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Russia and Baltic States
- 203 Russia mobilizes army to fight fires august 2010
- 202 The 2nd Wave Is Coming in Russia
- 201 Russia 2008 Travel Summary & Local laws and customs
- 200 Russia New legislation for real estate & tax rules may 2007
- 199 Russian ex-president Yeltsin dies
- 198 Journalist Anna Politkovskaya has been posthumously awarded
- 197 We must ask ourselves: Do we live in a society where corruption is a moral perversity to the normal flow of things? 28/9 2006
- 196 Transparency International listed Russia as one of the nations where perceived corruption had increased from the previous years survey, sep 2006
- 195 The Kremlin is warning Western governments july 2006
- 194 EU,US, Baltic States These countries have become the enemies in the new "chilly war" May 06
- 193 In fact, Russia is not so unique in having a problem with corruption -- indeed, most countries of the world operate in similar conditions 17 mai 06
- 192 Heads roll in anti-corruption drive 15 May 2006
- 191 Strong rebuke for the Kremlin - mai 2005
- 190 The energy ministers of the European Union (EU) have called on Russia to speed up the ratification of the Energy Charter, but Russia is not in a hurry to comply. April 06
- 189 Its a great story, but its an ugly one, too. Russia feb 2006
- 188 "The fish rots from the head." Indeed! jan 2006
- 187 Some estimates indicate that corruption in universities is rising by 7-10 percent annually, jan 2006
- 186 Russia Organized crime still remains a major challenge dec 2005
- 185 Russia’s Forestry Industry is perceived as one of the most corrupt in the world Nov 2005
- 184 Russia has reverted to the Wild East. But these days the crooks are the government. May 2005
- 183 U.N. Officials Cited in Oil - For - Food Case ´´take care´´ of ´´U.N. Official No. 1.´´ april 2005
- 182 UNDERSTANDING PALESTINIAN POLITICS , nov 2004
- 181 UNDERSTANDING TERROR NETWORKS, november 2004
- 180 PUBLIC THEOLOGY AND DEMOCRACYS FUTURE
- 179 Jan 20, 2004, When a leader who is trusted goes into battle, he must not be left alone
- 178 There may be an element of poetic justice in Vladimir Gusinsky
- 177 RUSSIA Groups Urge Putin on Privatization
- 176 Putin wanted to discuss methods of battling corruption
- 175 Corruption Costs Russia USD 30 Billion a Year
- 174 More Russians Back in Davos Feb 2003
- 173 Police officers were secretly members of criminal groups
- 172 THE TURKISH FACTOR IN THE GEOPOLITICS OF THE POST-SOVIET SPACE
- 171 EU candidates face corruption issues Nov 2002
- 170 Assassination of Magadan Governor Valentin Tsvetkov,
- 169 The Resurgence of Lies and Disinformation
- 168 Oil and trade play part in U.N. debate on Iraq
- 167 Center-Right Wins Latvian Poll
- 166 Radio Liberty Stripped Of Status
- 165 Most visits to Lithuania are trouble-free
- 164 The Soviet secret police -- VChK, GPU, NKVD, KGB Top Secret Files Tell Story of Expulsion
- 163 The Men Who Tried to Topple Mikhail Gorbachev
- 162 No Fireworks for 10th Anniversary After 10 Year No 7
- 161 Fall of the Soviet Union Symbolized Death of an Idea 10 Year after No 6
- 160 Defenders Recount Their Moment of Glory 10 Year after no 5
- 159 Communist Party Comes Full Circle 10 Year after No 4
- 158 What Putin Did During The Coup
- 157 Economic Crash No One Saw Coming 10 year after no 2
- 156 The Coup 1991 - 2001 Ten Years after no 1
- 155 OPEC, Russia and Iraq
- 154 Iran has said it wants the sea split equally between the five while Russia, Kazakhstan and Azerbaijan
- 153 the worlds third-largest nuclear arsenal belonged to little Ukraine
- 152 The shortcomings of Russias bureaucracy are legion, its incompetence is legendary
- 151 ............called for Chubais to quit. sep 2002
- 150 $3Bln Baku-Ceyhan Pipeline Gets Under Way
- 149 LUKoil in Talks With Kidnappers
- 148 Berezovsky & "The Godfather" and "Citizen Kane."
- 147 Not All Listen to Putins Orders
- 146 In Russia, majority shareholders rights do not exist
- 145 United States has blacklisted three Russian defense contractors it says are "transferring lethal military equipment" to countries supporting terrorism
- 144 Under the Vienna Convention on Consular Relations of 1963..........the Pacific port of Vladivostok
- 143 The Dignity of Difference: Avoiding the Clash of Civilizations
- 142 Russian companies paid a total of 33.5 billion dollars in bribes
- 141 Duma member Vladimir Golovlyov shot dead in contract killing aug 2002
- 140 Putin issues Ethics Code for civil servants aug 2002
- 139 Latvia Premier signs decree on party financial declarations
- 138 Whatever Happened To Those Vouchers? Mr Putin?
