Alexander Skobov: The Myth of “Good” Liberals in Power

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Alexander Skobov
Facebook
August 18, 2019

I have to reiterate my fundamental disagreement with mainstream liberal political analysts. Stated briefly, their big idea is that the Russian political elite consists of two parties, so-called civic liberals, who support bourgeois modernization, and the security forces, who support the restoration of the Soviet Union in both its manifestations—as a totalitarian political regime and as an economy totally subordinated to the state. All recent events are thus interpreted in the light of the alleged struggle between the two parties, i.e., the party of the security forces has gone on a decisive offensive.

This is a liberal myth. The Russian liberal crowd, who are mainly right-wing liberals, concocted the story that increasing crackdowns and the Putin mafia state’s transition from a soft-core authoritarian imitation democracy to a hard-core authoritarian regime has been opposed by a party of court (systemic) liberals, a party informally led by former Russian finance minister Alexei Kudrin.

Can anyone produce even a single bit of evidence corroborating the so-called Kudrin party’s opposition to the policy of increasing crackdowns? Right-wing liberals would tell me the Kudrinistas are forced to act out of the public eye and play by the rules governing infighting among courtiers (apparatchiks). The fact this infighting has no outward manifestations is no proof that there is no showdown between the two parties, they would argue.

Let’s assume this is true. Where, however, did Russia liberals get the idea there is even one cause for such a showdown? Kudrin and other systemic right-wing liberals have always advocated an authoritarian modernization in which a “progressive” elite imposes unpopular social and economic reforms on the unwashed masses with an iron hand. By and large, their ideal is shared by the so-called Russian fascists, i.e., the “patriots” and statists. The occupation regime running mainland China carried out the very same economic reforms after crushing dissenters on Tiananmen Square in 1989.

Has Mr. Kudrin ever said publicly that he is a principled opponent of such methods of strangling the opposition? He has not. Then why have Russian liberals decided he opposes the mass detention of peaceful citizens for protesting in public at certain times?

Liberals should stop imagining they have intercessors in the top ranks of the Putin organized crime group. There are no such intercessors.

Translation and photo by the Russian Reader

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Vitaly Manski: Don’t Shop at Armenia on Tverskaya

armenia.jpgVitaly Manski
Facebook
August 17, 2019

I will never again darken the door of the Armenia cafe and shop at Tverskaya 17. It’s next to my house. I have bought groceries there for many years and held work meetings there.

I love the country of Armenia. But the Armenia shop on Tverskaya has sued the unregistered candidates in the Moscow City Duma elections for loss of revenue due to the events of July 27 in Moscow. Loss of revenue!!!

I really would like the shop owners to experience an actual loss of revenue. I hope that I won’t be the only person to take action against these businessmen.

Image courtesy of Vitaly Manski. Thanks to Andrey Silvestrov for the heads-up. Translated by the Russian Reader

Steven Salaita: The Inhumanity of Academic Freedom

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“The Inhumanity of Academic Freedom,” a lecture Steven Salaita gave the day before yesterday at the University of Cape Town, is so powerful and echoes so many of the depressing things I have gone through as an agitator and (former) academic in the past several years that I would like to quote it here in full, but I’ll limit myself to quoting a single passage. Please read the lecture from beginning to end: it’s more than worth it. Salaita is a rare truthteller in a fallen world that fancies itself chockablock with truthtellers but which is actually pullulating with hasbaristas of various stripes. Thanks to George Ciccariello-Maher for the heads-up. Thanks to the Imatra IPV Reds Finnish baseball club for the image. (If you think it has nothing to do with the lecture, it means you haven’t read the whole thing.) // TRR

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In the end, we have to apply value judgments (mediated by lawless forces) to balance speech rights with public safety. In societies like the USA and South Africa, steeped in the afterlives of colonization, this task is remarkably difficult. We know that racism is bad, but global economic systems are invested in its survival. We know that anti-Zionism isn’t racism, that, in fact, it is the just position.  Yet no agreement exists about what comprises appropriate speech, in large part because maintaining a community is at odds with corporate dominion. As a result, there’s no way to prioritize a set of beliefs without accusations of hypocrisy (or without actual hypocrisy). The easy answer is to protect speech equally and let a marketplace of ideas sort the winners and losers. 

