Streetwise Professor

January 23, 2010

Russia Speed Round

Filed under: Economics,Politics,Russia — The Professor @ 10:04 am

Hasn’t been anything major coming out of Russia that justified a post, but I’ve collected a few items that warrant some comment.

  • The FSB first banned Oleg Kozlovsky from leaving Russia, then reversed itself after its action unleashed a storm of international protest.  Further evidence of the retrograde nature of Putinism, but an illustration of the difficulties of reverting to a full-blown police state when there are some channels of communication outside of the government’s control.  All the more evidence of the vital importance of keeping the internet independent in Russia–which, of course, will also serve as a spur to the authorities to strangle it.
  • Russia announced that it would hold some of its currency reserves in Canadian dollars.  Although the desire to diversify is understandable, and there is no doubt a political component to this (given Russia’s strident rhetoric against the dollar), the choice of the $C is, well, a little loony.  (Sorry.  Couldn’t resist.)  Russia will most likely want to draw down on its reserves in response to a sharp decline in energy and other resource prices.  But those conditions will be adverse for the $C, meaning that $C assets will provide bad payoffs in the states when they are most needed, and good payoffs when they are least needed.  That’s a very poor investment strategy.
  • Putin issued a ukase approving the reopening of a Deripaska-owned paper mill on Lake Baikal that will dump toxins into the world’s largest source of fresh water.  This disgusting outcome is, in large part, a manifestation of the Russian monogorod problem, as such a town is dependent on the mill.  This is a tragedy, and moreover, an illustration of the intellectual bankruptcy of the Russian government.  The monogrod problem is serious, and not going away.  It should be a priority issue, and is a ticking political time bomb. The mill was the major employer in the 17K town of Baikalsk, and supplies its heat.  Rather than viewing this as a perfect opportunity to come up with a new approach to monogords, the government just lurches along, zombie like, perpetuating the dead past.  The fact that this is also a sop to Deripaska makes the whole episode even more disgusting.  I guess all the Pikalyovo pen throwing is behind them now; that piece of theater has served its purpose, and Deripaska is back in Putin’s good graces.  One only wonders just what he’s done to get there, and what he’s doing to remain there.
  • Russia eked out a population increase of 15K-25K in 2009, due to a combination of higher birth rates, lower death rates, and immigration.  Absent immigration, population would have declined, but the changes in the birth and death rates are good news for Russia.  The question is whether this is a temporary abatement in an inexorable decline, or a harbinger of a brighter demographic picture.  For a case of the former view, see this: “Anatoly Vishnevsky, director of the Moscow Institute of Demography, says, this year’s figure reflects a conjunction of positive developments that will not last and that within five years, Russia will again see its population fall, unless Russian can attract and are prepared to accept more immigrants.”  Vishnevsky also states that the country is on the “edge of a demographic abyss.”  For a more optimistic view, see, AK’s/SO’s/whateverhescallinghimselfthesedays’ extended post.
  • Russia fired the head of its Ground Forces, and the commander of the North Caucasus Military District.  The commander of the 58th Army, which was the main force in the Russo-Georgian War is apparently also at risk of being sacked.  Predictably, Russia gave a risible official reason for the firings, claiming the two generals had reached the age limit for service–even though neither had, as anybody with access to their biographies would know.  Unofficially, it is rumored that the men were sacked for corruption, but that would be at most a pretext, for virtually everyone in the military or the Defense Ministry could be fired for corruption.  It is more likely that the terminations reflect intense dissatisfaction with the performance of the Russian military during the war with Georgia.  All the chest thumping about that glorious feat of arms evidently does not comport with reality, by a long shot.
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  1. The Russian need to diversify their currency reserves away from the US dollar anyway. They might not be choosing the best way to do it but does not beat the fact that they must do it.

    There are monogorods in China as well, kept alive by government decrees.

    Reading the Reuters post on demography, I don’t know if it is particularly desirable for Indians and Chinese to have such massive population increases but fair enough.

    Comment by Leos Tomicek — January 23, 2010 @ 6:26 pm

  2. Which Russia demographer predicted “Russia will see positive population growth starting from 2010 at the latest” – back in mid-2008? Three guesses.

    Comment by Sublime Oblivion — January 23, 2010 @ 11:23 pm

  3. Given the size of Russia’s population, is an increase of that magnitude even statistically different from zero?

    Comment by MM — February 3, 2010 @ 8:13 pm

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