- 137 Russia with Iran, and in particular its sale of nuclear technology
- 136 First Deputy Smolensk Governor Vladimir Prokhorov was shot and killed
- 135 Smuggling, da. Extortion, da. Murder, da.
- 134 Kremlin Kills Plan To Retake Resources
- 133 U.S. to Russia: Clean corruption up
- 132 Latvia Government decides on third competition to find anti-corruption chief
- 131 We do not give out any information!
- 130 "The U.S. Media -- Problems of Free Speech."
- 129 Defenders of the oligarch system in Russia liken the development to that of the robber barons in the United States and elsewhere
- 128 There Is a New Billionaire in Town
- 127 FREE PRESS in RUSSIA 2002, sorry its not
- 126 Russia Tracking down IMF billions Crime and Corruption Watch 27 Jun 2002
- 125 Russians pay for state corruption 07.2002
- 124 BUSHS SEARCH FOR COMMON GROUND june 2002
- 123 A bribery arrest in Krasnoyarsk
- 122 Georg P Shultz THE WORK OF DIPLOMACY Before & after the 11 sep 2001
- 121 THE FUTILE SEARCH FOR "ROOT CAUSES" OF TERRORISM
- 120 CIA Will Continue Search for New Russian Technologies
- 119 Swiss to repay Russia over bail for corrupt ex-Kremlin adviser Borodin
- 118 Lithuanian President Valdas Adamkus urged lawmakers to strengthen the fight against corruption
- 117 At present legal base for the transport and freight forwarding activities in the Russian Federation practically doesnt exist
- 116 Either the United States would cease to be a democracy or the Soviet Union would cease to be a Leninist dictatorship
- 115 Back to the USSR
- 114 From Russia With Love
- 113 "check that the paperwork was done correctly, but look right past the deeply corrupt heart of the matter
- 112 Stepashin Turns Up Heat on Ministers
- 111 After he refused to pay a police major a $20,000 bribe
- 110 With auditing today 10 years after the term arrived on the Russian market it turns out that everyone understands it differently
- 109 Putin said 7,000 killers had escaped punishment last year and that hundreds of thousands of other criminals
- 108 Majority of Russians believe Russia is among 10 most corrupt countries 02.02
- 107 He seems to have powerful patrons, and he is very smart The Corruption is still going on. Febr 02
- 106 Kremlin bailiffs pull the plugs on last independent television network jan 2002
- 105 GlavUpDK pays no taxes on the land it uses.
- 104 Indeed, last year Mr. Bush cited the 30 percent Russian.... January 25, 2002
- 103 Pugachyov is not some Putin protege plucked from obscurity TV 6 NTV jan 2002
- 102 Russian President Vladimir Putin appears to be ushering in a new era
- 101 Two held in first criminal probe into Gazprom
- 100 During its eight years of operation, Estline never posted a profit 2002.01
- 99 Corruption remains major problem in Latvia "I dont see any light at the end of the tunnel", 2002
- 98 Putin warns audit chambers against politicisation . jan 02
- 97 Bosse Ringholm - Riksgälden och Flygförsäkringsmarknaden!
- 96 Work to curb economic crime, corruption not good enough - Russian minister 25 dec 2001
- 95 Putin Answers Russians´ Questions NYT 24 dec 2001
- 94 Russia there is only one easy and relatively inexpensive way to ship goods -- by rail
- 93 Chubais Doesnt Mind the Heat Over UES
- 92 And Gazprom will soon find out if it is next
- 91 The Yeltsin-era insiders career is over and a wider war on corruption is under way
- 90 Visa hassles for many tourists are to be reduced from feb 02
- 89 Ombudsman concerned with corruption at Russian border checkpoint
- 88 Probes Giving Ministers Jitters
- 87 Moscow Gets New Tool for Money Monitoring
- 86 RUSSIA: The government-criminal alliance
- 85 RUSSIA: Rankings Rain on Economic Parade
- 81 Foreign Policy Research Institute WATCH ON THE WEST
- 80 Are Bribes a Great Deal? Russia 2001?
- 79 The attacks in New York City and Washington, D.C., 11 September 2001
- 78 U.S. Campaign Presents Benefits for Russia
- 77 Foreign Workers Face New Red Tape
- 76 The attacks in New York City and Washington, D.C., 11 September 2001
- 75 Yakovlev Decree Sets Sights on Corruption
- 74 New Details in RusAl Murder Suit
- 73 Stealing the State, and Everything Else A Survey of Corruption in the Postcommunist World
- 72 St. Pete Should Brace for Capital Invasion
- 71 Why Does Russia Need Vertical Integration?
