Streetwise Professor

September 12, 2009

There Goes That Damn Russophobe Again!

Filed under: Economics,Energy,Financial crisis,Politics,Russia — The Professor @ 7:32 am

I don’t watch much TV, and medical shows have always been near the bottom of my list of things to watch.  But one show that I find entertaining from time to time is House.  It’s about a quirky (and now, apparently, actually delusional) physician who, along with a team of young doctors whom he abuses continually, diagnoses strange afflictions.  In the couple of episodes I’ve watched, House and his team make several incorrect conjectures, before fixing on the correct diagnosis, thereby saving the patient du jour from a terrible fate.

Dmitri Medvedev is apparently auditioning for the Russian version of the show, and has delivered a devastating diagnosis–complete with medical metaphors–on the state of the Russian economy, and Russian society.  Indeed, it is so damning that if I, for instance, were to make it (and I have) I would be assailed with howls accusing me of the basest Russophobia.  Don’t believe me?  Read it for yourself, right here on the official Kremlin website:

The global economic crisis has shown that our affairs are far from being in the best state. Twenty years of tumultuous change has not spared our country from its humiliating dependence on raw materials. Our current economy still reflects the major flaw of the Soviet system: it largely ignores individual needs. With a few exceptions domestic business does not invent nor create the necessary things and technology that people need. We sell things that we have not produced, raw materials or imported goods. Finished products produced in Russia are largely plagued by their extremely low competitiveness.

This is why production declined such much, more than in other economies, during the current crisis. This also explains excessive stock market volatility. All this proves that we did not do all we should have done in previous years. And far from all things were done correctly.

The energy efficiency and productivity of most of our businesses remains shamefully low, but that is not the worst part. The trouble is that it seems that owners, directors, chief engineers and officials are not very worried about this.

As a result Russia’s influence in global economic processes is, quite frankly, not as great as we would like. Of course, in the era of globalisation the influence of any country cannot be unlimited. That would even be harmful. But our country must have substantial opportunities, as befits Russia’s historic role.

As a whole democratic institutions have been established and stabilised, but their quality remains far from ideal. Civil society is weak, the levels of self-organisation and self-government are low.

Every year there are fewer and fewer Russians. Alcoholism, smoking, traffic accidents, the lack of availability of many medical technologies, and environmental problems take millions of lives. And the emerging rise in births has not compensated for our declining population.

We managed to gather the country together to stop centrifugal tendencies. But many problems still remain, including the most acute ones. Terrorist attacks on Russia are continuing. Residents of the republics in the North Caucasus simply do not know peace. Military and law enforcement personnel are dying, as are government and municipal employees, and civilians. Of course these crimes are committed with the support of international criminal groups. But let’s face up to it, the situation would not be so critical if the socio-economic development of southern Russia were more viable.

To sum up, an inefficient economy, semi-Soviet social sphere, fragile democracy, negative demographic trends, and unstable Caucasus represent very big problems, even for a country such as Russia.

Of course we do not need to exaggerate. Much is being done, Russia is working. It is not a half-paralyzed, half-functioning country as it was ten years ago. All social systems are operating. But this is still not enough. After all, such systems only propagate the current model, and do not develop it. They cannot change current ways of life and therefore bad habits remain.

Achieving leadership by relying on oil and gas markets is impossible. We must understand and appreciate the complexity of our problems. We must frankly discuss them in order to act. In the end, commodity exchanges must not determine Russia’s fate; our own ideas about ourselves, our history and future must do so. Our intellect, honest self-assessment, strength, dignity and enterprise must be the decisive factors.

My starting point while setting out five priorities for technological development, offering specific measures for the modernisation of the political system, as well as measures to strengthen the judiciary and fight corruption, is my views on Russia’s future. And for the sake of our future it is necessary to liberate our country from persistent social ills that inhibit its creative energy and restrict our common progress. These ills include:

1. Centuries of economic backwardness and the habit of relying on the export of raw materials, actually exchanging them for finished products. Peter the Great, the last tsars and the Bolsheviks all created – and not unsuccessfully — elements of an innovative system. But the price of their successes was too high. As a rule, it was done by making extreme efforts, by using all the levers of a totalitarian state machine.

2. Centuries of corruption have debilitated Russia from time immemorial. Until today this corrosion has been due to the excessive government presence in many significant aspects of economic and other social activities. But it is not limited to governmental excess — business is also not without fault. Many entrepreneurs are not worried about finding talented inventors, introducing unique technologies, creating and marketing new products, but rather with bribing officials for the sake of ‘controlling the flows’ of property redistribution.

