Streetwise Professor

July 26, 2009

Blatant Theft vs. Discrete Theft

Filed under: Economics,Politics,Russia — The Professor @ 8:21 pm

The initial reporting on the  Russian Union of Industrialists and Entrepreneurs’ call to ban Skype and other VOIP services focused on the Union’s statement that these services were a threat to Russian security because they couldn’t be tapped.  More thorough follow-up reporting makes it clear, however, that this line was primarily intended to entice the government into protecting incumbent telecom operators from competition:

At a meeting of the lobby this week, telecom executives portrayed the most popular VoIP programs like Skype and Icq as encroaching foreign entities that the government must control.

“Without government restrictions, IP telephony causes certain concerns about security,” the lobby’s press release said. “Most of the service operators working in Russia, such as Skype and Icq, are foreign. It is therefore necessary to protect the native companies in this sector and so forth.”

. . . .

In a presentation posted on the lobby’s Web site, Vice President of TTK, a telecoms unit of state-owned Russian Railways, Vitaly Kotov, called on regulators to stop VoIP services from causing “a likely and uncontrolled fall in profits for the core telecom operators.”

Valery Ermakov, deputy head of Russia’s No.3 mobile phone firm MegaFon, drove the point home with a picture of two hands in handcuffs, the caption running, “protect investments and fight VoIP services.”

Delegates at the meeting also warned that it has been impossible for police to spy on VoIP conversations, Vedomosti business daily reported on Friday.

The lobby, called the Russian Union of Industrialists and Entrepreneurs, forecast that 40 percent of calls could be made through VoIP services by 2012.

As an alternative to Skype and its peers, the telecom executives proposed creating VoIP services inside their own firms, which would then make them safely available to the Russian public.

“MegaFon is interested in this market. We’re interested in providing analogous services. We don’t support limiting competition, but we want the market to be civilized,” Ermakov said.

TTK’s press service said on Friday that it will take until September for the relevant legal amendments to be drafted by the special committee, whose members include top telecoms executives and lawmakers from Putin’s United Russia party. [Emphasis added.]

Yes, Russia is renowned for its civilized markets.  What a hoot.

In some respects, though, there is something refreshing about the in-your-face honesty of these remarks.  In the US, companies seeking some special favor are more likely to use smarmy flacks and slick PR campaigns intended to gull people into believing that these favors are Good For America.  The ads that ADM runs during Sunday news gabfests are classics in the genre.  You wouldn’t know that ADM makes gobs of money off of you and me through ethanol subsidies, etc.

This contrast is probably a testament to the substantial difference in the impact of public opinion on public policy between Russia and the US.  For the most part, the government and the connected can ignore an atomized and apathetic Russian populace, and have relatively frank and open negotiations for quid and quo.   In the US, however, such deals–which occur, alas, all too frequently–must be negotiated more discretely, with opposition defused and support built through PR.

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  1. In some respects, though, there is something refreshing about the in-your-face honesty of these remarks. … In the US, however, such deals–which occur, alas, all too frequently–must be negotiated more discretely, with opposition defused and support built through PR.

    This is following on from the previous thread where you wrote:

    You may consider it just “acknowledging mistakes”–but the perception is that he is apologizing. It ain’t just me . . . and the perception is the reality.

    SWP, I think our views come ever closer to convergence.

    Perhaps soon you will even come to agree with my “PoMo nonsense”:

    And that’s really the difference between Russophobes and Russophiles. Russophiles know they live in the matrix; Russophobes think they’re free and laugh at the poor Russians, not realizing that they’re laughing at their own ugly reflections.

    And after that you will learn to stop worrying and love Putin.

    Comment by Sublime Oblivion — July 27, 2009 @ 2:46 am

  2. The mere fact that Sublime Durak agrees with you ought to be enough to make you reconsider, SWP.

    There’s nothing at all strange about the Kremlin using a smokescreen of “protecting domestic companies” to wipe out Skype. You don’t hear Medvedev proclaiming how vital Skype is, do you? You don’t think for a moment that domestic Skype will be as safe from prying Kremlin eyes as a foreign-based one, surely?

    The fact is simple: Opposition activists like Oleg Kozlovsky rely heavily on Skype for private communciations since e-mail is routinely monitored by the KGB. A move like this can’t be made openly and wantonly without generating a massive amount of foreign criticism that could embolden and enable the dissenters. Therefore, obviously, some cover is needed.

    What’s more, it’s quite hard to say just as in Nazi Germany where “business” ends and government begins in Russia. Just look at Sberbank and Gazprom!

    Comment by La Russophobe — July 27, 2009 @ 6:08 pm

  3. Call me a cynic, but whenever the U.S. and Russia start making noises about better relations Russian journalists/activists start dying in larger numbers and 4th branch of government bureaucrats in D.C. find some sock puppet like Biden to express their real views

    (Litvinenko, incidentally, suffered his made for TV agonizing death right after Russian prosecutors visited London to present their case for the extradition of Litvinenko’s former boss Berezovsky, and ditto for Nevzlin and the Russian prosecutors in Jerusalem about the same time).

    If we didn’t have Russia as a pseudoenemy, then who would be left? Iran? Most Iranians despise their government so that one doesn’t seem to work so well. China? We owe them too much money. Russia is the perfect enemy, because our bureaucratic classes know eachother so very well…

    Comment by Vic — July 28, 2009 @ 3:30 pm

  4. Vic–yes, you are a cynic. But as Lily Tomlin said, “we try to be cynical, but it’s hard to keep up.” It’s a full time job.

    The ProfessorComment by The Professor — July 28, 2009 @ 11:04 pm

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