Exodus

DSCN3281Human capital is fleeing Russia. Since President Vladimir Putin’s ascent to the presidency, between 1.6 and 2 million Russians—out of a total population of 145 million—have left for Western democracies and some new destinations where they can be freer with their skills put to better use. This emigration sped up with Putin’s return as president in 2012, followed by a weakening economy and growing repressions. It soon began to look like a politically driven brain drain, causing increasing concern among Russian and international observers.

In this report, the Atlantic Council’s Eurasia Center offers a comprehensive analysis of what we are calling the Putin Exodus and its implications for Russia and the West. It is supported by a pioneering sociological study of new Russian émigrés now living in four key locations in the United States and Europe, through a 100-question survey and a series of focus groups.

[…]

There are two particularly important findings. On the one hand, the new Russian émigrés living in different locations are very similar in the way they use their high cultural capital to adapt to new life and employment in a postindustrial society. At the same time, there is a distinct disparity between those who emigrated before 2012 and those who left later: among other things, the latter demonstrate a growing pro-Western and liberal orientation and greater politicization in general, including stronger support for the anti-Putin “non-systemic” opposition.

John Herbst and Sergei Erofeev, The Putin Exodus: The New Russian Brain Drain (Atlantic Council, Eurasia Center, 2019), p. IX

Although I am the last person who thinks you can find out what people really think using opinion polls, questionnaires, and focus groups, this new report from the Atlantic Council does, at least, deal with something real that has been underreported and little discussed in Russia and elsewhere. Since I have had lots of conversations with many different Russian immigrants over the years, I am also skeptical about the report’s optimistic conclusions about their alleged “liberalism.” Nevertheless, it is worth reading. Thanks to the invaluable Mark Teeter for the heads-up. Photo by the Russian Reader//TRR

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Darya Apahonchich: Relaxation for Men

darja-1Darya Apahonchich is one of the artists exhibited at the 2019 Festival of Political Photography at the Finnish Museum of Photography. Photo by Liisa Takala. Courtesy of Helsingin Sanomat

Relaxation for Men
Darya Apahonchich wanted to make prostitution visible so she photographed men
Jussi Lehmusvesi
Helsingin Sanomat
March 13, 2019

A good three years ago, Petersburg teacher Darya Apahonchich was walking to work when she noticed letters painted on the sidewalk.

ОТДЫХ

Freely translated, the word means “relaxation, rest.” Apahonchich knew it was one of the most common phrases in Russia for advertising prostitution.

Apahonchich was intrigued. On previous walks to work, she had noticed that ads for brothels had spread everywhere, including walls, light poles, and transformer boxes, and now they seemed to have flooded the streets, too. There was also something irritating about the word отдых.

Relaxation.

Or the slightly longer version:

Relaxation for men.

Apahonchich had an idea. She was also a professional artist and had worked in several groups that produced political art. She asked male acquaintances to think about how they really relaxed. Then she took the men to the sex ads and asked them to assume the poses they had chosen for relaxing.

The photographs were produced in the middle of sidewalks as passersby watched.

“I wasn’t trying to take smooth, finished art photos but snapshots,” she said. “People’s reactions were supportive or, more often, indifferent. Petersburg is a big city, after all, and people are not easily surprised.”

After the photoshoot, she posted the photos on social media and waited for a reaction.

Things kicked off after a while.

Apahonchich’s photos attracted attention on social media. The photographer was asked for interviews by more traditional media.

She was more delighted by offers from complete strangers, men who wanted to be involved in the project.

“They said they wanted to relax and asked whether they could help me,” Apahonich says.

Despite what you might imagine, there was nothing suggestive about the men’s requests. They genuinely wanted to be involved in doing something good.

The photographer accepted the offers and new photos were produced.

“It started out just as a fun thing but gradually turned into something more serious,” she says.

darja-2Two young men relaxing. Photo by Darya Apahonchich. Courtesy of Helsingin Sanomat

The success of Apahonchich’s photos could be explained by their skewed perspective. We have seen plenty of pictures of people victimized by prostitution at exhibitions but the gaze in her photos is focused on men.

This also has its own meaning for her.

“When people talk about prostitution, they usually talk about women, but I hope to make something invisible visible in the images I produce,” Apahonchich says.

It is a reasonable aspiration in the sense that men are active in the sex trade as middlemen, customers and, sometimes, vendors, too.

“Of course, men see my pictures differently. Some see them only as humorous. In the best case, I make the men looking at the photos reflect on their own position on the matter.”

The artist also has a personal reason for approaching the subject seriously.

Apahonchich walks around the Finnish Museum of Photography at the Cable Factory looking at the works of her colleagues in the Festival of Political Photography, which presents the work of twenty artists from around the world in a show entitled Potentiality.