3. Paternalistic attitudes are widespread in our society, such as the conviction that all problems should be resolved by the government. Or by someone else, but never by the person who is actually there. The desire to make a career from scratch, to achieve personal success step by step is not one of our national habits. This is reflected in a lack of initiative, lack of new ideas, outstanding unresolved issues, the poor quality of public debate, including criticism. Public acceptance and support is usually expressed in silence. Objections are very often emotional, scathing, but superficial and irresponsible. Well, this is not the first century that Russia has had to confront these phenomena.

Other than that, things are just great!!!  And feel free to point out how what I’ve been saying for the last 3 years has differed all that much from what Medvedev is saying today.

Where Medvedev and House part ways, however, is in the cure to the properly diagnosed disease.  House being fictional, he always can come up with the life saving treatment right before the last commercial break.  Medvedev, in contrast, having to deal with reality, can do no more than prescribe a placebo:

I recently identified five strategic vectors for the economic modernisation of our country. First, we will become a leading country measured by the efficiency of production, transportation and   use of energy. We will develop new fuels for use on domestic and international markets. Secondly, we need to maintain and raise our nuclear technology to a qualitatively new level. Third, Russia’s experts will improve information technology and strongly influence the development of global public data networks, using supercomputers and other necessary equipment. Fourth, we will develop our own ground and space infrastructure for transferring all types of information; our satellites will thus be able to observe the whole world, help our citizens and people of all countries to communicate, travel, engage in research, agricultural and industrial production. Fifth, Russia will take a leading position in the production of certain types of medical equipment, sophisticated diagnostic tools, medicines for the treatment of viral, cardiovascular, and neurological diseases and cancer.

. . . .

These goals are realistic. The targets we have set for achieving them are difficult but attainable. We have already developed detailed, step-by-step plans to move forward in these areas. We will encourage and promote scientific and technological creativity.

The chasm between the description of the disease–or more properly, diseases–and the proposed treatment is vast.  And indeed, diagnosis and treatment seem diametrically opposed.  Symptom one of the Russian disease, according to Medvedev, is “economic backwardness and the habit of relying on the export of raw materials.”  But what is treatment one?   Hair of the dog: “First, we will become a leading country measured by the efficiency of production, transportation and   use of energy.”

Now I realize there are some differences here; for instance, Medvedev bewails Russia’s wasteful use of energy, and proposes to fix that.  But still, it seems rather difficult to overcome a crippling dependence on raw material extraction–notably energy extraction–by focusing on energy production and transportation.

The other proposals are fantasy absent some complete revolution in the way Russia works.  Dirigiste, corrupt, “vertical” economic systems with poor protection of property rights–including intellectual property rights–are not going to become leaders in marketable technology.  And for a country with as appalling a health system as Russia’s to become a leader “in the production of certain types of medical equipment, sophisticated diagnostic tools, medicines for the treatment of viral, cardiovascular, and neurological diseases and cancer” is, well, beyond fantasy.  When it comes to healthcare, I suggest that Medvedev should make more down-to-earth goals, like running water in all hospitals and access to basic treatments.

This season’s Medvedev may share something else with this season’s House–delusions.  What other explanation could there be for this?:

Russia’s political system will also be extremely open, flexible and internally complex. It will be adequate for a dynamic, active, transparent and multi-dimensional social structure. It will correspond to the political culture of free, secure, critical thinking, self-confident people. As in most democratic states, the leaders of the political struggle will be the parliamentary parties, which will periodically replace each other in power. The parties and the coalitions they make will choose the federal and regional executive authorities (and not vice versa). They will be responsible for nominating candidates for the post of president, regional governors and local authorities. They will have a long experience of civilized political competition: responsible and meaningful interaction with voters, inter-party cooperation and the search for compromises to resolve acute social problems. They will bring together in one political entity every element of society, citizens of all nationalities, the most diverse groups of people and territories of Russia endowed with ample powers.

The political system will be renewed and improved via the free competition of open political associations. There will be a cross-party consensus on strategic foreign policy issues, social stability, national security, the foundations of the constitutional order, the protection of the nation’s sovereignty, the rights and freedoms of citizens, the protection of property rights, the rejection of extremism, support for civil society, all forms of self-organisation and self-government. A similar consensus exists in all modern democracies.

This year we started moving towards the creation of such a political system. Political parties were given additional opportunities to choose those occupying leadership positions in the federal regions and municipalities. We relaxed the formal requirements for the creation of new parties. We simplified the conditions in place for the nomination of candidates for election to the State Duma. We passed legislation guaranteeing equal access to public media for parliamentary parties. A number of other measures were adopted as well.

Another yawning chasm between word and deed/fact. No need to belabor this point.

