#1
From: "Peter Lavelle" <plavelle@metropol.ru>
Subject: A Reluctant Russophile - JRL Weekly Review (JRL #6140-#6149)
Date: Fri, 22 Mar 2002 1

Peter Lavelle: A Reluctant Russophile - JRL Weekly Review (JRL #6140-#6149)
(Peter Lavelle is a Moscow-based head of research for a Russian brokerage house)

[Note: With David's permission, I have volunteered to write a short weekly review of the JRL on a trial basis. My aim is two fold. First, I believe a critical overview of some of the postings can be helpful for those who have a strong interest in things Russian, though due to time constraints cannot fully digest David's heroic efforts. Second, I hope to generate more discussion on the List. We all are presented with a huge corpus of material to think about, I hope I can help focus our "imagined community" to better understand the subject so many of us are obsessed with and to promote more interaction among subscribers.

At the outset I would like to make clear what I intend to comment on. Almost all news service reports will not be reviewed, unless there is something unique or compelling in the report. I am most interested in analysis, especially from those who post original material on the JRL. This posting will be made, if it is eventually deemed helpful after a number of weeks, every Friday (close of business - Moscow time).

Additionally, this will not be a forum agitating my occasional "Untimely Thoughts"; others review my thoughts much to my satisfaction without me blowing my own horn. "Untimely Thoughts" will continue uninterrupted. Lastly, I represent myself and not the JRL or David. I am very appreciative that David has created a forum for me to express my opinion how others write and think about Russia. This Note will be repeated next week for those who might have missed or overlooked the original posting.]

Postings Reviewed:

#6140
The Russian Journal: Matt Taibbi, A welter of Russia 'experts' serves up opinion on tap (correction from #6138)

#6141
Financial Times (UK): Quentin Peel, Putin plays a weak hand well

#6142
Pravda.ru: Alexander Alexeyev, RUSSIA'S ECONOMY: TIMID PEEK AHEAD

#6143
Business Day (Johannesburg): John Helmer, HONEST CIPHER FOR CENTRAL BANK

Vedomosti: Tatiana Lysova, Aleksei Nikolsky, PUTIN'S RATING IS AN OBSTACLE

Novoe Vremya: Vladimir Shveitser, A NEW LOOK AT OLD VALUES

#6144
RFE/RL Russian Political Weekly: IS PUTIN POPULAR BECAUSE HE'S NOT YELSTIN?

Russia Business List #283, Ben Aris

#6145
Jamestown Foundation Monitor, WILL REGIONAL GOVERNORS BE PRESIDENTIALLY APPOINTED?

#6146
THE PUTIN SYSTEM: Heinrich Vogel

WPS Agency: POLITICAL FORECASTS

#6149
Carnegie Endowment for International Peace Meeting report Gazprom and Itera: A Case Study in Russian Corporate Misgovernance

Matt Taibbi takes the Gold this week, bar none. He threatens and promises a review of the "Russia-watchers" industry. As a graduate student, I was encouraged to apply Braudel's 'thick description' when attempting to understand the big picture of a subject. Taibbi does not disappoint in this regard. Russia watching is a high-powered monied cottage industry, Taibbi tells us much about "who is who" as well as where the money comes from. I do not know if his conclusions are correct (yet), but his piece is well worth a read. My greatest interest in this series is if Taibbi will review and comment on one the foremost experts on Russia - Matt Taibbi. Being from the eXile, I am confident he will find a way to square the circle. I, for one, will download his posting as a reference to interpret the rest of the series. And Matt, since when have you made up with the RJ?

Quentin Peel's piece, "Putin plays a weak hand well", is of note because he does not try to persuade us one way or another as to Russia's relative importance in the world. Rather, he approaches Putin Russia from the advantage point of perspective. The word "perspective" seems to be in vogue to assess international politics since 9/11. I am of the opinion that Russia has changed little since 9/11, however Putin has been able to make us look at Russia in new (though not always in a complimentary) ways. Indeed Putin is playing a weak hand better than most of us could ever imagine. "Perspective" has also allowed Putin to accept in very public way Russia's decline - something Yeltsin could never do.

Alexander Alexeyev's "RUSSIA'S ECONOMY: TIMID PEEK AHEAD" is a solid reflection of how many analysts, domestic and foreign, see Russia's short-term economic prospects. In the first quarter of this year, the government appears to be a bit jittery about the state of the economy. Alexeyev is neither an optimist nor pessimist. He voices his concerns of the over continued reliance on export of commodities and how the government needs to create a mechanism to have capital at a reasonable cost made available to Russia's rickety industrial base. A point he raises loud and clear is the fact that Russia's economic fate is in the hands of the government. Russia is a market economy and there is a "spirit of capitalism" here, though both remain in the shadow of semi-illegality. According to Alexeyev, the best thing the state can do is to nurture both. It is still unclear if the state has the vision and means to allow both develop on their own.

John Helmer's piece on Gerashchenko's demise, HONEST CIPHER FOR CENTRAL BANK, reflects the conventional wisdom on the subject. He rightly points out that still another relic of the past regime has been forced to leave the political scene. He is also right about how the dismissal was received - the market and the business community welcomed Putin's "long over due" decision. Calling the new Central Bank Chairman a "cipher" is not enough. Igantiev's extensive experience in banking and finance suggests that he is a man of enormous knowledge and high principle. It is also very important to take note that he has reputation for integrity that may not be equaled in the political elite. My sense is Igantiev will not challenge the President and Cabinet in the way Gerashchenko did. Gerashchenko relished in showing contempt for his superiors, even though he was considered the worst bank governor in the world. Helmer suggests that Igantiev was the IMF's "yes man" a decade ago. Maybe he was. Today Russia does not need the IMF or a politically driven bank governor. What the CBR has now is a man who will probably be first concerned with the state of Russia's finances. Dealing with Kasyanov and Putin will probably be not much different than what other bank governors must do when dealing with political bosses demanding financial policies catered for the moment. Igantiev's job won't be easy, but the CBR is now in better hands.

