Let's not fall victim to short term thinking. Russia is the only major economy which is a net energy exporter -- surely a desireable position to have in such troubled times? And concerns about Russia's reliability as a gas exporter to the EU have be set against the EU's alternatives -- Algeria, Libya.
The game is far from over. Russia could certainly have played its hand better. But Russia does not have to be perfect, only better than the guys on the other side of the table. Since the big guy on the other side is the EU, the smart money is still on Russia.
Useful article. Thanks for publishing it.
I agree that the Putin government has and still is overplaying its hand. Putin's strategy is now almost a neo-Stalinism.
IMO he sees it as the only one making sense, and IMO he is wrong.
They will gain nothing but grief in dealing with the likes of Cuba, Venezuela, and Libya. Or of the Islamic and African nations in general. Each will take as long as Russia gives. There will be impressive military parades and visits by Russian ships.
The sort of things that worked so well for the USSR.
Perhaps I shouldn't have included Cuba. Say what you will about Castro, he stuck with the USSR and its idea all the way.
Demographics is Russia's weak spot. Power cannot be sustained without people. Loyal and determined people.
In contrast to the writer I think debt and poor internal performance is not terribly important. Who is going to repossess Russia? Or challenge them? They got what they wanted with Georgia and again with the NG flap with the EU and Ukraine.
And internal performance would improve if the demographic disaster could be reversed; they are opposite sides of one coin. I don't see how that reversal can happen.
The UK has to expand its nuclear capacity for the production of electricity. Otherwise we are the plaything of Russian & Arab despots.
off topic slightly - I find it strange that the green movement talks about their opponents and oil money as a term of abuse, but surely the greens and their oposition to the nuclear option is in the interest of the oil money, so are the Greens supported by oil money?
Russia has a vested interest in the West not building nuclear reactors, so are the Russians bankrolling the Greens? 'Useful idiots' springs to mind.
Good stuff. Thanks.
I knew Russia was in trouble. Hell, Blind Freddy and his cat could see Russia was in trouble, but I had no idea it was this bad.
Shafting the investors was never a good idea. Really really short term thinking.
What makes me sad, really, is that Russia still cannot become a normal country. There is something in the DNA or the water that keeps that place backward economically and politically.
Does anybody with experience in Russia understand this?
Let's not fall victim to short term thinking. Russia is the only major economy which is a net energy exporter -- surely a desireable position to have in such troubled times?
The point here is not that 'Russia is an energy exporter' but rather that 'Russia is dependent on exporting energy... and in 'troubled times' will energy use go up or down as economic activity contracts generally?
And concerns about Russia's reliability as a gas exporter to the EU have be set against the EU's alternatives -- Algeria, Libya.
Except you miss out the most important alternative supplier... nuclear power: the strategic choice that neuters both the Middle East and Russia. This self evident truth is starting to dawn on even Europe's pea brained politicos, as demonstrated by the very large up-tick in the long dormant nuclear industry.
Since the big guy on the other side is the EU, the smart money is still on Russia.
Russia never misses an opportunity to screw itself over. Delusions of grandeur are so deeply embedded in both Russia's political and civil culture that any major enterprise doing business there needs their head examined in my view.
That said, a Russian chum of mine once argued that the trouble with Russia is there is no 'civil culture' and no 'business culture', there is only a political culture. His view was that there will be no identifiable Russian state at all within 50 years, just a series of fragmented depopulated mini-states.
Exxon giving Gazprom/Russia the middle finger has not been mentioned at all in the mainstream media as far as I know, so this is quite a stunning piece of reporting, Nicolas! That was almost a 'by the way' in your article but I think it actually deserves the headline!
We're stuck with importing gas, whether it is from Russia, Algeria, or somewhere else, for quite some time yet.
Even if we steamroller the environmental concerns and embark on a crash nuclear building program, the first dozen or so power stations will go to replacing our worn out base load generating capacity.
