PUTIN’S REBELLION AND THE PROTEST VOTE

The idea of fiscal justice – that taxes should be paid in proportion to the taxpayer’s means -can produce bloody rebellions and even revolutions. But not in Russia.

What then-President Boris Yeltsin did in the 1990s was an old trick he might have cribbed from the histories of the old regimes of France if he had had the resourcefulness to read them. In his case, desperation took the place of literacy.

Until the French Revolution of 1789 halted the practice, French kings pursued buying the loyalty of those powerful enough to threaten their rule by handing out gifts of state assets. Productive agricultural land was the most important of these, but import concessions and commodity monopolies were also awarded. In addition, the kings sold titles of nobility. In return, they exempted the titleholders from paying most of the taxes of the realm. That’s what an aristocracy is made of – the right to exemption from tax, traded for a royal bribe, and the promise not to take up arms against the monarch. In this respect, all aristocrats are nothing if not petty bourgeois, and the foundation of their fortunes, while not necessarily a crime, is certainly a tax break.

Compared to the tsars, Yeltsin democratized tax exemption among Russians. He also favored a small elite, which has managed to concentrate most of the cash value of the exemptions into their own hands while selling off their debts. They are known as the “oligarchs.”

It is easy to understand that, the more insecure kings are, the more tax exemptions they dispense, at the same time as their expenditure requirements – for armies to protect themselves from rebellion – grow apace. The tax base shrinks, as fewer and fewer people are obliged to shoulder the costs of the unbalanced, crooked state. Yeltsin’s one original contribution to this long, sordid history was his invention of the 100 percent tax on low incomes: The practice, implemented by a succession of finance ministers, of withholding salary payments to state employees on the pretence of bureaucratic delays. By extension of the same practice to all those owed money by the state, the tax was adopted by private employers toward their employees.

Throughout the worst of this tax, there was only one revolt -that of the Supreme Soviet in 1993. By physically liquidating the parliament and killing more than a hundred of its defenders, Yeltsin taught a generation of potential tax rebels that it was safer to steal from the system than to fight it.

In the history of tax rebellions, poor people generally stay aloof. They die in swarms, but usually from disease, not from protest. Those who are prepared to fight for fiscal justice -attacking either the king or his noblemen – usually come from the small propertied classes; well-off farmers, tradesmen, artisans or small-business owners. They aren’t so poor that they don’t pay any taxes. Nor are they wealthy enough to buy their way into the exemptions of the aristocracy. So, they are the meat in the fiscal sandwich. When kings fear for their lives, these are the people who pay for his peace of mind. But their potential for disloyalty is always on his mind. The development of European bureaucracy, with all its record-keeping, inspectors and sanctions, is the evolution of squeezing the meat in the sandwich to the limit.

The current conflict between President Vladimir Putin and the oligarchs is unique, because, for the first time in Russian history, it is the king who is trying to dismantle the tax exemptions. He is doing this without any show of support from the small-business groups who stand to benefit most. They are too afraid of Putin’s weakness and the oligarchs’ vindictiveness to take his side, at feast for now. Those who ought to be their natural representatives, the deputies of the Duma Tax Committee, are hirelings of the oligarchs. Yevgeny Primakov at the Chamber of Commerce and Arkady Volsky at the Union of Industrialists and Entrepreneurs ought to speak for them, but they don’t dare to raise their voices either.

What Yukos CEO Mikhail Khodorkovsky is trying to do by selling a 40 percent stake of his oil company to ExxonMobil is nothing less than cashing out the capital gains on all the Yeltsin dispensations from which he benefited before next March. The timing is short and the method desperate, because Khodorkovsky and his fellow oligarchs are certain that Putin will introduce the necessary taxes to redistribute the wealth in the realm once he is reelected. “Stealing” is the word that, in the worldwide history of tax rebellion, all rebels use more often than any other to attack this practice. Khodorkovsky is no more than a thief trying to bank his loot in the United States. He may count himself less fortunate than Mikhail Fridman and Victor Vekselberg, whose sale of Tyumen Oil Co. to British Petroleum early in the year caught Putin unawares, uncertain of what to do ahead of the oil-price crisis the Iraq war could have triggered. Roman Abramovich has been just as fortunate in getting his cash out without paying tax, although the assets have remained in Russian hands. Thieves they are, in Putin’s view and in the opinion of most Russian voters.

This too makes for a unique alliance in the history of tax rebellions – the king in league with the passive poor. It is just as well that Putin has effective command of the Army and the security services, because his enemies are currently so numerous, his allies so impotent and the stakes so big that he might otherwise become a target for violence. Yeltsin destroyed the inhibition to use violent methods in 1993. The methods the oligarchs have used also lack this compunction.

Some of the oligarchs don’t have the stomach for confrontation with the Kremlin, but believe that Putin will be satisfied with a pantomime of concessions. Their paid propagandists at Vedomosti and the Moscow Times charge that all Putin is holding out for is a slice of the tax-exempt proceeds for himself. Vladimir Potanin, who controls both newspapers, has publicly proposed a program of raising employee salaries – although, at the same time, he is trying to make sure that the employees of his Norilsk Nickel mining company and the voters of the city of Norilsk will not elect as mayor the union leader who has been agitating for just such an increase since January. Vekselberg recently gave in to the first major strike of a group of employees at his Siberian Ural Aluminum-while simultaneously trying to prevent a single newspaper from reporting the wage gains the strikers have made, in case their example becomes infectious.

That’s another of the risks the oligarchs are running, as the conflict with Yukos drags on toward Election Day on Dec. 7. The chance is growing that Russia’s poor may cotton on to what Putin is trying to do and find their own spontaneous ways of taking the offensive against the oligarchs. A protest vote of this magnitude won’t show up in the preliminary polls. But, if it happens, it will signal that Russia’s young aristocracy is on its last legs.

THE DURANTY PHENOMENON, THE KHODORKOVSKY ARREST

MOSCOW – There’s nothing more ungainly than newspapers, when their sanctimoniousness is aroused, and they try walking with their feet in their mouths. Call this the Duranty phenomenon.

Walter Duranty was the New York Times journalist who won a Pulitzer prize, journalism’s highest award in the US, for his reporting on Russia in 1931. Duranty died in 1957, and his editors at the Times, plus his Pulitzer board judges, have all joined him in the grave, so they are easy targets for critics. They believe that Duranty’s Pulitzer should be rescinded on the ground that he failed at the time to exercise the same judgment the critics have rendered in retrospect. More than one attempt has been made to oblige the Pulitzer board to yank the prize; another one is under way at the moment. Ukrainian-Americans are reported to be the most vocal Duranty, because they allege in demanding punishment for he failed to report on the lethal 1932-33 famine they blame on Moscow and Stalin.

“A lack of balance and uncritical acceptance”, claims a history professor engaged by the Times to review Duranty’s work, “was a disservice to the American readers of The New York Times and the liberal values they subscribe to,” The professor says publicly Duranty’s prize is a disgrace, and for the honor of the newspaper, it should be surrendered.

A letter to the Pulitzer board by the Times publisher, Arthur Sulzberger Jr., let the cat out of the bag. He conceded that “Duranty’s slovenly work should have been recognized for what it was by his editors and by his Pulitzer judges seven decades ago.” But at the same time, Sulzberger told the board, there are two good reasons for not rescinding the prize now, seventy years later. Rewriting history like this is a Stalinist practice, he argued. And more important, once you start, where do you stop? “The board would be setting a precedent for revisiting its judgments over many decades,” Sulzberger wrote.

Whoa! That really would test the limits of journalism’s elasticity, stretched as it always is between what the history professor calls the liberal values Americans subscribe to, and what reporters identify as the objective truth.

