Economic stagnation widens gap between Russian authorities and people

May 25 2018

On Friday, May 18, Free Russia Foundation and Atlantic Council organized an expert panel to discuss the politics and economics of Vladimir Putin’s fourth term as president. Experts expect further economic stagnation, with no structural economic reforms in sight, and discussed the growing gap between the Russian government and citizens.

The panel discussion included experts:

Vladimir Milov, opposition politician, economist, and energy expert and a Free Russia Foundation expert;

Anders Åslund, Senior Fellow, Eurasia Center, Atlantic Council ;

Alina Polyakova, David M. Rubenstein Fellow – Foreign Policy, Brookings Institution; Adjunct Professor of European Studies, Johns Hopkins School of Advanced International Studies.

Moderated by: Ambassador John Herbst, Director, Eurasia Center, Atlantic Council

Inadequate system and stagnation

“Russia is going through the biggest economic crisis since the collapse of the Soviet Union,” said Vladimir Milov yet “the government has no plan on how to address this.”  Living standards in Russia have decreased significantly since 2014 and the economy is dominated by ineffective state monopolies, a low level of entrepreneurship, weak growth levels and an absence of foreign investment, said Milov.

That the system is unsustainable was already clear in 2013 – a year before the war in Ukraine and political sanctions – when economic growth was just about 1 percent despite quite high oil prices at the time, said Milov.  “We built a paternalistic economy of redistribution rather than an economy that encourages private initiative, investment, innovation and increased productivity,” said Milov.

“The inadequacy of the system is understood by pretty much everybody, including a lot of people surrounding Vladimir Putin,” said Milov. Yet there is now “too much power centered around this particular figure,” who is not interested in real economic reforms.

Alina Polyakova said that despite the recent “lofty promises” of the Kremlin to focus on domestic and economic issues, it is unlikely that economic reforms are to be carried out since it “would undermine the regime itself.” “I think there is a linchpin here – for the regime to stay in power, for the Kremlin elite to stay in power, they have to maintain this patrimonial paternal system they have established,” said Polyakova. “If you think about self-preservation, which is the number one priority of Putin’s regime at this moment and for the foreseeable future, why would you do that [pursue economic reforms]?”

Anders Aslund also ruled out the possibility of any significant economic reforms in the near future. With an average of 1 percent growth over the last nine years, Putin didn’t have an economic plan before the elections, mainly running on the issue of Crimea, now in its fourth year of annexation, and after the elections he issued just “one tiny decree” with vague promises of improving the economy, with no concrete numbers, said Aslund.

Russia suffers from a steady capital flight of $30-40 billion a year – about 3% of GDP, with approximately $10-20 billion taken offshore, mainly illegally, by Putin’s cronies, according to Aslund. Russia has very little investment considering the level of its economic development, he said. Many innovators are leaving the country and the sanctions discourage Westerners from lending to Russia, whereas the country’s defense spending has increased from 3.3% of GDP in 2008 to 5.3% in 2017, and this in an economy with almost no economic growth, said Aslund.

And if one looks at the composition of the new government, which is headed by the same prime minister, who is himself suspected of corruption, and surrounded by technocrats mainly from the same inner circles, it is clear that “this is going nowhere,” said Aslund.

He added, “What we can say for sure is that there will be no reforms because Russia is a kleptocracy and it works for its rulers – it doesn’t work for its population.”

Priorities: geopolitics not living standards

While the government is occupied with geopolitics, ordinary Russians are faced with declining living standards. “We have a really huge gap between authorities and the population,” said Milov.

The majority of people support Putin’s current foreign policy initiatives – largely due to pervasive propaganda – but it is not on the list of their priorities, said Milov.  People want the government to re-focus on domestic, social and economic issues, yet this not a priority for the government.

State TV continues to talk about Ukraine, Syria and Trump, said Milov. It says that people “have to suffer” because Russia is doing great geopolitically; people “should be patient” and in some time “things are going to get back to normal by themselves,” said Milov.

People are not given the real economic picture and perspectives, and the voice of the opposition is also unable to reach the majority of the population, said Milov.  Yet people do feel there is a problem

“because of their [empty] pockets” and the opposition is working hard to reach out to them. There is a need to explain to people the link between Russia’s foreign policy and declining living standards.

Milov said that the government has been successful in spreading the message that any alternative to Putin would create “total chaos.”  Also, given the historical experience, Russian people are skeptical of radical changes and are afraid of the unknown, said Milov.

“It is quite difficult to try to change the situation, but it is also very possible and this is something that the opposition has been doing,” said Milov.

