In February 2008, we published our report “Putin – The Results”. It seemed to us back then that it was about time to review what he had brought about now that his presidential term was coming to an end. We assumed that the policies of his successor would differ in at least some ways from those of the previous incumbent. However, Putin continues to play a key role in Russian politics and the course which he followed for 8 year has barely changed.
A great deal has happened since 2008. Russia has plunged into a deep economic crisis. Instead of growing, the economy is contracting. A budget deficit has replaced a former surplus, millions have lost their jobs. Prices, utilities foremost among these, are rocketing. Meanwhile, the number of billionaires has doubled and social and inter-regional inequalities have worsened.
Official propaganda would have it that everything is still fine, the country has weathered the crisis, has conquered terrorism and is beating corruption, that we are proceeding by leaps and bounds along the road of innovation and modernisation, that we are respected around the world, that we are getting wealthier, that there is less poverty, that men and women are bringing forth children, and that “Russia dying out” was a thing of the wild nineties.
The purpose of this report is to tell the truth about what is happening in Russia, to dispel the myths put about by the powers that be, and to relate real information to our fellow-countrymen who for 10 years have not been getting that from the cheerful and frequently false information disseminated by the government-controlled TV and print media.
This report is divided into nine parts. The most important sections are those devoted to corruption in Russia, population issues, social inequality, the economic situation, and the Caucasus question.
Unlike our previous report, which was published in a small print run of 5000 copies and was distributed in the main via the internet, this report is intended for a mass readership and is being published in 1 million copies. The report will be distributed not only in St. Petersburg and Moscow but all over the country – from Vladivostok to Kaliningrad.
Corruption is Eating Russia Up
One of the direst results of Vladimir Putin’s rule has been that Russia has sunk into a dark pit of corruption. Still worse is the fact that corruption in the higher échelons of power in Russia has to all intents and purposes been legalised. Putin’s friends of old, such no-ones before he came to power as Gennadi Timchenko, Yuri Kovalchuk, the Rotenburg brothers, have all become dollar billionaires. It is hardly surprising that the country is beginning to copy its leaders’ modus vivendi.
The Country is Dying Out
Putinist mythology would have it that we are seeing successes on the demography front, that the birth rate is rising, and so on and so forth. This is compounded by spreading another myth that the country “was dying out in the 1990s”. Let us look at the facts.Our population at 1 January 1992 was 148.5 million people, at 1 January 2000 it was 146.9 million. (Table data from RosStat). The drop between these two dates was therefore 1.6 million. At 1 January 2010, Russia’s population numbered 141.9 million, giving a drop of a whopping 5 million between 2000 and 2010!
Russia: Raw Materials Appendage
When “Putin – The Results”, the first edition of our report, was published back in February 2008, Putin was happily boasting about economic successes. On 8 February 2008, he addressed a sitting of the State Council. Talking about the results of his presidency, he made much of the facts that GDP had risen during it and that in 2008 alone Russia had attracted $83 billion on inward investment. Even then, however, we warned that the economic model being constructed by Putin was just a speculative bubble that could burst at any moment. And that is precisely what happened six months after our report was published: a massive economic crisis broke in Russia in 2008, a crisis far worse than the 1998 default, one which if it is to be compared with anything, then only with the period of the collapse of the Soviet economy and the economic depression of 1992-1994. In 2009, Russia GDP fell by 7.9%. That is a record. The 1998 default happened after a smaller fall – 5.3%. This drop is on a par with 1992-1994.
Dead-End in the Caucasus
The Caucasus has played a key part in raising Putin to Olympian political heights. Immediately after he was appointed prime-minister in 1999, Putin initiated military engagements against Chechen separatists and memorably promised to “slaughter them in their outhouses” [TN: the Russian phrase “zamochit v sortire” is intended to sound crude but does not really have much meaning – I would have gone for “drown them in their own sh*t” in a literary translation. This manner of speech is much more “Putin”.] Riding the terrorism wave, Putin got the support of a large number of people and became president in Spring 2000. For the rest of the decade, the myth has carefully been cultivated that Putin pacified the Caucasus and beat the terrorists. In 2007, Putin declared that “ international terrorists’ aggression has been stopped in its tracks thanks to the courage and unity of the people of Russia.” Quite the opposite, however, is true. Below you will find a table listing numbers of acts of terrorism over the last decade. This table has been assembled by us from data officially promulgated by spokesmen for law enforcement and the specials services. The top priority is to maintain and secure Putin’s personal power and that of his group. This has led, for example, to the rebirth of political repression – witness the recently established and already infamous Dept. “E” to combat extremism, which is used to spy on and set up opposition leaders – and also to the fabulous increase in the numbers employed in the specials services and in the OMON riot police used to disperse opposition meetings and demonstrations wherever they may occur in Russia.
