Many Russia related stories to comment on, but not a lot of time, so here’s a quick recap.
Actions Speak Louder Than Words. It is now apparent that Dmitri Medvedev’s anger over the Magnitsky killing was so much codswollop. Or, if it wasn’t codswollop, recent events demonstrate just how irrelevant the President of the Russian Federation is. Specifically, American lawyer Jamison Firestone, an outspoken critic of the Russian government’s criminal treatment of Magnitsky and the events that led up to it, has fled Russia because Interior Ministry personnel made two attempts to reprise the theft scheme that ultimately led to Magnitsky’s imprisonment and death:
Firestone, 44, a U.S. citizen and former board member of the American Chamber of Commerce in Russia, said Interior Ministry officials made two attempts to obtain $21 million in taxes that a company he’s a director of paid to the government. He said the perpetrators forged his signature and corporate seals to seek tax rebates, similar to the $230 million in claims made by funds expropriated from Hermitage Capital Management, a $1 billion investment firm run by his client William Browder.
The alleged fraud underscores Russian President Dmitry Medvedev’s challenge reining in what he has called “legal nihilism.” Perceived lack of law is one reason Russia has attracted less than one-fifth the investment in China and Brazil and half of what’s invested in India, its fellow members of the so-called BRIC group of emerging nations, according to three years of data compiled by Cambridge, Massachusetts-based fund- tracker EPFR Global. The nation’s economy shrank the most on record in 2009. [Perceived? Like there’s any doubt?]
. . . .
“Corrupt law enforcement is the single biggest risk to business in Russia,” Firestone, co-founder of law firm Firestone Duncan, said in an interview in London, where he is looking for temporary office space. “Police have to stop being the mafia. These people are stealing the country.”
Since Magnitsky’s death in November after a year in pre- trial detention and incidents such as a Moscow police officer beating a man to death, Medvedev has proposed reforms of law- enforcement agencies. The head of the Moscow police’s tax-crimes department, Maj. Gen. Anatoly Mikhalkin, and the chief of the Moscow prison division were fired.
Justice Minister Alexander Konovalov said at a press conference on Feb. 16 that the Russian government “is taking certain steps to ensure that the situation with Magnitsky will never be repeated.”
That’s not enough, said Browder, the 45-year-old U.S.-born founder of Hermitage, once Russia’s largest foreign investor.
“Those who have been fired were the least important part of the conspiracy to steal tax money and kill Sergei,” said Browder from London, where he has been based since Russia refused him entry in 2005. “We’ve written well-documented complaints to the top law-enforcement officers in the country that a number of police officers, judges, organized criminals and businessmen have been involved in the theft of almost $500 million from the state, and were involved in imprisoning Sergei Magnitsky. So far there have been absolutely no consequences for those people.”
. . . .
In an interview with Robert Amsterdam, Firestone makes it plain that Medvedev’s words mean exactly squat:
RA: Medvedev has ordered mass firings of prison officials and other gestures, yet you are literally back in the same position as before the death of Magnitsky. What are we to take away from this in terms of the position of the Kremlin on these issues?
JF: Well I can’t tell you what’s going on inside the Kremlin, but I can talk about what’s going on inside the Prosecutor General’s Office. I can specifically confirm that there are individuals within the Prosecutor General’s Office, such as Andrei Pechegin, who have obstructed the investigations into the Hermitage cases and the Magnitsky case and the attacks against me at every single turn. I think that Medvedev has a genuine interest in at least Magnitsky’s death, but any real attempt to investigate the MVD officers who were behind the theft of Hermitage companies and the theft of state budget, as well as those responsible for the arrest, torture, and eventual killing of Magnitsky has been completely obstructed. So what Medvedev did is fire a bunch of prison officials are tangentially responsible for the welfare of all prisoners, but he completely missed the MVD officers who had orchestrated all of this.
There’s the wonder of “centralized modernization” for you.
More Evidence of Medvedev’s Awesome Authority. Medvedev has criticized the adulation of Stalin. Fat lot of good that does:
Muscovites will be able to learn about Soviet leader Joseph Stalin’s role in the World War II victory from street stands, a source in the Russian capital’s advertising and design committee said Wednesday.
“Information stands telling of Stalin’s role will be placed at sites where militia detachments were formed,” the source said, adding that the stands will be set up ahead of the 65th anniversary of the Soviet victory.
