Stanislav Dorochenkov: Afterword to the Pamphlet of 1942

Afterword to the Pamphlet of 1942
A film by Stanislav Dorochenkov, 2012
28’46”
Featuring Maxim Egorov, O.A. Belobrova, Lydia Smirnova
Camera: Boris Belay
Editing: Claire Beuneux
Directed by Stanislav Dorochenkov
Re:voir Films Paris

In 2010’s stifling heat in St. Petersburg, the regime and the mafia orchestrate the destruction of the city’s heritage for the sake of the nouveaux riche’s luxury. The attempt to remember helps me. I present a little known text by someone who defended this city, Dmitry Likhachev. Several times, he saved it alone by opposing the collective decisions of the Communist Party, thus rebutting an old Russian saying that I would translate roughly as “One man cannot fight an army.”

One can.

I see the phrase “Death will more likely be afraid of us than we of it,” engraved on one of the three stelae at the Piskaryov Memorial Cemetery, placed over the endless mass graves where the millions who died during the Siege of Leningrad lie.

With my Éclair camera, I walk the city during the White Nights to rediscover the  magnificent light of transparent twilight that transforms Petersburg into “the most fantastic city in the world.” The texts of the Russian chronicles (The Hypatian Chronicle, The Laurentian Chronicle, and The Lay of Igor’s Campaign) appear before me, following a broadcast inspired by Likhachev. I become aware of the ancient words, the most accurate account of the disaster of human forgetfulness.

Source: Dérives.tv

Annotation translated, from the French, by Comrade Koganzon and the Russian Reader

Return of the Wreckers

OLYMPUS DIGITAL CAMERA
When they work on construction sites, migrant workers from Central Asia often live in shantytowns like this one in Petersburg. Photo by TRR

FSB director Alexander Bortnikov has claimed that migrant workers from the former Soviet Union constitute the bulk of terrorist groups operating in Russia. He called on businessmen who employ migrant labor and officials who insure compliance with immigration laws to act more responsibly.

This comes from an organization whose direct legal predecessor, the NKVD, arrested and shot fifty-four people on the street where I live during 1937–1938. All these people were found guilty on spurious, trumped-up charges, and all of them were “rehabilitated” in the later, more “vegetarian” times after Stalin’s death, as Anna Akhmatova called them. Meaning the Soviet state admitted then, at least to the families of the victims, that their loved ones had been arrested and shot for no reason at all.

And yet, when the Great Terror was in full gear, the country’s leaders and its henchmen in the NKVD (now known as the FSB) were convinced or feigned that the Soviet Union was chockablock with wreckers, saboteurs, provocateurs, and foreign spies.

Now, in the absence of a public investigation and any trials of the accused (or any accused, for that matter), the agency’s current director wants us to believe that migrant workers from Central Asia are rife with “terrorist groups.”

The street I live on is quite small. It consists of two short blocks and exactly twenty houses. I can imagine the sudden arrests and executions of fifty-four of their neighbors made quite an impression on the street’s more fortunate inhabitants in 1937–1938.

As far as I know, the FSB has never really renounced its direct line of descent from the Cheka, the OGPU, the NKVD, the MGB, and the KGB. On the contrary, if statements made by its more prominent veterans such as Vladimir Putin are to be believed, its past and current officers are extraordinarily proud of this legacy, although they may admit on occasion that the Great Terror was a bit excessive.

So, in the interests of the state (which are nowadays equated with the interests of the members of the Ozero Dacha Cooperative and the so-called Laundromat, not with the interests of the “international proletarian revolution”), the FSB is still capable, I would guess, of lying through its teeth and scapegoating entire groups of completely innocent people, i.e., in this case, migrant workers from Central Asia. According to one expert on Central Asia, whom I trust, there are currently around three million such migrant workers in Russia.

How do you think they are going to feel after hearing Bortnikov’s announcement? Would you like to live and work in a country where you are regarded as a de facto terrorist? TRR

Terrorism in Petersburg: Then and Now

St. Petersburg Gets a Taste of Terrorism
Vladimir Alexandrov
Kommersant Daily
December 20, 1996

A bomb exploded in the Petersburg subway in the early hours of December 19. By a lucky chance, there were no victims. This was the first terrorist attack in Petersburg [sic].* Until the incident, law enforcement had either received false bomb threats or had found the bombs in time. FSB officers, who have joined the investigation, have not yet put forward any more or less convincing explanations of what happened.

