Nice Work If You Can Get It

Oleg Derispaska
Oleg Deripaska. Photo courtesy of deripaska.com

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Nikita Kulachenkov
Facebook
May 27, 2016

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

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

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

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

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

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

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

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

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

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

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

Source: Wikipedia, New York Times

Zorkin: The Road (Back) to Serfdom?

valery-court-constitutional-chairman-862.siValery Zorkin

A little over a week ago, western media outlets made a big little fuss over an article by Russian Supreme Court chief justice Valery Zorkin, published on September 26 by Rossiiskaya Gazeta, the official government newspaper. They accused Zorkin of advocating a “return to serfdom.” Elena Holodny, writing in Business Insider, seems to have broken the story in the English-language press and thus set the tone for subsequent coverage:

He advocates for serfdom and says that it was the main “staple” holding Russia together in the 19th century. He justifies his argument by saying that serfdom is beneficial for the serfs.

In the article he writes (translated from the original Russian by Business Insider):

Even with all of its shortcomings, serfdom was exactly the main staple holding the inner unity of the nation. It was no accident that the peasants, according to historians, told their former masters after the reforms: ‘We were yours, and you — ours.’

[…]

The roughly translated term “staple” (in Russian “скрепа”) is significant. It’s an older word that has become popular in recent years after Putin used it in a news conference in 2012.

Prior to the conference, that word was basically never used in speech.

In the news conference, Putin said there was a “lack of a spiritual staples” among Russians — meaning there was no spiritual unity. And he subsequently indicated that Russia needed a “spiritual cleanse.”

“Putin essentially used the term ‘скрепа’ to mean the ‘spiritual staples that unite the Russian society.’ He was saying that we need a spiritual unity amongst the whole Russian society,” a Moscovite [sic] told Business Insider.

Following Putin’s news conference, Russian politicians and citizens have started using the word all over the place.

And Zorkin is following suit by using the Putin terminology to indicate that serfdom is the “spiritual staple that unites the [Russian] society.”

In the current climate of cheap hysteria and mental laziness, it is easier to make headlines, literally, saying a top Russian official wants his country to return to serfdom than to read his long, mostly dry-as-dust, pseudo-scholarly article and figure out what he was really trying to say. The payoff, in fact, comes in the final three paragraphs of Zorkin’s article, in which there is no mention, much less “praise,” of serfdom (the emphasis, below, is mine):

Opinion polls and many conflicts in our courts show that the broad masses of our people only suffer as a given the style and type of social, economic, political, and cultural life that the era after the revolution of 1991 brought to Russia. But internally they do not regard them as just and proper.

Moreover, polls show that the greatest degree of aversion pertains to legislative innovations that attack the moral and ethical sphere of social life. [This aversion] is registered primarily among religious people, regardless of denominational affiliation. It is especially pronounced among the older and middle generations. In contrast to the results of opinion polls taken a decade ago, however, it has also begun to manifest itself quite clearly among completely atheistic young people. The new legislative “tolerance” in family, gender, behavioral, and educational relations has been met with growing and increasingly widespread protest.

In connection with the above considerations and historical analogies, I want to reiterate a thesis that I have repeatedly voiced before. Any attempt to overcome “in a single leap” the gap between the law (and law enforcement) and mass perceptions of welfare and justice are fraught with social stress, shock, the growth of all kinds of alienation within society, and between society and the authorities, and, finally, social chaos. Which, as a rule, has to be extinguished by means of counter-reforms and repression.

