Ben Aris : JRL#71 response/Brian Whitmore

Subject: JRL#71 response/Brian Whitmore
Date: Fri, 15 Apr 2016
From: Ben Aris <baris@bne.eu>

(Ben Aris, editor-in-chief – bne IntelliNews – bne.eu)

I would like to respond to item #9 in JRL #71 of April 15 “What I learned on Russian TV” by Brian Whitmore.

I should do a ripose entitled “what I learned from reading this piece”, but I am afraid I learned that lesson long long ago: RFE is not even attempting to learn anything at all about Russia, its people or Putin but prefers to pump out the same tired invective based on hearsay and some made up facts is very saddening. this piece is full of the same prejudice as most of the “organ’s” coverage but what amazes me is how Brian could pack so many errors and misconceptions in to such a small space!

To give him credit the Sud Deutsche/Goldman’s “mistake” during the Putin presser was a bit of a whopper and reflects the pretty blunt tactics the Kremlin now starting to use ahead of the elections. Putin’s spokesman Peskov was on the wire today and sending letters to the paper to apologise and took the blamed. Obviously it was a political play to negate some of the mud that was thrown at Putin by the release of the panama papers. and the goldman smear is one meme that won’t go back into the box now it is out. which was the point of the remark. a bit of mud throwing pre-elections.

The irony is not only the west not above this but RFE brazenly does the same thing – and almost on a daily basis. I was listening to Brian on his podcast that it was now a “fact” that Putin is corrupt as the panama papers has proven it. That is despite the fact that Putin’s name does not appear once in the 11.5mn pages of documents and so there is no proof whatsoever of his complicity or participation in an offshore scheme. The fact (and this is real fact) that Putin’s close friends are very wealthy almost certainly implies they have benefited from their relationship to Putin – but we knew that already. Moreover, this also happens in the west but with a few less zeros involved. the mechanism in Russia is cruder and more direct but they are in transition. this is true for all the CIS countries – including our friend Ukraine. the key issue here is if we should judging the evil of milking contacts on the basis of scale or on principle? that is a hard question. but for someone like RFE it is easy as the principled approach is clear – just so long as you ignore your own corruption at home, in Ukraine, in your allies like Uzbekistan, or Saudi, or Africa, or in pretty any country you operate in outside the developed world.

I am sure that a letter of apology following Brian’s saying Putin is corrupt is now “fact” is winging its way to Moscow as we speak – its just the post is slow in Russia.

Then Brian claims that Russia gross international reserves were $500bn in 2014 and not about the $388bn Putin said (actually Putin said they were $387bn, but we will let that one go). In fact Russia’s reserves were $386.2164bn at the of 2014 – slightly less than $387bn now.

I think another letter is in order. You could put this down to just the sloppy journalism it appears to be, but given this was so short and Brian was attempting to tick off a list of Russian lies, then at least he should have got his facts right. What makes this doubly bad is GIR numbers are some of the easiest to find online and even the CBR maintains a very useful page updated monthly on exactly what the latest numbers are (in English too!)

In a curious parallel Luke Harding from the Guardian made the startling claim that “Russian state media report $2 trillion have left the country in recent years”. That is more than twice the entire value of the Russian economy at the moment. gone. in two maybe three years. Russia’s entire capital flight since 2000 when Putin took office is only $564bn according to the official figures. And analysts say capital flight is running at between 5% and a max of 15% of GDP in the very worst years, or up to $150bn in one year. But most of this has gone to pay down fgn debt thanks to US financial sanctions.. In other words, foreign correspondents covering Russia are not very good at calculating Russian capital numbers.

People safer in Siberia than Paris or Brussels? errr.. if you are talking about the likelihood of being attacked by terrorists then the answer is an unenviable “yes” to this. if you are talking about the incident of street crime then I would hazard a guess that the answer is also a “yes”. I don’t know if Brian has ever been to a “banlieu” in Paris or the immigrant sections of Brussels, or even Brixton and Forrest Hill in London, but they aint such nice places to live. Put another way, I was just in Irkutsk and I would feel a lot safer walking home after a bottle of vodka with friends in Irkutsk than i would in the poorer parts of either European capital. but of course Brian gives no indication of on what basis he makes this statement so its impossible to judge. could be on the liklihood of freezing to death or being hit by a car and then he might actually be right.