There’s a catch, though. Value judgments don’t arise in a vacuum and discourses don’t exist in a free market. Structural forces, often unseen, always beneficial to the elite, determine which ideas are serious and which in turn get a hearing. If we conceptualize speech as a market-driven phenomenon, then we necessarily relinquish concern for the vulnerable. We’re left with competing narratives in a system designed to favor the needs of capital. It’s a highly lopsided competition. Those who humor the ruling class will always enjoy a strong advantage, which aspiring pundits and prospective academics are happy to exploit. Corporate and state-run media don’t exist to ratify disinterest, but to reproduce status quos. 

The political left is already restricted, on and beyond campus. The same notions of respectability or common sense that guide discussion of academic freedom also limit the imagination to the mechanical defense of abstractions. Sure, academic freedom is meant to protect insurgent politics, and often does, but the milieu in which it operates has plenty of ways to neutralize or quash insurgency.  

I focus on radical ideas because Palestine, one of my interests and the source of my persecution, belongs to the set of issues considered dangerous by polite society, at least in North America and much of Europe (and, for that matter, the Arab World). Others include Black liberation, Indigenous nationalism, open borders, decolonization, trans-inclusivity, labor militancy, communism, radical ecology, and anti-imperialism. Certain forms of speech reliably cause people trouble: condemning the police, questioning patriotism, disparaging whiteness, promoting economic redistribution, impeaching the military—anything, really, that conceptualizes racism or inequality as a systemic problem rather than an individual failing. More than anything, denouncing Israeli aggression has a long record of provoking recrimination. Anti-Zionism has always existed in dialogue with revolutionary politics around the globe, including the long struggle against Apartheid. 

Spikery, or, How to Give Aid and Comfort to Fascist War Criminals While Making Lots of Money

It’s funny the things you find in your email inbox in the morning. This morning, as usual, I found mailers from many of the Russian and English-language online newspapers I read, including Petersburg’s humble but always revealing business daily Delovoi Peterburg.

Today’s big news was that police had searched the head office of Bukvoyed, one of Russia’s largest bookstore chains.

Founded in 2000, Bukvoyed (“Bookworm”) has 140 stores around the country.

A source at Bukvoyed told Delovoi Peterburg the search had nothing to do with the company per se but with one of its business partners.

If you have been monitoring the fortunes of Russian business under the Putinist tyranny, a crony state-capitalist regime, run by “former” KGB officers as if it was the Soprano mob, only a million time nastier, you would know it has not been easy to do business of any kind in Russia during the last twenty years. The country’s current prime minister and ex-president, Dmitry Medvedev, once famously said the regime’s vast police and security apparatus, known collectively as the siloviki, needed to stop “nightmaring” (koshmarit) business.

He also famously said, when he was president, that his country was plagued by “legal nihilism.”

Although he was right on both counts, Medvedev did nothing about it. Since the brief, supposedly more “liberal” period when he was freer to speak his mind because, technically, he was the most powerful man in Russia, the nightmaring of business (and nearly everyone else who makes themselves a target by doing anything more ambitious than hiding their light in a bushel) has only got worse, and legal nihilism, along with anti-Americanism, homophobia, xenophobia, and neo-imperialism, has become even more entrenched as part of the Kremlin’s unwritten ideology and, thus, a guidepost for how Russia’s police, security agencies, prosecutors, and judges deal with “criminals.” 

As Denis Sokolov recently argued in Republic, the siloviki have established a system of “police feudalism” in Russia under which the FSB, the Russian Investigative Committee, the Interior Ministry, the Russian Prosecutor General’s Office, the Russian National Guard, the tax police, and other state security agencies have divided the country into fiefs, bits of “turf” where they are almost entirely free to shake down, rob, nightmare, and legally nihilize whomever and whatever they want under a set of unwritten rules outsiders can only guess at.