Zorkin’s article is thus an apology not for serfdom as such. After all, before it was abolished, serfdom really had been the glue that held the Russian political economy together, just as slavery had been in the southern American states, and Zorkin goes to great lengths in his article to show that the nineteenth-century Russian elites, even the nominal conservatives among them, mostly agreed that serfdom was an evil that had to be “extinguished”—eventually and ever so gradually. The article is, rather, a defense of the current reactionary regime, which has increasingly used a combination of funhouse mirrors (“pollocracy,” the relentless manufacture and promotion of moral panics, wildly manipulative and frantically suspicious media coverage of political and social conflicts abroad, “weaponized absurdity”), outright crackdowns on prominent political dissidents, and targeted ultraviolence to persuade itself, the various Russian publics (whether liberal, leftist, conservative or indifferent), and western reporters, policymakers, and pundits that it is acting on behest of a “conservative” popular base dwelling in the heretofore unknown “Russian heartlands.” And even (by way of giving the talking classes more nonexistent fat to chew) that this newfound “traditionalism” has considerable appeal well beyond those heartlands, in the allegedly morally fatigued countries of the perpetually collapsing liberal West.

As a friend of mine wrote to me when we were discussing Zorkin’s article, “It is no longer enough to gang up on gays. We must also make women wear long skirts and headscarves. And forbid them from getting a higher education.” This new overwhelming necessity to de-modernize Russia, however, is not grounded in an actual conservative groundswell or the perennial aversion of the “broad Russian masses” to reform and (God forbid) revolution. Rather, it is meant to jam up brain cells so they cannot ponder (much less act against) sleights of hand like this:

Sanctioned [Russian oligarch] villa owners could be reimbursed with Russian pension savings: The government said in mid-September it was setting up a fund to support sanctioned companies, which would receive a cut of the 309 billion rubles ($7.8 billion) gleaned from redirecting part of the public’s pension savings to the budget this year, the RBC news agency said at the time.

Zorkin has not been the only top Russian official contemplating the lessons of Russian history in the past couple of weeks:

German Gref, head of Russia’s biggest lender Sberbank, on Friday castigated systemic inefficiencies in the Russian government that, he said, waste trillions of rubles and threaten to drag Russian society back into Soviet times.

“We have inconceivable social costs in the area of public administration,” Gref said in a speech to investors and top officials gathered at the VTB Russia Calling investment forum.

These costs increase government spending and render well-intended initiatives ineffectual, threatening Russia with a repeat of past mistakes, he said.

“[Soviet leaders] didn’t respect the laws of economic development. Even more, they didn’t know them, and in the end this caught up with them. It is very important for us to learn from our own history,” Gref said.

Actually, Gref’s speech was much more revolutionary (whatever you think of his neoliberal biases) than this mild account would suggest. If you listen to the whole thing (below, in Russian), you will realize it was a direct attack on the myth of Putin’s extreme competence as a manager of economic policy and the omniscient wizard behind Russian’s alleged newfound prosperity:

In this light, Zorkin’s article should not be seen as a literal call for a return to serfdom, but yet another warning (dolled up, as is often the case with pseudo-scholarship like his, as a “sober” reading of Russian history) that at least one important part of the ruling class is supremely ready and willing to deepen and expand the Duginist quasi-Talibanesque media spectacle of the past year, in which basically anyone at all (except the ruling class itself, of course) is blamed for Russia’s misfortunes or accused of plotting against it—the “Kiev junta,” “foreign agents” (i.e., local NGOs defending basic rights), NATO, Obama, singer Andrei Makarevich, “Ukrainian fascists,” western rock bands, Greenpeace activists, the EU, American students studying Russian at Petersburg universities, “extremist” journalists, you name it. The only solution offered for repelling these “assaults” is to intellectually and culturally medievalize the country that once, not so long ago, gave the world its first artificial satellite and sent the first man into space. But the real point of all this flailing is to prevent anyone from asking too forcefully why this incredibly wealthy country’s vast human and natural resources are siphoned away on frivolous mega projects like the Sochi Olympics and making a few members of a lakeside dacha cooperative fantastically wealthy.

In any case, serfdom’s alleged new best friend, like so many latter-day enemies of “innovative” gender relations and education for women, was singing a very different tune (almost the opposite one, in fact) only eight years ago. They do have ways of making a guy talk. And polling the life out of people whose heads they are otherwise stuffing with nonsense and who cannot be trusted to vote the “right” way.