Defenders of the Fatherland: “Say When You’ve Had Enough”

"Happy February 23rd!"
“Happy February 23rd!”

Leda Garina
Facebook
February 23

On February 23, female feminists spoke out—finally!—in defense of men.

The Eternal Flame, Field of Mars, Petersburg
The Eternal Flame, Field of Mars, Petersburg

“We think the very idea of ‘defenders’ is one of the pillars of oppression, whether ethnic, gender or whatever other kind. From the time they are babies, men are inculcated with the notion that they must be defenders. Actually, however, they are merely taught to behave aggressively and completely suppress their emotions. And they grow up as people prone to exercise violence and control. They become cogs used by those in power, dogs who have been taught a single command: ‘attack.’

“We believe society must change, that a more humane society is a sign of progress. Armies and armed conflicts must become things of the past, like human sacrifice and the bonfires of the Inquisition. Like the first winged chimeras, which had been built but still could not fly.”

"Say When You've Had Enough"
“Say When You’ve Had Enough”

Photos by David Frenkel. Translated by the Russian Reader

Eliminating Local Government in Russia

An elderly woman pulling a metal container with water past a snow-covered wooden house with carved window frames in the village of Kondratyevo, Omsk Region, February 17, 2017. Photo courtesy of Dmitry Feoktistov/TASS Россия. Омская область. 19 февраля 2017. Жительница села Кондратьево в Муромцевском районе Омской области. Дмитрий Феоктистов/ТАСС
An elderly woman pulling a container with water in the village of Kondratyevo, Omsk Region, February 19, 2017. Photo courtesy of Dmitry Feoktistov/TASS

Duma to Legalize Elimination of Settlements by the Regions
Maria Makutina
RBC
February 22, 2017

The Duma has tabled an amendment that would legalize converting municipal districts into urban districts. RBC’s sources have informed us the move to eliminate local government in settlements would be supported by the relevant committee. In Moscow Region, such mergers have sparked grassroots protests.

An “Elegant Way” of Eliminating Local Self-Government
Mikhail Terentiev, an United Russia MP from Moscow Region, has submitted amendments to the law on general principles of local self-government to the Duma Committee on Local Self-Government. (RBC has the document in its possession.) The MP has proposed amending the law to make it possible to merge all settlements, including rural settlements, that constitute a municipal district with an urban district. Under such a merger, the settlements and the municipal district would forfeit their status as municipal entities. Decisions about such mergers would be taken by regional authorities “with the consent” of local representative bodies.

Terentiev has also proposed changing the definition of an “urban district,” as stipulated by the law. Currently, it is defined as a urban settlement that is not part of a municipal district. The new draft law defines it as “one or more contiguous populated areas that are not municipal entities.”

Moscow Region authorities have found an “elegant and simple  way” to legalize the single-tier system of local government that, in recent years has, been established in a number of Russia’s regions, including Moscow Region, Andrei Maximov, an analyst with the Committee of Civic Initiatives, explained to RBC.

Moscow Region Governor Andrei Vorobyov. Photo courtesy of Sergei Fadeichev/TASS
Moscow Region Governor Andrei Vorobyov. Photo courtesy of Sergei Fadeichev/TASS

Protests
In November of last year, Andrei Vorobyov, governor of Moscow Region, announced plans to convert around twenty municipal districts into urban districts in 2016–2017. According to Vorobyov, the reform would save money by reducing the number of officials.

The proposed move sparked popular protests. Moscow Region municipal district council members, unhappy with the dissolution of local executive and representative bodies, held protest rallies. Public hearings on reforming local systems devolved into clashes with the Russian National Guard.

A Local Self-Government Congress was held in Moscow in February. Local council members from Moscow Region requested that Prime Minister Dmitry Medvedev and law enforcement agencies investigate “numerous incidents in which local government bodies, including municipal districts, rural settlements, and urban settlements, have been forcibly dissolved.”

“The law does not provide for dissolving a municipal district or converting it into a urban district, so Moscow Region authorities conceived a way of getting round the law. First, they merge rural settlements with an urban settlement, and then they turn it into an urban district.  But the municipal districts are left in a limbo,” said Maximov.