In Russia, the Moscow Times was an English-language newspaper that was created in 1992 from financial sources that remain a mysterious, and then twice rescued from financial collapse by Russian oligarchs. The first was Mikhail Khodorkovsky, the Menatep Bank and Yukos shareholder, who was jailed in Moscow on serious criminal charges over the weekend. The second, and more recent rescuer was Vladimir Potanin, the controlling shareholder of Norilsk Nickel, Russia’s largest mining company. Potanin’s control of the newspaper is far larger than Khodorkovsky’s was, and includes not only a sizeable shareholding, but also a lien on the newspaper company’s accumulated debts.

In the Russian revolution that started in 1991, and continued over the past weekend, the Moscow Times has always been on the side of those into whose hands the country’s wealth has been taken. Power to the people! has meant electricity for Oleg Deripaska and Anatoly Chubais. Bread to the hungry! is the slogan of Vladimir Potanin’s agro-industrial holding. Land to the peasants! has meant oilfields for Khodorkovsky and Mikhail Fridman. The Times has also backed a series of US government policies meant to dismantle the Russian military-industrial base to prevent it from ever again posing the superpower threat the Soviet Union had represented. Washington wanted a Saudi Arabia without rockets. The Times thought that was just dandy.

But now that the jailing of the Yukos shareholders coincides with a parliamentary and a presidential election, Russians can vote for the first time on the fundamental direction they think the slogans of the revolution should take. And despite the fact that men like Khodorkovsky and Potanin can bend the media, the political parties, the cabinet of ministers, and the parliament to their will, the combination of president and popular sentiment makes for a fresh shift of property that is on course to win both elections as democratically as Russia under Yeltsin ever managed. With a crucial difference: Putin isn’t making the election choice the phony one of himself versus the red tide, as Yeltsin tried three times, and still required a 10% fraud to win. Putin is silent, and the choice is thunderingly obvious.

According to the Times editorial, however, Putin’s silence is “unbecoming”. Not for the first time, the Times quotes Chubais -the real US ambassador to Moscow – in demanding that Putin justify Khodorkovsky’s arrest or release him. According to the Times, Chubais also threatened force, if Putin doesn’t reply. “There will be a conflict of such an extent that it will bring in the entire society, and it could turn out to be uncontrollable,” Chubais threatened. Those are fighting words for a man who no longer controls an army the way he did during Yeltsin’s time in office -and whose test run for president (in the poll of 2008) is currently drawing him voter approval of around 3.5%.

For the first time since 1991, the Russian president has called into question the policy of the oligarchs in turning over the economy’s resource assets to foreign enterprises, and taking the multi-billion dollar concession fees for themselves. No civilized country in the oil world – not even Saudi Arabia – allows foreign corporations to control the rate of their oil production and the risk of reserve depletion. If Russia must depend on oil for the short term, then Khodorkovsky was warned – in July – that neither he, nor Yukos, will decide this question of national strategy. And yet, he has continued to negotiate a sale to ChevronTexaco and ExxonMobil. As I have reported many times since July, it was the asset sale, not Khodorkovsky’s political manipulations, that crossed the Kremlin, and led to his current fate. The slow shift in the public positions of the economic policy ministers like German Gref and Victor Khristenko – toward decelerating oil output growth, increasing investment in reserve replacement, di versifying away from oil -demonstrated how difficult it was for the president to pull his own government behind his resource policy, instead of the oligarchs. Nonetheless, Putin has put up the greatest show of resistance to bad policy in the modern history of Russia. His reward has been a Moody’s rerating of sovereign debt, and the massive support of the silent Russian majority, which will get its big chance on December 7, Election Day.

But discrediting the English language as a platform of wealthy reaction, the Moscow Times reports the president is silent. That’s because the newspaper’s proprietor, like everyone else in Russia right now, can hear the message all too audibly. Power to the people! Bread for the hungry! Land for the peasants! If the Times is doing today what Duranty is accused of doing so long ago, then it will only be a matter of weeks, not decades, before we can judge for ourselves where the truth in the Russian revolution is really heading.

LAST HURRAH, OR BRONX CHEER, FOR CHUBAIS

Anatoly Chubais is the biggest factotum in Russia, and an oligarch of sorts, in part because he controls United Energy Systems (UES), the electricity utility on which the profit margins of several other oligarchs depends; and also because he was the government official who rigged the privatization schemes that created the oligarchs’ private wealth.

Because he is not the direct owner of UES, and governs it by an appointment of the majority shareholder, the federal government, he could in theory be dismissed with a stroke of President Vladimir Putin’s pen. His power is thus usually measured by the fact that he has surived so long. On the other hand, that power is usually qualified by the often reported public opinion that he is one of the most hated men in Russia.

Chubais’s survival in the Kremlin’s good-books is attributed by his friends to his resourcefulness as a manager. But when President Vladimir Putin began to focus this past summer on what should be done with Russia’s natural resource reserves, policymaking for the future of the country’s electricity – the generating plants, the transmission lines, the mechanism for regulating the market price of power – has begun unravelling many of Chubais’s schemes. His attempt to transfer unfinished power plants to oligarchs like aluminium producer, Oleg Deripaska, in return for little cash, and unsecured promises of capital expenditure, was aborted. Chubais’s bigger attempt to attract the oligarchs into buying up UES shares to use later in swaps for privatized regional generating companies has also been stymied, although not before the UES share price jumped more than 250% in the past year.

In a normal stock market, the share value of an electricity utility like UES is usually based on the depreciated replacement value of the generating assets it operates. But in the rigged Russian market, Chubais triggered a speculative run on the shares by proposing to allow buyers of UES now to swap them into controlling stakes of regional energy companies later, when UES is dismantled, and the regional sources of electricity will be offered for sale. Power-hungry aluminium and steel makers jumped at the opportunity to lock in control of their subsidized electricity costs for years to come. So did arbitrageurs looking for an opportunity to buy electricity assets on the cheap for profitable resale.

Then Putin began to intervene, in part to hold down electricity prices before the December parliamentary election; and in part to prevent another privatization ripoff. As the UES board struggled to secure Kremlin approval, the unbundling of UES into regional energos was postponed. The scheme for privatizing the energos was also reviewed, and under pressure, the state-controlled board of UES conceded that an open cash auction for energo shares might be preferable to Chubais’s share swap scheme. One of the steelmakers complained that it was unfair to change the rules in the middle of the game. That the game had been rigged from the start was the retort from Chubais’s critics.

At that point, Chubais announced he would be a candidate for election to the State Duma on December 7.

Normally in Russian politics, a man like Chubais would hesitate before running for a parliamentary seat, unless he were convinced that he would shortly need it for the immunity it provides to criminal prosecution. While the other oligarchs have tried to cash out, and place their cash beyond reach of the second Putin administration, Chubais hasn’t the same leverage. If he has hidden a fortune under a mountain of gold somewhere abroad, it’s peanuts to compare with the fortunes of those Chubais created for others.

The timing of Chubais’s political move suggested that he expected that he would be dismantled before UES, possibly after Putin’s reelection next March.

To announce, therefore, that he is not only running, but leading the small party called the Union of Right Forces is one thing; to follow almost immediately with the declaration that if elected, he won’t take his seat, is to forego the immunity, but call into doubt his real motive. Chubais’s candidacy is the first ever offered to Russian voters to pass judgement on his methods of privatization. It is also a vote on whether voters want electricity prices to be fixed by the oligarchs, or by the state. The outcome of both seems so obvious, it has to be wondered why Chubais would invite his fellow Russians to heap on top of the opprobrium his record has already earned, the nemesis that such a display of vanity should provoke. More than once Chubais has admitted getting away with the deceiving the International Monetary Fund; the last time, he said, was on the eve of the August 1998 financial crash. Even for voters with short-term memories, it isn’t likely Chubais will get away with persuading them to support him for his unrepentant insincerity and cynicism.

In the retiring Duma, the Union of Right Forces (SPS is the Russian acronym) holds 7% of the seats after winning 9% of the 1999 vote. Most polling organizations currently estimate that, compared to the eiection four years ago, voter sentiment has been cut in half, and that the party is struggling to make the 5% threshold for proportional representation of its party list. Chubais is ranked third on the SPS list, behind Irina Khakamada and Boris Nemtsov. If the latter duo were worried that their party organization was headed for oblivion, Chubais may have persuaded them that his candidacy was a necessary, if desperate measure.