Indeed, the vast difference between what Medvedev says, and the facts on the ground and the government’s actual policies is the source of much skepticism, not to say cynicism.  For instance, in a post titled “Medvedev’s call for Reform Rings Hollow” James at Robert Amsterdam writes:

There is a reasonable argument that it is better to have this kind of empty dialogue rather than no dialogue at all, but when the former Chairman of Gazprom is the one voice to complain about the excess influence of the state in the business sector, then we know we have a problem taking it seriously.

Other observers have taken it a bit further.   My thanks to a commenter, who points us to this acerbic reaction to the Medvedev article by  Aleksander Ryklin:

“My first reaction when I read the piece was a desire to copy it and rework it a bit. For example, maybe put it on a pink background and decorate it with flowers here and there. To mark out particular paragraphs with lipstick kisses and others with smiley faces.”

Ouch.

The Ryklin article is brutal:

After all, no grown-up, self-respecting person should appear so pathetic. They shouldn’t so openly and publicly display their own helplessness.

On the other hand, people shouldn’t so brazenly and with such open, unconcealed cynicism demonstrate their complete contempt and spite for the intellectual abilities of the population temporarily under their power. He isn’t taking just me for an idiot, but everyone in the country. So I also felt discomfort on behalf of the country.

Playing For Laughs

As soon as I read it, I was asking myself: What is this? A cry of the soul? A suicide note? A letter to Vladimir Putin? To his wife? To posterity? To historians? No, no, my friends. This letter is addressed first and foremost to idiots. But you and I are not idiots. At least, not all of us.

. . . .

To be honest, I’m not very sorry for Medvedev. Because I don’t believe for a second that he is sincere. He wants to “cooperate”? Then he can start by firing Putin, by dissolving the Duma, and then we’ll see. He can’t, you say? Then what is he pretending for? So that maybe someday something will happen? It would have been better to stick his letter into a time capsule and bury it under the biggest Kremlin tower than to humiliate himself like this in front of all honest people.

I don’t know whether it’s pathetic, or cynical, or what, but the complete disconnect between the gravity of the diagnosis, and the lack of serious effort to treat the diseases doesn’t bode well for the future.

Indeed, after finishing reading Medvedev’s long piece carefully, what comes to mind is not the typical TV doc-drama ending with the patient saved in the nick of time, but the punchline to an off-color joke about a guy who gets bit in an unmentionable place by a poisonous snake: “You’re gonna die.”

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8 Comments »

  1. “I don’t know whether it’s pathetic, or cynical, or what, but the complete disconnect between the gravity of the diagnosis, and the lack of serious effort to treat the diseases doesn’t bode well for the future.

    Indeed, after finishing reading Medvedev’s long piece carefully, what comes to mind is not the typical TV doc-drama ending with the patient saved in the nick of time, but the punchline to an off-color joke about a guy who gets bit in an unmentionable place by a poisonous snake: “You’re gonna die.””

    Let’s see… How much progress was being made towards a cure back when US government and contractor personnel were writing Russian economic policy?

    A cure that wasn’t killing the patient, that is.

    And starting where Russia was in 1999, what course of treatment would have made better progress towards a diversified economy not dependent on energy exports, and with towns not dependent on single major enterprises as their major source of employment? Isn’t it likely that infant industries established as part of a diversification strategy would have withered and died when global credit markets essentially stopped about this time last year?

    In other words, in that case wouldn’t Russia be about where Russia is now? Except without the ~600 gigabuck foreign currency reserve the GoR started this mess with, that is.

    Comment by rkka — September 12, 2009 @ 3:34 pm

  2. rkka, you are really a broken record, you work out of three memes that never vary. Your perpetual whine insinuating that America failed Russia is getting old.

    One more time, the US when the USSR fell had no responsibility towards Russia. None. After decades of US taxpayers having to shovel their tax money into Cold War defense spending it was a relief to write Russia and all of its costs and pathology off.

    Hard times hit the newly liberated Eastern bloc too in the ’90’s and they took responsibility for themselves and forged civil societies, granted for some they are still a work in progress, but, they didn’t backslide into the dump that Putin’s Russia is and that you defend.

    Comment by penny — September 12, 2009 @ 5:46 pm

  3. “One more time, the US when the USSR fell had no responsibility towards Russia. None.”

    I never said otherwise. However, it was a responsibility the USG chose to take up.

    “After decades of US taxpayers having to shovel their tax money into Cold War defense spending”

    That was the choice of the US government and people. Nothing the USSR did forced the US to do that.

    “it was a relief to write Russia and all of its costs and pathology off.”

    Except that the USG then decided to launch a futile project for eternal global military dominance. A fat lot of god that has done us.