The Presidential Human Right Council has argued that the reforms in Moscow Region violate the public’s right to local self-government. HRC deputy chair Yevgeny Bobrov said as much to Vladimir Putin at the council’s December 8, 2016, meeting. The president promised to “work” on the issue.

Nevertheless, in 2015, the Russian Supreme Court ruled that the merger of two rural settlements and the Ozyory urban settlement into an urban district was legal.

Simplifying Governance
MP Terentiev explained to RBC that his amendments were motivated by the need to optimize the budget in Moscow Region.

“The governor and I realized that money could be saved on officials,” he said.

Thanks to the reforms, “there will be an overall approach to wage policies and the opportunity to reduce administrative barriers to business,” Terentiev argued.

The current law stipulates that Russia is divided into settlements, which are organized into municipal districts, and particularly large settlements, which are organized into urban districts, Maximov explained. According to Terentiev’s draft amendments, any territorial entity in Russia can be turned into an urban district, meaning it can be moved from the two-tier system to the one-tier system.

The authorities have been attempting to confer the status of urban districts on municipal districts in order to dissolve settlements and simplify governance. Rural authorities can interfere with the plans of regional authorities to implement urban planning projects and create obstacles to resolving land use issues, which currently require the consent of the settlements affected, political scientist Alexander Kynyev explained to RBC.

The Total Deterioration of Settlements
Experience has shown that populated areas lacking elements of self-governance deteriorate and disappear, RBC’s source on the Local Self-Government Committee told us. According to the source, the draft amendments would lead to the total deterioration of the settlement-tier of governance throughout the entire country.

“It is nonsense to eliminate settlements in densely populated Moscow Region. It doesn’t fit into any paradigm. It is just the governor’s whim. It will be easier for him to manage his affairs this way, and so the law has been mangled for this sake. He has to demolish everything so it will be easier to build it up again,” RBC’s source said.

The reform has been opposed by people of different views and parties. Local self-government as such has been threatened. As the 2018 presidential election approaches, the federal authorities want to avoid such controversies, argues Kynyev.

Through the Back Gate
Terentiev tabled his draft amendments as part of the second reading of a draft law bill that would abolish direct popular votes on whether to change the status of urban and rural settlements. The government tabled the draft law back in the spring of 2015. It was passed in its first reading the same year, after which the Duma has not returned to it.

Radical change in the territorial basis of local self-government has been brought in “through the back gate,” noted our source in the Duma, although the 2014 local self-government reforms were “seriously discussed” in society, he recalled.

Alexei Didenko (LDPR), chair of the Duma’s Local Self-Government Committee, agreed the draft bill could “eliminate the machinery of popular self-government,” and ordinary people would find it harder to defend their interests. According to Didenko, the draft amendments were at odds with what the president said during his 2013 state of the nation address: “Local governance should be organized in such a way  anyone can reach out and touch it.”

Didenko told RBC  the decision whether to support Terentiev’s draft amendments or not would be made by his committee, most of whom are United Russia members, in March. Two sources in the Duma told RBC the committee would approve the draft amendments.

How Local Authorities Have Been Stripped of Their Powers
In his December 2013 address to the Federal Assembly, President Putin asked that the organizational principles of local self-government be clarified. According to Putin, the quantity of responsibilities and resources of municipal officials were out of balance, “hence the frequent confusion over powers.”

In May 2014, a law reforming local self-government was passed, endowing the regions with the right to assume a considerable number of the powers previously exercised by local authorities in taking economic decisions.

The original draft of the bill called for the abolition of direct elections of big-city mayors and city council members. The final draft stipulated the heads of municipal entities could be either elected directly or appointed from among council members.  In the first case, the head of the municipal entity could lead the administration himself. (If the municipal entity in question is a city, he would become city manager.) In the second case, the head of the municipal entity would chair its representative body.

Regional legislative assemblies were accorded the right to divide cities and towns into intra-urban municipal entities. Two new types of municipal entities were introduced for this purpose: urban districts with intra-city divisions, and intra-urban districts.

First-tier council members (that is, council members of urban and rural settlements) are elected directly by voters. Second-tier council members (of municipal districts and urban districts with intra-city divisions) are either elected or delegated from among the heads of settlements and first-tier council members, in the case of municipal districts, or only from among first-tier council members, in the case of urban districts with intra-city divisions. The method of electing council members was also to have been defined by regional law.