Our infrastructure is built on piping gas to most homes and businesses for use in heating and cooking , so a gradual switch over to mainly electrical power for these is going to take time.
If we had built the nukes twenty or so years ago, we wouldn't have had to use our North Sea gas for power generation, which would have kept us less reliant on imported gas for longer and might have left us on the outside looking on at the current Russian imbroglio.
Ironically France, with no oil, gas or coal to speak of, is the best equipped country in europe to cope with the current situation even if they are dependant on some pretty dodgy regimes for their uranium imports, though they tend not to go for the softly-softly, hands off approach to their suppliers.
And concerns about Russia's reliability as a gas exporter to the EU have be set against the EU's alternatives -- Algeria, Libya.
If reliability and stability are important then consider that 50% of current known Uranium reserves are in Canada and Australia.
That should make people think about their options.
"Except you miss out the most important alternative supplier... nuclear power"
That's a little bit premature, Perry. Time to celebrate would be after Germany & Sweden reverse their plans to shut down all their nuclear power plants, and after Britain actually starts building new generation plants instead of just talking about it.
As Kevin so perceptively points out, even a whole-hearted commitment to nuclear power would take years to get the EU out of the danger zone it has backed itself into.
Yes -- Russia is a mess. But we live in a world where (reportedly) even Switzerland has had to get some very quiet international help to stablize the Swiss Franc. In a world filled with messed up countries, don't count Russia out.
In a world filled with messed up countries, don't count Russia out.
Pah, just look at their demographics. Even Europe looks good by comparison. Russia has no future.
A quick addendum, or perhaps erratum, to my last post.
I looked up France's nuclear imports and found the following information:
France uses some 12,400 tonnes of uranium oxide concentrate (10,500 tonnes of U) per year for its electricity generation. Much of this comes from Areva in Canada (4500 tU/yr) and Niger (3200 tU/yr) together with other imports, principally from Australia, Kazakhstan and Russia, mostly under long-term contracts.
So perhaps not all the regimes that she gets her uranium from are that dodgy, or amenable to French pressure. (Although that might depend on how you see the KRudd regime.)
The article also points out that the UK is a major customer for French electricity, thus reminding us of another potentially hostile regime we are dependant upon for our energy supplies.
"Russia is the only major economy which is a net energy exporter"
Alice, the only reason you can (I cannot) call Russia a major economy is that it is an energy exporter. Throw in the timber and metals export (demand for which is also not all that hot) - and Russia is the biggest banana republic, and probably one of the few that has to import bananas.
Do you realize what happens to an industrial plant when you do not maintain it properly, let alone invest in modernization, for 15 years? For a lot of that equipment, you cannot even find spare parts anymore - it's like looking for vacuum tubes (and sometimes it literally is). And when one machine breaks down, a whole line shuts down. This is Russia's industrial base today.
Furthermore, to man that industrial base, you need workers. Outside of Moscow and St. Petersburg, the Russian "blue collar" male these days, the descendant of the muzhik is barely employable - he just does not stay sober. It's not uncommon for factories in Russia to shut down production lines for a week after paying wages, and managers hope to hobble along on 50% staffing. A middle school buddy with whom I have kept in very sporadic touch runs an accounting/consulting firm in Chelyabinsk, and thus is in contact with local managers a lot. His summary of their accounts goes something like this: "I cannot fire a drunk, because I can only replace him with another drunk, and this one at least is competent enough not to cause a fire." It should be noted that most of those accounts are made over drinks.
Russia is being swallowed by China... not very noticeably yet, but wait and see.
Alice -
In what aspects can the "economy" of Russia (and sattelites) be measured as "MAJOR?"
An Economic History of the Russias (there are several, still) by someone of the calibre of Niall Ferguson would be very enlightening at this point; especially for those who imply "genetic" disabilities to those populations (which are diverse).