    Comment by rkka — September 12, 2009 @ 9:23 pm

  4. I remember when the USG “decided” to help Russia, only it really wasn’t all of the USG. It was more a cult of personality. Who remembers the Gore-Chernomyrdin Commission, now an ancient blueprint on how to create a bureaucracy to “support” a cause, while actually doing nothing and papering this over with empty “success stories”?

    Even worse would be the “Harvard boys”, all chummy with Clinton who squirreled away 10’s of millions of US taxpayer money, most of it without any competitive bidding, because they were so smart, no one else could have effectively bid against them… created the Harvard Institute for International Development (but the acronym “HIID” is more, shall we say, indicative of their attitudes towards economic reform). HIID subsequently influenced $ 100’s of millions to their chums. Jonathan Hay – HIID’s rep in Moscow – was a good example of the excellent people running Harvard’s and hence a sizable component of US-funded initiatives in Russia (yep, scandals abound, malfeasance, misappropriation – a good example for his Russian counterparts, whoops, forgot arrogance…)

    So, rkka may have something by saying it was the USG… on the other hand – which Russian officials complained at that time? Most of them had their hand out to receive this largess.

    Comment by Kavkazwatcher — September 13, 2009 @ 6:31 am

  5. I’ll say it again…the Professor has misunderestimated Dmitry Anatolyevich.

    And Penny’s excuses aside, a great deal of the U.S. aid to Russia in the Nineties, save for locking up the WMDs and their scientists, was damn useless. You can blame the Russians for that but then you have to blame the people around Yeltsin.

    The difference between Medvedev and Penny/LR is that the former actually wants to reform his country, the latter in neo-Bolshevist attitude believes that Russia will either meet their expectations right now or deserves to die off.

    Comment by Steve J. Nelson — September 13, 2009 @ 10:44 am

  6. “The difference between Medvedev and Penny/LR is that the former actually wants to reform his country, the latter in neo-Bolshevist attitude believes that Russia will either meet their expectations right now or deserves to die off.”

    And it is really amusing to see their reaction when people point out that Russia has pretty much stopped dying off. In their narrow little world this wasn’t supposed to happen, especially when Russia rejects submission to US will while doing so.

    The tragic thing is that US clients Ukraine and the Baltics still are.

    Comment by rkka — September 14, 2009 @ 5:16 am

  7. There’s also the weird cognitive dissonance of people like former McCain advisor Randy Scheunemann who spread vicious rumors about Sarah Palin during the 2008 campaign calling her a narcisstict moron, then as David Corn of The Nation pointed out, turned around and got her to sign on a PNAC style resolution to staying in Afghanistan for years and years to come, thereby opening her to charges of selling out if she does get the GOP nomination (and I pray she doesn’t, otherwise it will be a complete rout, despite Obama’s manifest failures).

    Staying in Afghanistan requires maintaining a logistical lifeline for 80,000 U.S. and NATO troops through the former USSR, which requires Russian support, rails, territory and probably even Russian airlifters since we don’t have enough. And these people do everything they possibly can meanwhile to piss off Russia. It’s madness. At least they realized that we need to keep borrowing from China to maintain our empire of bases in 120 countries, and the “we need to be ready for World War III with China” element of their movement has piped down. But they still need at least Russia to play the role of great power adversary to justify all those stealth fighters, aircraft carriers and nuclear subs.

    Maybe they don’t have cognitive dissonance. Maybe they’re just two faced scoundrels.

    Comment by Steve J. Nelson — September 14, 2009 @ 2:29 pm

  8. There’s also the weird cognitive dissonance of people like former McCain advisor Randy Scheunemann who spread vicious rumors about Sarah Palin during the 2008 campaign calling her a beauty queen [sic] moron, then as David Corn of The Nation pointed out, turned around and got her to sign on a PNAC style resolution to staying in Afghanistan for years and years to come, thereby opening her to charges of selling out if she does get the GOP nomination (and I pray she doesn’t, otherwise it will be a complete rout, despite Obama’s manifest failures).

    Staying in Afghanistan requires maintaining a logistical lifeline for 80,000 U.S. and NATO troops through the former USSR, which requires Russian support, rails, territory and probably even Russian airlifters since we don’t have enough. And these people do everything they possibly can meanwhile to piss off Russia. It’s madness. At least they realized that we need to keep borrowing from China to maintain our empire of bases in 120 countries, and the “we need to be ready for World War III with China” element of their movement has piped down. But they still need at least Russia to play the role of great power adversary to justify all those stealth fighters, aircraft carriers and nuclear subs (what Thomas P.M. Barnett calls “the big war crowd”).

    Maybe they don’t have cognitive dissonance. Maybe they’re just two faced scoundrels.

    Comment by Steve J. Nelson — September 14, 2009 @ 2:30 pm

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