In February 2015, two other methods for electing heads of municipal entities were introduced. The first method allows the head of a municipality, chosen by the municipality’s council from among its members, to lead the local administration. However, he surrenders his mandate as a council member. The second method allows a bureaucrat, chosen by council members from a slate of candidates suggested by a hiring committee, to lead the local administration. This had made it possible for city managers to become autocratic mayors.

Translated by the Russian Reader. See my December 15, 2016, post on the same topic, “In Tomilino.”

Defenders of the Fatherland

fatherland-defenders

Front page of St. Petersburg news website Fontanka.ru on the morning of 21 February 2017. The lead story is headlined, “Who Is Accused of Attempting to Kill Montenegro’s Prime Minister?” On the other hand, today’s most popular story is, allegedly, “Defenders of the Fatherland to Be Congratulated with a 30-Gun Salute.”

_________________

Russia law on killing ‘extremists’ abroad
Steven Eke
BBC News
27 November 2016

A new Russian law, adopted earlier in the year, formally permits the extra-judicial killings abroad of those Moscow accuses of “extremism”.

In the wake of the death of ex-spy Alexander Litvinenko in London, the Sunday Telegraph has alleged that Russian spy agencies – “emboldened” by the new law – have carried out a number of such targeted killings.

In July, the upper chamber of the Russian parliament – the Federation Council – approved a law which permits the Russian president to use the country’s armed forces and special services outside Russia’s borders to combat terrorism and extremism.

At the same time, amendments to several other laws, governing the security services, mass media and communications, were adopted.

The overall result was to dramatically expand those defined as terrorist or extremist.

Along with those seeking to overthrow the Russian government, the term is also applied to “those causing mass disturbances, committing hooliganism or acts of vandalism”.

Much more controversially, the law also defines “those slandering the individual occupying the post of president of the Russian Federation” as extremists.

Specific law

Russian lawmakers insisted that they were emulating Israeli and US actions in adopting a law allowing the use of military and special forces outside the country’s borders against external threats.

But the Russian law is very specific in that it permits the president – alone, and apparently without consultation – to take such a decision.

The only proviso is that he must inform the Federation Council within five days.

At the same time, he is not obliged to disclose the location of the operation, which units are involved, or the timescale for its execution.

Memorial, one of the oldest and most-respected Russian human rights groups, reacted strongly to the new law.

In an open letter addressed to Vladimir Putin, it accused the Russian leader of sanctioning extra-judicial executions.

It said the country’s “highest leaders” had turned a blind eye to the activities of “death squads” in the North Caucasus for some years. And, it predicted, with the adoption of the new law, those activities would now be seen in other countries too.

‘Poison umbrella’

The case of Mr Litvinenko has led to an outpouring of conspiracy theories, many of which suggest he was killed by a Russian secret service, of which there are several.

But in reality, there have been only a very small number of killings by poison of Russia’s opponents abroad.

Indeed, the last known case abroad of this type of execution was of Georgi Markov, the Bulgarian dissident assassinated by “poison umbrella” in London in 1978.

Many years later, during the perestroika era, a retired KGB general admitted that he had provided the toxin.

Such events were, however, widespread inside the Soviet Union during the terror of the 1930s to 50s.

The 1958 trial of Pavel Sudoplatov – a lieutenant general in the Soviet secret service, who was closely involved in the execution in Mexico of Trotsky – heard how toxins were “illegally tested” on a large number of prisoners who had been sentenced to death.

In more recent years, there is convincing evidence that an extra-judicial killing was carried out by Russian special forces in Qatar in 2004 when the former Chechen separatist president, Zelimkhan Yandarbiev, was blown up by a car-bomb.

Russian Is Easy: Bans for Brekkers

ban-s-rostbifom

One reason Russian has become a lot easier over the past ten or twenty years is that Russia’s creative classes have been strenuously churning their native tongue into a Russified variety of English.

Here’s a great example, as suggested to me just now by one of Mark Zuckerberg’s algorithms, which know I adore this ghastly self-hating twee monster called Rusglish.