The Russian people are worried about the crisis – that is true. But they are more worried about inflation. And that has fallen from 12.9% in December to 5.3% in April. Moreover, 51% of Russians think the country is now moving in the right direction in March says Levada, which is up from 45% in January, a 24 month low. This was helped by two consecutive months of rising real wages and an improvement in the PMI manufacturing index which is in the black again for the first time in a year. Moreover, if Russians are so unhappy with the way Putin is running the country then its hard to understand why 65% said in March they will vote him a 4th term in office in 2018 – the highest level of support every since the poll was started in 2004.

As for the plan of action – well the stabilisation efforts the govt have made have been surprisingly effective. The economy even put in a little bit of month on month positive growth over the first three months of this year. And those hard currency reserves? they are growing again. Of course Russia’s economy is suffering, but then so is everyone else in the region. indeed the IMF just said at its spring meeting the entire world is suffering we are looking at the possibility of global stagnation now. is the Russian economy suffering ‘more’ than everyone else? that is a different question, but the answer to that is “no” if you are looking around in eastern europe and Russia still compares well with many European countries. from someone who actually lives here I can tell you the shops and restaurants are full as spring finally arrives and you barely notice the crisis – unless you want to travel to France due to devaluation.

Far from having “no idea” on how to deal with the crisis, the Kremlin is dealing with it rather well. the major macro economic issue is how to keep dipping into its enormous reserves to a modest level, not basic things like “how to fund the deficit when you have no cash” which most of its neighbours are facing. This is after all a particularly nasty crisis – bne has covered this extensively and by many counts 2015 has been more painful than 2008 crisis (that was caused by the US massive mismanagement of their own economy I might point out – a crime for which the only person that has been jailed so far is a computer programmer, who of course happened to be a Russian.) we would like to see the Kremlin do deep structural reforms – and they won’t. but that is the fate of transition countries. The Kremlin could do more, so much more, on the reform front – but they will get there in the end. don’t believe this? then compare Russia with 1991, or even 2000 when Putin took over. they have to learn these things the hard way and not very good studies.

Finally is the set of sweeping generalisations at the start of this piece that is full of mistakes. Its not that Russians “can’t afford” medicines. but they are lot more expensive. the state is heavily subsidising pharmaceuticals (as Putin pointed out and even gave the numbers) but can’t shield the population from all the cost increases and this is a big problem. however, state spending on imported pharmaceuticals is now one of the largest budget items and one they can’t afford to cut. Here in Moscow (which is admittedly a lot better off than the rest of the country) the punters who used to go to private clinics (a rapidly rising number as these now cater to the middle class, not the rich, and have mushroomed in recent years) have started taking 4 consultations where they took only 1 before. also people are slower to choose to have complicated expensive procedures than they were. the situation has deteriorated, but to suggest that people are going without treatment entire because they can’t afford it is flat out wrong. likewise with school, kindergarten and hospital closures. this is going on across the west too but Russia still has all things on the same per capita level as most other countries. everyone, not just Russia, is tightening belts. that is what “austerity” means. this is far from the point where it is a serious social problem. indeed the investment in universities has meant the best have climbed back into the best 100 in world ranking and improving their places every year.

Corruption is a big issue too. but here Russia is actually making progress, albeit slowly, having steadily moved up the transparency intl index – which is why RFE no longer mentions this organisation which it used to quote incessantly. Ukraine, on the other hand, is ranked dead last on the TI index (which RFE also never mentions) and is going backwards. But corruption is endemic – in all the counties of the CIS – and will take a generation to defeat. Everything that is being done now could be done better. the crisis has only made corruption worse.

Putin should have not said Goldmans owns Sud Deutsche if he wanted to slate the western press but would have been better off claiming the US govt owns RFE and it is being used as a propaganda tool to single mindedly rubbish Russia and practices a snake oil seller standard of journalism – and it would have been true. The US govt spends almost double what Russia does on its mouth pieces. But he didn’t I guess because the standard of RFE journalism is so poor that no one takes it seriously. and where is the propaganda value in that?