With no claim to scholarship, but some reading, research, and marital connections with Russian families of pre-1917 importance in its commercial, economic and financial development, I suggest that a review of the comparative progress and commercialization (building of an "economy") with active decentralization of administration preceding the "Great Sleep," to that in Europe of the same periods, might change or broaden some viewpoints as to what is possible there.
The effects of the "Great Sleep" that began over 90 years ago are only beginning to be shaken off in a period when the noises of rapid transfers of information create confusing cacophonies for people who have heard little that was believable for three generations.
These remarks are not intended to be so much pro-Russian as they are pro-human. We seem to expect a discernment for the values of individuality to arise swiftly there in the East that is Russia whilst the peoples of the West are sliding from individuality into collectivisms and centralizations.
History can aid, but not assure, understanding.
The current administrations of Russia, essentially existentialists, are ignoring History.
"Russia is being swallowed by China... not very noticeably yet, but wait and see."
Timescales! Yes, anyone with a map can see the instability of empty resource-rich Siberia next to over-populated resource-poor China. China swallowing Siberia is a realistic scenario -- as is China walking across Kazakhstan to the Caspian and then moving down through Iran. The question is when, and under what circumstances?
What I am reacting against is looking at Russia in isolation, as if it were the only messed up country in the world. Yes, there are great weaknesses (as well as significant strengths) in Russia's industrial base. But are the Brits making much steel in Sheffield these days, or shipping much coal from Newcastle? Goodness, the US is not even self-sufficient in automobile production these days!
What you are pointing out, Plamus, is that time is not on Russia's side -- which is quite true, for the reasons you stated. It is possible that Russia could go quietly into a drunken & infertile night, but it is more likely that there will instead be a last desperate throw of the dice. Especially when the Russian leadership looks at the losers on the other side of the table.
His view was that there will be no identifiable Russian state at all within 50 years, just a series of fragmented depopulated mini-states.
It's possible, but I think some if these mini-states will thrive once they throw off Moscow's yoke, attracting migrants from the stagnant Russian heartland. Plus ça change...
No problem. Russia can always do what it always has done when faced with a difficulty.
Crack open a few bottles of vodka, shoot a few people (or send them to the other end of the country), export some weapons to dodgy allies and generally strut around making vague threats.
As is always the case the reverse of popular opinion is the truth. Russia will undoubtedly come out of this crisis the strongest country as The USA and UK are finished(particularly the UK). Experts have been predicting Russia's downfall for centuries only to have it come back stronger than ever. To the author, Russia is wisely pairing back their developement which will only lead to higher prices in the future. Demographics is not a problem: birthrate + immigration almost equaled the death rate. A slightly falling population is a blessing in a resource restrained world. Russia can always access more people from Belarus or the Ukraine. The new lower valuation of the rouble will further invigorate their industry and blunt the effects of the dutch disease. Russian growth was highest when oil traded in the teens/twenties. The only question for Russia is how badly USA/UK and a few others who followed their model will implode. If they implode to badly Russia will probably have to resort to trade protectionism to stimulate domestic industry. Country's need Russia's oil&gas however Russia does can manufacture their exported trinkets themselves. Yes Russia workforce must be truly awful, in the last few months Daimler Benz purchase a 25%stake in Kamaz, Siemens announced a nuclear partnership with rosatom, toyota opened a new plant, Ford expanded their plant. The list goes on and on. The Russian-German partnership is a perfect synergy which will be more powerful than any other alliance.
The Russian-German partnership is a perfect synergy which will be more powerful than any other alliance.
Like it was in 1940? Good luck with that.
Dan, is there any objective basis for a single one of your theories? And where do you get your bizarre ideas on Russian demographics? Oh, and most of the population growth that is happening in Russia is non-ethnic Russians.
But your attitude is very typical of what people in Russia think, which is fine by me as personally I am delighted so few Russian have a good appreciation of their true situation. The world will be a great deal better off when Russia exists only in the history books. Good riddence
It's been manifest for years that the neo-Soviet durak-osel-ubitsa-Putinistas are thoroughly corrupt. It's not surprising in the least that they overplayed their hand after flashing their cards.