Oh Dear, The Roads
We all know that the bad state of our roads roads is one of Russia’s major headaches. In our first report on the results of Putin, we described in detail the degradation of the road infrastructure under his presidency. The very fact that the rate of road-building dropped during the “fat” years is a disgrace. China in just 20 years has built itself a modern highway network: in 1989 the Chinese had just 147 kilometres of motorway, today they have 60,000. Meanwhile, in Russia the road-building industry is going down the drain.
A country of screaming inequality
Total inequality and the deepest of divides within society and between the regions are the hallmarks of Putin’s Russia. Social inequality stands first and foremost amongst these. Economic growth under Putin was accompanied by increasing social divisions. At the end of the 1990s, the income differentiation coefficient was 12-13, i.e. the average income of the richest 10% of the population was 12-13 times as great as the poorest 10%. By 2000, it was 16.9 times as great, an increase of over 20%! No greater income differentiation coefficient has ever been recorded in Russia’s modern history. Furthermore, differences of such magnitudes are not characteristic of developed countries and are more commonly to be found only in 3rd world countries.
One of Putin’s greatest failures was the mess he made of pensions reform. When he came to power, Putin promised that he would give the country a modern pensions system that would provide the elderly with a decent income and at the same time not make for too great a burden on the budget. This was achievable – if the country had gone over to a funded pensions system under which pensions are paid not from the contributions of the currently employed and the general budget but from accumulated contributions and the income derived from investing them. The pensions reform has been a catastrophe. Despite the oil price windfall, pensions have stayed under the official subsistence level throughout Putin’s rule. The distribution pensions system is cracking at the seams. Back when we published our first report on Putin, we predicted that Russia’s pension fund deficit would hit 1 trillion roubles by 2015. But our gloomy prognosis was not gloomy enough: the deficit reached 1 trillion 166 billion roubles – 3% of GDP – in 2010! Funding pensions is one of the main drains on Russia’s federal budget today.
Organising a Winter Olympics in the Subtropics
Nikita Khrushchev is remembered as the communist party general-secretary who tried to grow corn (maize) around Murmansk, in Siberia, and in the Far East. This earned him the nickname of Cornflakes Nick. Russia is a winter country. It takes some searching to find places in Russia that never see snow or ice. Putin found one such, however – the subtropical resort of Sochi. And then he decided that a Winter Olympics should be held there. One wonders what nickname Russians will invent for him: Summer Snow Vlad maybe, or something else? One thing no one doubts, however, is that these winter olympics will linger long in popular memory. The initial euphoria at the IOC’s award of the Olympics to Sochi was rapidly replaced by dismay in general and serious grief in particular for many of the town’s inhabitants. Because the town’s very existence as a resort suddenly became uncertain, as did the futures and lives of thousands of its citizens.
For over 10 year of his rule, Putin has been trying to make us believe that building transnational pipelines is a matter of strategic and geopolitical importance. The official propaganda would have it that the new pipelines will make Russia still mightier and Europe and China still more dependent on our hydrocarbons. Look at them more closely, however, and it becomes apparent that these projects are swindles plain and simple. Take, for example, the North Stream pipeline. Its first-stage capacity is 27.5 billion cubic metres a year and this is due to rise later to 55 billion. The officially stated cost of the project is $11.5 billion, though it will in fact cost no less than $15 billion. Putin’s reasoning for the pipeline is that it will help rid Russia of dependence on the unpredictable Lukashenko and the Belarus-Poland transit issue. Let’s turn now to South Stream. It has a first-stage capacity of 30 billion cubic metres a year, rising to an eventual 66 billion. It will cost no less than $25 billion to lay – across the bottom of the Black Sea through the territorial waters of Russia, Turkey, Bulgaria (while bypassing the Ukraine). This however will still not take away our dependence on Ukrainian transit, since 130 billion cubic metres a year are pumped to Europe through that country. So even if South Stream is used to its maximum capacity, that will still leave at least 60-70 billion cubic metres being pumped through the Ukraine.