At one of Chef Aram Mnatsakanov’s tiny empire of restaurants in Petersburg, Jérôme (don’t ask), you can order something called ban s rostbifom and ban s svininoi for brekkers.

menu

It’s not the rostbif and svinina (“roast beef” and “pork”) that caught my eye. They’ve long been part of the great and mighty Russian language.

What caught me eye was the word ban (bun). Why were “Russia’s Jamie Oliver” (not my coinage) and Co. unable to condescend to the perfectly Russian, extremely ordinary, and utterly comprehensible word bulochka (“bun”) when writing up the menu?

Because that would have sounded too common. For €6.77 a pop Mnatsakanov’s diners expect something “fancier” (as Mum would have put it) than a plain old bulochka their babushkas could have baked for them out of the kindness of their lonely hearts.

Mnatskanov’s customers don’t want kindness. They want conspicuous consumption. And they want it labeled, at least partly, in English, even if that English is as supremely common and humble as “bun” (ban). TRR

Images courtesy of Jérôme

The Call of War

call-of-war

Smash the fascists in World War II and become a Soviet hero!
A New Online Strategy [Game] about the Second World War
Tank battles, naval and air war fought on historical maps! Command your troops and destroy the enemy with nuclear missiles! Are you ready to rewrite history?

ru.callofwar.com

NB. Call of War is an online game available in different languages. It was created by Bytro Labs GmbH in Hamburg Germany.

Bhaskar Sunkara: “You Say East Ukraine, I Say West Russia”

Has Bhaskar Sunkara ever been to “West Russia”?

west-russia

Source: Facebook

bhaskartwitter-660x440
Bhaskar Sunkara. Photo courtesy of Magculture

Bhaskar Sunkara (born June 20, 1989) is an American political writer, editor and publisher of Jacobin magazine.

The son of immigrants from Trinidad and Tobago, Sunkara described Jacobin as a radical publication, “largely the product of a younger generation not quite as tied to the Cold War paradigms that sustained the old leftist intellectual milieus like Dissent or New Politics.”

The New York Times interviewed Sunkara in January 2013, commenting on Jacobin’s unexpected success and engagement with mainstream liberalism. In late 2014, he was interviewed by New Left Review on the political orientation and future trajectory of the publication and in March 2016 was featured in a lengthy Vox profile.

Sunkara writes for Vice magazine, Washington Post and The Nation, among other outlets. He has appeared on the PBS Tavis Smiley program, MSNBC’s Up w/ Chris Hayes and the FX show Totally Biased with W. Kamau Bell.

Source: Wikipedia

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Residents in eastern Ukraine face worst fighting in years in war with Russian-backed separatists
Sabra Ayres
Los Angeles Times
February 15, 2017

The news reached Mariupol Mayor Vadim Boychenko via a morning phone call from an assistant: A rocket attack damaged 11 houses on the outskirts of the Ukrainian city.

There were no casualties, but a major concern had become a reality: The escalation of fighting elsewhere in the nation in recent weeks had reached the industrial city, a key component in southeast Ukraine’s struggling economy.

“We’ve gotten used to a peaceful life,” Boychenko said during a recent interview at his office. “I really don’t want to return to the problems we had started to forget.”

Ukraine’s nearly three-year battle against Kremlin-backed separatists in the east erupted into the worst fighting in two years in late January. Exactly why the fighting intensified recently remains unclear, though such encounters have occurred with some frequency during unrest that included Russia’s annexation of Crimea in March 2014.

The small city of Avdiivka, 90 miles north of Mariupol, became the epicenter of the recent violence. The fighting quickly spread along a 300-mile line separating the Ukrainian government-controlled lands and those claimed by separatists in the Donetsk and Luhansk regions.

Mariupol had seen only sporadic fighting over the last two years, primarily in the region’s eastern villages. But as news trickled in about the bombardment of Avdiivka, Mariupol began again hearing the deep rumble of explosions and heavy artillery fire less than 10 miles away.

The fighting halted vital shipments from Avdiivka’s coal processing plant to Mariupol’s massive iron and steel works plants, jeopardizing production at one of the region’s biggest employers.

Many local residents said they feared the renewed violence could quash the growing sense of confidence in Mariupol after nearly two years of relative stability.

One concern in the region is that President Trump and Russian President Vladimir Putin could strike a deal that would lift U.S. sanctions on Russia or force Ukraine to make painful compromises with Moscow. Ukrainian President Petro Poroshenko has urged Western leaders to keep sanctions in place.