- 70 After a false start, Russia may at last be breaking free of the shackles of
- 69 "There is no place for a radio like Ekho Moskvy here anymore."
- 68 RUSSIA: Ethos of corruption in nuclear establishment
- 67 Baltic States Membership in NATO Unlikely
- 66 RUSSIA: Audit blasts $880 million Moscow charity scheme
- 65 RUSSIA: $10 billion per year foreign direct investment lost due to non-transparency says PwC
- 64 RUSSIA: Prosecutor vows to pursue extradition of media mogul
- 63 Corruption in Russian newspapers exposed
- 62 Putin tightens curbs on press with bank raid
- 61 Wife Says Russians Have Rediscovered Their Pride
- 60 Putin Moving to Control Russia on All Political Levels
- 59 Oligarch hits out at his Kremlin monster
- 58 Russian Journalists Targeted in Attacks Corruption Investigators Face Slashed
- 57 Putin Moving to Control Russia on All Political Levels
- 56 Oligarch hits out at his Kremlin monster
- 55 RUSSIA: MEDIA EXECUTIVE ORDERED ARRESTED, VOWS TO STAY OUT OF COUNTRY
- 54 WESTERN AID TO RUSSIA ``LACKING OVERALL STRATEGY``
- 53 USA: GAO AUDIT REPORT FINDS AID TO RUSSIA FAILED
- 52 GAO AUDITORS SAY AGRICULTURE DEPARTMENT LAX IN HANDLING RUSSIAN FOOD AID
- 51 BANKS WORK WITH TRANSPARENCY INTERNATIONAL TO ESTABLISH ANTI-MONEY LAUNDERING PRINCIPLES
- 50 The High Price of Russias Military Improvement Plan
- 49 In Russia, Rich Get Poorer, Poor Get Poorer
- 48 Russia Makes me Nervous-Latvias Vike-Freiberga
- 47 RUSSIA: GIANT MEDIA FIRM CHARGED WITH FRAUD OVER ASSETS TRANSFERRED OFFSHORE
- 46 RUSSIA: ELECTRONIC ANTI-CORRUPTION PROPOSED USING THE INTERNET
- 45 Increasing the Risk of Investing in Russian Companies
- 44 Russian auditor confirms graft in Govt.
- 43 Swiss firms mafia links
- 42 Russia: Putin’s Coming Concession to the Oligarchs
- 41 Gridlock: All Trains Lead to Moscow
- 40 BEREZOVSKII SAYS KREMLIN THREATENS HIM OVER ORT SHARES
- 39 Russia continues to be an intensely dangerous place to work
- 38 The Long Arm of Organized Crime Reaches Deeply Into St. Petersburg's
- 37 RUSSIA
FEDERAL PROSECUTOR SEEKS TO OVERTURN PRIVATIZATION DEAL…
- 36 Russia Makes me Nervous
- 35 Putin Begins Crackdown on Russia's Oligarchs
- 35 Russia Formulates a Hybrid Economy
- 35 Regional Bosses Give Initial O.K. To Putin Move
- 34 Latvia Worried About Delay in NATO Baltic Expansion after Yugoslav War
- 34 Moscow Threatens "Hostile" Western Media
- 33 Russia’s Dwindling Population Ensures Rigid Foreign Policy
- 32 Paper Mocking Yakovlev Is Seized
- 31 Russians Plan To Jack Energy Prices
- 30 Moscow Budget
- 29 Baghdad, Belgrade and Moscow Collaborate Against Washington
- 28 Actualizing
the Alliance: Russia and China Move Toward a Pipeline
- 27 Russia Helping Iraq Upgrade Air Defenses
- 5 The Consequences of Russias Looming Food Shortage
- 4 Putin’s Friendly Face Will Not Last
- 3 Reforms in Post-Soviet Russia Failed. Nov 1999
- 2 THE CRISIS IN RUSSIA (Published in USA Sep 1998)
- 1 To bee a good Citizen of Sweden you must remember this?
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Tuesday, Jul. 16, 2002.
Putins 8-Year Plan
An increasing share of economic activity in Russia is moving under the control of fewer and more powerful oligarchs, as current economic growth is ever more dependent on commodities, in particular oil.
The government therefore has a problem in that it has to find a way to boost very significantly investment capital flows into the noncommodity parts of the economy to achieve higher annual GDP growth rates that can be sustained in order to create a more diversified economy -- both in terms of activity and ownership -- by the end of the decade.
If it fails to do so then Russia will end up as little more than a Venezuela writ large, with a "boom to bust" commodity dependent economy. Far from realizing the proclaimed goal of integration into the global economy as an equal partner, Russia will be held hostage to the commodity price cycle and a few very powerful individuals and companies.
