Russia at the Crossroads

  • Update 2017:  Liu Xiaobo died in a Chinese prison in 2017. 
  • Update Dec 26, 2013: Mikhail Khodorkovsky was released from jail on Dec 20, 2013. He is now organizing a democratic movement for Russia from exile. 

Note: This post was written in 2013; some things have changed, but the situation in Russia has become even worse, and the country faces a steep decline based on population decrease. 

Mikhail Khodorkovsky is an almost forgotten Russian voice; he spent the last 10 years of his life in Russian jails in Siberia. He once was one of the richest men of Russia, but he disagreed too much with Putin. On October 24, 2013 he managed to publish a letter to the New York Times from jail. It is worth reading, because it summarizes the state of Russia today very eloquently. He says that the situation and the outlook for Russia is grim, therefore the Europeans should step in and renew the deep bonds between Europe and Russia in order to help Russia move on. This would be a win-win situation, because Russia is a part of Europe, and it has many natural resources that Europe needs.The European integration project is itself stagnating, and opening Russia to Europe would create a boost for both sides. He concludes his article with a vision:

Yes, such a change would require a serious new effort from the Euro-Atlantic civilization. First in terms of personnel, and second in terms of technology and innovation. We would be talking about hundreds of thousands of entrepreneurs and specialists, about a gigantic splash of energy from a new generation of Europeans onto huge, and thus far poorly developed, expanses, about joint work, about a new Europe — from the Atlantic all the way to the Pacific.

For our people — the Russian people — this would become a real opportunity to overcome a situation that has existed since the 17th century, and to bridge the gap that has formed between the limited number of Russians who have a notion of modern Europe and live by its standards, and the rest of the country’s population, the many millions whose dream of a better life has been unscrupulously exploited for centuries by politicians who continue to preach a nonexistent “special way” for Russia that only leads people deeper into misery.

Today, against the background of ongoing migrations into Europe and ongoing change in Asia, the split between Europe and Russia is a gap that can lead to extremely unfavorable consequences. The disastrous project of stagnation needs an ambitious European alternative.

I agree with him. The historic separation between Europe and Russia can be overcome, and if France and Germany could settle their history of wars and become close friends, why could Russia not join the European Union as an associate or even full member? It is a colossal project, but it also offers incredible opportunities for everyone. A European system that extents from the Atlantic to the Pacific and reaches deep into Asia, with a population of almost 700 million people and huge natural resources, would transform world politics and change history.

The obstacles to this vision are taunting. The political will to move into this direction would have to come from Russia. and it cannot be done while Putin is in power. He uses nationalism as the major theme of his government – the nonexistent “special way”. But after the end of the Soviet Union, Russia lost its status as a super power: It has few allies, no international presence, and enormous internal problems. After their disastrous support for a murderous Syrian government, Russia is more and more isolated. Russia today is a reactive world player, similar in size and strength to Brazil or Mexico, and their last major trump-card is the permanent seat on the Security Council.

Like a Grand Hotel whose best days are gone, Russia has pride, but the infrastructure is crumbling. It did not have a successful transition into a new system after the dissolution of the Soviet Union in 1991/92. The Russian Revolution failed for a second time. Today, the most intransigent problem for the country is corruption. How can Europe align itself with a country that is drowning in corruption, a country where the whole power structure is corrupt, not just a few officials? To put this in perspective: Transparency International creates a yearly corruption perceptions index, and for the year 2012, Russia scored #133 out of 174 countries, equal to Iran, and only one step above Nigeria, Kenya, or Pakistan.

Russia seems to have an eternal problem with political power. It survives today as a “soft” dictatorship. This form of dictatorship is different from the Mid-20th century totalitarian models of Mao, Stalin, or Hitler, but still very dangerous for the citizens, and very detrimental to the country. “Soft” dictatorships embrace market systems, like China, or even democracy and markets, like Russia. But these institutions are just the facade; behind it there exists a police state that skillfully manipulates public opinion and elections, and silences  opponents by “using” the legal or criminal system against them. Khodorkovsky is a prime example for it. Such systems have no internal checks and balances, because the people who should act to enforce controls and search for truth, like judges or police, are themselves all part of the system. They get bought off. Justice functions only in the service of political power considerations, and all other institutions are either powerless or fake.