Stalin’s name, which has not been present in Moscow’s festive decorations since Soviet times, came to the focus of public attention last summer, when the Kurskaya station of the capital’s subway was under reconstruction.
Somehow I don’t think that Medvedev has to worry (or dream) about becoming the object of a personality cult.
And speaking of “centralized modernization.” Brian Whitmore had another quote from Surkov:
We have a school of thought that teaches that political modernization — by which is meant political debauchery and ‘anything goes’ — is the key to economic modernization. There is a different concept, to which I hold, which considers the consolidated state as a transitional instrument, a tool for modernization. Some call it authoritarian modernization. I do not care what it is called.
This is an even better example of the false choice that Surkov–and most other defenders of Putin, and too many commenters on this blog–offer to justify an authoritarian system.
Apology via Twitter will be acceptable. In his every-word-a-lie-including-it-and-the oped in the NYT some time back, Russia’s Ambassador to NATO (with emphasis on the ass) Dmitri Rogozin slandered US and other NATO troops by claiming that unlike brave Soviet conscripts, US/NATO soldiers and Marines did not fight their adversaries face-to-face, preferring to bomb from on high. The US Marines and NATO and Afghan allies are assaulting a fortified urban area, Marjah, in Afghanistan. For a few takes on the close combat this involves, check here and here. And for a view of urban combat from a major, major badass who knows it up close in personal, try this. Oh, and Dmitri, if there’s not enough face-to-face bloodshed for your liking, it’s probably because all but the dimmest Iraqi or Taliban realize that tangling in close combat with a US or Brit or French or Canadian outfit is suicidal. So, if you have the decency (yeah, I know), and since you like Twitter so much, why don’t you take a break from bragging about ass-kicking and Tweet an abject apology to those you’ve slandered. Maybe your son can post it on his blog too. (At least I’m pretty sure it’s his son. But what’s up with the “!” Alexei! ? Reminds me of Maury! Povich or something.)
Here we go again. Again. Even though BP has taken backseat in TNK-BP, that doesn’t protect it against expropriation. Gazprom want gas. TNK-BP have gas. So Russia take gas. Specifically, it looks like the expropriation of Kovytka is imminent. The trick this time? Require that the firm develop its gas reserves in Kovytka to retain its license. But deny it access to the pipeline necessary to ship the gas. Then revoke its license because it didn’t develop gas it couldn’t sell due to lack of transport:
But Russia’s Natural Resources Ministry has consistently warned TNK-BP to speed up development or lose the rights to Kovykta.
The joint venture has argued that it cannot ramp up output to the required levels because Gazprom has a monopoly on exports to nearby China. It would need to build pipelines costing billions of dollars to reach its Asian markets.
TNK-BP was originally asked to sell its stake in Kovytka to Gazprom, the Russian state energy monopoly, in 2007 but talks stalled after years of wrangling on price.
Because Kovytka is a designated “strategic field”, it could fall automatically to Gazprom if TNK-BP is stripped of its licence as expected. TNK-BP and BP declined to comment.
The new pressure could signal that the Russian government is preparing finally to make a decision on Kovykta’s future, analysts said. “This is a sign they want to make progress,” said Chris Weafer, chief strategist at Uralsib, a Moscow investment bank. “It follows a familiar pattern of putting pressure on the other side to force them to make concessions. It is pretty much the modus operandi we saw in the other energy disputes of previous years,” he added, referring to a similar wave of threats that led to Royal Dutch Shell selling control of its Sakhalin 2 oilventure to Gazprom in 2006.
Gazprom has insisted it is no longer interested in Kovykta. But Russia is under increasing pressure to clinch a gas supply agreement with China, which is already signing up alternative supplies from Central Asia and potentially from Qatar.
Even as Gazprom has dragged its feet on Kovykta, its rival Rosneft, the state oil group, has been eyeing the field. Rosneftegaz, a Rosneft vehicle, is due to table a proposal on buying the field from TNK-BP in March, people close to TNK-BP said.
BP sees the field as a long-term prospect and has not booked the gas to its reserves.
Er, maybe they didn’t book the gas as reserves because they knew they’d never see a dime from it.
Going Down! Rusal’s reverse pop continues apace, with the stock down 30 percent since the IPO, and down the last 4 days, including a 6.7 percent drop on one day, after dropping 5.4 percent the day before. Remind me not to take investment advice from this guy:
“The main problem with Rusal is its debt,” said Kenny Tang, an analyst at Redford Assets Management in Hong Kong. “It relies on the short-term funding and facilities from the banks for its operation, which might be a concern for investors. They are worried about Rusal’s cash flows after the listing.”