Through its spokesman, Elena Dikun, the SPS isn’t so sure. Dikun says she doesn’t know what Chubais will be doing to campaign for the party in the next four weeks. To questions of what benefit the party thinks Chubais brings to its campaign, Dikun added that the only official comment the party will make about Chubais is that he holds the number-three slot on the ticket.

If SPS won’t say that Chubais will add votes to the ticket, Chubais isn’t so reticent. On a personal website, www.chubais.ru, he has posted the results of a poll among voters which asked whether voters would be more or less likely to vote for, or against, SPS if Chubais is on the ticket. According to the sample of 1,132, 54% responded that they would vote for SPS, whatever names led the party list. Almost 20% replied that they wouldn’t vote for SPS under any circumstances. That left 299 voters in the sample. According to Chubais, 4% said that they had been thinking of voting for SPS, but now that Chubais was running, they would not. Twenty-two percent said that Chubais’s candidacy had convinced them to vote for SPS. At best, then, the net benefit of Chubais’s candidacy to SPS may be a positive 18%.

For the Chubais boosters, this is evidence enough that negative sentiment for him in the Russian electorate is irrelevant. His campaign is needed, they say, to garner bonus votes that may tip SPS over the 5% electoral barrier. But none of the nationally recognized election pollsters believe this to be true. According to VTsIOM, SPS was polling 5.3% in August, before Chubais took his position on the party list; afterwards, it dropped to 3.6% in September. Analysts at the polling agency claim Chubais has changed almost nothing, and that SPS’s vote range remains bounded between 4% and 5%. ROMIR, another of the national pollsters, concurs. He puts the SPS vote between 5% and 6%, but is emphatic; “SPS has a very stable group of electors, and Chubais will not scare them off. But I’m not sure he will be able to add new voters.” The Public Opinion Foundation (FOM) has run voter intention surveys with Chubais’s name on the SPS list, and without.

The results show a vote range of 3% to 4%, without the addition of Chubais’s name making a difference. The Centre for Political Technologies confirms a similar finding. The SPS vote is currently running below 5%, and Chubais hasn’t lifted that, at least not yet.

There is one clue in the national polls to explain why some voters might vote for SPS because of Chubais. Most profiles of SPS voters indicate that they are predominantly female, young, and residents of Moscow or St.Petersburg. Many of them are so young, in fact, they don’t know what Chubais was doing in the mid-1990s. His record is irrelevant to these voters. They associate him with the wealth that is conspicuous where they live, and essential for their lifestyle. Call them courtesans with candles – they don’t care about high-priced electricity.

If SPS breasts the tape on election day with voters like these, then Chubais will have won a sideshow. The question of whether there is any place for him in Putin’s policy for the future of Russia’s natural resources will be decided elsewhere.

END OF THE ROAD FOR DERIPASKA?

Oleg Deripaska, chief executive of Russian Aluminum (RusAI), Russia’s largest aluminum producer, and head of Basic Element, which holds his investments in other sectors of the Russian economy, has been feeling maligned for a long time now. A two-year-old lawsuit by smelting rival Mikhail Zhivilo in New York accusing Deripaska and his associates of using illegal tactics in the acquisition of his assets has been dismissed for lack of jurisdiction. But, in all likelihood, the case will either be returned to the courts on appeal or refiled. The trouble Deripaska has had with the U.S. authorities preceded the court case and appears to be persisting, despite the efforts of well-known American lawyers he has engaged to clear him. In Zurich, Deripaska has lost an appeal of an arbitration panel’s award of $90 million to Krasnoyarsk archrival Anatoly Bykov. He faces more of the same in other European jurisdictions. In Frankfurt am Main, lawyers defending Germany’s leading financial newspaper, Frankfurter Allgemeine Zeitung, from a defamation suit filed by Deripaska have turned up more than he can have bargained for.

In Russia, Deripaska can also complain that he’s been maligned. In Moscow, he is the target of a recent petition to the Kremlin by paper and pulp producers who accuse him of using a variety of hostile-takeover tactics. His acquisition of the Ingosstrakh insurance company is under investigation by the General Prosecutor’s Office. Although he married into the Yeltsin circle, he hasn’t been able to put his Kremlin connections to much use in recent months. The four keys to his profit margin in the aluminum trade – electricity, alumina, freight rates and tolling privileges – have come under serious pressure. His attempts to secure shareholding control or regional political influence over the price of energy to his smelters have been less than effective. His control of the Nikolayev alumina refinery, the supplier of roughly one-third of his smelter’s raw-material requirement, is under threat from the government in Kiev and an ambitious Ukrainian metals magnate. Rail tariffs have recently been raised by 5 percent or more, and the possibility of special discounting has shrunk. Deripaska was able to lobby Finance Minister Alexei Kudrin to drop his attempt to halt the tax concessions conferred by tolling contracts – but he lost a similar bid in Ukraine.

Through RusAl, Deripaska has made big promises – to build a new smelter in Murmansk, a new bauxite mine in Guinea, a new partnership with the Chinese Aluminum Co., a new metals complex in Australia, a new smelter in western Ukraine – but there is little yet to show for any of them.

In its section describing investment plans for the next five years, RusAI’s Web site lists four priority projects that are quite different and a good deal less costly. A Ukrainian court recently appointed an expert to take inventory of what exactly has been done at the site of the promised Pervomaiskoye smelter in order to enable it to rule on whether Deripaska has broken the terms of the agreement with the Ukrainian government that allowed him to take over the Nikolayev asset.

To the question of why his fellow oligarchs are looking to cash out at least some of their assets, but not Deripaska, the short answer may be that he has looked for a multitude of exits, only to find that the way is blocked. He can’t list RusAI shares on the London or New York Stock Exchange, because the company’s assets have yet to be consolidated into a single shareholding company. Although Deripaska recently denied that he had made a deal with Roman Abramovich to buy the latter’s half-share of RusAI, sources inside Millhouse, Abramovich’s holding company, claim that Deripaska has been making a bid but lacks the cash to pay the $3 billion sale price outright and cannot come to terms with other shareholders at Millhouse who don’t share the desire to cash out of Russia. They may be biding their time for a counter-bid aimed at Deripaska’s half-share of RusAI. Then, on Oct. 3, Deripaska turned around and declared he had bought a 25 percent stake in RusAI from Abramovich. No price or payment terms were disclose.Deripaska has never revealed the price of any of his transactions, or how they have been paid for.

Borrowing to fund asset takeovers, leverage existing assets, or even pay for production upgrades and expansions, isn’t easy for Deripaska. Although he considers that a current debt portfolio totaling $1.5 billion – including last week’s $100 million loan from Credit Suisse First Boston – is a gilt-edged indicator of his international creditworthiness, he still trails behind his fellow oligarchs in being able to obtain unsecured credits. For every dollar RusAI borrows, international banks want their hands on a metal ingot.

It was therefore noteworthy when Deripaska, on a recent visit to the southeastern Siberian city of Irkutsk, announced that he wants to add to his stakes in the region’s Bratsk smelter, a new smelter site at Taishet and the regional electrical utility, Irkutskenergo. Deripaska said that he aims to bid for Sukhoi Log, the largest unmined gold deposit in Russia.

Now, goldmining would be a first for Deripaska, and Sukhoi Log nothing if not expensive. A few days before his remark, Deripaska had lost out in the bidding for a 45 percent state shareholding in Lenzoloto, the Irkutsk regional goldminer, which has been taken over by Vladimir Potanin’s Norilsk Nickel group at a price of more than $152 million. Potanin would like the market to think that, with control of Lenzoloto, he now has the inside running for the state award of the Sukhoi Log mining license, which will go up for tender after the presidential election next March.