Alina Polyakova said that the regime seems to be “nervous and anxious” regarding “its own ability to maintain control,” with the population “becoming more disillusioned with the system.” The previous social contract between the government and people – to provide economic growth in exchange for political rights – seems to have been re-written since 2012 into a new form which stresses Russia’s role as a “great power” and the Russian “people have to pay for this.”  Yet is questionable how long this new contract will be sustainable, said Polyakova.

It is also essential, said Polyakova, to directly link Putin with the government in the eyes of the Russian people. Despite the low level of trust the Russian people have in the government, Putin’s approval ratings remain high as if Putin were somehow “above” the government.

Anders Aslund said that although the regime doesn’t look sustainable, one has to be cautious in assessing the future since Soviet history shows the regime “can last for many years.”

What the West can do though, said Aslund, is to continue to reveal Russian kleptocrats and their hidden money abroad. The West should continue adopting legislation that would reveal the beneficial owners of the anonymous companies offshore that are together estimated to be hiding up to $1 trillion of Russian money.

by Valeria Jegisman

The panel discussion included experts:

Vladimir Milov, opposition politician, economist, and energy expert and a Free Russia Foundation expert;

Anders Åslund, Senior Fellow, Eurasia Center, Atlantic Council ;

Alina Polyakova, David M. Rubenstein Fellow – Foreign Policy, Brookings Institution; Adjunct Professor of European Studies, Johns Hopkins School of Advanced International Studies.

Moderated by: Ambassador John Herbst, Director, Eurasia Center, Atlantic Council

Inadequate system and stagnation

“Russia is going through the biggest economic crisis since the collapse of the Soviet Union,” said Vladimir Milov yet “the government has no plan on how to address this.”  Living standards in Russia have decreased significantly since 2014 and the economy is dominated by ineffective state monopolies, a low level of entrepreneurship, weak growth levels and an absence of foreign investment, said Milov.

That the system is unsustainable was already clear in 2013 – a year before the war in Ukraine and political sanctions – when economic growth was just about 1 percent despite quite high oil prices at the time, said Milov.  “We built a paternalistic economy of redistribution rather than an economy that encourages private initiative, investment, innovation and increased productivity,” said Milov.

“The inadequacy of the system is understood by pretty much everybody, including a lot of people surrounding Vladimir Putin,” said Milov. Yet there is now “too much power centered around this particular figure,” who is not interested in real economic reforms.

Alina Polyakova said that despite the recent “lofty promises” of the Kremlin to focus on domestic and economic issues, it is unlikely that economic reforms are to be carried out since it “would undermine the regime itself.” “I think there is a linchpin here – for the regime to stay in power, for the Kremlin elite to stay in power, they have to maintain this patrimonial paternal system they have established,” said Polyakova. “If you think about self-preservation, which is the number one priority of Putin’s regime at this moment and for the foreseeable future, why would you do that [pursue economic reforms]?”

Anders Aslund also ruled out the possibility of any significant economic reforms in the near future. With an average of 1 percent growth over the last nine years, Putin didn’t have an economic plan before the elections, mainly running on the issue of Crimea, now in its fourth year of annexation, and after the elections he issued just “one tiny decree” with vague promises of improving the economy, with no concrete numbers, said Aslund.

Russia suffers from a steady capital flight of $30-40 billion a year – about 3% of GDP, with approximately $10-20 billion taken offshore, mainly illegally, by Putin’s cronies, according to Aslund. Russia has very little investment considering the level of its economic development, he said. Many innovators are leaving the country and the sanctions discourage Westerners from lending to Russia, whereas the country’s defense spending has increased from 3.3% of GDP in 2008 to 5.3% in 2017, and this in an economy with almost no economic growth, said Aslund.

And if one looks at the composition of the new government, which is headed by the same prime minister, who is himself suspected of corruption, and surrounded by technocrats mainly from the same inner circles, it is clear that “this is going nowhere,” said Aslund.

He added, “What we can say for sure is that there will be no reforms because Russia is a kleptocracy and it works for its rulers – it doesn’t work for its population.”

Priorities: geopolitics not living standards

While the government is occupied with geopolitics, ordinary Russians are faced with declining living standards. “We have a really huge gap between authorities and the population,” said Milov.

The majority of people support Putin’s current foreign policy initiatives – largely due to pervasive propaganda – but it is not on the list of their priorities, said Milov.  People want the government to re-focus on domestic, social and economic issues, yet this not a priority for the government.

State TV continues to talk about Ukraine, Syria and Trump, said Milov. It says that people “have to suffer” because Russia is doing great geopolitically; people “should be patient” and in some time “things are going to get back to normal by themselves,” said Milov.

People are not given the real economic picture and perspectives, and the voice of the opposition is also unable to reach the majority of the population, said Milov.  Yet people do feel there is a problem

“because of their [empty] pockets” and the opposition is working hard to reach out to them. There is a need to explain to people the link between Russia’s foreign policy and declining living standards.