“Sanctions are the only way to get Putin to the table,” he said last week in an interview with journalists and academics in Kiev, the capital.

Nationally, there is little faith in the Minsk agreements, a road map to peace brokered in 2014 by European leaders between Ukraine, the Kremlin and the separatist rebel leaders. Poroshenko maintains that Ukraine is committed to its obligations to the agreements.

“Minsk is my plan. Putin accepted it. His signature is there,” he said.

Mariupol has gone through a noticeable transformation since war erupted in eastern Ukraine in the spring of 2014. Once the epitome of a run-down, Soviet industrial port city with two massive metallurgy plants puffing out pollution day and night, Mariupol in the last two years has emerged as a center of civic activism in Ukraine’s southeastern battlefront.

The city was the center of several violent outbreaks in spring 2014, when Ukrainian forces and supporters of the pro-Russian separatist groups fought gun battles in the downtown streets. The charred former police headquarters and city council buildings still stand as reminders. On Jan. 24, 2015, a missile attack hit an eastern region of Mariupol dense with Soviet-era concrete housing blocks, killing at least 30 people.

The previously politically passive, mostly Russian-speaking city created community groups that mobilized to gather whatever money they could to buy medical kits, food, and flak jackets and helmets for Ukraine’s ill-prepared military. The fighting displaced 1.75 million eastern Ukrainians, but locals opened their homes and about 56,000 newcomers settled in Mariupol.

“We don’t call them refugees anymore,” Boychenko said. “They are ‘new Mariupolites’ and have already become part of our city.”

Once-thriving Donetsk is now occupied by rebel forces, so Mariupol, the largest city in the Donetsk region under Ukrainian control, became the de facto cultural hub of the eastern industrial area along the Don River basin, known as the Donbas.

Displaced activists from Donetsk opened an avant-garde theater and creative space that has hosted some of the country’s big names in modern talent.

Small businesses — grocery stores, small restaurants and mom-and-pop shops — whose owners fled the fighting returned, and new cafes have opened. Ukraine’s most popular music group, Okean Elzy, gave a free concert in May attended by more than 30,000 people.

“We’ve been working all year to create a positive mood in the city,” Boychenko said.

Alex Ryabchyn, a deputy in Ukraine’s parliament who was born in Mariupol, said the city is in the early stages of reinvention.

“The population is starting to think of themselves as being the center of southeastern Ukraine. That’s new, “ said Ryabchyn,  who was an economics professor in Donetsk State University before fleeing to Kiev after the pro-Russia rebel takeover.

Mariupol faces major challenges, particularly in the economic sphere. Ukraine’s economy has been battered since protests ousted a Moscow-friendly president, Viktor Yanukovich in 2014. The war ripped apart the country’s coal mining and steel processing industry, destroying many plants and severely curtailing production in those that survived.

The aging steel plants need modernization and the economy needs diversification to revitalize the region. Highways linking Mariupol to other cities are so bad that drivers are forced to reroute to avoid the worst sections. Train rides from Kiev to Mariupol, about 500 miles, take 18 hours, and the airport cannot accept commercial flights because of its location near the front lines of fighting.

Mariupol can feel like an isolated peninsula in Ukraine, an image many hoped was changing.

“You can see why [an increase in fighting] is a problem,” Irina Chirkova, 24, a waitress in Mariupol, said as a series of explosions pierced the cold air. “We have a lot of potential here — a big port, an airport and nice beaches. But our infrastructure needs investment, and who is going to invest in us now with this war?”

Russia’s Economic Performance: Fudging the Stats

“The Country’s Leaders Are Relying on Erroneous Economic Data”
Economist Grigory Hanin Explains How the Official Figures Are Deceiving 
Alexander Trushin
Ogonyok
February 11, 2017

The article “Russia Cannot Be Understand by Labor” (Ogonyok 3, 2017), which dealt with low workforce productivity in Russia, struck a huge chord with readers. Serious academics responded to it, including Grigory Hanin, a professor at RANEPA’s Siberian Institute of Management, and Dmitry Fomin, an assistant professor at the Novosibirsk State University of Economics and Management. They are convinced the official figures on which both government agencies and the authors of the above-mentioned article rely do not jibe with reality.