In Apahonchich’s own images, men relax alongside “Relaxation for men” ads. One reads the newspaper, another plays on the train tracks, a third does yoga, and a fourth plays the balalaika.

A fifth man fishes.

According to the artist, the men who wanted into the project hardly represent the majority opinion regarding prostitution.

“Russia is still a conservative country and we have a different notion of women’s rights than in Scandinavia. It is common for men not to see any problem with prostitution. Many of them think it’s quite acceptable if, say, they have problems with their marriages.”

It is illegal in Russia to advertise sex services but, according to Apahonchich, Russian cities are in no hurry to get rid of the ads. She argues that the economic interests of the powers that be are often linked to human trafficking.

“It’s about money,” she says. “In Russia, the media have written about the links between corruption and prostitution. The police, for example, visit brothels regularly. They even have their own term for their visits. They are called ‘Saturday specials.'”

Her drastic claim is supported by a longitudinal interview study in which researchers mapped the experiences of sex workers with police in Petersburg and Orenburg. The study found that over a third of the sex workers had been abused by police.

The study was done in 2014, but researchers have obtained similar outcomes in more recent studies.

Estimates of the total number of people involved in sex work in Russia are as high as three million.

“I don’t approve of the word ‘sex worker,'” says Apahonchich. “In my opinion, it is not work but exploitation. I am talking about women who are involved in prostitution. Of course, there are differences in how people view the matter. If someone wants to call themselves a sex worker, I accept their choice, of course, but I don’t think of it that way.”

She also finds it misleading to talk about “sex.”

“Many girls go into prostitution at the age of thirteen or even younger. I think it is a question of rape culture more than of sex.”

darja-3Man and pillow. Photo by Darya Apahonchich. Courtesy of Helsingin Sanomat

Apahonchich has a personal reason for regarding prostitution negatively. She earns her daily bready by teaching Russian to women who have come from Syria and Afghanistan, for example. She is painfully aware her students are at high risk of being marginalized and forced into prostitution.

“Since they come to Russia as refugees and immigrants, they are on really shaky ground. They are often undocumented and cannot defend themselves,” Apahonchich says, looking anxious.

She is clearly concerned about her students.

She has not shown her photographs in class.

“I try to keep politics to a minimum,” she says. “A large number of my students are from quite conservative regions and I don’t want to scare them. Also, some of the students’ husbands have a negative attitude to their going to school, so in this sense, too, caution is important.”

“So, I concentrate on teaching the language and I answer their questions.”

There is one subject, however, that Apahonchich plans to raise in class.

She wants to teach the women how to talk to the police.

darja-4A man relaxes by meditating. Photo by Darya Apahonchich. Courtesy of Helsingin Sanomat

Relaxation for men. Although sex advertising has been moving to the Internet in Russia, the letters on the cobblestones still entice men into becoming customers.

Apahonchich’s own attitude to the advertisements has changed as she has photographed them.

“In the past, I would complain about them and think about all the young women they concealed. But after shooting them I saw them as locations and advertisements.  I would think that one was in a good spot for marketing or this one had really different colors, that I had no photos with yellow lettering in them. Or this image was in a good place for setting up and shooting.”

Another thing has changed. The photographer now knows what to say to men who fiercely defend prostitution.

“I ask them whether they would be willing to do the same job themselves or let their children do it. Since they don’t want it for their own children, why would they wish it on others?”

darja-5.JPGThe ads encouraging relaxation are also in English. Photo by Darya Apahonchich. Courtesy of Helsingin Sanomat

Apahonchich recounts how one of the men in the photos heard a child ask his parents what the ad meant as the model sat waiting on the pavement.

It was no easy task for the parents to explain what the words meant.

Nor was it easy to tell the child why a price had been placed under a woman’s name.

Translated from the Finnish by the Russian Reader

 

Si prestas tu martillo, te prestaré mi hacha

On this latest episode of Departures, Robert Amsterdam speaks with an admired friend and colleague Dr. Anders Åslund, author of the new book, Russia’s Crony Capitalism: The Path from Market Economy to Kleptocracy.

In his book, Åslund contends that in his eighteen years in Moscow, Putin has succeeded in establishing a Russian state and economy that are “exceedingly reminiscent” of those that existed in tsarist Russia, a far cry from the democratic state and liberal market economy that global observers had anticipated would inevitably follow the collapse of the Soviet Union.

According to Åslund, Putin has accomplished this by constructing an “iron quadrangle” comprised of “four circles of power,” which are “vertical state power,” “big state enterprises,” Putin’s “cronies,” and “Anglo-American offshore havens,” respectively.

