Russia Year Zero

Cat eating scraps from pizza box. May 24, 2016, Petersburg. Photo by the Russian Reader
Cat eating scraps from pizza box on May 24, 2016, in Petersburg. Photo by the Russian Reader

Zero Sum
When nothing is produced, all power belongs to the man who divides and distributes
Maxim Trudolyubov
Vedomosti
May 27, 2016

It is probably already clear to everyone that the implicit “social contract,” about whose existence it was customary to natter in the fat years, was a hoax. Rejecting political subjectivity, ordinary folks and not-so-ordinary folks, big business, and regional elites were able to enrich themselves and, in the consumerist sense, converge with Europe.

It was not, however, a one-off deal with a perpetually fixed rate of profit, but a protracted process. We voluntarily became political zeroes. We gave up free speech, the right to elect and be elected, and the right to demand accountability from our politicians, and part of the population gave up the right to funded pensions. But the unit of prosperity we got in return was given to us not as property but was lent to us. Now the government has collected the debt. The zeroes remain, but the unit will soon run out. The government has no other sources for funding projects, but unpredictable and expensive projects—military campaigns as in Syria, for example, and infrastructural projects like the Kerch Strait Bridge—are the whole point of Russian politics.

The authorities supported the population during the crisis of 2008, but by 2011, dissatisfaction with government policy and the Putin-Medvedev castling move had sparked protests. The Kremlin learned its lesson, and it is ordinary people who are now primarily bearing the burden of the crisis, not the state. Having surrendered their rights to the Kremlin, people will now have to surrender not only their pension savings but also their savings accounts and, so to speak, the fat they have saved up on their bodies if they do not decide to take back their political rights. People’s well-being is, in fact, the “source of growth” that President Putin has asked his economic advisers to find. Actually, he was kidding: the source has never been lost.

When the president, in May 2016, summons his economic council, having forgotten about its existence for two years or so, and says the country needs new sources of growth, how are we to understand this? How were we supposed to understand his proposal to reduce economic dependence on the oil price, which he voiced in the autumn of 2015? It is like offering to grow oneself a new liver after sixteen years of binge drinking.

The Kremlin has created the current situation by consistently rejecting any measures that could have, long ago, reduced dependence on oil and generated stable sources of growth beyond the extractive and defense industries. It is impossible to fix in a month what has been done over sixteen years. Moreover, the very same people have been summoned to do the fixing, people still divided by irreconcilable contradictions. What joint effort at seeking ways out of the crisis are Alexei Kudrin and Sergei Glazyev capable of mounting? The sum of their efforts will inevitably be zero.

It would appear this zero quite suits the Kremlin, as economist Konstantin Sonin argued in a recent interview with Slon.ru. Incidentally, efforts are also needed to maintain zero growth, and those efforts are being made. Certain malcontents might not like the “zero” economy, but the Kremlin really likes it, because it strengthens the power of the front office, where decisions about redistribution are made. When nothing is produced, all power belongs to the man who divides and distributes.

Translated by the Russian Reader

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The 501st: Russian Death

russian death
“Russian Death”

‘Sociologist Denis Volkov from Moscow’s independent Levada Center pollster, on the other hand, says the bill is unlikely to make Russians more wary about what they post on the Internet. “Most people are not aware of these laws,” he says.’

Ha-ha. It’s good that reporters are forced to turn to “sociologists” and “pollsters” for quotable quotes, and that the Putinist state decided at some point long ago it would pollocratize everyone and their cousin into submission, because otherwise the “independent” Levada Center would have had to pull up stakes long ago and move to Nevada to start calling odds on the trifecta at Santa Anita racetrack.

I have already seen the chilling effect that the bill and the generally malignant, soul-destroying climate of the last year or so have had on what people talk about politically (or not) in daily life, much more dare to post on the Internet, e.g., Russia’s role in Syria, which absolutely no one I know has discussed, publicly or otherwise, under any circumstances for a very, very long time now. And that is just the top of the list.

A fair number of Russians, young and old, know very well how to read signals coming from on high and when to keep their mouths shut. Or how to substitute abstract, self-important chatter or furious trivial pursuits for meaningful conversations about what is happening in their country and what to do about it. Now is one of those times, and it is absolutely depressing.

All it will take is a few more “light touches,” and the country will essentially be dead, that is, waiting for its Supreme Leader to kick the bucket (when? twenty years from now?) so it can rejoin the rest of the world and resume building “democracy,” “capitalism” or whatever it has been pretending to do the last twenty-five years.