Yes, Russia will come out of this the strongest country ... in vodka consumption. The days of big oil are coming to an end. In the meantime, I'd expect the small-scale equivalent of Chernobyls, of accidents that didn't have to happen. Seriously, who'd be dumb enough to invest fixed, long-term capital in Russia, now? The Russian mafiacrats themselves have been investing overseas.
I'd think of China more in terms of lebensraum, and less in terms of seizing oil fields. Aren't the mineral resources mostly near the Urals? In any case, Tom Clancy got it wrong; the Russian people are likely to be sold out by their hyper-nationalist leadership before they even know to lift a finger in protest, given the totalitarian control that the Putinistas have been reasserting over the Russian news media, and it'll be sold to them as something glorious.
it'll be sold to them as something glorious
It certainly has been!
Woops, my bad. I thought you were refering to CNN selling Obama's "stimulus" package to the American people. Guess that Russia is not the only one with totalitarian control over the media.
Laszlo and TDH it is truly enjoyable reading your emotional rants. I don't report theories, only facts. I am not an emotional extremist.
1. population decline fell to -1/1000 in 2008. and the fertility rate is now 1.8 and climbing rapidly(about 12% a year)
2. "Who be dumb enough to invest capital in Russia" Every major corporatin in the world. German investments are actually ramping up. Before partnering last week with Rosatom they dumped their JV with the French nuclear reactor manufacturer Areva. - ouch
some more highlights for you:
If the Current pace of investment continues Russia will overtake the USA as the largest grain producer in the world by 2020 and also the largenst manufacturerer of paper products.
BTW: Russian growth from 2000-2002 was 8-9% while oil was trading in the teens. The ruble appreciation due to high oil prices limited Russian industrial expansion. Now the ruble has been devalued setting the stage for the next expansion
Russia was the largest new car market in Europe for 2008. All majors except Honda have factories in Russia.
Russia is 13% covered by fresh water double that of the USA and vastly more than most other countries.
Unfortunately The USA and UK are finished. UK is a total basket case. Its an insolvent country(banks and goverment) with no industry to speak of. They sold all their North Sea oil and gas for 10$ a barrel. As the Indian prime minister has said Britain is a "Third rate power" and now a 3rd world nation.
The USA consumes 20 barrels of oil per capita(twice that of Western Europe) and imports about 82% of that oil. The banking system is bankrupt. The Federal goverment has debt and liabilities(before the bailouts) of 42 TRillion(this includes social security and medicare which are unfunded but must be paid out- they never will be). The future of the USA is downright frightening as they have pinned their whole society(culture&identity) on "economic growth" but it is a de-industralized bankrupt country that has wasted its oil and gas resources.
Russia on the other hand has enough oil and gas to last for centuries while The UK and USA plummet into the abyss. Russia occupies the most important strategic location. It is the center of the eurasian land mass connecting the 2 population centers of the world. Russian Railways will soon link China with Berlin. Allowing containers to be transported on rail at a fraction of the cost and time. The UK is an island without resources and the USA is separated by 2 oceans from the world population centers.
If you need any more information please post I will be happy to correct your misconceptions.
These are from CIA fact book. UN figures are almost identical but less user friendly to extract.
Russia:
GDP (purchasing power parity): $2.225 trillion (2008 est.)
Population: 140,702,096 (July 2008 est.)
Population growth rate: -0.474% (2008 est.)
EU as a whole:
GDP (purchasing power parity): $14.96 trillion (2008 est.)
Population: 491,018,683 (July 2008 est.)
Population growth rate: 0.11% (2008 est.)
USA:
GDP (purchasing power parity): $14.58 trillion (2008 est.)
Population: 303,824,640 (July 2008 est.)
Population growth rate: 0.883% (2008 est.)
So Dan, you are delusional.