The consolidation of this iron quadrangle is the result of Putin’s years’ long effort to deinstitutionalize the Russian state, and devise a system that guarantees macroeconomic stability, but falls short of delivering economic growth. As Åslund describes, these circumstances will likely yield a Russia in regression, a nation that is increasingly patrimonial and, as a result, will accelerate the ongoing retreat of democracy. Should this continue unabated, global powers, particularly those in the West, may expect Putin to grow increasingly authoritarian, and in the tsarist tradition, grow evermore inclined to taking risks in seeking sources of legitimacy other than macroeconomic stability.

Source: robertamsterdam.com

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South Korean jets fired warning shots at a Russian military plane. South Korea’s defence ministry said two Russian bombers and a surveillance plane, plus two Chinese bombers, had violated its airspace (above barren islands also claimed by Japan). Reports from inside the Korean government said the Russians acknowledged the incursion and blamed it on malfunctioning equipment.
The Economist Espresso, 24 July 2019

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What is Vladimir Putin goal [sic] for Russia and the Russian people?
Dima Vorobiev, Former Soviet propaganda executive
Answered Jul 18

Russian Federation is run as a highly profitable commercial project of about 100,000 families, with President Putin and a circle of a few influential state-oligarchical clans at the top.

They have been very successful and ensured two decades of stable and relatively wealthy existence for the broad masses of our population.

Vladimir Putin’s goal for Russia and the Russian people is to perpetuate this project for as long as possible.

Below, a resident of St. Petersburg, hugely impressed by many successes of President Putin, uses his portrait for personal protection in his daily affairs against bad luck, evil spirits, and corrupt government servants.

putinist

Source: Quora

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Giuseppe Conte, Italy’s prime minister, does not belong to either of the parties in his populist coalition government. But today the former law professor will report to parliament on the allegedly grave misdemeanor of one. Prosecutors are investigating allegations that the hard-right Northern League negotiated with Russian intermediaries for funding worth tens of millions of euros. The League’s leader, Matteo Salvini, who was not at the meeting in Moscow and denies receiving money, at first refused to make a statement to parliament, but now says he will give his version of events. It might be thought the claims should be particularly damaging since they are backed by a purported recording of the discussions. But they seem to have done Mr. Salvini no harm. A poll at the weekend showed backing for the League had risen nearly three points, to 35.9%, since before the recording was made public. For now, Mr. Salvini seems bulletproof.
The Economist Espresso, 24 July 2019

Olga Romanova: How “Law Enforcement” Works in Russia

calvey
Michael Calvey in court. Photo by Maxim Shemetov. Courtesy of Reuters and Republic

“We Give You Serebrennikov and You Give us Calvey”: How Law Enforcement Works
Olga Romanova
Republic
May 13, 2019

“Who would make the decision about your arrest?”

“My colleagues would betray me, but they would vet it with my bosses.”

“What about Vasya [a big businessman]?”

“Cops, the economic security squad. It’s enough for the word to come down from the district office to grab him. Vasya is a respected person. He’s a thief.”

“And me?”

“You’re an enemy of the state. If the neighborhood cops can decide to arrest Vasya, the Secret Chamber, so to speak, would have to give the orders to arrest you. The decision to arrest you would be made by no one lower ranked than Bortnikov’s deputy, although you’re naked and barefoot, and no one would ask the prosecutor’s office or the Investigative Committee to go after you. It’s creepy and pointless.”

This should give you an idea of the conversations I have with my acquaintances in the security forces nowadays. It helps to do business with people who know the score. None of them is surprised when you ask them who would arrest someone, how they would do it, and when they would do it. Everything would have been planned long ago, and there are no illusions. If a person has to be placed under arrest and charged, it is going to happen. If they do not need to be indicted, they can be kept in custody for a while. No one remembers, even for appearance’s sake, that there are courts in Russia, and courts decide whether to remand someone in custody after hearing arguments by all the interested parties. Everyone knows the decisions are not made in court.

Who Makes the Decisions?
Who made the decision to arrest Kirill Serebrennikov? Who decided to let him go for the time being? Who arrested Michael Calvey and the employees of Baring Vostok? Who let them out of jail? Why? Who made the decision to arrest Mikhail Abyzov?

There is no one with whom you can talk about these cases.

This is not quite true. My sources in all the law enforcement and security agencies, who can be frank with me as long as they remain anonymous, talk to me about these cases, too, but they look really worried when they do.

Rank-and-file law enforcement officers are confused. They do not understand why someone decided to back off the Serebrennikov case so abruptly and quickly. The train was rushing the director and filmmaker towards a sentence of the four years or so in the camps when a powerful hand jerked hard on the brakes. The passengers jumped off the train, of course, for they didn’t want to keep traveling in that direction, but the trainmaster, driver, and conductors were completely at a loss.