Vedomosti's article "PUTIN'S RATING IS AN OBSTACLE" is of interest because now we are being asked to backtrack on how we think about political stability in Russia. Many of us longed for a leadership change during those long and disappointing years of Yeltsin's second administration. Now we are asked 'how much of Putin is a good thing?'. Vedomosti's article was written in response to a report issued by Helena Hessel of Standard & Poor's. I had the great pleasure to be present at a presentation she made on Russia a few weeks ago. She is reasonable and concise (the rest of the presenters only tortured us with useless information or self-satisfying monologue). The thrust of her argument is clear and correct. Russia's political stability is a function of Putin's leadership qualities. This is true. She correctly contends that Putin's hegemonic powers retard the development of other (checks and balances) political institutions. What her rating agency does not really consider is the alternative to Putin: the bureaucracy. Hessel is absolutely right, but not for all the right reasons.

One of the most interesting articles of the week was Novoe Vremya's, A NEW LOOK AT OLD VALUES. It is interesting and odd at the same time. I never thought about comparing the political agendas of Yabloko and Russian Social Democratic Party. The article is very compelling - social democracy, at least on paper, has a number of variants in Russia. I like the article because two of Russia's bad boys are compared: Yavlinsky and Gorbachev. I wonder how much they like being compared to the other. The article focuses on the platforms of parties, the similarities and differences. Actually, the article is an exercise in comparative political discourse. It is very academic in this sense. In a political sense, the comparison may only be academic - neither party may make it in the next Duma. The article is worth reading - not all of political thinking here is as banal as the hacks over at Unified Russia or the CPRF.

Public opinion polls in Russia still have a long way to go to be taken seriously.

Nonetheless, RFE/RL's political weekly consideration of the question "IS PUTIN POPULAR BECAUSE HE'S NOT YELSTIN?" is curious and a bit amusing - I didn't think that the RFE/RL folks dabbled in pop psychology. The answer to their question is painfully obvious. The fact Putin is not in anyway like Yeltsin is a bonus for the incumbent. I am sure there are many Americans who like George W because he is not Clinton. To be fair, the article does put into perspective of how many Russians probably think of their present reality compared to the tumultuous 1990s. Though by the end of the article, I could not but think of the "big sleep" mentality so many Russians long for of the 1980s.

Ben Aris' Russia Business List posting is as good as it gets. He asks us to consider if Russia has started to experience business cycles in a normal sense. What make this piece particularly smart is the attention given to the difference between outstanding macroeconomic performance and the touch and go prospects on the company level. This issue is very close to me - I see the numbers coming out of each Ministry and I also see the state of the small and medium size businesses, two different worlds indeed. On the positive side, Aris rightly points out that much of Russia's economic growth as of late is consumer spending driven. He also notes that the government needs to keep up with the needs and protections small and medium size businesses need to sustain this demand. No shrill commentary in this article, just a lot of hard facts and reasoned analysis. The statement "Another irony of the recent rapid growth is that the Kremlin's radical reform programme has also had virtually no impact on growth, other than to boost confidence" should be enough to invest the five minutes needed to read the article.

WILL REGIONAL GOVERNORS BE PRESIDENTIALLY APPOINTED? asks the Jamestown Foundation Monitor. My experience is that these guys are a bit up tight. This article does justice to a debate that has gained steam over the last few months. Is appointment of governors over local elections a threat to democracy in Russia? This is anyone's guess at this point. In theory local elections should probably be promoted as much as possible. The unfortunate reality is that many local elections as bought (cheaply) by local business interests.

Vogel's THE PUTIN SYSTEM is an overview of what Putin has accomplished over the past two years and the challenging agenda ahead. He claims Putin's presidency thus far made changes at "relatively low political risk, since they did not impose a direct burden on the majority of the population". He also questions if Putin matter of rule is strong enough to start the next stage of reform without losing popular support and the bureaucracy's backing.

There was a time when I looked forward to WPS' POLITICAL FORECASTS. Now I read the forecast as a forum to assess the level of disinformation in the print media. There is a lot of muddle about Gerashchenko's fate. The intrigue and speculation is less than convincing - not to mention compelling. The usual and boring "constellation of forces" among the Chekists, "Northern Alliance" and Family is repeated as if it were news. There is not much substance in this particular issue. However, it is a worth a read. I bought video bootlegs of "Harry Potter" and "Collateral Damage" not out of personal interest; rather out of interest as to what people are interested in.

For those interested in the tough and tumble world of Russian business, William Browder's report on Gazprom, Itera and PwC reads like criminal thriller. It is interesting and disappointing that with all claims of corruption and finger pointing in Russia's business world, it has to be a foreigner to report on Gazprom's horrific practices.

Concluding observation. Gerashchenko's dismissal and Klebanov's re-engineered job description has been widely thought of as a victory for Kasyanov. This actually may be a correct assessment. However, taking a counter-intuitive position, it seems to me Putin is allowing Kasyanov just that much more rope to.

Putin is no fool and Kasyanov is positioning himself, because of his additional powers and responsibilities, to become the quintessential fall guy if these start going wrong. Being number two in Russia is never easy.