After reading about Bukvoyed’s legal-nihilistic woes, then, I was startled by the banner ad I found at the bottom of the page.

mooks“Synergy Global Forum, October 4–5, 2019, Gazprom Arena, Saint Petersburg. Arnold Schwarzenegger. Grant Cardone. Michael Porter. Randi Zuckerberg. Ichak Adize.” Ad courtesy of Delovoi Peterburg

Referred to, hilariously, as “spikery” (“speakers”) on the Russian version of the Synergy Global Forum’s website, these five greater and lesser lights of global capitalism have been, no doubt, promised or paid extraordinarily hefty fees to keynote this hootenanny in the belly of the crony state-capitalist beast.

Formerly known as the Zenit Arena (after the city’s Russian premier league football team, FC Zenit, owned by state-controlled Gazprom), even the venue itself, the Gazprom Arena, is a monument to the mammoth crookedness, thuggery, violence, and corruption replicated all over the world’s biggest country every day for the last twenty years by the Kremlin’s minions.

But you would never know that by reading the cheery boilerplate on the Synergy Global Forum’s website.

Gazprom Arena is the most visited indoor stadium in Eastern Europe, second only to the famous Wembley in London. The main feature of the project — a sliding roof, which allows you to carry out activities in a comfortable environment at any time of the year and in all weather conditions. Large capacity, modern technical equipment, and two-tier parking make Gazprom Arena one of the best venues for major festivals, exhibitions, and business conferences.

More important, however, is the ostensible point of all this spikery, other than making lots of money for everyone involved.

Synergy Global Forum has been held since 2015. The first Forum gathered 6,000 participants and became the largest business event in the country. Two years later, we broke this record and entered Guinness World Records — 25,000 entrepreneurs and top managers participated at SGF in Olympiyskiy in 2017. This year we set a new big goal — to gather 50,000 participants from all over the world at SGF 2019 in St. Petersburg. Synergy Global Forum not only gives you an applied knowledge, but also motivates and inspires to global achievements, gives the belief that any ambitious goal is achievable. What goals do you set for yourself?

Aside from being one big [sic], this sampling of spikery reveals that the apocryphal gospel of Dale Carnegie and other “good capitalist” snake oil salesmen is alive and well and making waves in a place like Russia, where it could not be more out of place.

I don’t mean that Russia and Russians are “culturally” or “civilizationally” incompatible with self-improvement, the power of positive thinking, and other tenets of American capitalist self-hypnosis. If you had spent most of your adult life in Russia, as I have, you would know the opposite is the case.

Unfortunately. Because what Russia needs more than anything right now is not more navel-gazing and better business practices, but regime change and the rule of law. Since I’m a democratic socialist, not a Marxist-Leninist, and, I hope, a realist, these things cannot come about other than through a revolution in which Russia’s aspiring middle classes, at whom snake-oil festivals like the Synergy Global Forum are targeted, join forces with the grassroots, who have been nightmared and legally nihilized in their own way under Putin.

One of the first things a new bourgeois-proletariat Russian coalition government would have to do, aside from prosecuting and imprisoning tens of thousands of siloviki and banning them from politics and the civil service for life, would be to disentangle the country from its current incredibly destructive armed and unarmed interventions in conflicts in other countries, starting with Ukraine and Syria.

What does the Synergy Global Forum and its sponsor, Synergy Business School have to do with such seemingly distant and terribly messy international politics? Well, this:

The school has branches in 26 Russian cities, as well as a unique campus in Dubai, which is home base for an international MBA program for students from the UAE, Yemen, Saudi Arabia, and Iran.

So, in fact, Synergy Business School is in the business of equipping people from some of the world’s most powerful and aggressive theocratic, monarchist, and crony state-capitalist tyrannies with MBAs while claiming its core values are “openness to newness, commitment to development, and intelligence.”

You can say I’m a dreamer but I am nearly sure SBS’s core values are completely at odds with the neo-imperialism, neo-colonialism, militarism, hostility to civil and human rights, and fascism of the current regimes in Russia, Saudi Arabia, and Iran.