We quote the letter they sent to us:

“Your magazine has been promptly sounding the alarm as to Russia’s lagging behind in terms of workforce productivity. Your focus on the obsolescence of Russia’s production facilities is also justified. But the stance adopted by the authors is weakened when they rely on figures from Rosstat, which embellish the real state of the economy, as the Soviet Central Statistical Directorate (TsSU) used to do. We have produced alternative estimates of macroeconomic indicators for the Soviet Union since the early 1970s and now for the Russian Federation, based on a number of more reliable figures from Soviet and Russian statistics. We have been able to refine Rosstat’s estimates. The gap in workforce productivity between Russia and the developed countries is greatly underestimated in the article. If instead of the quite dubious cost data cited there, you use the genuine data, you find a gap of five to seven times or more, sometime as much as ten times.

“The authors have greatly underestimated the deterioration of physical capital. We have made alternative estimates of the depreciation of fixed assets in the Russian Federation from 1991 to 2015, taking into account the real value of fixed capital during this period and the preceding Soviet period. The estimates have shown that the depreciation of fixed capital amounted to 64.4% in 2015, rather than the 49.4% indicated by Rosstat. […] For a better understanding of our country’s problems with regard to the depreciation of physical capital, we should factor in the depreciation of human capital, the disastrous decline in education from the 1970s to the present. The objective of navigating a way out oof Russia’s backwardness in terms of workforce productivity is extremly complex, requiring colossal efforts and sacrifices from the entire society[.]”

Ogonyok asked one of the letter’s authors, Grigory Hanin, to explain what was wrong with the statistics cited by everyone from government agencies to ordinary people.

What is the difference between the official figures and your estimates of Russia’s macroeconomic indicators?

According to the longitudinal research Dmitry Fomin and I have been doing, Russia’s GDP has not grown by 13.4% from 1992 to 2015, as Rosstat claims, but has decreased by 10.2%. During the same period, Russia’s workforce productivity has fallen by 30.1% instead of having grown by 9.2%, as the official figures claim. Basic fixed assets (buildings and plant, machinery, machine tools, and other assets involved in production) have decreased by 29.2% in terms of their full book value, although the official figures claim they have increased by 50.9%.

How do you explain this discrepancy?

The official figures deal with basic fixed assets incorrectly. We are talking about physical capital, a vital economic resource. Along with human capital, it defines the level of economic development and shapes GDP’s performance and value and other macroeconomic indicators. No other indicator has been distorted as much in statistics in the Soviet Union and Russia as this one. It is a fairly complicated indicator. Many countries have problems with it, even the World Bank, which does its estimates based on the official data submitted by each country, including Rosstat.

How important is the erroneous estimate of fixed assets?

First of all, when there is inflation, which there has almost always been in the Soviet Union and Russian Federation, the underestimation of fixed assets has always led to exaggerating their performance, since old and new assets are valued in terms of different rubles: old assets in terms oof expensive rubles, and new assets in terms of cheap rubles. All of this impacts the underestimation of the value of depreciation and production costs. Consequently, profits are exaggerated.

Meaning, we cannot get a fix on the real state of the Russian economy?

It’s a problem that has been dragging on since the late 1920s, when assets were, according to my calculations, undervalued by almost half. Consequently, resources spent on refurbishing the assets were not take into account, nor was the increase in production costs. In the 1930s and 1940s, the underestimation continued to grown, despite reevaluations in certain sectors. Only in 1960 was a general reevaluation of fixed assets carried out, but it was chockablock with mistakes. Afterwards, due to ongoing inflation, the error in calculating the value of fixed assets continued to grow. By the late 1980s, it had grown by four and a half times. By 2015, the fixed assets were underestimated by 7.3 times, according to our calculations.

In the Soviet economy, all cost data that reflected productivity and national income growth, including the value of fixed assets, were distorted. Soviet production figures given in physical terms (tons, units, etc.) can be considered more or less reliable, because the central planning process was based on them.

But the problem persisted when we switched to a market economy in the 1990s?

In the early 1990s, Russian statistics switched to international standards. We seemingly had rid ourselves of the shortcomings of Soviet statistics, but new ones emerged. Several attempts were made in the 1990s to reevaluate fixed assets, but the official figures on the trends in fixed assets still turned out wrong.