Milov said that the government has been successful in spreading the message that any alternative to Putin would create “total chaos.”  Also, given the historical experience, Russian people are skeptical of radical changes and are afraid of the unknown, said Milov.

“It is quite difficult to try to change the situation, but it is also very possible and this is something that the opposition has been doing,” said Milov.

Alina Polyakova said that the regime seems to be “nervous and anxious” regarding “its own ability to maintain control,” with the population “becoming more disillusioned with the system.” The previous social contract between the government and people – to provide economic growth in exchange for political rights – seems to have been re-written since 2012 into a new form which stresses Russia’s role as a “great power” and the Russian “people have to pay for this.”  Yet is questionable how long this new contract will be sustainable, said Polyakova.

It is also essential, said Polyakova, to directly link Putin with the government in the eyes of the Russian people. Despite the low level of trust the Russian people have in the government, Putin’s approval ratings remain high as if Putin were somehow “above” the government.

Anders Aslund said that although the regime doesn’t look sustainable, one has to be cautious in assessing the future since Soviet history shows the regime “can last for many years.”

What the West can do though, said Aslund, is to continue to reveal Russian kleptocrats and their hidden money abroad. The West should continue adopting legislation that would reveal the beneficial owners of the anonymous companies offshore that are together estimated to be hiding up to $1 trillion of Russian money.

by Valeria Jegisman

Call for Submissions – The Kremlin’s Influence Quarterly vol. 3

Oct 26 2020

The Free Russia Foundation invites submissions to The Kremlins Influence Quarterly, a journal that explores and analyzes manifestations of the malign influence of Putin’s Russia in Europe.

We understand malign influence in the European context as a specific type of influence that directly or indirectly subverts and undermines European values and democratic institutions. We follow the Treaty on European Union in understanding European values that are the following: human dignity, freedom, democracy, equality, the rule of law, and respect for human rights. Democratic institutions are guardians of European values, and among them we highlight representative political parties; free and fair elections; an impartial justice system; free, independent and pluralistic media; and civil society.

Your contribution to The Kremlins Influence Quarterly would focus on one European country from the EU, Eastern Partnership or Western Balkans, and on one particular area where you want to explore Russian malign influence: politics, diplomacy, military domain, business, media, civil society, academia, religion, crime, or law.

Each chapter in The Kremlins Influence Quarterly should be around 5 thousand words including footnotes. The Free Russia Foundation offers an honorarium for contributions accepted for publication in the journal.

If you are interested in submitting a chapter, please send us a brief description of your chapter and its title (250 words) to the following e-mail address: info@4freerussia.org. Please put The Kremlin’s Influence Quarterly as a subject line of your message.

Free Russia Foundation’s Press Release on Submission of Article 15 Communication to the International Criminal Court

Oct 06 2020

On 21 September 2020, the Free Russia Foundation submitted a Communication to the International Criminal Court Prosecutor’s Office (in The Hague, Netherlands) seeking accountability for Crimean and Russian authorities concerning international crimes perpetrated during Russia’s illegal occupation of Crimea. The Communication was prepared in cooperation with Global Rights Compliance and Center for Civil Liberties and is based on a focused inquiry conducted over the past year. In our inquiry, we documented crimes as part of a systematic, planned attack by the Russian state against civilians and groups in Crimea in order to discourage them from opposing the illegal occupation of Crimea and to force their departure from the peninsula. Crimes against civilians included unlawful arrests, beatings, torture, enforced disappearances, and other inhumane acts causing severe mental and/or physical pain. In particular, the crimes targeted the Crimean Tatars, a native ethnic group who had only recently returned to their homeland, having previously been forcefully and brutally displaced by the Soviet Union in 1944.

One of the principal coercive acts was the illegal detention and concomitant violence before, during, and after the imprisonment of political prisoners. Most of those detained were arrested by Russian and Crimean authorities on terrorism charges, but it was their legal, pro-Ukrainian advocacy that led to their imprisonment. In addition, trials of those arbitrarily detained were conducted in wholesale disregard of their fair trial rights. For example, some of those illegally imprisoned were denied a speedy trial, access to independent lawyers, and the opportunity to defend themselves against their arrest in a courtroom.

In order to force those illegally detained to confess to crimes they did not commit, Russian and Crimean authorities also perpetrated acts of torture and cruel or degrading treatment, the levying of additional charges against them, even more inhumane prison conditions, denial of communications with their families and threats made against them, enforced disappearances, and even, in at least one case, a mock execution.

Other inhumane acts include “punitive psychiatry” and the denial of adequate prison conditions, including the following: (i) feeding people inedible food or, at times, no food at all; (ii) facing severe overcrowding in prisons; (iii) denial of regular water supply; (iv) threats of assault against them by prison cellmates; and (v) adding pork to food – prohibited for observant Muslims. Further, medical attention was systematically inadequate or denied for many individuals.