I write this not because I believe in building a “better” capitalism (I don’t), but because I am nearly sure one party to this mass chicanery, including the invited spikery, does believe it is possible to do just that and thus “peacefully” transform these countries into slightly quirky versions of Australia and Canada. (For the record, I don’t for a minute believe these supposedly democratic countries have no problems of their own with human rights, etc.)

That is not going to happen if only because, at another level, carefully hidden from the incurious eyes of the people who go to such events, either as  their real purpose is to whitewash these regimes, make them more attractive to foreign investors, and expand their international networks of shills and useful idiots.

I learned this valuable lesson about Putinist Russia by carefully following the amazing career of Vladimir Yakunin, another “former” KGB officer and fellow Ozero Dacha Co-op member who could write a textbook about how to co-opt distinguished foreign academics, decision-makers, and journalists into, mostly unwittingly, toeing the Putinist line.

It comes down to this. Why are Arnold Schwarznegger, Randi Zuckerberg, and their fellow 2019 Synergy Global Forum spikery so willing to help whitewash a gang of fascist war criminals who are also at war with their own people?

Since there is no good answer to this question, they should be arrested upon their return from the forum and charged with colluding with hostile foreign powers.

If you don’t understand what I mean by “fascist war criminals,” please read the article below. // TRR

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Russia and Assad are butchering Syrian civilians again. No one seems to mind
Terry Glavin
National Post
July 24, 2019

Maybe it’s because of the guilty anti-interventionist conscience of the world’s comfortable liberal democracies, or because it’s now an article of respectable faith in the NATO capitals that Syrian lives simply aren’t worth the bother. Maybe it’s just that we’ve all become so accustomed to reports of slaughter and barbarism in Syria that it barely warrants public attention at all.

Whatever the reason, or excuse, Russian foreign minister Sergei Lavrov is finally having his way in the Syrian governorate of Idlib, and the world barely notices.

It’s been nearly a year since Lavrov expressed his desire that the “abscess” of Syrian resistance in Idlib, a sprawling province that borders Turkey in Syria’s northwest, be “liquidated.” It’s been nearly a month since 11 humanitarian organizations came together with the United Nations Office for Humanitarian Affairs to warn that “Idlib is on the brink of a humanitarian nightmare unlike anything we have seen this century.”

We’ve reached that brink now. Just this week, 66 civilians have been killed and more than 100 non-combatants wounded, the UN reports, in a series of bombing runs carried out across Idlib. The worst massacre was an airstrike Monday on a public market in the village of Maarat al-Numan. At least 39 people were killed, among them eight women and five children.

Since the Syrian dictator Bashar Al-Assad’s barrel bombers and Russia’s fighter-bombers began their recent offensive in Idlib on April 29, the Syrian Observatory for Human Rights has tallied 2,641 casualties. The UN counts 400 civilian deaths, but there is no accurate count of the dead and injured in Syria anymore. The wounded lie dying in the rubble of bombed buildings. At least 25 hospitals and clinics in Idlib have been destroyed since April 29, bringing the number of health centers deliberately targeted since 2011 to about 570. More than 800 health workers have been killed.

Three years ago, when the UN and monitoring agencies stopped counting, the Syrian dead were numbered at 500,000. In the face of these most recent war crimes and atrocities, the UN’s humanitarian affairs office has been reduced to begging Assad and Lavrov to ease up to allow humanitarian aid into Idlib’s besieged districts, and pleading with Russia and Turkey to uphold the terms of a year-old memorandum of understanding that was supposed to demilitarize Idlib. Fat chance of that.

The Kremlin-Ankara pact arose from negotiations that began in the months following the 2016 fall of Aleppo, where thousands of Syrian civilians were slaughtered by Vladimir Putin’s air force in the course of the Kremlin’s commitment to Assad to help bomb the Syrian resistance into submission. Joining with Russia and Iran, Turkish strongman Recip Erdoğan entered into a series of talks in Astana, Kazakhstan, that eventually led to an agreement to establish Idlib as a jointly-patrolled “deconfliction zone.”