Laszlo,
-.474 is the cia estimate, Russia published a figure of -1 per 1000 I believe that would be -.0001%, wiki says -.08, either way it doesn't matter as a slightly decreasing population is preferable to a growing population because of resource constraints.
wiki :the pop growth rate was -.08% from Jan to Nov
http://en.wikipedia.org/wiki/Demographics_of_Russia
more:
In all, the number of deaths exceeded the number of births by 1.3 times, down from 1.5 in 2006. Eighteen of the 83 provinces showed a natural growth of population (in 2006: 16). The Russian Ministry of Economic Development hopes that by 2020 the population will stabilize at 138-139 million, and by 2025, to increase again to its present day status of 143-145, raising the life expectancy to 75 years. [10] The demographic situation continued to improve in 2008, with the population declining 113.3 thousand (0.08%) from January-November, compared to 207.6 thousand (0.15%) during the same period in 2007.[2] The number of deaths exceeded the number of births by 1.2 times, compared to 1.3 in 2007.
***18 provinces showed a + pop growth rate*** let me explain what is going on: the remote unfeasable soviet settlements are depopulating while the economically viable ones are growing. No demographic crisis at all just people moving to the work.
baby boom:
as to the birthrate here is education for you:
http://www.cdi.org/russia/johnson/2008-28-2.cfm
"From Crisis to baby boom" This article talks about the 2007 birthrate. The 2008 was much better and as I stated previously is accelerating rapidly(12% annum).
I couldn't find the final # of births for 2008 but they were between 1.8 and 2 mil so lets say 1.9 mil
at any case they are making nice steady progress and will probably settle at a fertility rate slightly higher than the replacement rate of 2.1.
Sorry to burst your bubble, but hey look on the bright side in the last few months Caterpillar, John Deere, and Agco have all announced they are building production facilites in Russia, this just adds to the list of American(for now) companies you can work for there.
"We at Intel have a saying: Give the urgent projects to the Americans, big projects to the Indians, and the impossible ones to the Russians. The Russians can do anything"
From Steve Chase head of Intel R&D in Russia.
http://www.dataart.com/company/dataart/news20040722.htm
Ouch!
either way it doesn't matter as a slightly decreasing population is preferable to a growing population because of resource constraints.
What on earth does that mean? What do you mean by 'resource constraints'? It is people and their interactions that generate wealth, not inanimate resources.
Certainly the article paints a very discouraging eye-witness picture of an extremely strategic Russian resource based industry where the problems are not lack of stuff in the ground but typically counter productive Russian behaviour.
Also life expectancy in Russia is horrendous, particularly for males by all accounts I have seen. A chum of mine is a western medical professional who has been involved with paediatrics in Moscow for many years now and if what they told me was correct, Russian life expectancy is not going to improve significantly for the foreseeable future.
The well deserved global crash we are entering now is going to trash everyone's economy, that is for sure, but in Russia there is very little to land on... it lacks the sophisticated economy-in-depth found in most western countries and has endemic political interference in the economy that makes the sheer idiocies in much of the west seem mild by comparison.
But hey, I see little value in trying to convince you that Russia is a busted flush if you are determined to think otherwise. Lets just wait 5-10 years and see what comes out of the other end of this economic depression. If you think Russia will be relatively stronger, I think you are in for a disappointment. As any regular reader of this blog knows I am very bearish for many (indeed most) western societies but all the reasons I have for that apply doubly so for Russia, which is why I find the bombast of Russian politicians and their apologists very hard to take seriously.
If Russia can develop a viable and reality-based business culture without the poisonous influence of the political looter class, that would be great, but I cannot see any prospects for that at all. Things are bad enough in the west where there is at least some tenuous tradition of reality based economics to draw on, in Russia they do not even have that.
In the demographics discussed, particularly in comparative demographics, attention should be given to age level percentages, and the trends within each of those levels as extrapolated forward.