What is your estimate of the scale of the disaster?

It was only this year we finished a full year-by-year estimate of the performance of fixed assets from 1991 to 2015. I have to confess the outcome was surprising. I should emphasize from the outset that our calculation does not claim to be totally precise. (There is no such animal in macroeconomic statistics.) But we are confident of its objectivity. So, the volume of fixed assets in terms of depreciation had decreased approximately twofold by 2015 compared to 1991. [This figure differs from the total book value, which is based on the original cost of the assets, to which upgrading costs have been added — Ogonyok.] This is much more than the damage incurred by the Great Patriotic War [i.e., WWII]. The decrease then amounted to 33.5%. Here is another figure. The Russian economy has lost a total of 422.5 trillion rubles in fixed assets, taking into account their depreciation over the last 25 years. This sum is equal to Russia’s GDP for the last five years. The reduction of fixed assets has occurred because capital investment during the post-Soviet period has been less than the scale of asset retirement. Rosstat, however, does not take this into account attempting to persuade us the reverse is true: that physical capital has increased by 51% since 1991. This radically alters how we evaluate the economy’s profitability, because it dramatically increases the costs of depreciating fixed assets. According to our estimates, in the early 2000s, their overestimation led to huge losses for the major manufacturing industries, while the commercial services sectors were highly profitable. Guided by official data on income, however, the tax authorities collected taxes mainly from the loss-making manufacturing sectors, thus exacerbating their financial difficulties, while exacting a minimum of taxes from the service industries.

How does the Russian economy look nowadays?

Let’s begin with the fact that half the fixed assets are left. I should note they are used better now in certain industries where the market economy has had a positive effect. The greatest reduction of fixed assets has occurred in manufacturing, but they have grown in the commercial services sector. At the same time, we have two industries that were almost wholly revived by foreign capital, beer brewing and confectioneries manufacturing. The services sector has increased almost twofold in Russia since 1991. This applies to the private sector of the economy: retail and wholesale trading, food services, hotel management and tourism, vehicle maintenance, private medical care, communications, public information services, and so on. In the public services sector—public healthcare, science and education, sport and physical education, housing and public utilities, the public road system—fixed assets have declined, but not as much as in industry. In Soviet times, there was a disproportion: an emphasis on heavy industry alongside underdeveloped service and consumer sectors. Now we see the hypetrophied growth of commercial services and the underdevelopment of the economy’s investment sector.

How has GDP’s performance fluctuated during this period, according to your calculations?

We have still not reached the level of 1991 in comparable prices, whereas Rosstat shows a surplus of 13%. However, in the 1990s, Rosstat even undervalued the drop in GDP a bit, because it gave insufficient weight to the gray economy. GDP was greater in the 1990s than Rosstat has claimed. On the other hand, from 1998 to 2007, the official figures greatly exaggerated the growth in GDP: 82%. According to our figures, growth amounted to only 48%. The upsurge in the early noughties, aside from a rise in the oil price, was due to the use of the reserve production capacity and manpower that had formed in the 1990s. By 2007, however, these growth opportunities had been tapped out. Stagnation and then a decline in economic growth inevitably had to set in. Which was what happened.

And things are also not kosher with the official inflation estimates?

Exactly. The underestimation of inflation levels is determined, albeit roughly, by the difference between Rosstat’s GDP performance stats and ours. This difference amounts annually to around two percentage points. Instead of 5% per year, say, it amounts to 7%.

Why do we need to calculate inflation accurately?

It affects social spending by the state: pensions, benefits, and all other payments that the state should index for inflation. And besides, there are the state’s investment costs, which have to account for inflation. But if accurate figures do not exist, then there is not enough money for new projects, which happens quite often.

Have foreign experts provided more accurate assessments of the state of the Russian economy?

No, they have all been mistaken, because they used Rosstat’s figures for their estimates. In the 1990s, they thought that since Rosstat had switched to international standards, they would not need to recalculate anything. On the other hand, the World Bank monitors two hundred countries, and it is simply physically incapable of recalculating the data for every country’s economy.

You have claimed that workforce productivity in Russian is lower than in developed countries, by five to seven times, or even ten times. What is the basis for these estimates?