A series of these de-escalation agreements have each in their turn become death traps. In Homs, in Ghouta, in Quneitra, the pattern has repeated itself. Weakened by starvation sieges, and bloodied by Russian fighter jets, Assad’s barrel bombs, ground assaults by Iran’s Hezbollah units and multiple chemical attacks — sarin, chlorine, napalm — Syria’s various and fractious resistance outfits have surrendered several cities and towns on the promise of safe passage with their families to one or another de-escalation area. Convoys of buses carry them across the countryside. They settle in, and then they come under attack again.

Until April 29, Idlib was the last of these demilitarized zones, and by then the population had doubled to three million people. Among Idlib’s recent arrivals were civilians fleeing the Syrian carnage who had not been able to join the six million Syrians who have managed to escape the country altogether. But the newcomers also include members of various armed opposition groups, and the Assad regime has deftly manipulated its “de-escalation” and safe-passage arrangements to pit those groups against one another.

More than a dozen safe-passage agreements struck prior to the Kremlin-Ankara arrangement amount to what democratic opposition leaders have called ethnic cleansing and “compulsory deportation.” Most of the opposition groups that submitted to them have ended up in Idlib. Among them: Islamic State fighters from Yarmouk, and the jihadist fronts Ahrar al-Sham and Jaish al-Fatah from districts around Aleppo and Damascus.

What this has meant for Idlib is that the mainline opposition in the Turkish-backed and formerly American-supported Syrian Interim Government has been losing its hold on the governorate, and its democratically elected local councils have come under increasing pressure from the Hay’at Tahrir al-Sham jihadist coalition. And now that Assad’s Syrian Arab Army has been moving in from the south, and Russian and regime bombs are falling from the skies, tens of thousands of civilians are on the move again.

More than 300,000 people are on the roads, most of them headed towards Turkey, but Turkey has already taken in half of Syria’s six million refugees and the Turkish border is now closed to them. More than 1,000 Turkish troops are patrolling Idlib’s northern countryside as part of the Astana accord, and they won’t let the Syrian civilians pass. Humanitarian groups report that hundreds of Syrian refugees have been picked up in Istanbul in recent weeks and deported back to Syria.

“Yet again innocent civilians are paying the price for the political failure to stop the violence and do what is demanded under international law — to protect all civilians,” is the way UN Humanitarian Coordinator Mark Lowcock puts it. “Our worst fears are materializing.”

No help is coming from Europe. The European Union has made its peace with Ankara — Erdoğan prevents Syrian refugees from sneaking into Greece or Bulgaria or setting out in leaky rafts into the Mediterranean, and Europe looks the other way while Erdoğan deports Syrian refugees back to the slaughterhouse of Idlib.

Neither is any help coming from the United States, where the Kremlin-friendly Trump administration is balking at the idea of imposing sanctions on Turkey for buying into Russia’s S-400 missile system, and is otherwise continuing the Obama administration’s policy of thinking about mass murderer Assad as somebody else’s problem.

And then there’s Canada, where we’re all supposed to congratulate ourselves for having high-graded the best and brightest Syrians from the UN’s refugee camps, and we expect the Syrian refugees we’ve taken in to be grateful and to forgive us all for standing around and gawping while their country was turned into blood, fire, and rubble.

Whatever our reasons, or excuses, Idlib is being liquidated, a humanitarian nightmare is unfolding in Syria again, and hardly anybody notices.

Inland Empire: Life in Russia Without Visa and Mastercard

buyerThis woman is happy she doesn’t live in Russia, where Visa and Mastercard may soon be banned. Courtesy of Fluencia

Inland Empire: How Will Russians Live Without Visa and Mastercard?
Sergei Khestanov
Republic
July 12, 2019

The new attack by Russian lawmakers on the international payment systems Visa and Mastercard may come to a head, successfully or unsuccessfully, this summer. For the law bill’s sponsors success would mean the near-total financial isolation of Russians from the rest of the world. All that would remain would be to adopt restrictions on foreign currency.