Example: If longevity in the age 50-70 bracket is increasing, population will appear to increase even if birth rates remain at 1-1 for the overall existening population.
Of course other factors, such as decines in longevity, also affect to overall "growth rate."
Russian agriculture revival and massive potential:
http://www.iht.com/articles/2008/08/06/business/farm.php
Russian government officials recently announced plans to transform the country into the world's leading grain exporter within five years. While there are skeptics, Natasha Zavozdina at investment bank Renaissance Capital said the target is realistic.
"With $70 billion (1.8 trillion RUB) investment within 5 or 7 years... the goal will be achieved," she said. "As long as production is profitable, public and private investment will be flowing in."
http://mnweekly.ru/business/20080919/55347483.html
"its people and their interactions that generate wealth"
That's interesting, since the discovery and exploitation of oil, coal & gas world population and GDP went into an exponential rise. In fact the graphs of world GDP, oil production, and population are IDENTICAL Bell curves(an exact 1:1 correlation - fancy that). Now all three are on the downside of the bell curve.
Without fossil fuels, the only human interaction generating wealth would be bartering chickens for a pair of wool socks at the local market.
Russian government officials recently announced plans to transform the country into the world's leading grain exporter within five years. While there are skeptics, Natasha Zavozdina at investment bank Renaissance Capital said the target is realistic.
Five year plans, just like in the good old days...
That's interesting, since the discovery and exploitation of oil, coal & gas world population and GDP went into an exponential rise
Here's little experiments for you so that you can try to figure out how idiotic what you just wrote was in answer to the statement "it's people and their interactions who generate wealth": take three barrels of oil and leave them alone together in a room for 1 week. Exactly how much wealth was generated in that week?
Russian government officials recently announced ...
Oh right, and tractor production is also up and all the peasant are smiling and voting 107% for the beloved leader. After all, everyone knows the Kremlin is the most trustworthy institution known to man because Russia's state has separated powers.
I think the big advantage we have in the west, no, make that HUGE advantage we have over poor old Russia is a decent proportion of the population knows our governments are completely full of shit.
I also heard about Exxon giving Russia the Bird from an Exxon employee and they said it was for exactly the reasons the author indicated. And I quote "there are plenty other projects without those jerks and who the hell really wants to work on Sakhalin anyway? Give 'em five years of ever bigger fuck ups and they'll ask us to come back at twice the price. I hope we tell them to pound sand then too".
Ludmilla,
take a thousand people and leave them without oil and gas, then see how much wealth/GDP is generated. Now do you see how idiotic your statement is? Sorry to burst your bubble. What you will have is an economy circa 1850. Think Haiti, Cuba, Ireland(prior to easy credit of the last 2 decades etc.. or any resource poor nation.
As oil production(flow rates peak) so will world GDP and population. They are irrevokably linked together as any grade school student could tell after looking at the graphs. As the author of this article astutely pointed out, Russia's colossal artic reserves will never be developed and the equally colossal eastern siberian reserves will only have the low hanging fruit developed(the Vankor field for example). The days of easy&cheap to extract oil are over. The Majority of the world's remaining reserves have an Energy return on energy invested in the single digits compared with the 20 for Saudi Arabian/West siberia fields. This basically makes them uneconomic to extract.
The relationship between fossil fuel extraction, population and GDP is concisely explained in this 2 minute video: http://www.youtube.com/watch?v=nz2UY4n4las
Dan, as you seem to be hard of thinking and frankly just a blogroach, resources are not wealth in and of themselves, it is people using technology (which is created by people, not barrels of oil) that makes wealth. Reducing the population does not make you wealthier.
If all it takes is resources, why is Russia a second rate nation and Japan, who imports all resources, a first rate nation? People are assets not liabilities, so your very early 20th century notions of how wealth is created are frankly absurd.
Jim
ya they have egg on their face from announcing earlier this decade they would soon overtake Saudia Arabia as the largest Crude producer. Oops they did that!