Photo courtesy of the Facebook page of Russkaia smert’ (Russian Death)

Nice Work If You Can Get It

Oleg Derispaska
Oleg Deripaska. Photo courtesy of deripaska.com

“I believe that it takes just 100 people to change a country for the better provided that these people are driven professionals capable of creating something new. I am sure that in Russia there are far more than 100 such people, so let’s join forces and work together.”
Oleg Deripaska

_________

Deripaska’s Company Releases Sales Figures for “Olympic” Apartments
Natalya Derbysheva
RBC
May 27, 2016

sochi-olympic village marina
Mockup of the Sochi Olympic Village’s Coastal Cluster. Photo: Andrei Golovanov and Sergei Kivrin/TASS

Oleg Deripaska’s company RogSibAl has sold 20% of the luxury apartments it built on the Black Sea coast in Sochi for the Winter Olympics. The company believes this is a good result. 

RogSibAl, a subsidiary of Oleg Deripaska’s Basic Element, built 2,700 luxury  apartments on the Black Sea coast for the 2014 Winter Olympics in Sochi. Athletes lived in the apartments during the competition. According to Vnesheconombank, the project’s budget was 25.3 billion rubles, 22.3 billion rubles of which RogSibAl borrowed from Vnesheconombank.

The coastal Olympic Village is now known as the Imereti Resort District. It consists of four quarters, the Coastal Quarter, the Maritime Quarter, the Park Quarter, and the Reserve Quarter. Apartments are available for purchase in all four quarters. The price per square meter ranges from 152,000 rubles to 195,00 rubles [approx. 2,070 euro to 2,650 euros per square meter—TRR].

Since the apartments went on sale in 2013, 20% of them have been sold, a Basic Element spokesman told RBC, meaning that over 500 apartments in all have been sold. Basic Element’s spokesman added that the company had sold 118 apartments from January to May 2016.  The company plans to have sold 350 apartments for a total area of 25,000 square meters on the year.

Basic Element has been renting out the unsold apartments. According to the company’s spokesperson, the rental demand for the 2016 summer season is 97–100%.

The sales figures are worse than what Basic Element had planned in 2011. Igor Yevtushevsky, RogSibAl’s general director, had then told Vedomosti that the company was planning to sell 50% of the apartments before the start of the Olympics, and the other half in 2014–2015.

Basic Element’s spokesman said it would be unfair to compare current sales figures with projections made in 2011.

“The project has undergone big changes,” he explained.

The company cites data from the MACON Realty Group, according to which 387 business- and luxury-class real estate transactions were concluded in Sochi from January to May 2016, meaning that the Imereti District’s share of this business was 23%.

The government has discussed the conditions of restructuring the loans issued by Vnesheconombank for building Olympic sites, RBC’s sources told it earlier this week. A federal official explained that Deripaska’s companies were in the most complicated circumstances in terms of loans, since the demand for apartments was not great.

Sochi Olympic Village. Photo courtesy of Nikita Kulachenkov
Sochi Olympic Village. Photo courtesy of Nikita Kulachenkov

Basic Element has not disclosed the figures of the income from its sales of the properties. Its spokesman did say, however, that all the proceeds were being wholly turned over to Vnesheconombank in repayment of the loan and that RogSibAl had been fulfilling all its obligations to the bank.

Given that sales usually begin at the design and construction stage of a property, 20% sales in the second year after a property has been operation is hardly satisfactory, argues Marina Udachina, director of the Institute for Innovations, Infrastructure and Investments. According to her, the situation is partly due to a slowdown in economic growth and a reduction in the demand for luxury properties.

__________

Nikita Kulachenkov
Facebook
May 27, 2016

Only 20% of the apartments in the Olympic Village have been sold in two years.

Here is what we wrote about this a month before the Games:

“The site is being built by oligarch Oleg Deripaska, one of the few private investors in the Olympics. Only he is building with public money. Twenty-two of the twenty-five billion rubles in the project’s budget has been secured with a loan from state-owned Vnesheconombank. Derispaska’s company is planning to pay back this money by selling the village as a residential complex after the Games. It will be hard for them to find buyers. A single bed in the village costs as much as a two-room flat in Moscow.”

Of course, the crisis, sanctions, and being “surrounded by enemies” have inevitably led to a drop in demand for fairly pricey holiday apartments. On the other hand, this was offset by the fact that demand was supposed to shift to the domestic market from Greece, Cyprus, Turkey, and other countries where housing had become almost twice as expensive for Russians.