Going Our Own Way
There had long been talk of the need to talk of a completely autonomous domestic payments system, but the events of 2014 and, especially, the imposition of sanctions visibly accelerated the process.

In fact, in the spring of 2014, MPs in the Russian State Duma drafted amendments to the law “On the National Payment System” that would have forced Mastercard and Visa, which had been obliged to observe the sanctions against a number of Russian banks, to deposit amounts of money equal to their two-day turnover in special accounts at the Russian Central Bank. Visa said it would stop doing business in Russia. Negotiations with the Russian government and Central Bank followed this announcement. The draft law was considerably softened. The amount of the obligatory deposit was removed from the bill, and it was decided that international payment systems would operate in Russia through specially established local subsidiaries.

After Mir bank cards were launched, they were quite unpopular among Russians for a long time. Russians preferred time-tested foreign bank cards. Besides, initially there were purely technical problems with Mir that caused their cards to be rejected, but after the Russian Central Bank issued stern warnings, banks updated the software of their ATMs and payment terminals, more or less solving the glitches.

Another problem is that Russian cards are nearly useless abroad since they are accepted almost nowhere. However, given the small percentage of Russians who travel abroad, this is not such a huge problem.

The breakthrough in promoting the domestic cards came in 2018. On July 1, 2018, the electronic wage payments of all state-sector workers were transferred by law to Russian bank cards. By January 1, 2019, they had taken a big bite out of the share of the Russian market controlled by their famous competitors. According to the Federal Anti-Monopoly Service, during the period from January 1, 2018, to January 1, 2019, the share of actively used Visa cards among the Russian populace fell from 45% to 39.5%, while Mastercard’s share fell from 42% to 36%. The reduction in the international payment systems’ share of the Russian market happened as Mir doubled its share of active card users, which rose from 12.5% to 24.5%.

This is not surprising. The traditional Russian principle of pushing certain things, ironically dubbed the “voluntary compulsory” method, is rather effective. Outcomes are achieved quickly, making such methods of promotion quite popular. We should say, in all fairness, that this happens not only in Russia.

Such aggressiveness has a price, however. Compulsory promotion of goods and services reduces competition, since the advantages of using a particular service or buying a certain product derive from the market’s absence. Over time, products and services pushed in this way lag behind their absent competitors in terms of their quality.

Striking examples of diminishing quality in a market in which competition was restricted were the Soviet automobile and electronics industries. The latter lagged behind the world especially disastrously. Remember the old joke, “Soviet handheld calculators are the biggest handheld calculators in the worlds”?

Rejecting the Outside World
But degradation as a consequence of pushing goods and services through non-market methods is only half the trouble. It is much more dangerous to ban and expel foreign products and services from the domestic market. The new regulations described in the draft law “On the National Payment System” could force international payment systems out of Russia since they would be unable to comply with the regulations. Once they leave, Russian bank cards would not be accepted for payment abroad, and cards issued by foreign banks would not be valid in Russia.

Mir cardholders who never travel abroad would not even notice this nastiness. Everyone else would soon voluntarily be forced to join them. Give the Russian state’s high and growing share in the Russian economy, the regulations would not provoke fatal disaffection with the leadership.

Russia’s policy of self-isolation was adopted long ago, and a large segment of the populace has no real objections to it, while people who use their bank cards within Russia mostly do not care what system processes their transactions. What matters is that everything works fine and does not cost too much. Mir’s reliability is now on a par with the international payment system, and so are its rates. Besides, if push came to shove, the Russian Central Bank and the Federal Anti-Monopoly Service could force it to reduce its rates.

There are no rational reasons for establishing a homegrown system when the duopoly of Visa and Mastercard serve the Russian market just fine. China’s UnionPay and Japan’s JBC have been processed by certain Russian banks, but they have never played a significant role. You cannot make money in a highly competitive, mature market, long dominated by world leaders like Visa and Mastercard, unless you employ non-market methods of competition. The market simply does not need new players.

