump the Russian government and the Central Bank have been prioritising inflation reduction over growth.

Basically what was happening before the crisis was that the government focused on getting its own financial house

in order and building up its reserves whilst leaving businesses to sort out and fund their investment plans often by borrowing on the international money markets.  The financial crisis showed the danger of this approach so the priority since the crisis has been to strengthen the domestic financial system to the point where it is possible for it to sustain a long term investment programme by drawing on its own resources.  This is only possible in a low inflation environment.

Though the inflation has roughly halved from what it was before the crisis, there was a significant inflation spike last year, which has forced the Central Bank to raise interest rates and to take further measures to restrict monetary growth.  That inflationary spike was in turn caused by three factors (1) the poor harvest, with its effect on food prices  (2) the over rapid credit growth at the start of 2012 and (3) the delay in the annual tariff increases to mid year and the way in which these were staggered throughout the autumn and winter.

Of these three factors (2) and (3) were surely a consequence of the political needs of the election period.  It is a commonplace that governments seeking re election loosen the purse strings to create a “feelgood” factor with the bills being paid once the election is out of the way.  Russia has just seen a very pale example of this.

Anyway the result is that Russia not only has real interest rates, which by international standards are extraordinarily high (in most of the developed world interest rates are currently in negative territory) but, adding to the downward pressure, the government is also tightening fiscal policy by introducing its budget rule.

The result is that demand and investment and therefore growth are being choked off.  Not surprisingly the policy has its critics (Deripaska is being particularly outspoken) but it is a standard trade off that historically all advanced economies make.  Japan during its glory days in the 1950s and 1960s repeatedly experienced growth pauses as the Finance Ministry and the Central Bank regularly tightened fiscal and monetary policy to deal with periods of surging inflation.  Like Russia, Japanese policy in the 1950s and 1960s was haunted by recent memories of hyperinflation in the 1940s and early 1950s and of national dependence on foreign lenders.  Of course an even more famous example of tight monetary policies being used to choke off inflation at the expense of growth (in that case even at the price of outright recession) was the Volcker Shock in the US in the early 1980s.

I don’t think there is any serious possibility of Russia going through a contraction anything like as severe.  My own view is that with monetary and fiscal policy as tight as they are, all other things being equal, inflation should fall in the second half of the year.  The Central Bank has given itself a medium range target of 5-6% but with policy this tight I would not be surprised if it overshoots it. One way or the other, if inflation falls, interest rates will come down, monetary policy will loosen and growth will resume though this time in a much more subdued inflationary environment.  This ought over time to make it possible for businesses to borrow in order to invest and for banks to lend for the long term without concerns at both ends that the value of loans will be eroded.  It should also encourage saving fostering capital formation through deposit growth.

In other words far from being an indicator of weakness the growth pause shows that the economy is being intelligently and responsibly managed and is not being sacrificed to reckless notions of growth at all costs.  Without pointing any fingers, it is an altogether more responsible policy than what one sees in some other places.

I would finish by saying that this policy also makes a great deal of political sense.   Though the policy comes in for noisy criticism from the likes of Deripaska (who as an industrialist has an obvious interest in getting the cost of borrowing brought down) Mark Adomanis has posted a useful graph from Levada on his blog that shows that inflation is far and away the most serious issue of concern for Russians.

Anyway that is my take of the present position.  I’d be interested to know if anyone disagrees or thinks differently and of what those who actually live in Russia and who have more direct experience of the economic situation there think of all this.

Russia Moving Into The Fastlane

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One of the most reliable indicators of influence is access to cars. They are the standard symbol of affluence and middle-class status the world over. They are also far more understandable at the everyday level than things like the PPP GDP per capita, or the number of burgers your national McWage will buy.

Following on my last post, which focused on production, let’s now examine another indicator: The number of cars bought in any given year per 1,000 people.

auto-sales-russia-cee

As we can see from the graph above, Russians (22/1,000 as of 2012) are now buying more new cars per person than any other Central-East European country. Now, this is NOT to say that they are richer than the Czechs (18/1,000), or even the Poles (9/1,000) and Estonians (18/1,000). The latter countries’ markets are already substantially saturated and close to Western levels of auto ownership, while Russia still has some catching up to do; furthermore, they don’t have tariffs on imported second-hand cars, whereas Russia’s are quite substantial. It is also probably true that on average Czechs buy higher quality and more expensive cars than Russians. Nonetheless, the difference between Russia and countries like post-crisis Latvia (7/1,000) and Hungary (7/1,000) are now so wide that it’s hard to argue that the latter are still substantially more prosperous.

auto-sales-russia-and-other-countries

The difference is of a similar magnitude to today’s Greece (6/1,000), in the wake of its economic depression – and has also gained on other countries that were part of developed Europe but hard-hit by the crisis like Spain (17/1,000), Portugal (11/1,000), Ireland (20/1,000), and Italy (26/1,000). In a very real sense, the fact that ordinary Russians can now more readily afford relatively big-ticket items like automobiles than citizens of some countries long considered to be past of the developed world is quite a momentous affair. In fact, not only are they being overtaken by Russia, but by Brazilians (20/1,000) and the Chinese (14/1,000) too, even if the last BRICS member India (3/1,000) continues to be mediocre. That said, there is still a very considerable gap between Russia and the truly front-tier countries like Germany (41/1,000) and the US (47/1,000).

Russians Produce 7 Cars For Every 10 They Buy

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One common trope about the Russian economy is that it has virtually no manufacturing to speak of and lives off “oil rents” that can collapse any day.

Whiles there is a small nugget of truth to this assertion, but by and large it is simply false. It is true that a great chunk of Russian exports do accrue to hydrocarbons and metals, because that is its comparative advantage in trade. That said, there are plenty of Russian products on the domestic market. The automobile industry is a good and representative example of this because they it’s a stalwart of many national economies and there exist reliable and easily accessible statistics on it.

Car Production Car Sales Autos self-sufficiency
Czech Rep. 1,178,938 193,795 608%
Mexico 3,001,974 987,747 304%
South Korea 4,557,738 1,530,585 298%
Poland 647,803 328,532 197%
Japan 9,942,711 5,369,721 185%
Germany 5,649,269 3,394,002 166%
Turkey 1,072,339 817,620 131%
China 19,271,808 19,306,435 100%
Argentina 764,495 832,026 92%
Brazil 3,342,617 3,802,071 88%
South Africa 539,424 623,921 86%
France 1,967,765 2,331,731 84%
Russia 2,231,737 3,141,551 71%
USA 10,328,884 14,785,936 70%
UK 1,576,945 2,333,763 68%
Sweden 162,814 326,441 50%
Italy 671,768 1,534,889 44%
Ukraine 76,281 263,604 29%
Australia 209,730 1,112,132 19%

As such, I decided to compile a representative list of countries, with data on production and sales for 2012 drawn from OICA, in order of the ratio of their auto production to new auto sales – that is, their degree of self-sufficiency in cars.As we can see above, while Russia is perhaps rather lower than average, its domestic auto manufacturing industry nonetheless manages to satiate 71% of demand for new cars.

This is quite comparable to France, the US, and the UK, and is vastly higher than a similarly resource-dependent rich country, Australia. Quite a lot of other resource-heavy countries like Saudi Arabia, Venezuela, and Norway don’t produce cars at all. Mexico is a huge exception, but the reason for that is that it borders the US and the US has outsourced quite a lot of its auto industry south of the border to take advantage of lower labor costs – a situation analogous to the Germans’ outsourcing of car production to Spain in the 1980′s, and Central-East European countries like the Czech Republic, Slovakia, Hungary, and Poland in the 2000′s.