As a result, sales did not take off, which is a pity. I know that after the Games a good person, familiar to a lot of my people on my wall, worked on the project.

We can also add to this news the latest about Sberbank, which after agonizing for a long time has today finally sold the Mountain Carousel ski resort on the installment plan to the former governor and current minister Tkachyov* and his young but quite talented son-in-law. The joke there is that Sberbank invested 25 billion rubles into Mountain Carousel, while Vnesheconombank loaned it 55 billion rubles. Vnesheconombank fiercely resisted the sale, because it is one thing when Sberbank is in hock to you to the tune of 55 billion rubles, and quite another when it is Tkachyov and family. Apparently, Gref is tougher and stronger than the moribund Vnesheconombank, although it does not make our lives any easier.

Since for some reason business has not been booming at nearly all the former Olympic sites, the government has authorized the repayment of Olympic loans over a period of 25 years at a reduced 5% interest rate. And to keep Vnesheconombank from kicking the bucket altogether, the Finance Ministry will give it another 150 billion rubles straight from our pockets.

I probably do not need to remind you of the total amount that we, the taxpayers of the Russian Federation, paid for the construction of all these “great power” bells and whistles.

P.S. I’m going to do a little populism practice. Anyone in Russia want a twenty-five-year mortgage at five-percent interest? Ask Tkachyov, Potanin, Deripaska, and Vekselberg “how.” )))

Translated by the Russian Reader. Thanks to Alexei Navalny for the heads-up. This post should be read in tandem with my post for May 25, 2016, “The Decline Has Gone Uphill.”

* On August 2, 2012, Tkachyov announced plans to deploy a paramilitary force of Cossacks in Krasnodar Krai, beginning September 2012, as vigilantes to discourage internal immigration by Muslim Russians. In a speech to police, he stated, “What you can’t do, the Cossacks can. We have no other way—we shall stamp it out, instill order; we shall demand paperwork and enforce migration policies.”

Source: Wikipedia, New York Times

The Life of Eygeny

Evgeny Lebedev, publisher of The Independent
Evgeny Lebedev, publisher of The Independent

While having a gander this morning at how Novaya Gazeta, Russia’s premier liberal newspaper, has been covering the Syrian conflict in recent months, I stumbled across this op-ed piece, essentially an open letter to the British establishment, dated November 6, 2015. Published in the (mostly nonexistent) “English version” of the paper’s website and headlined “Britain must make Vladimir Putin an ally in the disaster that is Syria,” the piece is attributed to “Eygeny [sic] Lebedev, Publisher, The Independent, London.”

To cut to the chase, Evgeny Lebedev (his actual name) who has dual UK-Russian citizenship, it transpires in the piece, wants Britain to make common cause with Russia against the Islamic threat, to wit:

“There may be up to 7,000 Russian nationals who are in Syria as a result of being radicalized. Moscow, not a multicultural city in the way that London is, and run by an administration that is much more militarily decisive because it doesn’t put all big decisions to Parliament [sic], is clear: these terrorists must be killed, before they return to Russia to wreak havoc.

“On that point, Britain and Russia should be of like mind. We, too, know that there are many British citizens who have been radicalised and, for unfathomable reasons, decided to flee to this anarchic region and fight against all the things readers of this newspaper take for granted: democracy, peace, civilization.

“We have common cause with the Russians [sic], a common enemy. The biggest threat to humanity today is cancerous, Islamist ideology that is growing fast right across the world—one that claims, with what truth we don’t yet know, to be behind the weekend’s tragic plane crash in Egypt’s Sinai desert.

“Not for nothing did the head of our [sic] security services say last week that the terror threat in Britain is the highest it has been in his 32-year career.

“Destroying this cancer, or plague, at source could hardly be more worthwhile or urgent; and yet, rather than work with the Russians [sic] to do this, we seem intent on cutting ties instead.

“Britain should not be leaving it to the French to mediate between Russia and the West. For all the greatness of this island nation, for all its hard and soft power, there is a laxity in our [sic] approach to the Syrian crisis.”

If you want to find out more about the exciting life of the fine fellow who penned this, avail yourself of Wikipedia’s bio of the man.

I think your eyes should pop out of your head when you realize that the son of a KGB First Chief Directorate spy and Russian oligarch is nowadays a respectable man about town and media mogul in London, the exact same place where his wealthy dad used to do his spying back in the bad old days. But then again, neither you nor I are as worldly as publisher Lebedev and his dad, so what do we know?

Photo courtesy of Wikipedia