The reason for the persistent promotion of Mir card is not commercial. It is an insurance policy of sorts, one that will have claims made on it if real, harsh Iranian-style sanctions are imposed on Russia. If you regarded this scenario as a serious possibility you would have cause to establish a national system, especially because Chinese banks (on whom great hopes were placed in 2014) have essentially supported US sanctions. In these circumstances, it is better to have a stunted system in terms of its international access than to witness a sudden collapse of cashless payments if harsh sanctions are imposed.

However, this non-competitive idea immediately inspires people who are willing to make money by destroying their competitors.

If regulations pushing the international payment systems out of the Russian market were adopted, it would deprive Russians of the ability to pay for things abroad without cash, and the logical next step of banning or restricting the export of foreign currency from the country would be easy as pie. Simultaneously, Russians would find it much harder to purchase foreign goods in foreign online shops, something that would be incredibly difficult without access to international payment systems.

A side effect of the ban would be the promotion of Russian-registered joint ventures for selling Chinese goods to Russians.  This would have a positive effect on the receipt of VAT from these purchases. VAT matters since VAT revenues constitute up to a third of Russian federal revenues, making them comparable to Russia’s export revenues.

The natural consequence of depriving Russians of access to foreign online shops would be a rise in prices. At first, the government would profit slightly because VAT revenues would grow—until people stopped buying things.

The policy of isolating the Russian economy from the world economy in terms of Russian nationals being unable to spend money outside Russia has been reasserted, and yet another step on the long road of restrictions and bans may soon be taken. The tendency towards restrictions on foreign currency has once again been confirmed. We might recall the recent discussion about restricting unqualified investors from opening foreign currency accounts.

The hope remains, of course, that, as in 2014, the international payment systems would reach an agreement with the Russian government, Russian MPs would be reined in, and cardholders would not feel the pain. Unlike 2014, however, the Russian Central Bank has supported the bill.

Sergei Khestanov is a macroeconomics adviser to the director of Open Broker and associate professor of financial markets and financial engineering at RANEPA. Translated by the Russian Reader

They Wore Uniforms

angela davisEast German politician Margot Honecker and Angela Davis at the communist World Festival of Youth and Students. Photo courtesy of Ullstein Bild, Getty Images, and the Wall Street Journal

In yesterday’s edition, the Wall Street Journal revealed the grim truth about actually existing socialism.

“In the Atrium Gallery, the Regimes Museum displays uniforms, flags, posters and other paraphernalia from East Germany. Not only soldiers, sailors and police wore military-style uniforms. So did postmen, bus and streetcar operators, volunteer firefighters and members of the Red Cross.” (Joseph D’Hippolito, “Angela Davis, East Germany and Fullerton,” Wall Street Journal, June 27, 2019)

Mr. D’Hippolito might be interested to know that East Berlin actually had streetcar operators because it actually had streetcars. The last tram made its last run in West Berlin in October 1967. Since reunification, the city’s transport authority has tentatively expanded a few of the East Berlin lines into West Berlin, but there are bigger plans afoot for expanding the city’s “half of a tram network.”

Nevertheless, Berlin has the third longest streetcar system in the world, after Melbourne and Petersburg. I have no clue about what has been going on in Melbourne, but Petersburg has spent many of the last thirty some years devastating its network, once the longest in the world. Trams there have had to give way, as they did in West Berlin, to private cars, thus exacerbating climate change.

But capitalism is superior to socialism, no?

Watch this space for “Was There Life on Mars?”, my report on East Berlin: Half a Capital, a terrific exhibition currently on view at the Ephraim Palace in Berlin-Mitte.

Needless to say, the exhibition’s curators have a slightly more sophisticated take on life under socialism than the WSJ could ever imagine. Tellingly, the day I visited, all the other visitors were my age and older and had the bearing and look of East Germans, meaning they were revisiting their childhoods and youths.