Deripaska’s announcement suggests that he thinks that Potanin may be politically vulnerable and open to a Kremlin challenge to knock him out of the race. Other declared bidders for Sukhoi Log include Polymetal of St. Petersburg, led by Alexander Nesis, and Khazret Sovmen, former owner of Polyus, Russia’s largest operating goldmine, which was acquired a year ago by Potanin. One thing all of them have already learned is that the tender will not be issued by Natural Resources Minister Vitaly Artyukhov until he learns whom the Kremlin wants to win. And that decision won’t be made until after the election season is behind us.

So, Deripaska’s open bid for Sukhoi Log turns out to be a wager that, among the oligarchs and Yeltsin leftovers, he has a better chance of surviving than Potanin. It’s little wonder that Deripaska thinks he’s been maligned to date.

IRAQ WAR DOES NOT PAY DIVIDENDS TO RUSSIANS

Russian oil producers, pipelines and ports are certain to be badly hit if the United States forces a regime change in Iraq and, consequently, world oil prices fall sharply. And that’s only scratching the surface of the threat to the Russian economy from an American war on Iraq, and all that would follow.

Understanding this should be an antidote to a spate of recent reports in the Anglo-American press. These claim that, behind the curtain of the United Nations Security Council, the Russian government is negotiating a secret deal with the United States to trade Moscow’s concession for war to start, in exchange for Washington’s guarantee to secure Russian oil company concessions in Iraq, or to pay a matching indemnity. No matter how the value of Russia’s interests in Iraq may be summed up, and never mind how unreliable and unpredictable the Bush administration’s undertakings are understood to be, the cost of oil prices’ collapse to the Russian economy is certain to be greater than any promised indemnity. (more…)

PUTIN IS NOT THE LAST OF THE MOHICANS

If you believe what you are told about Russia in virtually all the world media at this moment, President Vladimir Putin is an isolated savage fighting a last-ditch battle against the forces of advancing civilization, out¬numbered, out¬gunned and doomed. If Putin — and a handful of his advisors — represent the last of the Mohicans, then who exactly are the advancing redcoats, and are they the civilizing force we’ve been told they are?

So far, Mikhail Khodorkovsky, the chief shareholder and CEO of oil company Yukos, has positioned himself in the domestic and foreign media as the force of civilization that Russia badly needs. Much of Prime Minister Mikhail Kasyanov’s cabinet has allied itself with him. It’s peculiar then that,unlike the redcoats of the original Fennimore Cooper story of the American Indians versus the British and French invaders, this Russian claims that it is in his country’s interest that he should sell effective control of one of Russia’s largest oil assets to an Americar oil company.

It is stranger even that ExxonMobil should believe Khodorkovsky when he told them to visit Kasyanov to ask if he would approve such a deal, the value of which is roughly estimated to be about $25 billion. Khodorkovsky also claims that he received Putin’s approval for a sale to an American oil company. That Putin has changed his mind since then is obvious. But why would ExxonMobil go to Kasyanov if it already understood that Putin was the man in charge?

The answer is that Khodorkovsky and his mostly American advisors believe they can lay siege to the Kremlin and force Putin to surrender if they can demonstrate — mostly via the press, but also through fireside chats with the likes of Henry Kissinger, whom Putin met in New York — that there is no support for Putin’s opposition to Yukos. Khodorkovsky is figuring that the Americans, the media and the Russian politicians he has on retainer are enough to topple Putin. Although the Kremlin walls are thick ones, that’s the firepower the Yukos redcoats are betting on.

And so, last week Khodorkovsky stoked speculation on the Russian stock market and fed the ever-obliging Financial Times the line tha the ExxonMobil deal was only a whisker away. Khodorkovsky’s minions misread Putin’s remarks to the New York Times in an interview published on Oct. 6 and tried to cast last week’s police raids on Yukos as a sign that Putin was close to surrender. Khodorkovsky has been buying press coverage for so long, he’s forgotten that everyone in Russia — except himself — believes everything they read to be false.

What Putin said was clear: “we have a category of people who have become billionaires overnight, as we say. The state appointed them as billionaires.” The corollary was that the state would decide what is to happen to them next, not the media, which — Putin added — have been “subjugated — in the same way that the oligarchs behaved with natural resources.” Asked specifically what he intended to do about Khodorkovsky’s proposed sale to ExxonMobil, Putin drew the distinction between foreign investment in new oil projects and foreign shareholding control of Russian oil assets. If he was the last of the Mohicans, this was no forked tongue — he was speaking confidently and categorically. He was reminding Khodorkovsky that he, like Mikhail Fridman and German Khan of Tyumen Oil Co. and Abramovich of Sibneft, have failed to invest in long-term oil prospecting or new oilfield production outside the areas that were developed by the Soviet state. That task has been left for international companies to undertake, while the Russian oligarchs awarded themselves huge dividends and leveraged their companies with mounting debt. The state has so far refrained from taxing that dividend outflow as most other European and American governments do — through capital-gains or dividend-remittance taxes. Putin knows that he doesn’t have a single minister in the cabinet, and certainly not a prime minister, or even a presidential chief of staff, who would countenance such proposals and who can be trusted not to betray the president’s orders. At least, not for the time being.

And so, all Putin has been able to do is to pursue his policy with the only means available to him. If it takes a prosecutor and a policeman to inform Yukos, ExxonMobil and the world that, in Russia, as everywhere else in the civilized world, it will be the government that must decide on what terms Russian natural-resource assets can be swapped, pledged or sold, then that’s who must deliver the message.

“We favor foreign capital involvement in Russia’s economy,” Putin told his U.S. interviewer. “ExxonMobil is operating in the Far East, in Sakhalin, it is involved in investing a lot of money there, and we will support their further activities there. As regards purchasing part of the Yukos company, again this is a corporate matter, but once again we are talking about a possible major deal here, and I think it would be the right thing to do to have preliminary consultations with the Russian government on this matter.”

Only a fool would imagine that when Putin spoke of the government, he meant Kasyanov.

And so, when Putin chose to speak next on the same subject — at the Yekaterinburg summit meeting with German Chancellor Gerhard Schroeder on Oct. 9 — Putin was addressing all the fools. According to a wire-service report, “the president stressed that the gas pipeline system of the Russian Federation was ‘the offspring of the Soviet Union,’ and only Russia could ‘maintain it in working condition, even regarding its parts outside the country.”We will not divide Gazprom,’ Putin said. He added that the European Commission should have no illusions on this account. ‘In the gas sphere, they will have to deal with the state,’ the president stressed.”

What Putin said about the gas sphere applies no less forcibly to the oil and the mining spheres, to Yukos, Norilsk Nickel, Russian Aluminum and Siberian Ural Aluminum; to Khodorkovsky, Fridman, Vladimir Potanin, Oleg Deripaska and Victor Vekselberg.

This is not surrender talk from the last of the Mohicans.

However, it is a disgrace and shame to Western media like the Financial Times and of virtually all the Russian media, the Russian parliament and Kasyanov’s cabinet that Putin has been made to appear to be waging this fight for a national-resource and investment policy, virtually unsupported and apparently alone. If the truth were to be known, Putin has been getting the support and technical advice he needs from those who are not so vain or corrupt that they want to disclose their names. Khodorkovsky has bought the silence of the Communist Party and of others in the parliamentary election race who might have debated the resource-policy issues as they deserve to be. But the Kremlin knows that there is a broad and deep popular resentment against the oligarchs that will favor the policy Putin has been maintaining in recent weeks. He knows the economics of this resource policy have been tested and proven from Japan and South Korea to France, the United Kingdom, even California. Whatever lineup popular Russian resentment produces in the new State Duma will not affect the fact that, after the presidential election next spring, Putin will be the government, and Khodorkovsky will have lost.

Thus, there is no point now in Putin or his trusted circle of advisors responding directly to Khodorkovsky’s publicity campaign. Whoever will be stronger after the election, he won’t be. And when that is clear, the Duma deputies for whom Yukos has paid will turn tail.