The hands on the clock in the driver’s cab showed 12:10 a.m. when he felt the train tremble violently. (It was then traveling between Ploshchad Lenina and Vyborgskaya stations, on the Kirovsky Zavod-Vyborgskaya Line).

“At first, I thought one of the junction boxes in the train’s pneumatic system had exploded, but several seconds later, I realized something unpredictable had happened,” he said.

The steering system was compromised. The emergency sensors lighted up.  The driver immediately reported the incident to the duty officer at the station, and he contacted the police.

In fact, an explosive device had gone off in the train’s second car. There were two passengers in the car at the time, one of whom was deafened by the blast wave. His face and hands were injured by shards of glass.

Despite the fact the energy supply system was malfunctioning, the train rolled into Vyborgskaya station under its own momentum. The wounded man received first aid. Because he had trouble speaking and was quite disoriented, he was almost immediately taken to hospital. The second passenger, a woman, disappeared from the scene for reasons as yet unknown.

An FSB investigative team soon arrived. They inspected the car. It was an awful sight. The bomb had torn apart the car’s insides. The windows had been knocked out, the doors torn from their grooves, and the seats and upholstery ripped apart. The windows had been blown out in adjacent cars as well.

The damaged train was moved onto a storage track, near the Ploshchad Lenina subway station, where there used to be a depot.

The outcome of the forensic investigation was made public only yesterday. Judging by the blast pattern, an explosive device with no casing was placed in the subway car. It contained approximately 400 grams of TNT. The mechanism used to ignite the explosives has not yet been identified.

“It was our good fortune that there were few people on the train at the time of the attack [according to some sources, there were sixteen — Kommersant]. Otherwise, the consequences of the explosion would have been difficult to foresee,” said an FSB spokesman.

The motives and the people who carried out the attack are also still unknown. According to a few witnesses, when the train was stopped at Ploshchad Lenina, several young men dashed out of the car where the explosion would later occur, but no has yet linked the subsequent events with these men. Nevertheless, they are being actively sought by police.

Traffic on the stretch of track between Ploshchad Lenina and Vyborgskaya was restored by early morning on December 19 because the tunnel had suffered almost no damage. Diagnostic work on the tracks and cable conduits will continue tonight, however.

Nearly all police units in St. Petersburg have been on alert since the attack. Security at all subway stations, on public transport, and at other vital sites in the city has been increased. The FSB has established a special task force to investigate the crime.

Petersburg Governor Vladimir Yakovlev was informed about the incident half an hour after the explosion. According to him, it was hardly connected with events in Chechnya. Mentioning recent similar events in different countries, the governor suggested that “terrorism has, apparently, simply become a profitable business.”

This is the first terrorist attack in St. Petersburg in the last three months, although the police constantly receive anonymous bomb threats. (The callers usually claim the bombs have been planted in schools.) The last time police received an anonymous message about a bomb in the subway was in early October of this years. Traffic on the Moskovskaya-Petrogradskaya Line was halted for ten minutes due to the threat.

Translated by the Russian Reader. Thanks to Comrade Norsu for the invaluable heads-up and having a good memory.

_______________________________

wanted the alleged bomber
Social network users were quick to join the exciting hunt for the “alleged bomber,” especially because the screenshot image disseminated by local media evoked every radicalized Islamophobe’s wet dream of a “Muslim terrorist.”

Man Named as Suspect in Subway Explosion Turns Himself over to Police
Inna Sidorkova and Vladimir Gordeev
RBC
April 3, 2017

A man resembling the man in a photograph whom the media had identified as a suspect in the terrorist attack in the subway has produced himself at a Petersburg police precinct.

“He saw himself on TV, got scared, and came to the police himself,” said RBC’s source in law enforcement. According to him, the man had nothing to do with the terrorist attack.

Earlier, REN TV and online newspaper Fontanka.ru had published a screenshot of a recording made by a CCTV camera. The image showed a man who, allegedly, had carried out the terrorist attack. The still showed a tall, bearded man dressed in black.