What should they do with the next train and its contingent of VIP passengers? Should they railroad them, as they were ordered to do, or should they avoid hurrying the case? After the emergency brake has been pulled, everyone emerges with injuries and bumps. Some of the crew were counting on promotions after they had wrapped up such a big case. Other members of the crew were acting on orders from a celestial. He will not forgive them because now they know there are tougher celestials in the system. He cannot forgive the people involved in the case for knowing that fact nor can he forgive the other celestials for intervening. The passengers could not care less. Either they get to where they are going or they do not get there, but the crew is always aboard the train.

True, a smart alec from the Investigative Committee told me something interesting about the procedural aspect.

“Why is everyone so angry? The Serebrennikov case was sent back to the prosecutor’s office, so what? You saw that the court ordered a forensic examination. The first forensic examination was really crooked. The judge in the trial of Serebrennikov’s accountant, Nina Maslyaeva,  wondered why everyone was so glad. Serebrennikov’s case would now be sent back to the prosecutor’s office because his circumstances are the same as Maslyaeva’s. You are mixing up cause and effect. The judge in the Maslyaeva case cannot reach a verdict because he understands the outcome of the forensic examination, which was the same as in the Serebrennikov case, will now be different, and Maslayeva will have to be re-indicted in the light of the new forensic examination in the Serebrennikov case.”

Translated into ordinary language, he means the case can still go any which way. Procedurally, all the cards are still on the table, and the haggling could continue. Things could go one way or the other. The powers that be could change their minds and send Serebrennikov to prison, but they could also let him go. They could arrest him again and send him down. The statute of limitations is a flexible thing.

Somewhere above the clouds, the thunder gods fight over the case. Invisible to the world, they communicate with ordinary people by making motions to conduct additional forensic examinations. Ordinary people make of it what they will. Police investigators are also part of the rank and file, part and parcel of Russia’s unwashed masses.

In ordinary times, this is not what happens to ordinary defendants in ordinary cases. Everyone would have gone down five years each per capita, and no would have batted an eye. In this case, the decisions are obviously political. Look who made the decision! Who telephoned whom? What levers did they use? Who or what did they offer in exchange? Freebies are for freaks, after all. We will return to this subsequently when we discuss other factors.

If the boring procedural hypothesis made by my anonymous source at the Investigative Committee is right, events should unfold as follows. The authorities will get the results of the new forensic examination in the Serebrennikov case. If the total damages are less than was claimed earlier (or, say, there were, miraculously, no damages at all), the charges against Serebrennikov and the other defendants will be dropped right in the courtroom. If, on the contrary, the sum of the damages is more or less hefty, a million rubles, at least, the defendants will be found guilty and sentenced to prison. Then you can appeal the verdict wherever you like.

No one would ask why a particular ruling was made. No one would ask what happened. Why are some people treated one way, while others are treated another way? The foot soldiers of law enforcement know the score. But when they do not know the score, they know it is better not to ask whether a mistake has been made but to follow orders.

How Things Go Down
The Calvey case bears a strong resemblance to the case against Vladimir Yevtushenkov. Yevtushenkov failed to take the hints. He was told directly what to do but refused to hand over his business. Then he was arrested and given a good talking. He and his captors came to an understanding. He was released and his business confiscated. Unlike Yevtushenkov, however, Calvey is as poor as a church mouse. Compared with Yevtushenkov, that is. Calvey does not own a Bashneft, after all.

The foot soldiers in the security forces have not been particularly surprised about how the Calvey case has unfolded. They expected something of the sort. They expected him to “cash out,” as they call it, and they believe he has, in fact, cashed out. They are uninterested in what this meant. It is not their war, and the spoils are not theirs to claim.

We should look at this more closely.

My source, whom I  trust, albeit warily, explains the obvious to me.

“All cases are business as usual except the cases in which there a phone call,” he says.

I have two questions for him right off the bat. What does he mean by “business as usual”? Who usually makes the  “phone call”?

He explains that people who follow high-profile cases and comment on them fail to take one important factor into account in their arguments. The high-profile cases are handled by another agency as it were. They involve the same players: the prosecutor’s offices, the courts, the remand prisons, and the Investigative Committee. All of them realize, however, when they are handling a special case involving the interests of high-ranking officials and elite businessmen. In these cases, they need to keep close track of which way the wind blows.

The bulk of cases are “mundane.” There is a huge number of such cases, and they can drag on forever. Take, for example, the Baltstroy case, the case of police anti-corruption investigator Boris Kolesnikov, and the case of ex-deputy culture minister Grigory Pirumov, cases that everyone has forgotten, and the Oboronservis case, the cases of the banks implicated in the so-called Russian Laundromat, and the case of Alexander Grigoriev, the man, allegedly, behind the Laundromat, who was mixed up with Putin’s cousin Igor Putin. New indictments in these cases are made all the time. More and more defendants are convicted in these cases and sent down. It never stops, but public interest in these cases is almost nil.