CALL OFF THE ELECTION HOAX

MOSCOW – In a well-known Russian anecdote, a police investigator is questioning the son-in-law of an elderly lady who has been found dead. “Why did she die?” the policeman asks. “Because she ate poisoned mushrooms,” the son-in-law replies. “So why is her body covered with bruises?” the policeman asks. “Because she was stupid, and didn’t want to eat,” the son-in-law says.

Russian politics are more than a little like the old lady.

It is now one month into the parliamentary election season, with just eight weeks to go before polling day. Each day, the electorate is being pummeled by multimillion-dollar propaganda campaigns, which include the manipulation of voter polls designed to generate the impression of fake groundswells of opinion. Almost every nuance has been professionally anticipated, diagnosed and neutralized with as much election technology as money can buy.

If you look at the headlines of Russian newspapers, or ask ordinary voters, you’re bound to conclude that one of the dominating issues at this stage of the campaign is whether the oligarchs — the handful of men who acquired Russia’s major energy and mineral assets on the cheap and are now trying to sell them off to foreign buyers — should be allowed to get away with the cash for the second time in five years. I say the second time, because the ruble crash and bank default of August 1998 allowed oligarchs like Mikhail Khodorkovsky (remember Menatep Bank?) and Vladimir Potanin (Uneximbank?) to rid themselves of bad billion-dollar wagers their banks had made and expand the difference between their onshore costs and offshore profits — all at the expense of most Russian savings. Ordinary Russians haven’t forgotten that.

If, next, you ask the leaders of the major political parties running for seats in parliament two questions about this subject, you might think their answers would address what is on the minds of the voters. In order to understand what Russian politicians, especially those who say they are campaigning in opposition to the government, think the voters should hear, I have spent a month asking one question about the oligarchs and one about what is to be done about them. What should be on the tip of every Russian politician’s tongue right now, if not the answers to these two questions?

1. Do you or does your party approve of the sale of a strategic shareholding of Yukos to a foreign oil company?

2. Do you or does your party support taxing the oligarchs’ wealth, such as a capital-gains tax, a tax on foreign remittances of profit or a superprofit tax?

Fatherland and the Liberal Democratic Party of Russia (LDPR) are usually classified as pro-Kremlin in the way their members have voted in the Duma now coming to an end. Fatherland contested the last Duma election in opposition to its current ally, the United Russia group; in this campaign, they are indistinguishable. Together, they claim a 40 percent share of the current Duma’s seats. The best the pollsters are projecting for them in December is 37 percent. The LDPR currently has a 3 percent share of the Duma’s seats, but the polls are suggesting a harvest of protest votes to propel them to 14 percent.

When they campaign for votes, Fatherland – whose name in Russian, Otechestvo, suggests the fatherland, motherland, patriotism and nationalism — and Vladimir Zhirinovsky, the only public figure recognized by LDPR voters, act as if national policy ought to rule out the massive transfer of Russian wealth abroad. You would guess that both parties should find it easy to answer yes to both questions, even if they might be a trifle uncomfortable with the details.

At Fatherland, the party spokesman found the questions so surprising that he asked for them to be submitted by e-mail. That was done many days ago. There has been no reply. At the LDPR, the spokesman for the party and for Zhirinovsky refused to answer either question. That’s because, he said, “we are not ready to provide a new economic program, and we don’t comment on any suggestions in the economic-policy area.”

In the ideological center of the Russian political lineup, there is Yabloko, the oppositionist party led by Grigory Yavlinsky. He commands a 4 percent share of the retiring Duma; his projected share in the new one, if the polls are right, would be only 3 percent. Yavlinsky was once a professional economist. A month ago, his spokesman, Maxim Zubilin, said that it was a little early to answer the questions because “our election program is not quite ready.” Regarding taxes, he said, Yabloko is “a consistent advocate of cutting them, all taxes, starting with value-added tax. The reason for this is that the decrease of taxation will help move capital out of the shadows.” But what if capital moves out of the shadows — and out of Russia, too? To Zubilin, this sounded like “a way of sharing with the people” and was definitely not Yabloko’s idea. On the other hand, Zubilin acknowledged that there may be a problem of capital leaving Russia and that “we think it should be prevented through economic, not administrative, measures.” So what about taxing capital gains and foreign-profit remittances? Zubilin wouldn’t answer.

And what about the number-one question on everybody’s mind — the Yukos question?

Zubilin seemed crestfallen. “Regarding the possibility of the sale of a strategic share in Yukos to foreigners,” he said, “I think the party doesn’t have an official position.” Zubilin then added that “Yukos is a private company, and the sale of its shares to foreign investors is its own affair. Yukos is one of the most transparent companies in Russia. The wish of U.S. investors to invest money into this company is a good proof of that.” Since Zubilin’s reliance on U.S. investors to decide Russian economic policy seemed an odd pitch for Russian votes, I decided to try Yabloko again — after the foreign press had put the Yukos sale to ExxonMobil or ChevronTexaco on the front pages, and after President Vladimir Putin had been to the United States to chat about the matter with President George W. Bush — and Henry Kissinger over dinner at the latter’s New York apartment. This time, Yabloko’s spokesman was more cautious. He requested that the questions be sent by email. Two weeks have passed, and there has been no reply.

Yabloko thought that Sergei Glazyev, the former economist who is heading the Motherland party, might be in favor of taxing the oligarchs’ wealth and even of preventing Khodorkovsky from selling his shareholding. In 1996, Glazyev, then head of economic security on the Kremlin’s Security Council, came out against the methods by which the oligarchs had acquired their assets through phony privatization and against the uses to which they put their capital. But that was then. What about a month ago, when Khodorkovsky was reported to be selling 20 percent of Yukos for about $11 billion to ChevronTexaco?

I must have picked the wrong day, because Glazyev’s spokesman said that he wouldn’t answer until Sept. 22, when he planned to release his economic program. I called back last week, long after the program had had time to mature and after Khodorkovsky was now telling his friends at the Financial Times that he was selling a 40 percent stake of Yukos to ExxonMobil for $25 billion. Anna Gorbatova is Glazyev’s spokeswoman, and, from what she says, she feels sorry for him. On the one hand, she says, Glazyev is too busy to answer questions. On the other hand, he is traveling and too tired to answer his mobile phone. If he had the chance to review the questions by e-mail, Gorbatova said, the poor man might be able to give an answer in two weeks.

Glazyev is a frail fellow with a thin-reed voice that could easily fail under the pressure of campaigning. It’s perhaps just as well that he has the burly Dmitry Rogozin, with plenty of stamina, as the number-two candidate on the Motherland ballot. Rogozin has always presented himself as an ardent nationalist — with military overtones, when he managed the first of Gen. Alexander Lebed’s political campaigns. Since then, Rogozin has matured into the chairmanship of the Duma Committee for International Relations, where dealing with foreign policy is his daily bread and butter.

Surely, if anyone in the election campaign had a view on the Yukos question, it would be Rogozin. He sent his spokeswoman Olga Sagoreva to the telephone. But she was almost as sorry for Rogozin as Gorbatova was for Glazyev. “Rogozin,” she apologized, “is firstly a politician, and not very good with economic questions.” If a candidate for public office is no good at something, it’s a relief to hear it first from his closest associates. But there is no point beating around the bush — Rogozin doesn’t have an opinion to pass on to voters about taxing the oligarchs in general or dealing with Yukos in particular. His spokeswoman thought that it might be useful if I asked Glazyev, because she thought he might not be as bad at economics as Rogozin. She also invited an e-mail. There has been no reply.