Later, Channel Five published the photograph of a second suspect in the terrorist attack.

alleged suspect
The “alleged terrorist” looks very much like a Russian Orthodox priest or seminary student. Photo courtesy of RBC and their sources in law enforcement**

** UPDATE (5 April 2017). His real name is Andrei (Ilyas) Nikitin, and here is the touching story of how this totally innocent man got booted off a plane in Moscow because Islamophobic, panick-mongering Russian media and social media users had already dragged him through the mud and labeled him a “terrorist.”

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Execution of the five Pervomartovtsy, April 13, 1881. Source: Wikipedia

*Pervomartovtsy (Russian: Первома́ртовцы; a compound term literally meaning those of March 1) were the Russian revolutionaries, members of Narodnaya Volya [The People’s Will] who planned and carried out the assassination of Alexander II (March 1, 1881), and attempted to assassinate Alexander III (March 1, 1887, also known as “The Second First of March”).

The 1881 assassination was planned by Narodnaya Volya’s Executive Committee. Andrei Zhelyabov was the main organizer. After his arrest on February 27, he was replaced by Sofia Perovskaya.

Alexander II was killed on March 1, 1881, by a bomb thrown by Ignacy Hryniewiecki. Hryniewiecki wounded himself fatally in the assassination; Nikolai Sablin committed suicide. The conspirators—Zhelyabov, Perovskaya, Nikolai Kibalchich, Gesya Gelfman, Timofei Mikhailov, and Nikolai Rysakov—were tried by a Special Tribunal of the Ruling Senate on March 26–29 and sentenced to death by hanging. On April 3, 1881, five Pervomartovtsy were hanged, except for Gelfman, whose execution was postponed due to her pregnancy. Her execution was later commuted to indefinite penal servitude. She nevertheless died in prison of post-natal complications.

The second “First of March” was planned by members of the so-called Terrorist Faction of Narodnaya Volya, including [Vladimir Lenin’s older brother] Alexander Ulyanov. On March 1, 1887, they went to St. Petersburg’s Nevsky Prospect with bombs and waited for the Tsar’s carriage to pass by. However, they were arrested on the spot before his arrival. All fifteen conspirators, including Alexander Ulyanov and Pyotr Shevyryov (the main organizers), Pakhomy Andreyushkin, Vasily Generalov and Vasily Osipanov (the bombthrowers), and ten other people were tried by a Special Senate Committee on April 15–19 and sentenced. The first five men were hanged on May 8, 1887, while the rest were sentenced to prison, exile or penal servitude.

Source: Wikipedia. The article has been edited lightly to make it more readable. TRR

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A 1988 map of downtown Leningrad, showing Zhelyabova and Perovskya Streets (inside the red oval). The streets were renamed in memory of the People’s Will terrorists in October 1918. The streets reverted to their pre-Revolutionary names (Bolshaya and Malaya Konyushennaya Streets) only in October 1991. (Image courtesy of retromap.ru.)

Yet streets named in memory of their fellow People’s Will terrorists Alexander Ulanov and Nikolai Kibalchich are still firmly in place on the grid of post-Soviet Petersburg to this day.

Alexander Ulyanov Street, in Petersburg’s Okhta neighborhood
Kibalchich Street, in Petersburg’s southern Frunze District

Sergey Abashin: Reading about Migrant Workers

Central Asian migrant workers queueing to obtain work “patents” at the Russian Interior Ministry’s migrant workers processing center on Red Textile Worker Street in central Petersburg, March 10, 2017. Photo by TRR

Sergey Abashin
Facebook
March 19, 2017

Very few people are interested in reading about migrant workers in Russia. True, many people readily believe the myths and repeat them, but they don’t want to get to the bottom of things, even if you hand them the data on a silver platter. This apathetic attitude to figures and facts is also typical of how migration is regarded.

I wrote yesterday [see below] about the trends in the numbers of migrant workers from the Central Asian countries in Russia for 2014–2016. Let me remind you that the number of Kyrgyz nationals first fell and then began to grow, exceeding the previous highs by 10%. The figure is now about 0.6 million people. (I am rounding up). The number of Tajik nationals has decreased by 15–25% and has been at the same level, about 0.9 million people, for over a year, while the number of Uzbek nationals has decreased by 30–40%, to 1.5 million people.