There are cases that collapse, however. Why does this happen?

Why was the case of ex-economics minister Alexei Ulyukayev not reviewed on appeal? Why was his prison sentence not reduced by four years during the sentencing appeal hearing? Does anyone know why? Perhaps the political spin doctors get it, but Russia’s law enforcers do not have a clue. What they understand is when an order comes down to reduce a sentence and when it does not. They leave the blabbing to the spin doctors.

Alexei Fedyarov is a former prosecutor from Chuvashia. Nowadays, he is the head of our legal department at Russia Behind Bars. He gave me permission to quote him.

“It happens. A case is going fine. In the morning, you have a meeting with your superiors. They tell you everything is great, keep pushing, you’ve got the bastards. I was handling a case against the management of the Khimprom factory in Novocheboksarsk. At briefings, I was told my group and I were doing a great job. We had done the initial investigation beautifully and now it was time to detain the suspects, remand them in custody, and put them away. I went to my office, where the city prosecutor was waiting for me. He asked me to hand over the case file. I gave him the case file and he told me it was over, I should forget it. He was personally going to deliver the case file to the head prosecutor of the republic and that would be the end of it.  There would be no supporting documentation or anything. The case really did disappear, although an hour before I had been told to push it.

“During that hour, the head prosecutor of the republic had got a message from the Russian Prosecutor General’s Office. A call from a deputy prosecutor general was enough for them to take the whole thing back, despite the fact it was a big, interesting case involving illegal wiretapping throughout the company and even the local police department and the tax police office. We had found tons of recorded conversations: they recorded everything. They were trying to protect themselves and investigate other people.”

Sources of the “Telephone Call”
How does the “telephone call” work?

The “telephone call” is a conventional name for the outcome of lengthy negotiations. We see only the reflection of this process: Calvey’s arrest, his transfer to house arrest, Serebrennikov’s arrest and his release on his own recognizance, Abyzov’s arrest.

I am going to quote my anonymous source verbatim. In this instance, the way he says what he says is as important as what he says.

“Anyone can hit the brakes. It could be Bortnikov. It could be Chaika. But it is the outcome of agreements among people, not an arbitrary decision. They do not do things that way. Maybe new factors have been brought into play, but there has to be someone who wants to negotiate on behalf of the accused person, who appeals on his behalf. He would be told, ‘Okay, fine. But you have to give us such-and-such in exchange.” Then it is a matter of talking with Lebedev [Chief Justice of the Russian Supreme Court] and everything is put into reverse. It could be like, ‘We’ll give up Serebrennikov if you take the heat off Calvey.’ You see, the siloviki are not all on the same side. There is no longer one side. Not even everyone in the FSB or its departments is on the same side. The Constitutional Department fights with the Anti-Terrorism Department. It’s the same thing in the prosecutor’s office and the Investigative Committee. In the Investigative Committee, there is the group loyal to Bastrykin and then they are the boys from the North Caucasus. There are also the guys from Tatarstan and Bashkortostan, who are filthy rich but live orderly lives and are also capable of getting things done.

“Anything goes at this level. Why are you inclined to exaggerate how this works? Number One basically does not care about this stuff.”

I should try and explain.

The Investigative Committee and Prosecutor General’s Office are still at serious loggerheads. The conflict has even intensified. It is a personal conflict and a clash of business interests and a fight over resources. The amount of resources has not grown. On the contrary, there are palpably fewer resources. Relations between the Investigative Committee and the Prosecutor General’s Office are currently not just strained, they are intolerably strained.

In court, they take the same side, but those are the rules of the game. If a case has gone to trial, you cannot come out against your colleagues: you would be digging yourself a hole. As a prosecutor, you did not reverse the indictment. You were involved in prolonging the suspect’s custody in remand prison, and you seconded all the motions made by the case investigator. The case investigator, of course, always plays along with the prosecutor. In criminal trials, they are the prosecution.

Even the “groundlings” find it easier to make a deal. The big bosses may be at war with each other, but down on the ground, the workhorses plow away and know the score. There is no love lost for Bastrykin among Investigative Committee officers just as prosecutors are not fond of Chaika. But it is like this everywhere: people like their bosses only when they are standing right in front of them. There is a certain difference, however. Chaika and his deputies at the Prosecutor General’s Office are all former case investigators. They have paid their dues. Bastrykin does not have this background: he is not a criminologist. Their workhorses thus complain about different things. Bastrykin’s underlings complain about incompetence, while prosecutors grouse about their bosses’ passion for business.