Glazyev has positioned himself as the young left-leaning voter’s alternative to the Communist Party of the Russian Federation (KPRF). He insists that he is neither on the take from the Kremlin nor from the anti-Communist corporations to split the Communist vote and diminish its voting power in the new Duma. But what to make of the KPRF itself? It’s noteworthy that, on the 18 candidate Communist federal list that voters will see on their ballot papers, there is one, Sergei Muravlenko, who is a former chairman of the board of directors of Yukos, and another, Alexei Kandaurov, currently head of an analysis department in one of Yukos’ corporate divisions. They are on the KPRF ballot, according to party officials, because they are “old party comrades,” not because they are from Yukos. So what does the old party think of Khodorkovsky’s attempt to transfer his capital to an American corporation?

Ivan Melnikov is the party’s campaign voice, and he doesn’t like to lose it. On the one hand, he wants to address the questions, so he has asked for them to be sent by e-mail. On the other hand, he doesn’t want to answer them. Indeed, Melnikov has evaded answering these two questions for more than a month. As an associate of Melnikov’s at KPRF headquarters explains, he will continue to refuse to answer the questions, but avoid looking like he is doing so.

The KPRF is reputed to be the strongest opposition party in Russia, maybe the strongest party of them all. Current polls give it a projected 37 percent share of the new Duma. That is not only up on last month’s poll projections, but also double the party’s current Duma strength. Allowing for the exaggeration such polls are meant to convey — to galvanize a wave of anti-Communist energy from the electorate — it does appear that there may be a tidal wave of opposition sentiment coming in December, If so, it’s hardiy good news for the government and the Kremlin. That is, if you believe the way the sides and choices of the political campaign have been portrayed by the government’s propagandists. But what if there is no opposition, because, on the burning issues of the day, there is no one in the campaign who will give voters the answers to two of the most obvious questions of all?

Ever since Khodorkovsky began to feel the heat for his attempts to cash out and secure U.S. backing for himself, his capital and his ambitions, he has told his supporters that the real reason for his confrontation with the Kremlin is politics, not economics. According to Khodorkovsky and his supporters, he has been spending too much of his company’s time trying to influence the outcome of the Duma elections and buying votes and candidates, threatening the Kremlin’s strategy for a majority parliament of its own. In short, Khodorkovsky has claimed that his sale of Yukos is being blocked because he is threatening to create a political opposition all of his own. To this end, he has been reported to have bankrolled Yabloko, the KPRF and, possibly, other candidates as well.

If this is true, the money appears to have bought nothing but silence so far. But the tongue-tied candidates do tell one thing: If they don’t dare campaign on the issue of the Yukos sale, then the only choice in Russian politics doesn’t include them. So, let’s call off the Duma election — it’s nothing more than the poisoned mushroom in the well-known anecdote. Let’s go straight to the only real choice that Russians have to vote on — Putin VS. Khodorkovsky. The Russia Journal

AFTERSHOCK OF NORD STREAM EXPLOSIONS RUMBLES WARSAW — POLISH POLITICIANS GO “NUTTERS”

By John Helmer, Moscow
  @bears_with

The Polish government in Warsaw, facing re-election in less than a year, wants all the credit from Washington for their joint operation to sabotage the Nord Stream gas pipelines on the Baltic seabed.

It also wants to intimidate the German chancellor in Berlin, and deter both American and German officials from plotting a takeover by the Polish opposition party, Civic Platform, next year.

Blaming the Russians for the attack is their cover story. Attacking anyone who doesn’t believe it, including Poles and Germans, Warsaw officials and their supporting media claim they are dupes or agents of Russian disinformation.

Their rivals, Civic Platform (PO) politicians trailing the PiS in the polls by seven percentage points,   want Polish voters to think that no credit for the Nord Stream attack should be earned by the ruling Law and Justice (PiS) party. They also want to divert  the Russian counter-attack from Warsaw to Washington.

“Thank you USA” was the first Polish political declaration tweeted hours after the blasts by Radoslaw Sikorski (lead image, left), the PO’s former defence and foreign minister, now a European Parliament deputy. In support and justification,  his old friend and PO ministerial colleague, Roman Giertych, warned Sikorski’s critics: “Would you nutters prefer that the Russians find us guilty?”

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THE BORNHOLM BLOW-UP REPEATS THE BORNHOLM BASH — POLAND ATTACKS GERMANY AND BLAMES RUSSIA

By John Helmer, Moscow
  @bears_with

The military operation on Monday night which fired munitions to blow holes in the Nord Stream I and Nord Stream II pipelines on the Baltic Sea floor, near Bornholm Island,  was executed by the Polish Navy and special forces.

It was aided by the Danish and Swedish military; planned and coordinated with US intelligence and technical support; and approved by the Polish Prime Minister Mateusz Morawiecki.

The operation is a repeat of the Bornholm Bash operation of April 2021, which attempted to sabotage Russian vessels laying the gas pipes, but ended in ignominious retreat by the Polish forces. That was a direct attack on Russia. This time the attack is targeting the Germans, especially the business and union lobby and the East German voters, with a scheme to blame Moscow for the troubles they already have — and their troubles to come with winter.

Morawiecki is bluffing. “It is a very strange coincidence,” he has announced, “that on the same day that the Baltic Gas Pipeline  opens, someone is most likely committing an act of sabotage. This shows what means the Russians can resort to in order to destabilize Europe. They are to blame for the very high gas prices”.   The truth bubbling up from the seabed at Bornholm is the opposite of what Morawiecki says.

But the political value to Morawiecki, already running for the Polish election in eleven months’ time, is his government’s claim to have solved all of Poland’s needs for gas and electricity through the winter — when he knows that won’t come true.  

Inaugurating the 21-year old Baltic Pipe project from the Norwegian and Danish gas networks, Morawiecki announced: “This gas pipeline is the end of the era of dependence on Russian gas. It is also a gas pipeline of security, sovereignty and freedom not only for Polish, but in the future, also for others…[Opposition Civic Platform leader Donald] Tusk’s government preferred Russian gas. They wanted to conclude a deal with the Russians even by 2045…thanks to the Baltic Pipe, extraction from Polish deposits,  LNG supply from the USA and Qatar, as well as interconnection with its neighbours, Poland is now secured in terms of gas supplies.”

Civic Platform’s former defence and foreign minister Radek Sikorski also celebrated the Bornholm Blow-up. “As we say in Polish, a small thing, but so much joy”.  “Thank you USA,” Sikorski added,   diverting the credit for the operation, away from domestic rival Morawiecki to President Joseph Biden; he had publicly threatened to sabotage the line in February.  Biden’s ambassador in Warsaw is also backing Sikorski’s Civic Platform party to replace  Morawiecki next year.  

The attack not only escalates the Polish election campaign. It also continues the Morawiecki government’s plan to attack Germany, first by reviving the reparations claim for the invasion and occupation of 1939-45;  and second, by targeting alleged German complicity, corruption,  and appeasement in the Russian scheme to rule Europe at Poland’s expense. .

“The appeasement policy towards Putin”, announced PISM, the official government think tank in Warsaw in June,  “is part of an American attempt to free itself from its obligations of maintaining peace in Europe. The bargain is that Americans will allow Putin to finish building the Nord Stream 2 pipeline in exchange for Putin’s commitment not use it to blackmail Eastern Europe. Sounds convincing? Sounds like something you heard before? It’s not without reason that Winston Churchill commented on the American decision-making process: ‘Americans can always be trusted to do the right thing, once all other possibilities have been exhausted.’ However, by pursuing such a policy now, the Biden administration takes even more responsibility for the security of Europe, including Ukraine, which is the stake for subsequent American mistakes.”

“Where does this place Poland? Almost 18 years ago the Federal Republic of Germany, our European ally, decided to prioritize its own business interests with Putin’s Russia over solidarity and cooperation with allies in Central Europe. It was a wrong decision to make and all Polish governments – regardless of political differences – communicated this clearly and forcefully to Berlin. But since Putin succeeded in corrupting the German elite and already decided to pay the price of infamy, ignoring the Polish objections was the only strategy Germany was left with.”

The explosions at Bornholm are the new Polish strike for war in Europe against Chancellor Olaf Scholz. So far the Chancellery in Berlin is silent, tellingly.