Now let us look at the data on remittances, all the more since the Central Bank of Russia has published the final figures for 2016. In 2016, private remittances from Russia to Kyrgyzstan amounted to slightly more than $1.7 billion, which is 17% less than during the peak year of 2013, but 26% more than in 2015. Meaning that, along with an increase in the number of migrants, the amount of remittances has grown quickly as well, even at a faster pace. Remittances to Tajikistan amounted to slightly more than $1.9 billion in 2016, which is 54% less than the peak year of 2013. The amounts have been continuing to fall, although this drop has slowed as the number of migrant workers has stabilized. Remittances to Uzbekistan were slightly more than $2.7 billion in 2016, which is 59% less than in the peak year of 2013. Meaning the largest drop in the number of migrants has led to the largest drop in remittances.

*****

Sergey Abashin
Facebook
March 18, 2017

Data on the number of foreign nationals living and working in Russia has not been made public since April 2016, when the Federal Migration Service was disbanded. But this does not mean there is no such data. The figures exist, and they become available from time to time. For example, an article published in RBC [on March 16, 2017] supplies some data as of February 1, 2017. What follows from the figures?

The number of Kyrgyz nationals has increased since February 2016 by 5.6%, and since February 2015 by 8.9%, and amounts to 593,760 people.

The number of Tajik nationals increased by 0.7% over the past year, and by 13.3% over two years, and amounts to 866,679 people.

The number of Uzbek nationals has decreased over the past year by 15.2%, and by 31.7% over two years, and now amounts to 1,513,694 people.

So we see three different trends. After Kyrgyzstan joined the Eurasian Economic Community [now, the Eurasian Economic Union], the number of its nationals in Russia has continued to grown. After a decline of 15–20%, the number of Tajik nationals has stabilized, while the number of Uzbek nationals has fallen by 30–40%.

There are slightly less than a total of 3 million people from Central Asia living and working in Russia. (I did not take Turkmenistan and Kazakhstan into account. If I had, the figure would have come to about 3.6 million people.)

Sergey Abashin, who teaches at the European University in St. Petersburg, has been a frequent contributor to this website. Translation and photo by the Russian Reader.

Russia’s Economic Performance: Fudging the Stats

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

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

We quote the letter they sent to us:

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

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

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

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

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

How do you explain this discrepancy?

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

How important is the erroneous estimate of fixed assets?

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

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

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

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

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

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

What is your estimate of the scale of the disaster?

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

How does the Russian economy look nowadays?

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

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

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

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

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

Why do we need to calculate inflation accurately?

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

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

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

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

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

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

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

Can we bridge the gap with the developed countries?

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

And nothing can be done?

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

***

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

Business Card

An  Economist with a Stance

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

The Numbers

A Big Difference

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

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

* In 2015, relative to 1991

** In 2016

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

Kotlas: Russia’s Bankruptcy Capital

A City of Bankrupts
Vladimir Ruvinsky
Kommersant Dengi
November 28, 2016

Kotlas, a district center in Arkhangelsk Region, will be one hundred years old in 2017. During the first half of the twentieth century, it was one of the main transit centers for political prisoners, but nowadays it is the capital of individual bankruptcies. There is no work in the city, which over the past ten years has become a local consumer’s paradise, and every fourth resident is up to their ears in debt.

In 2012, Kotlas resident Tatyana and her entire family, including her husband, daughter, and brother, took out a total of five million rubles in loans from banks. She asked we not reveal her surname, since her husband is unaware their daughter also took out a loan. As Tatyana says, they took out the loans not for themselves, but for a friend.

“I worked for two female entrepreneurs who sold clothing. We had known each other for something like twenty years. We would visit each other’s homes, go to each other’s birthday parties, and attend the weddings of each other’s children,” Tatyana recalls. “One of them, in fact, asked me to take out the loans because otherwise, she said, they would have to borrow at an interest rate of eight percent on the black market.”

Tatyana borrowed 1.7 million rubles at Trust, Tinkoff Bank, Home Credit, and OTP Bank.