The Investigative Committee and the Prosecutor’s Office have an innate tendency to divide up into clans, which are defined geographically: there are Circassian clans, Bashkir clans, etc. They are local fraternities of sorts, and they do not go away when someone moves and transfers to a new job. The clans are often at odds with each other. This is something you must always factor in when dealing with Russian law enforcers.

Internal disunity has also been increasing day by day in the conglomerate known as the FSB. Even mid-level officers have trouble getting along. For example, M Directorate, which oversees the Interior Ministry, the Federal Penitentiary Service, and so on, is often combined, in many regions, with the Economic Security Department, and there is a big problem with compatibility in terms of the cases they pursue. But there is also K Directorate, aka the 8th Directorate, which oversees banks and the financial system. Regarded as “blue bloods,” they are strongly disliked by other FSB officers.

“A guy from K Directorate worked out at the World Class gym where I worked out. His driver took him to work in a Maybach. Now he has transferred his membership to the gym in Zhukovka. A membership there costs 600,000 rubles a year [approx. $9,500] and the swimming pool is filled with mineral water. ‘My clients work out there,’ he said to me, ‘so I moved my membership there,'” an athlete and retired FSB veteran told me.

The FSB’s Constitutional and Anti-Terrorism Departments are a whole other story. They oversee everyone who has any dealings with the opposition and they inspire no confidence whatsoever. For example, I am flattered Kirill Serebrennikov and I are overseen by the same FSB officers. But we are overseen by officers from the Constitutional Department, while the Anti-Terrorism Department are working-class blokes who specialize in completely different cases. They were merged into a single directorate in which the Anti-Terrorism Department, supposedly, is subordinated to the Constitutional Department. Naturally, they cannot stand each other.

What about the top bosses? They are busy with other things, which is why they are in charge. They are busy with politicking and intrigues. These quiet squabbles surface as cases like the recent arrest of Colonel Kirill Cherkalin from K Directorate. Did he really take a bribe? Maybe he did: anything is possible. It is more likely, however, he was arrested as part of a war for turf, turf that has been shrinking exponentially with every passing day. Fattened cows no longer graze on this turf: there are basically no cows left to milk. The entire herd has been devoured.

What to Expect
I will quote in full the monologue my anonymous source delivered when I asked him about the future. I do no think there is any need to decode it.

“The turbulence will increase. Until all the issues with Russia’s natural gas and its transit through Ukraine are settled, Number One won’t have time for things happening here. They have been outsourced to our guys. They have been told to go and bite everyone’s heads off. They have temporary permission to do it.

“But there are few fat cats. All the money has been sent abroad. Everyone is living on loans. All of Rublyovka is up to their ears in loans. There will be searches in some people’s homes, and some folks will be ripped to shreds. There will be a lot of this kind of stuff this year. The government will be purged, too. People love this sort of thing.

“Abyzov made no impression on anyone. No one understood what it was about. The only thing people will remember is that he offered to pay a billion rubles in bail. No one will forget him and the billion rubles.

“Circumstances are such that even the system’s insiders cannot make any forecasts. The settings are changing constantly. There is no stable paradigm.

“It is like with water. At room temperature, we understand how it acts. You can stick your finger in it and blow on it. But now it is being warmed. It has not boiled yet and vaporized, but you do not know what to do with it and how it will act next.

“The tax police are busy with major shakedowns. They are kicking everyone’s ass. When we ask them why they are doing it, they reply, ‘Crimea is ours, and our job is to get people to make additional payments.’ But additional payments and penalties are different things, especially penalties meant to wipe people out. They are going after people’s last rubles.

“I have a friend who works as a business court judge on tax cases. Whereas earlier, when she would be asked why she reduced a claim from one hundred million rubles to ten million, she could have an off-the-record chat with the head judge of the court and explain she was doing it so the person could keep their business, such chats are not kosher nowadays.

“Hard times are coming. The Syrian project fell through, and Russia failed to get control of the pipeline going through Turkey. Nothing that was planned in Syria has worked out, and both the South Stream and Nord Stream projects fell through [sic]. Nor will they replace the Ukrainian transit, although that was the goal. But it impossible to exit Syria, and now they have butted their noses in Venezuela. Their luck has been bad. People’s nerves are on edge up top.

“Number One is interested only in oil and gas, and so other parties have got involved in the game. If it were up to Number One, he would crush everyone and no one would breathe another word. He probably decided the lower ranks should take care of this stuff themselves. The very top bosses are not concerned with these matters at all right now. The lower ranks are running things and a huge amount of haggling has been happening.  We are witnessing a classic turf war.”

Welcome to the magical world of turbulence in a pot of boiling water.