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LEMONS, MIMOSAS, AND STALIN’S SHOVEL

By John Helmer, Moscow
  @bears_with

The only Russian leader in a thousand years who was a genuine gardener and who allowed himself to be recorded with a shovel in his hand was Joseph Stalin (lead image, mid-1930s). Compared to Stalin, the honouring of the new British king Charles III as a gardener pales into imitativeness and pretension.   

Stalin cultivated lemon trees and flowering mimosas at his Gagra dacha  by the Black Sea in Abkhazia.  Growing mimosas (acacias) is tricky. No plantsman serving the monarchs in London or at Versailles has made a go of it in four hundred years. Even in the most favourable climates, mimosas – there are almost six hundred varieties of them — are short-lived. They can revive after bushfires; they can go into sudden death for no apparent reason. Russians know nothing of this – they love them for their blossom and scent, and give bouquets of them to celebrate the arrival of spring.

Stalin didn’t attempt the near-impossible, to grow lemons and other fruit in the Moscow climate. That was the sort of thing which the Kremlin noblemen did to impress the tsar and compete in conspicuous affluence with each other. At Kuskovo, now in the eastern district of Moscow, Count Pyotr Sheremetyev built a heated orangerie between 1761 and 1762, where he protected his lemons, pomegranates, peaches, olives, and almonds, baskets of which he would present in mid-winter to the Empress Catherine the Great and many others. The spade work was done by serfs. Sheremetyev beat the French king Louis XIV to the punch – his first orangerie at Versailles wasn’t built until 1763.

Stalin also had a dacha at Kuskovo But he cultivated his lemons and mimosas seventeen hundred  kilometres to the south where they reminded him of home in Georgia. Doing his own spade work wasn’t Stalin showing off, as Charles III does in his gardens, like Louis XIV before him. Stalin’s spade work was what he had done in his youth. It also illustrated his message – “I’m showing you how to work”, he would tell visitors surprised to see him with the shovel.  As to his mimosas, Stalin’s Abkhazian confidante, Akaki Mgeladze, claimed in his memoirs that Stalin intended them as another lesson. “How Muscovites love mimosas, they stand in queues for them” he reportedly told him.  “Think how to grow more to make the Muscovites happy!”

In the new war with the US and its allies in Europe, Stalin’s lessons of the shovel and the mimosas are being re-learned in conditions which Stalin never knew – how to fight the war for survival and at the same time keep everyone happy with flowers on the dining table.

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AND THEN THERE WERE NONE

By John Helmer, Moscow
  @bears_with

Agatha Christie’s whodunit entitled And Then There Were None – the concluding words of the children’s counting rhyme — is reputed to be the world’s best-selling mystery story.    

There’s no mystery now about the war of Europe and North America against Russia; it is the continuation of Germany’s war of 1939-45 and the war aims of the General Staff in Washington since 1943. Defense Minister Sergei Shoigu (left) and President Vladimir Putin (right) both said it plainly enough this week.

There is also no mystery in the decision-making in Moscow of the President and the Defense Minister, the General Staff, and the others; it is the continuation of the Stavka of 1941-45.  

Just because there is no mystery about this, it doesn’t follow that it should be reported publicly, debated in the State Duma, speculated and advertised by bloggers, podcasters, and twitterers.  In war what should not be said cannot be said. When the war ends, then there will be none.  

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RUSSIANS RAISE THEIR GLASSES – THE TOAST IS TO BEATING THE BLOCKADE OF MOSCOW



By John Helmer, Moscow
  @bears_with

Alas and alack for the Berlin Blockade of 1948-49 (Berliner Luftbrücke): those were the days when the Germans waved their salutes against the unification of Germany demilitarised and denazified; and cheered instead for their alliance with the US and British armies to fight another seventy years of war in order to achieve what they and Adolf Hitler hadn’t managed, but which they now hope to achieve under  Olaf Scholtz — the defeat of the Russian Army and the destruction of Russia.

How little the Germans have changed.

But alas and alack — the Blockade now is the one they and the NATO armies aim to enforce against Russia. “We are drawing up a new National Security Strategy,” according to Foreign Minister Annalena Baerbock. “We are taking even the most severe scenarios seriously.”  By severe Baerbock means nuclear. The new German generation — she has also declared “now these grandparents, mothers, fathers and their children sit at the kitchen table and discuss rearmament.”  

So, for Russia to survive the continuation of this war, the Germans and their army must be fought and defeated again. That’s the toast of Russian people as they salute the intrepid flyers who are beating the Moscow Blockade.  

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THE INTERNATIONAL ATOMIC ENERGY AGENCY GOES TO WAR — GORILLA RADIO GOES NUCLEAR

By John Helmer, Moscow
  @bears_with

Last week the International Atomic Energy Agency’s (IAEA) board of governors voted to go to war with Russia by a vote of 26 member countries against 9.

China, Vietnam, India, Pakistan, Egypt, Senegal and South Africa voted against war with Russia.  

The IAEA Secretary-General Rafael Grossi (lead image, left) has refused to tell the press whether a simple majority of votes (18) or a super-majority of two-thirds (23) was required by the agency charter for the vote; he also wouldn’t say which countries voted for or against. The United Nations Secretary-General Antonio Guterres then covered up for what had happened by telling the press: “I believe that [IAEA’s] independence that exists and must be preserved is essential. The IAEA cannot be the instrument of parties against other parties.” The IAEA vote for war made a liar of Guterres.

In the IAEA’s 65-year history, Resolution Number 58, the war vote of September 15, 2022,  is the first time the agency has taken one side in a war between member countries when nuclear reactors have either been attacked or threatened with attack. It is also the first time the IAEA has attacked one of its member states, Russia, when its military were attempting to protect and secure a nuclear reactor from attack by another member state, the Ukraine, and its war allies, the US, NATO and the European Union states. The vote followed the first-ever IAEA inspection of a nuclear reactor while it was under active artillery fire and troop assault.

There is a first time for everything but this is the end of the IAEA. On to the scrap heap of good intentions and international treaties, the IAEA is following the Organisation for the Prohibition of Chemical Weapons (OPCW), and the UN Secretary-General himself.  Listen to this discussion of the past history when the IAEA responded quite differently following the Iranian and Israeli air-bombing attacks on the Iraqi nuclear reactor known as Osirak, and later, the attacks on Pakistan’s nuclear weapons sites.

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INTERNATIONAL ATOMIC ENERGY AGENCY TAKES UKRAINE SIDE IN WAR IN SEPTEMBER 15 VOTE, MAKING UN SECRETARY-GENERAL GUTERRES EITHER A LIAR OR A FOOL

By John Helmer, Moscow
  @bears_with

The International Atomic Energy Agency (IAEA) decided this week to take the side of Ukraine in the current war; blame Russia for the shelling of the Zaporozhye Nuclear Power Plant (ZNPP); and issue a demand for Russia to surrender the plant to the Kiev regime “to regain full control over all nuclear facilities within Ukraine’s internationally recognized borders, including the Zaporizhzhya Nuclear Power Plant.”      

This is the most dramatic shift by the United Nations (UN) nuclear power regulator in the 65-year history of the organisation based in Vienna.

The terms of the IAEA Resolution Number 58, which were proposed early this week by the Polish and Canadian governors on the agency board, were known in advance by UN Secretary-General Antonio Guterres when he spoke by telephone with President Vladimir Putin in the late afternoon of September 14, before the vote was taken. Guterres did not reveal what he already knew would be the IAEA action the next day.  

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THE RUSSIAN SITUATION COMEDY IS NO LYING MATTER – THE JOKE IS ON THE OFFICE OF FOREIGN ASSETS CONTROL

By John Helmer, Moscow
  @bears_with

Never mind that King Solomon said proverbially three thousand years ago, “a merry heart doeth good like a medicine.”  

With seven hundred wives and three hundred concubines, Solomon realized he was the inventor of the situation comedy. If not for the sitcom as his medicine, the bodily and psychological stress Old Solly had to endure in the bedroom would have killed him long before he made it to his death bed at eighty years of age,  after ruling his kingdom for forty of them.