I doubt what they were feeling was the much-dreaded or much-celebrated “Ostalgia,” but something more akin to surprise. After all, the planet on which they were born and grew up disappeared in the twinkling of an eye. Since there was an extraordinarily large, determined grassroots resistance and reform movement in East Germany in the seventies and eighties, a movement wholly or almost wholly absent in West Germany, the country and the world lost a lot when the capitalist vacuum cleaner simply sucked up the country after 1989.

In Berlin, one effect has been the extraordinarily intense gentrification of many former East Berlin districts, especially Mitte, Prenzlauer Berg, and Friedrichshain. As I discovered recently, however, there are pockets of wholesale gentrification as far east as Friedrichshagen, now a picture-perfect bourgeois colony for West Germans.

You do find yourself wondering where all the pre-1989 inhabitants of these places have gone.

In Fullerton, California, however, they are still fighting “communism,” something that never existed in any case {TRR}

Nationalizing Russia’s Middle Class

OLYMPUS DIGITAL CAMERAIn the last decade or two, Russia’s monied classes and middle classes have been wildly enriched or merely kept afloat by cheap, disenfranchised labor from Central Asia. I took this photo on April 10, 2017, in the container village inhabited by Central Asian migrant workers building Petersburg’s so-called Marine Façade on 476 hectares of reclaimed land in the Neva Bay next to Vasilyevsky Island.  

Nationalizing the Middle Class: Society’s Previously Most Dynamic Group Seeks to Rely on the State
Vladimir Ruvinsky
Vedomosti
June 26, 2019

Analysts at Alfa Bank have concluded Russia’s middle class has been shrinking. More importantly, it is being nationalized, which distances the prospects of qualitative economic growth.

What constitutes the Russian middle class is mostly a philosophical question: a specific definition of it has never gained a foothold. Some researchers argue it never emerged in the social sense and remains akin to a folklore character. Other researchers, focusing on income levels, have claimed to have sighted it in Russia, but in recent years their observations have been suffused with sadness.

In a new report, “The Russian Middle Class: Lowering the Appetite for Risk,” analysts at Alfa Banks have defined the middle class as a group of people whose monthly income is between 39,000 and 99,000 rubles per person [i.e., between 546 euros and 1,387 euros at current rates], that is, 110–250% of the median income in Russia, and who are able to buy durable goods.

In the noughties, the middle class grew. By 2014, it constituted 37% of the Russian populace. In four years, however, all of this growth had been forfeited. In 2017, only 30% of the populace could be counted as middle class, which was less than in 2004 (34%). Simultaneously, the group’s share in the populace’s total income dropped from 48% in 2014 to 39% in 2017.

The middle class has lost its economic clout, becoming more vulnerable. In some ways, it has lost more than other classes. Alfa Bank’s analysts write that the middle class’s real incomes stagnated in the ten-year period between 2008 and 2018, while the incomes of the country’s most impoverished groups rose by four percent, and the incomes of the wealthiest Russians increased by eleven percent. An indicator of the middle class’s fading fortunes was that its core spent three percentage points more on groceries during the ten-year period, just like the country’s lower classes, while its expenditures on holidays and education dropped by one to two percentage points. In 2014–2018, the middle class’s loan payments grew by 20% in nominal terms. This is probably why it has not been involved in the new consumer loan boom.

Simultaneously, the middle class has been undergoing nationalization. It is a commonplace the middle class consists of people independent of the state and living on their own means. Its progress has been regarded as a vital driver of economic growth, including in Russia.

Its potential, however, appears to have weakened. Whereas in 2003 approximately ten percent of the middle class was employed in the state sector, this figure had grown to fifteen percent in 2017, according to Alfa Bank.

This is not a disaster yet, especially since middle-class employment in commerce, the restaurant business, finance, real estate, and health care has grown. However, the middle class’s share of business income has decreased more than it has among the general populace.

Traditionally considered the core of civil society, the middle class has come to rely more and more on the state for employment, claims Natalya Orlova, Alfa Bank’s chief economist. Even if the middle class does not shrink anymore, its nationalization worsens the prospects for Russia’s progress, since its ranks will be replenished by people who do not power the economy but count on the regime for their livelihoods.

Translated by the Russian Reader