“I worked for my friends selling luxury clothing. The turnover was good so I was not particularly afraid,” she explains.

Soon afterwards, her friends persuaded to take out additional loans for them. Her husband, daughter, and brother agreed to do this, borrowing 900,000 rubles, 1.8 million rubles, and 700,000 rubles, respectively. The deal was based on trust. Tatyana’s family handed the loan agreements over to the female entrepreneurs, and they paid back the loans themselves. This went on for two years.

“In 2014, the police came and searched our workplace. It turned out the women had been running something like a pyramid. They had been borrowing money on paper to purchase goods. They had not been buying anything, however, but had been cashing out the loans,” say Tatyana. “That is how we got in trouble, although we had not taken out the loans for ourselves.”

The banks demanded repayment of the loans. At first, Tatyana admits, she felt like hanging herself.

“But that is no solution. A woman I know hung herself over a loan. Someone shot himself. Well, if I hung myself, the debt would have been passed on to my relatives. So I got up and went to work.” Continue reading “Kotlas: Russia’s Bankruptcy Capital”

Facebook Is Fun! (Islamophobia in Russia)

Théodore Géricault, The Raft of the Medusa, 1818-1819. Oil on canvas, 491 cm x 716 cm. Louvre Museum, Paris. Image courtesy of Wikipedia
Théodore Géricault, The Raft of the Medusa, 1818-1819. Oil on canvas, 491 cm x 716 cm. Louvre Museum, Paris. Image courtesy of Wikipedia

My memories of kindergarten are fairly fuzzy by now, but I do seem to recall we did a lot of sharing. This, I think, explains why the dark satanic mill known as Facebook has become so indispensable and popular in our modern world. Like kindergarten, it’s all about sharing.

For instance, this morning I was feeling fairly glum about the ongoing slaughter in Aleppo, the apparently total indifference my Russian friends (and “friends”) feel about the role their armed forces have been playing in this massacre, and my inability to do anything about any of this, much less changing anyone’s mind.

Apparently, Facebook even has algorithms for detecting when you’re feeling blue, and like a cheery kindergarten minder in such circumstances, it gets you involved in some fun sharing to buck you up.

This was what Facebook decided to share with woebegone me this morning.

shared

“At Venice Film Festival, Sokurov Says European and Muslim Aesthetics Incompatible,” reads the headline on Newsru.com, an alarmist Russophone news website based in Israel.

When I clicked on it, the item turned out to be old news, an article, dated September 8, 2015, quoting controversial statements made at last year’s Venice Film Festival by the Petersburg auteur Alexander Sokurov, who was in Venice to debut his latest indisputable masterpiece, Francofonia.

Presenting his film Francofonia at the Venice Film Festival, Russian filmmaker Alexander Sokurov said the European and Muslim aesthetics were incompatible. Calling for an end to “the endless and pointless incursions,” to immigration by an alien culture, Sokurov thus polemicized with the chair of the festival jury, Mexican filmmaker Alfonso Cuarón, who earlier had suggested solving Europe’s rampant immigration crisis by organizing entry for the immigrants. The Italian newspaper Corriere della Serra reported on Francofonia and Sokurov’s statements.

Presenting what the newspaper called “a brilliant allegorical tale about the Old Continent through its museum symbol, the Louvre,” Sokurov said, “History teaches us nothing. Prudence and compassion are alien to history.”

“Europe, which has attained supreme achievements in art and philosophy, keeps making one mistake after another,” said the Russian maître, as quoted by InoPressa.

“What is happening, these endless and pointless incursions [or, invasions], seem like an indescribable nightmare, a humanitarian catastrophe in the face of which ordinary people are powerless, and politicians do nothing. And no one thinks to protect our culture, which will cease to exist quite soon,” the filmmaker continued.

[…]

The Italian periodical described the action of the film as follows: a ship that must bring European culture to a safe haven sails into a storm. If it sinks, its precious cargo will be irrevocably lost to all Europeans.

“Europe finds itself on The Raft of the Medusa, as in the famous painting by Théodore Géricault, exhibited in the Louvre. Just like the frightening boats, crowded with desperate people making their way to our shores.”