After the British sitcom died in the 1990s, the subsequent stress has not only killed very large numbers of ordinary people. It has culminated today in a system of rule according to which a comic king in Buckingham Palace must now manage the first prime minister in Westminster  history to be her own joke.

Even the Norwegians, the unfunniest people in Europe, have acknowledged that the only way to attract the British as tourists, was to pay John Cleese of Monty Python and Fawlty Towers to make them laugh at Norway itself.   This has been a bigger success for the locals than for the visitors, boosting the fjord boatman’s life expectancy several years ahead of the British tourist’s.  

In fact, Norwegian scientists studying a sample of 54,000 of their countrymen have proved that spending the state budget on public health and social welfare will only work effectively if the population is laughing all the way to the grave. “The cognitive component of the sense of humour is positively associated with survival from mortality related to CVD [cardio-vascular disease] and infections in women and with infection-related mortality in men” – Norwegian doctors reported in 2016. Never mind the Viking English:  the Norwegian point is the same as Solomon’s that “a sense of humour is a health-protecting cognitive coping resource” – especially if you’ve got cancer.  

The Russians understand this better than the Norwegians or the British.  Laughter is an antidote to the war propaganda coming from abroad, as Lexus and Vovan have been demonstrating.   The Russian sitcom is also surviving in its classic form to match the best of the British sitcoms, all now dead – Fawlty Towers (d. 1975), Black Adder (d. 1989), You Rang M’Lord? (d. 1988), Jeeves and Wooster (d. 1990), Oh Dr Beeching! (d.1995), and Thin Blue Line (d. 1996).

The Russian situation comedies, alive and well on TV screens and internet streaming devices across the country, are also increasingly profitable business for their production and broadcast companies – not despite the war but because of it. This has transformed the Russian media industry’s calculation of profitability by removing US and European-made films and television series, as well as advertising revenues from Nestlé, PepsiCo, Mars, and Bayer. In their place powerful  Russian video-on-demand (VOD) streaming platform companies like Yandex (KinoPoisk), MTS (Kion),  Mail.ru (VK), and Ivi (Leonid Boguslavsky, ProfMedia, Baring Vostok)  are now intensifying the competition for audience with traditional television channels and film studios for domestic audiences.  The revenue base of the VOD platforms is less vulnerable to advertisers, more dependent on telecommunications subscriptions.

Russian script writers, cameramen, actors, designers, and directors are now in shorter supply than ever before, and earning more money.  “It’s the Russian New Wave,” claims Olga Filipuk, head of media content for Yandex, the powerful leader of the new film production platforms; its  controlling shareholder and chief executive were sanctioned last year.  

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RUSSIAN AVIATION INDUSTRY CORRECTS YELTSIN YAW – BOEING, AIRBUS DITCHED



By Olga Samofalova, translated and introduced by John Helmer, Moscow
  @bears_with

It was the American humourist Mark Twain who didn’t die in 1897 when it was reported that he had. Twain had thirteen more lively years to go.

The death of the Russian aerospace and aviation industry in the present war is proving to be an even greater exaggeration – and the life to come will be much longer. From the Russian point of view, the death which the sanctions have inflicted is that of the US, European and British offensive against the Soviet-era industry which President Boris Yeltsin (lead image, left) and his advisers encouraged from 1991.

Since 2014, when the sanctions war began, the question of what Moscow would do when the supply of original aircraft components was first threatened, then prohibited, has been answered. The answer began at the Federal Aviation Administration (FAA) in 1947 when the first  Supplemental Type Certificate (STC) or Parts Manufacturing Approval (PMA) was issued by Washington officials for aircraft parts or components meeting the airworthiness standards but manufactured by sources which were not the original suppliers.   

China has been quicker to implement this practice; Chinese state and commercial enterprises have been producing PMA components for Boeing and Airbus aircraft in the Chinese airline fleets for many years.  The Russian Transport Ministry has followed suit; in its certification process and airworthiness regulations it has used the abbreviation RMA, Cyrillic for PMA. This process has been accelerating as the sanctions war has escalated.

So has the Russian process of replacing foreign imports entirely.

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FOR WANT OF A NAIL THE KINGDOM WAS LOST – ENGLISH PATHOLOGIST GUY RUTTY FACES CHALLENGE TO THE RELIABILITY OF HIS NOVICHOK EVIDENCE



By John Helmer, Moscow
  @bears_with

The weakest link in the British government’s four-year long story of Russian Novichok assassination operations in the UK – prelude to the current war – is an English medical expert by the name of Guy Rutty (lead image, standing).

A government-appointed pathologist advising the Home Office, police, and county coroners, Rutty is the head of the East Midlands Forensic Pathology Unit in Leicester,  he is the author of a post-mortem report, dated November 29, 2018,  claiming that the only fatality in the history of the Novichok nerve agent (lead image, document), Dawn Sturgess, had died of Novichok poisoning on July 8, 2018. Rutty’s finding was added four months after initial post-mortem results and a coroner’s cremation certificate stopped short of confirming that Novichok had been the cause of her death.

Rutty’s Novichok finding was a state secret for more than two years. It was revealed publicly   by the second government coroner to investigate Sturgess’s death, Dame Heather Hallett, at a public hearing in London on March 30, 2021. In written evidence it was reported that “on 17th July 2018, Professor Guy Rutty MBE, a Home Office Registered Forensic Pathologist conducted an independent post-mortem examination. He was accompanied by Dr Phillip Lumb, also an independent Home Office Registered Forensic Pathologist. Professor Rutty’s Post-Mortem Report of 29th November 2018 records the cause of death as Ia Post cardiac arrest hypoxic brain injury and intracerebral haemorrhage; Ib Novichok toxicity.”  

Hallett, Rutty, Lumb, and others engaged by the government to work on the Novichok case have refused to answer questions about the post-mortem investigations which followed immediately after Sturgess’s death was reported at Salisbury District Hospital; and a cause of death report signed by the Wiltshire Country coroner David Ridley, when Sturgess’s body was released to her family for funeral and cremation on July 30, 2018.  

After another three years, Ridley was replaced as coroner in the case by Hallett in March 2021. Hallett was replaced by Lord Anthony Hughes (lead image, sitting) in March 2022.

The cause-of-death documents remain state secrets. “As you have no formal role in the inquest proceedings,” Hallett’s and Rutty’s spokesman Martin Smith said on May 17, 2021, “it would not be appropriate to provide you with the information that you have requested.” 

Since then official leaks have revealed that Rutty had been despatched by the Home Office in London to take charge of the Sturgess post-mortem, and Lumb ordered not to undertake an autopsy or draw conclusions on the cause of Sturgess’s death until Rutty arrived. Why? The sources are not saying whether the two forensic professors differed in their interpretation of the evidence; and if so, whether the published excerpt of Rutty’s report of Novichok poisoning is the full story.   

New developments in the official investigation of Sturgess’s death, now directed by Hughes, have removed the state secrecy cover for Rutty, Lumb, and other medical specialists who attended the post-mortem on July 17, 2018. The appointment by Hughes of a London lawyer, Adam Chapman, to represent Sergei and Yulia Skripal, opens these post-mortem documents to the Skripals, along with the cremation certificate, and related hospital, ambulance and laboratory records. Chapman’s role is “appropriate” – Smith’s term – for the Skripals to cross-examine Rutty and Lumb and add independent expert evidence.

Hughes’s appointment of another lawyer, Emilie Pottle (lead image, top left), to act on behalf of the three Russian military officers accused of the Novichok attack exposes this evidence to testing at the same forensic standard. According to Hughes,  it is Pottle’s “responsibility for ensuring that the inquiry takes all reasonable steps to test the  evidence connecting those Russian nationals to Ms Sturgess’s death.” Pottle’s responsibility is to  cross-examine Rutty and Lumb.

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