Tag Archives: russia

Democracy that Delivers #24: Karina Orlova on the Risks Reporters Face in Russia and Why She Had to Leave

Podcast guest Karina Orlova (right) with hosts Ken Jaques (center) and Julie Johnson.

Podcast guest Karina Orlova (right) with hosts Ken Jaques (center) and Julie Johnson.

The American Interest journalist Karina Orlova discusses the risks reporters face in Russia and why she had to leave. Orlova talks about her experience reporting on Russian politics and business, and the powerful forces that exert control over journalists and media outlets in that country.

She also shares fascinating insights into current living conditions in Russia and citizen attitudes towards corruption and governance. Follow Karina’s work at The American Interest or on her Facebook page.

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Russia’s Rent-Seeking Downward Spiral

It is clear that if we do not start taking action today, including by carrying out structural reforms, we could end up going into a lengthy period of economic stagnation tomorrow. Our economy is still based primarily on natural resources rather than on manufacturing. Our economic system has changed little in essence. Where does most of our money come from? From oil, gas, metals and other raw materials.

– Vladimir Putin, Annual Address to the Federal Assembly, April 3, 2001

Fifteen years later, the Russian economy envisioned by that progressive speech by Putin in April 2001 seems to be a distant memory. Russia’s economy, and budget, are still largely dependent upon the sale of oil and the majority of Russian industry is still based on extractive industries. The modern vision of Russia in that speech, one deeply embedded into the international system, where property rights are protected by the undiscriminating rule of law, has been replaced by a cynical “managed” system of crony capitalism where profits are skimmed off by insiders while Russia has isolated itself by its actions on the international stage.

Since 2001, record-setting commodity prices have supported increased social benefits, military spending, and infrastructure investments, each of which has supported corruption schemes where insiders profit off of the state’s largess (see the cost of the Sochi Olympics as Exhibit A). High commodity prices also allowed the Russian government to slowly smother individual rights and free speech at home and, largely through key investments in media, buy the country a larger voice in affairs abroad.

Rather than pulling away from a resource-based economy, Russia’s entire economy appears to now be moving in near perfect correlation with energy prices (see chart below).

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Russia’s Plan for Economic Recovery: Demolish Small Businesses

With shocking disregard for property rights, due process and the rule of law, overnight on February 9 the Moscow city government set out around city to raze hundreds of small businesses. The demolition took place in spite of the fact that many of these businesses had the proper paperwork to operate a business in that location, and in some cases court orders staying any proposed demolition. While the Moscow city government can rely on revenue from other sources, these kiosks and mini-malls supported hundreds of small shops that provided employment for over 2,000 Moscow residents according to the city’s own estimates.

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Gagauzia: Another Obstacle on Moldova’s Path to Europe?

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In 2014, shortly before the Republic of Moldova signed its EU Association Agreement, nearly 99 percent of the electorate in the little-known, autonomous region of Gagauzia in southern Moldova voted in a referendum to reject closer links with Europe in favor of joining the Russian-led Eurasian Economic Union. Moldova’s central government first tried to block, and then declared unconstitutional, that referendum. Gagauzia’s separatist inclinations, weak economy, and deep ties with Moscow could pose as much of a threat to Chisinau’s hope of drawing closer to the European Union as the unresolved conflict in Transnistria.

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Will There Ever Be a Resolution in Eastern Ukraine?

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CIPE’s Frozen Conflicts blog series looks at the current situation in seven breakaway regions of the former Soviet Union, with a particular focus on the economic dimension. To learn more about frozen conflicts and what can be done about them read CIPE’s Economic Reform Feature Service article on the subject.

In May 2014, not long after the EuroMadian demonstrations toppled Ukraine’s former President Yanukovych, pro-Russian separatists in two Eastern Ukrainian regions, Donetsk and Luhansk, held referenda – unrecognized by Kyiv and the West – and declared their independence as “people’s republics.”

According to a September report from the UN, an estimated 8,000 people have been killed and almost 18,000 wounded in the ensuing war in Eastern Ukraine – the area known as the Donbas – as the new government in Kyiv has tried to regain control over its territory. The UN High Commission on Refugees (UNHCR) estimates that the conflict has created 1.5 million internally displaced persons. While the Kremlin long denied its military involvement, the Russian business magazine Delovaya Zhizn revealed the number of Russian casualties: 2,000 dead, 3,200 wounded.

Of the three million who are left in the region, about two million are children and pensioners. This leaves only one million working-age adults to support them and do the fighting. For around two months, between the beginning of September and November 2015, fighting in Donbas subsided, and some Ukrainian news outlets were speculating that the war could be coming to an end. But just as some IDPs were starting to return to the region, reports of ceasefire violations emerged. In September, UN agencies and a number of humanitarian NGOs were expelled from Luhansk by the forces in control of the area.

While the military aspect of the situation has been extensively covered, less well known is how the occupied region is managing economically. At first, the Kyiv government paid social benefits to the separatist region, despite not receiving any of its tax revenues. But since November 2014, when Kyiv cut the region off, the separatist authorities have been supporting residents with pensions paid out in rubles. They claim that these funds derive from tax collections, not support from Moscow, but this assertion seems questionable given a sharp economic decline. Interestingly, in June 2015 the authorities paid out pensions in U.S. dollars.

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Vested Interests Continue to Drive Conflict in Nagorno-Karabakh

frozen-conflicts-nagorno-karabakh

CIPE’s Frozen Conflicts blog series looks at the current situation in seven breakaway regions of the former Soviet Union, with a particular focus on the economic dimension. To learn more about frozen conflicts and what can be done about them read CIPE’s Economic Reform Feature Service article on the subject.

Unlike the situation in most of the other post-Soviet breakaway regions, the conflict in Nagorno-Karabakh is far from frozen. Indeed, there are some recent signs that a fresh shooting war could be brewing. Regular exchanges of fire along the line separating Nagorno-Karabakh from Azerbaijan proper are threatening a ceasefire that has been in place since 1994. This year has seen the highest number of casualties since 1994, due to the increasingly advanced weaponry being deployed.

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Russia’s Quiet Annexation of South Ossetia

frozen-conflicts-south-ossetiaCIPE’s Frozen Conflicts blog series looks at the current situation in seven breakaway regions of the former Soviet Union, with a particular focus on the economic dimension. To learn more about frozen conflicts and what can be done about them read CIPE’s Economic Reform Feature Service article on the subject.

Often lost among coverage of Russia’s annexation of Ukraine’s Crimea, the ongoing crisis in Eastern Ukraine, and the general deterioration of the relationship between Russia and the West, is the quiet process through which the breakaway Georgian region of South Ossetia has been merged into Russia.

After Georgia declared its independence from the Soviet Union in 1991, Russian-backed separatists in South Ossetia in turn declared their own independence from Tbilisi. Fighting lasted until 1992, when Russia brokered a ceasefire agreement and placed peacekeeping troops in the region. South Ossetia voted for absorption by Russia, with no response from Moscow, while Georgia continued not to recognize the region’s independence. As a result, the conflict was frozen, and South Ossetia became a de facto state.

The situation remained such until August 2008 when, following several months of increasing tensions, Georgia and Russia fought a five-day, full-scale war in the region. That war marked a major turning point, as Russia decided to recognize South Ossetia as an independent state. The only other countries to do so were Nicaragua, Venezuela, and the Pacific island of Nauru.

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