There are two types of economists: macroeconomists and industrial economists. And there are methods of estimating workforce productivity. The first focus on price indicators, while the second focus on non-monetary indicators. The first calculation is often wrong due to the dubiousness of the ruble-to-dollar conversion factors. But you can use non-monetary indicators for certain industries, and then you obtain different outcomes. For example, petroleum production. Divide the volume of production by the number of people employed in the industry, and you get output per worker. You can do the same thing with metallurgy, machine building, agriculture, and all industries, and then compare them with other countries. That was how we got the outcome about which we wrote to you. The estimate was derived from numerous Russian industry publications.

How do you assess the state of human capital in Russia?

We suffered huge demographic losses in the twentieth century through wars, purges, famine, emigration. According to my estimates, we lost between 70 and 80 million people. Moreover, the losses affected the intellectual segment of the populace more: such people were more likely to die in wars and more likely to emigrate. Three of the four living Russian Nobel Prize winners work abroad. Add to that the degradation of secondary and higher education that has been observed since the 1970s. Plus the stupefaction of the populace by the media, especially the electronic media. I go to our library in Novosibirsk, one of the largest libraries in Russia. The reading roooms are nearly empty: there are more librarians there than readers. Recently, I visited the Bavarian State Library. Tears welled up in my eyes. I saw an enormous reading room, nearly a kilometer long, chockablock with people. If you go into our main bookstore in Novosibirsk you’ll find ten to fifteen shoppers, while in Munich they have a seven-storey bookstore. There are something like two hundred people people browsing the shelves, picking out books, sitting on couches, sipping coffee, and chatting.

Can we bridge the gap with the developed countries?

Bridging the gap is unthinkable. Imagine you are standing at the starting line, and your competitors have taken off and have a five-kilometer headstart on you. The government relies on erroneous economic data and underestimates the depth of problems. The illusion is generated that economic recovery is possible without serious costs. We have estimated that, in terms of 2015 prices, 14.6 trillion rubles in investments would be required to maintain fixed assets and grow them by 3%. Plus, we would need 900 billion rubles for working capital. To develop human capital—education, healthcare, research—we would have to invest 10.3 trillion rubles. This would amount to 25.8 trillion rubles a year, which is a third of Russia’s annual GDP.

And nothing can be done?

It’s possible to narrow the gap. To do this, we would have to redistribute incomes to physical and human capital, and to the neediest segments of the populace. But even that would require enormous efforts. We could, for example, redistribute incomes to narrow the social differentiation among decile groups from the current ratio of 30:1 to 6:1, that is, the figure that exists in most Western European countries. But this would all take many years to accomplish.

***

Ogonyok asked Rosstat to comment on the divergence in key economic development indicators for Russia. We are waiting for a response to this request.

Business Card

An  Economist with a Stance

Grigory Hanin finished graduate school at the Leningrad Finance and Economic Institute in 1962, and then worked at Novosibirsk State University. In 1968, he successfully defended his candidate’s dissertation, but the Higher Attestation Commission (VAK) refused to approve it due to its “market-based approach.” In 1972, Hanin was dismissed from the university for his dissenting views on the economy, which were, allegedly, “negatively affecting” students in the economics department. Hanin could not be expelled from academics, however. He successfully defended his candidate’s dissertation at the Institute of World Economy and International Relations of the Russian Academy of Sciences (IMEMO RAN), and then his doctor’s dissertation at the Central Economic and Mathematical Institute of the Russian Academy of Sciences (TsEMI RAN). Hanin did research on alternative macroeconomic estimates of the Soviet economy. In 1987, Hanin and journalist Vasily Selyunin published the famous article “Tricky Numbers” in the journal Novy Mir, causing a huge public outcry. Hanin is currently a professor at RANEPA’s Siberian Institute of Management, where he researches recent Russian economic history.

The Numbers

A Big Difference

How official and alternative estimates of Russia’s macroeconomic performance vary

Rosstat’s figures Alternative estimates
GDP* 113.4% 89.8%
Productivity* 109.2% 69.9%
Inflation** 5.38% 7.38%

* In 2015, relative to 1991

** In 2016

Translated by the Russian Reader. Thanks to Sergey Shpilkin for the heads-up