Olga Romanova is the director of Russia Behind Bars, a charitable foundation that aids Russian convicts and their families, people who have been victimized by the Russian justice system. Translated by the Russian Reader

Denis Sokolov: Police Feudalism in Russia

medievalA scene from a protest against the government’s raising the pension age, September 9, 2018, Saint Petersburg. Photo by Anton Vaganov. Courtesy of Reuters and Republic

Police Feudalism
Denis Sokolov
Republic
July 15, 2019

Yunus-Bek Yevkurov, former head of Ingushetia, was “upmoted” to the Defense Ministry, but Russia’s police machine has continued to persecute protesters in Ingushetia. On July 12, Rashid Maysigov, a correspondent with the website Fortanga, was arrested. When police searched his house, they found, allegedly, the now-obligatory “package containing a white substance” and—apparently, to make the image of Maysigov as a troublemaker complete—leaflets calling for Ingushetia’s annexation by Georgia lying on a coffee table. In the wee hours of July 13, Zarifa Sautiyeva, deputy director of the Memorial for the Victims of Repressions in Nazran, was arrested. Sautiyeva has risen to prominence as one of the female leaders at the protest rallies in Magas, the capital of Ingushetia, in 2018–2019. Sautiyeva was charged with complicity in violence against the authorities. This is the first case when a woman has been sent to the remand prison in Nalchik, in neighboring Kabardino-Balkaria, as part of the continuing investigation of the Ingushetian protests. On July 14, Russia’s federal media watchdog Roskomnadzor blocked Fortanga, the main source of news about the protests.

zarifa sautiyevaZarifa Sautiyeva. Courtesy of Caucasian Knot

What’s Good for Jupiter
There is one thing the arrests of Ingush and Circassian activists, the searches in the homes of people who protested construction of a church in a Yekaterinburg park, the fines meted out to people who marched in solidarity with Ivan Golunov on June 12, the New Greatness case, the arrests for “extremist” posts on the VK social network, and the harsh arrests of protesters outside the Moscow City Elections Committee on Sunday have in common.

None of them have anything to do with keeping the peace and administering justice. They are rituals meant to mark the territory of a class. Equipped with firearms and badges, Russia’s new service aristocracy enthusiastically shows unarmed civilians without badges their place.  The statistics for “ritual” criminal charges—drugs charges, “extremism” charges, and weapons possession charges—speak for themselves. The willingness of law enforcement officers to beat up arrestees harks back to hazing in army barracks and the prison practice of “registering” new inmates by ritually humiliating them.

Russia’s political elite—the siloviki, the officials who control financial flows, organized criminals, and insider businessmen—live by other rules. They are governed by other articles in the Russian criminal code and have other means of resolving conflicts. The fight against corruption and economic crimes is the political weapon that has replaced elections up and down Putin’s “power vertical.” The number of criminal cases against high-ranking officials and officers of the Interior Ministry, the FSB, and the GRU has risen exponentially.

Particularly touching are several cases that are interrelated, according to reporters who covered them. The first case involves the arrests of FSB Colonel Kirill Cherkalin and two of his accomplices on April 25, 2019. They were charged with fraud, i.e., they forced a businessman to hand over a share, worth 490 million rubles [approx. $7.8 million], in a company. Cherkalin was also charged with taking an $820,000 bribe for “protection.” The second case is the flight abroad of Valery Miroshnikov, deputy head of the Deposit Insurance Agency (ASV). Allegedly, he and Cherkalin had cooked up a scheme for making money from the restructuring of banks. Finally, there is the arrest of an entire gang of FSB special forces officers and K Directorate officers: they robbed a bank while on duty, so to speak. Several officers from Alpha, the FSB’s special forces unit, decided not to return from an assignment in the North Caucasus, going to ground instead.

Now that is the sporting life, the life of a medieval knight. A jail sentence for posting the “wrong” thing on social media or attending a peaceable protest rally cannot compare. What is good for Jupiter is bad for the bull. The new division of Russia into quasi-medieval estates is borne out by the fact that, unlike their victims, police officers get suspended sentences for cooking up “drugs” cases, not actual prison time.

The number of businessmen who have been “skimmed” by being charged with economic crimes has skyrocketed. In a report entitled “The Fortress Subsides,” Kirill Rogov recently cited data on the sharp increase in the number of economic crimes investigated by the FSB. We do not need statistics, however, to understand the implications of the attack on Sergei Petrov, the arrest of Michael Calvey, and similar cases.