It has also been made very clear by President Vladimir Putin that a very significant element of the solution to this problem lies in the hands of the oligarchs. He has clearly set out the terms of the carrot that will be given for cooperation -- an amnesty for repatriated flight capital and a continued forgiving attitude toward how state assets were acquired -- and he has hinted strongly at what sticks might be deployed if the oligarchs choose not to participate voluntarily in the next phase of the administrations growth plan.
This stick would surely come in the form of much more aggressive scrutiny of corporate activities, capital flight and tax audits, which in many instances could result in prosecutions, heavy fines and even confiscation of assets.
In an address to the oligarchs just after being elected president two years ago, Putin made it clear that they had a two-year window to clean up their acts and to start behaving as good corporate citizens. That period has now come to an end.
Defenders of the oligarch system in Russia liken the development to that of the robber barons in the United States and elsewhere, and therefore view it not just as inevitable but as necessary. This line of argument naively glosses over some very fundamental differences. In no other country did the oligarchs (or their equivalent) not simply sit close to the heart of government but largely displace and usurp it at a time when the largest privatization of state assets in the history of the planet was taking place.
For example, there is no historical counterpart to the loans-for-shares scheme that transformed mere millionaires into oligarch billionaires in the mid-1990s
The result of the endgame that we are now entering will either see the emergence of a Korean- or Japanese-style "Chaebol" system if the carrot is accepted, with all of the long-term economic risks that this entails, or a period of increased political and investment risk if the government ends up wielding the stick.
A good way to look at the governments plan for economic reform is to break Putins likely two terms in office into four two-year periods, with each having a specific objective and each having specific implications for investment and risk.
The theme of the first period can best be described as the removal of obstacles to future growth and the changing of attitude toward investment. Some of the obstacles removed were economic; e.g. tax reform has clearly broadened the tax paying base and permanently increased revenues, while pushing for growth in oil production and exports has created an additional safety zone in the budget and reduced vulnerability to oil price weakness. Other obstacles were people, the removal of Central Bank Chairman Viktor Gerashchenko and Gazprom CEO Rem Vyakhirev being the most high-profile examples. Over this period investors were rewarded with strongly rising asset prices. For example, over the three years to the end of June, the RTS gained 188 percent compared to a loss of 24 percent for the average emerging market and a loss of 44 percent for Nasdaq.
The theme of the next two-year period can be described as one of preparation for future growth. Key obstacles have been removed but the economy is not yet ready to grow at the 6 percent to 8 percent annual rate being called for. That is still two years away in the third of the two-year periods, and in order for the objectives of that period to be achieved a sound investment infrastructure has to be put in place. This chiefly means reforming the banking system to create the infrastructure for capital flows, pension reform to create a local source of long-term investment capital, and judicial reform to protect investors and their investments.
The theme of the third two-year period is seen as implementation, as capital flows increase through the newly created investment infrastructure. Like Putins first two years in office, this third period is shaping up to have the same high-risk, high-reward characteristics. If successful, then the last of the four periods, covering Putins final two years in office, should see Russia become more closely integrated into the global economy with significant benefits in the form of substantial long-term investment flows.
However, it is the achievement of the objectives of the next phase of the economic plan and the future of the oligarchs that are closely linked. More than 50 percent of industrial capital investment is directed towards the fuel sector, and most of this is used to grow production and exports ever faster. So far this suits the government objective of lessening exposure to oil price weakness, but rather than wishing to become the new Saudi Arabia (a scenario that several of the oil oligarchs have publicly endorsed), it is clear that the governments objective is for a one-off structural change that will see oil exports raised to between 4.5 million and 5 million barrels per day and then a substantial shift in capital investment into developing other sectors of the economy.
A substantial amount of the estimated $160 billion of Russian capital held in foreign bank accounts is under the control of commodity exporters and oligarchs.
Investment spending in the noncommodity parts of the economy is today at a negligible level and success in increasing this to desired levels will depend on how successful the government is in either persuading, or forcing, the owners and controllers of that capital to take it out of safe foreign bank accounts and to significantly slow down oil-related capital expenditures.
If the scenario involving four two-year plans is correct then we should expect there to be increasing debate on the deployment of Russian-owned capital, in parallel with the building of the domestic investment infrastructure, between now and the March 2004 presidential election.
After that, those in the Kremlin who still harbor ambitions to finally extract a fair price for state assets sold far too cheaply in the early and mid-1990s may yet be given an opportunity to realize those ambitions. The phrase "hydrocarbon windfall tax" might now only be mentioned in hushed tones in government circles, but nonetheless it cannot have failed to come to the attention of certain oligarchs.
Whether they choose to heed the warnings will be the subject of intense scrutiny during this next phase of the economic development plan.
Chris Weafer, head of research at Troika Dialog Investment Bank, contributed this comment to The Moscow Times.
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