What, like the debt is a surprise? Investors should have been worried about the cash flows before the listing–and then avoided it like the plague.
No wonder the HKEx figures that 10 or so Russian companies will do IPOs there: sounds like a great place to unload overpriced equity!
F22ski Dogfight. There are diametrically opposed views on the viability of the Russian alleged 5th generation fighter, and hence the threat it represents to American air dominance. (Still some comments pinging back and forth on my earlier post on the T-50). First, from the Weekly Standard (via Air Power Australia):
In an open-source assessment of Russia’s Sukhoi PAK-FA, aka the Raptor Killer, Air Power Australia concludes, “once the PAK-FA is deployed within a theatre of operations, especially if it is supported robustly by counter-VLO capable ISR systems, the United States will no longer have the capability to rapidly impose air superiority, or possibly even achieve air superiority.”
. . . .
Can the Russians produce the PAK-FA in considerable numbers? The Russian defense industrial base is in sorry shape (think the Shkval torpedo that likely sunk the Kursk and the Beluva submarine-launched ballistic missile that has offered Moscow one spectacular embarrassment after another). But if the Russians can get the PAK-FA off the ground despite all that, maybe it’s not as hard to build a fifth-generation fighter as the Pentagon thinks.
A more skeptical view from StategyPage (which is, contrary to the assertions of some commentors, a pretty informed and reliable source):
Russia effort to develop an F-22 class fighter (the PAK FA) is going to require a lot of work. The prototype, that took its first flight recently, was clearly the basic Su-27 airframe modified to be stealthier. This included changing the shape of the aircraft to be less radar reflective, and providing internal bays for bombs and missiles. But there’s much more to do in order to achieve anything close to the stealthiness of the F-22. It took fifteen years for the F-22 to go from initial flight, to entering service. The PAK FA could proceed faster, learning from the F-22 experience (especially if some of the Internet based espionage carried out in the last decade was Russian). But such development speed has not been a Russian characteristic.Another problem is the engines, which were not ready for the first flight. Older model engines were used, because initial flights are mainly to confirm the basic airworthiness of the airframe. The new engines, also being used in the Su-35, are suffering development problems. The Russians have always had difficulties with their high end military engines, and that tradition continues. Currently, the Russians say it will take several years to perfect the new engine.
Russia will also need a new family of air-to-air missiles, as the current ones are too large for the internal bays on the PAK FA prototype. These are already in the works, along with more compact versions of air-to-surface missiles. There are also problems with the electronics and, well, you get the picture.
Given all the issues–the ability to do real stealth (for which the US has extensive experience, Russia zip), radar, missiles, and engines (the biggie)–I tend to lean to the SP view. But y’all can talk among yourselves.
I’ll Bite Your Legs Off! Despite US happy talk that a nuclear arms control treaty with Russia is imminent, it is pretty evident that Russian demands on missile defense will make that very difficult, if not impossible (save a cave from Obama). This part was amusing to me:
Russia recently embarked on a campaign of military muscle flexing. It regarded America’s missile defense plans in Europe as a threat, and threats must be countered with shows of strength.
Prime Minister Vladimir Putin said Russia must develop new offensive weapons to counter the proposed U.S. missile shield.
“You will see tactics of attack and shooting,” a Russian general said.
“Our soldiers are equipped with new machine guns and we have new tanks. We are far more mobile than before.”
I see. Answer development of ballistic missile defense with “new machine guns” and “tactics of attack and shooting.” Does this mean that before, Russia relied on tactics of attack and throwing rocks? “Far more mobile”? Uhm, Russian power projection potential beyond, say, Georgia, is basically zip, new machine guns or no.
Don’t Mention the War. After viewing with shock and amazement the trollfest that broke out over at LR in response to her posts on the Winter Olympics, R beseeched me not to write about the subject. I wasn’t planning on doing so anyways, but her well advised caution reinforces my intentions. I’ll leave the critique up to the Duma.
Believe it or not, I could go on and on in this vein. But dammit Jim, I’m just a doctor, not a miracle worker, so I’ll leave it at this. Besides, there’s only so much I can take of this stuff. I think to relax, I’ll watch something that’s lighthearted by comparison, you know, maybe the documentary titled “Siberian Apocalypse” about to play on History International.