Concerning acts of torture, it was perpetrated by different Russian authorities, including the FSB. Allegations include the use of electric shocks in an effort to get an accused to confess. One was beaten in the head, kidneys, arms and legs with an iron pipe. With another, fingers were broken. Still another endured spinal bruises and having a plastic bag placed over his head to the point of unconsciousness. Further, threats of sexual violence against a detained man were made. Murder as well. Hands were broken, teeth were knocked out in still another.

Trials were largely held behind closed doors for illegitimate reasons, and many of the witnesses were secret not only to the public but also to the Accused. Further, credible allegations exist that, at times, there were FSB or other agents in the room, silently instructing witnesses what to say and how the judges should rule. This adds credence to words, according to the Kyiv Post, heard by Arsen Dzhepparov from a senior FSB lieutenant who stated “I will prove by all possible – and impossible – means that [an Accused is] guilty – even if he isn’t guilty”.

Concerning the crime of persecution, nearly all of these deprivations of fundamental rights were carried out with discriminatory intent. Specifically, these groups were targeted due to their political view – namely, by peacefully opposing the illegal occupation of their country. Some were targeted on ethnic grounds or religious grounds on the basis of their Crimean Tatar background.

War crimes, another group of crimes punished at the ICC, were also perpetrated in addition to or in the alternative to the crimes against humanity. This includes the crime of torture, outrages against personal dignity, unlawful confinement, wilfully depriving protected persons of the rights of a fair and regular trial, and the transfer of the occupying power of parts of its population into the territory it occupies or the deportation of all or parts of the population of the occupied territory within or outside this territory.

All these crimes had the ultimate objective of the criminal enterprise – the removal of pro-Ukrainian elements out of Crimea and the annexation of Crimea into the Russian Federation without opposition, including the installation of pro-Russian elements, which include the emigration of more than 70,000 Russians, the illegal imposition of Russian law in the occupied territory, forcing Russian nationality on many Crimeans, and the appropriation of public property.

Ultimately, we hope that all the information gathered by the ICC in the context of its preliminary investigation will lead the ICC to investigate mid- to high-level Russian and Crimean officials on this basis. The international community expects responsible global leadership that follows the rule of law and expects it – no matter the situation – to be respected, especially from a state that is a permanent member of the UN Security Council. When this fails to happen, the international community must demand accountability. We hope that an investigation can be opened and responsible officials of the Russian Federation will be investigated. After an investigation that conforms to international best practices, responsible persons should be charged with the systematic perpetration of international crimes.

Novichok Use Implicates Putin’s Government in Navalny’s Poisoning

Sep 02 2020

Today, the German government has announced that Russian pro-democracy leader Alexey Navalny was poisoned by Novichok. Novichok is a deadly nerve agent developed by the Soviet government chemical weapons program and used on several occasions by the Russian government to kill its critics in the recent years.

To restate the obvious, Novichok is a poison that can only be accessed with the authority of the Kremlin. Therefore, today’s announcement by German officials  directly implicates the Kremlin and Putin in the high-profile assassination attempt on Navalny.

The choice of Novichok was not just a means  to silence Mr. Navalny, but a loud, brazen and menacing message sent by Putin to the world: dare to criticize me, and you may lose your life.

The announcement by the German government of its intent to formally notify the Organization for the Prohibition of Chemical Weapons (‘OPCW’) of the use of Novichok against Navalny is a meek bureaucratic half-measure that fails to acknowledge the extraordinary threat to human life posed by Putin’s regime everywhere. Taken together with Angela Merkel’s promise earlier this week to help Putin finish his Nord Stream 2 pipeline despite an international outcry amounts to condoning the poisoning and normalizing it into a new modus operandi where Putin’s murders go unpunished. Free Russia Foundation urges the leaders of the EU, its Member States and the U.S. Government to take an urgent and drastic action to punish the perpetrators of this heinous crime not only to serve justice, but to establish a powerful deterrent against new attacks by Putin’s regime globally.

Free Russia Foundation Statement on Kremlin’s Interference in Elections in Georgia

Aug 26 2020

We are deeply concerned with information recently distributed by the well-respected authoritative source Center “Dossier.” According to “Dossier,” the Kremlin is using Russian political expert Sergey Mikheev and consulting company “Politsecrets” to manipulate Georgian society, distribute disinformation and anti-democratic narratives, undermine Georgia’s Western aspirations, and interfere in free and fair elections in Georgia scheduled for October 2020.

More

Free Russia Foundation Calls for Investigation into Alexey Navalny’s Poisoning

Aug 20 2020

Free Russia Foundation is gravely concerned about the life and safety of Alexey Navalny. More