Putin’s name will be associated with these early 21st century soft dictatorships. The system “Putin” has a front side and a back side. In purely economic numbers, he is a successful leader, because GDP grew enormously under his leadership, which started in 2000 and lasts until today, with a strange Medvedev switch of top positions between 2008 and 2012. GDP grew from 260 billion US Dollars in 2000 to 2.1 trillion dollars in 2012.  The current growth rate is approximately 3.5 to 4%. This translates into a GDP per capita rate of $18.000; still far behind the US per capita GDP rate of $50.000, or Germany’s rate of $40.000.  Russia’s financial success, however, is not due to a strong and productive economy, it is mostly due to the rising prices of oil, gas, and other raw materials. A quarter of Russian GDP comes from exports. In the same time period (2000 to 2012) the crude oil price rose from $20 to $120 per barrel, a six-fold increase. Russia today is the biggest oil producer in the world, surpassing Saudi-Arabia.

Putin is still in power because he was lucky. The rising demand for oil and gas has helped him to finance his reign. On the back side of the “system Putin,” the cost for Russia is enormous. It is loosing international recognition, and its economy is eroding. Russia faces massive capital outflow (about 15 billion per year) which means rich Russians take the money they make and invest it somewhere else. And the people who don’t have money that they can move abroad, want to move themselves. The degree of repression in Russia can be measured by the amount of people wanting to leave. In the last 10 years, more than 2.5 million people have already left Russia, and these are most likely the talented ones. This brain-drain, together with a shrinking population, represents really bad news for Russia. According to the Russian market research company ROMIR, a third of Russia’s young professionals are thinking of leaving the country (see the BBC article referenced below.) This trend is caused by a lack of opportunities, and no hope for the future, which leads to wide-spread depression and lack of motivation. How can individuals and families survive in a system ruled by corruption? Various gangster organizations have taken over, and the government itself is nothing but a group of thieves and liars.

Another symptom for the failure of the “system Putin” is the flight of foreign investors. They have given up on Russia. The withdrawal of foreign capital since 2008 has now reached $350 billion and continues. Entrepreneurs and investors are often subjected to criminal prosecution as a form of extortion. Some of them, like Sergei L. Magnitsky and Vasily G. Aleksanyan, have died while in prison. The Magnitsky case is especially interesting, (see below), because it jolted the US Congress into action. A US law was created and signed by Obama in Dec 2012 that prohibits entry to 18 Russian officials who were involved with the death of Sergei Magnitsky. This angered Putin so much that he stopped adoptions of Russian children by American parents. Who is loosing out in this kind of retaliation?

Not only entrepreneurs are leaving Russia – the economists go as well. Sergei Guriev, a highly respected Russian economist, decided that it is no longer save for him in Moscow after being visited by government officials, and he went to Paris in June 2013. He had written a report about the Khodorkovsky trial, and found that it was a sham. (see the Bloomberg article below.)

If the government reacts to political opposition by criminalizing it, as it happened in the case of the girls who form the Pussy Riot band, or for Alexei Navalny, the candidate for mayor in Moscow, a political dialog about the future of the country cannot occur any more. Russia reverts back to it’s old Czarist ways, and moves away from developing a democratic culture. The only hope is that there are enough people in the educated middle class who have the sense of justice, and the necessary courage, to stand up and fight for a better system. Putin must go now.

Instead of a footnote:

There is another political prisoner whom we should not forget. It is Liu Xiaobo,  who is in a Chinese jail, and whose crime was to demand democracy for China. He received the Nobel Peace Prize in 2010, but the Chinese government is too afraid to allow him to speak. They want the opposition to be silent as well. The dictatorships may be soft, but the repression is always brutal.

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