The article here refers to the numerous cases of the illegal delivery [sic] by sea (sometimes ending in tremendous loss of life) of thousands of immigrants from the Middle East and North Africa.

During the presentation of his film, Sokurov called for “a stop to these migrations.”

“To really help these people, it is necessary to intervene in the countries from which they are escaping and try to solve the problems there. Instead, we pile them up together here, where they have no prospects, and try and impose our TV lifestyle on them,” he argued.

“The outcome will be catastrophic for both parties,” the filmmaker warned.

Sokurov was certain that “our aesthetic and the Muslim aesthetic are incompatible.”

“With all due respect, we must maintain a distance and protect our culture from the iconoclastic fury that is destroying it,” said the filmmaker.

He reminded the audience of the total destruction of unique landmarks in the ancient city of Palmyra, Syria, by militants from the terrorist group Islamic State, which is banned in the Russian Federation.

Recently, the extremists blew up three tombs of local patricians in the captured city. Earlier, they demolished the Temple of Baalshamin (2nd century BC) and the Temple of Bel, consecrated to the supreme Semitic deity [sic].

“Even the Nazis would have not dared to do what has happened in Palmyra,” said Sokurov.

I have quoted at length the day brightener Facebook chose for me, because it amply demonstrates a sad but irrefutable fact. Islamophobia is a perfectly common attitude and a perfectly respectable political “stance” in Russia, adopted and bruited loudly and publicly by well-read, highly educated members of the “liberal” Russian intelligentsia, as evinced here by one of their darlings, Alexander Sokurov.

This, in turn, explains the near-total silence of “liberal” and even “leftist” Russians on the destruction of Aleppo.

Let me put it as crudely as possible. Despite the court judgement handed down on popular blogger Anton Nosik the other day, a really large number of educated “white” Russians think Muslims are subhumans whom, if push comes to shove or your “civilizational project” has got bogged down and you cannot think of anything better to do, can be slaughtered with impunity and without blinking. In fact, it is better for one’s digestion, state of mind, and personal pursuit of high culture (per Sokurov) to put a mental wall between yourself and whatever is happening to the Muslims in your midst, or to the Muslim Crimean Tatars in Crimea, or to the Muslims in Grozny (back in the first years of Putin’s perpetual reign), or to the Muslims in Aleppo.

If you think I am exaggerating, I invite you to come to the Motherland and have heart-to-heart chats with a sampling of members of the so-called intelligentsia. In some cases (but not, happily, all cases) you will come away thinking you’ve just spent time with Trump supporters, UKIP cacklers, BNP bruisers or clowns from the KKK.

But the funny thing about Facebook is that it is not the only satanic mill on the oppressively vast World Wide Web. Nowadays, you can also ask something called Google whatever question your wicked heart can conceive—for example, how many Muslims are there in Russia?

“In Europe overall, however, Russia’s population of 14 million Muslims (10%) is the largest on the continent.”

Yikes!

Where did all those Russian Muslims come from? Did they immigrate to the Motherland from Syria and other majority Muslim countries?

No, despite the recent heavy influx of migrant workers from the Muslim Central Asian republics (once also part of Russia, in its guise as the Soviet Union), which has even more recently been waning due to the bad economy, among other factors, most of Russia’s Muslims were born and bred in the Russian Federation. Thus, to the outside world, they are “Russians,” if not to many of their fellow Russian citizens, who probably cannot get their heavily bookish heads around such funny facts as Moscow’s being the largest Muslim city in Europe.

You would think that, with so many Russian Muslims and post-Soviet Muslims sharing (there is our keyword again!) your cities, towns, and villages with you, you would not want to go out of your way to antagonize Muslims for no reason at all.

(Not because they are touchier than your average bear, but just because no one in this world enjoys being kicked around for years on end just because they’re different.)

But that is what the Russian government has been doing in Syria, and that is what significant numbers of Russia’s best and brightest have been doing for a long time now, if only rhetorically, if only at the Venice Film Festival, on Facebook or in their kitchens.

The consequences, both now and in the future, could not be more miserable, especially for the alleged “European” culture that only Russian intelligenty and European neo-Nazis seem to get so exercised about.

Thanks, Facebook, for cheering me up! I knew I could count on you. TRR