The Siloviki Revolution
What we are talking about is not the ruling regime’s collapse but its logical evolution, the emergence of a new Russian state. The runaway growth of cases in which criminal prosecution has been used to combat competitors and extract feudal rent from various social groups, including grassroots activists, businessmen, and other siloviki and officials, could point to a qualitative transformation of the social order in Russia. Eliminating competitors for fiefs can, however, be regarded as a form of political competition, while squeezing rents from vanquished regions and sectors is something akin to the victor tasting the fruits of victory. This is borne out by Vladimir Vasilyev’s administration of Dagestan, where the new order entailed a complete purge of the regional bureaucracy and an invasion of officials from more advanced Tatarstan. In other regions, on the contrary, the siloviki revolution has come off more quietly.

The actions of the special services in Ingushetia, Dagestan, and other regions of Russia enables us to make certain generalizations about the new political reality.

First, Russian law enforcement’s apparatus of violence has gradually turned into a ritual apparatus of violence. Planting drugs, “extremist” pamphlets, ammunition or (when a system insider has been targeted for arrest) marked bills on victims has nothing to do with real criminal investigations. They are parts of the arrest ritual, informal parts of the processual code. All that remains is for the State Duma to draft the relevant amendments and vote them into law. Aside from the main program, the arrest ritual contains supplementary messages for the civilian populace: “We will arrest your women,” “We will beat your children and send them to jail,” “All resistance to the punitive machine will be punished disproportionately,” “When a regional head is dismissed or a journalist is released, it does not mean protesters have won,” and so on.

Second, in recent years, the Russian state has been reduced to a police apparatus of violence. All other branches of government are its appendages and palace retinue. At the same time, the state has devised a completely modern media policy. Field officers arrest the regime’s undesirables, and the press services of the security forces voice the “official position” while anonymous Telegram channels, social media forums, and dubious websites leak the “real” reasons for the arrests to the hoi polloi.

For example, the Circassian activist Martin Kochesoko was arrested for possession of marijuana. The police who detained him rubbed his hands in the weed just in case, while the Telegram channels that get their information from law enforcement authorities told readers about Kochesoko’s links with foreign foundations and his dangerous love for federalism.

Third, the police machine is hierarchical, and it is organized on the principle of feudal vassalage. Each police unit has its own turf, its own sectors, its own fief, whether it is a bank, an oil company, the Deposit Insurance Agency, the war in Donbas or the Chinese markets in Moscow. This fief should automatically become a hereditary or corporate fiefdom. Ingush law enforcement officers cannot operate in Moscow or neighboring republics without getting special permission. Zarifa Sautieyva was arrested only when she showed up in her home region. Moscow avoids meddling in the affairs of vassals for no good reason. Ramzan Kadyrov wants jurisdiction over all Chechens, including Chechens in exile, and he gets it.

Fourth, Moscow can recall regional governors and replace one viceroy with another, but the Kremlin has no intention of stopping the punitive machine because there is nothing else left of the state. The inert, corrupt, and hierarchical police machine has become the caste of security forces (siloviki), a parody of medieval knights. Initially, it saw itself as owning all of Russia; later, it has divided the country into fiefdoms according to unwritten rules. It is not only the Kremlin that wants it this way. Russia’s punitive machine has an “on” switch, but no “off” switch. The only recent exception to this rule is the Ivan Golunov case. This case had many idiosyncrasies, however. His supporters were able to free the arrest reporter partly by following the special rules for the regime’s insiders.

Finally, police feudalism and the Russian state are the same things. When protesters appeal to the Russian constitution and the rule of law, the state regards this as an attack on its sovereignty. The constitution, the courts, and the laws belong to the state. The state or, rather, its beneficiaries will do as they like with these privatized institutions. This machine can be employed for private commercial ends or political goals, but it is forbidden to change the regime and disband the service aristocracy.

Feudal Zombies
If these generalizations are valid, we must thoroughly reexamine the strategies of ethnic and grassroots movements. It is naive and pointless to seek justice from the Leviathan.

Ethnic movements can never find support in the current system because a police state is unable to negotiate. It simply does not have the option of negotiating with unarmed people who are not endowed with the proper authority in the shape of badges. Therefore, the most reasonable demand made by the Ingush activists so far is the demand to release political prisoners. They must be freed from the punitive system’s jurisdiction.

We can say the same thing about grassroots movements, authentic local government, and democratic elections. They are possible only in the absence of police feudalism. Tackling Russia’s new service aristocracy is a separate, thorny issue that neither Putin nor the person who succeeds him can solve even if they wanted to solve it. The system is not amenable to reform. It can only shrink, gradually devouring itself.

Police feudalism is so obsolete, however, it is hard to imagine it will be able to maintain itself for long. We need to think about how to organize public life without these time travelers from the past; we must know what to do when this army of skeletons vanishes into thin air. As soon as we have a notion of what institutions and public organizations are needed, how much it would cost to build them, and who would be ready to invest in new political projects, this will happen spontaneously and inevitably.

Translated by Thomas Campbell

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

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