Does anyone one on this site employ critical thinking and verification, or do you simply regurgitate what is in the MSM media? Well let me clue you in - what appears in the MSM regarding Russia is biased as Russia's interests directly intersect those of the Neo-Con/pro Israel crowd, whom control not only foreign policy but the editorial boards.
Jim,
Technology, wealth, GDP is all underpineed by cheap fossil fuels. Remove fossil fuels and you have nothing.
"Why is Russia a second rate nation and Japan a first rate nation"
I will intelligently answer your infantile question. For 80 years Russia did not have a capitalist system, therefore there was no incentive to build a better mousetrap. Now after just a few short years of capitalism they are beginning to dominate in many fields(and they are just starting)
computer science(the whole world knows who to turn to when a problem need solving)
aerospace
agriculture
nuclear technology.
oil&gas
transport/logistics
Atually it is an amazaing tribute to the Russian people what they were able to accomplish under a collective system where there was no private incentive to innovate. Their scientific achievements in that light are even more amazing.
Comparitively speaking the future in Russia is so bright you have to wear shades. In general the world picture is very bleak but at least Russia has copius amounts of O&G, fresh water and uranium. If they insulated their economy they could live better than the rest of the world.
Russia is learning the hard way that without the rule of law, stable property rights and a large middle class, all the natural resources in the world will not do any favours. Think on this, Dan, one of the richest places on the planet, little Hong Kong, has to import its own water. By contrast, Africa is - with the odd exception - a total basket case despite its vast resources; Russia ditto. Even Latin America, which has been similarly blessed, is only really starting to hit some kind of respectable economic growth.
If they insulated their economy they could live better than the rest of the world.
... Seriously, this is Econ 101. And why would anyone ship anything from China to Europe by train for a multiple of what it costs to use a ship?
Numbers are just numbers and cannot predict anything. History is real. Russia's tip-of-iceberg, visible modernism obscures her third world base. She poked her head up out of the third world briefly and failed. Back to the third world until others are able and willing to lift her up again. Her natural resources will wait to be exploited until Russia can afford to export them, but she will not soon overcome her 90-year developmental deficit.
Russia's tip-of-iceberg, visible modernism obscures her third world base.
No one other that the wilfully blind misunderstand that Russia is essentially a third world country with nuclear weapons. And the idea that Russia, which is essentially an African style kleptocracy, actually has a 'capitalist' system is hilarious. The article Nicolas Bourbaki wrote above is just another indication that the Emperor, I mean Tzar, has no clothes.
We are all in the downward spiral now and Russia is not well positioned to come out of this any better than anyone else as they simply lack a culture capable of anything but top down direction. Hell, governments in the west are doing their damnedest to destroy ours but at least we have one.
Perry, I'll see your statement and raise a little: "Top down direction" in the Bear's case will fail again. They need to go 12000 feet down to reach "oil" but their industrial base will only allow 1200 feet.
Time to celebrate would be after Germany & Sweden reverse their plans to shut down all their nuclear power plants, and after Britain actually starts building new generation plants instead of just talking about it.
I don't know about the Swiss, but the Germans seem perfectly happy to increase their dependence on nuclear power. As long as it's generated somewhere else.
Editor's note: Eric, send me an e-mail using the sidebar address as there is something I need to tell you privately about why every comment you post gets caught by the spam bot killer
There is a reason why the smart money is investing capital in Russia, obviously there is no smart money on this site.
The comically ignorant epitaphs emanating from this board are eerily similar to Hitlers characterization of Russia as a "backwards barbarous" state. That didn't work out to well.
Categories in which Russia is #1 now or will be in the near future:
1.Agriculture production
2. military hardware(Russian hardware is still better and cheaper than USA hardware and has only recently started to upgrade) - they are # 1 exporter now.
3. oil&gas production
4. nuclear reactor manufacturing
5. Auto manufacturing (for Europe)
6. nanotech
They will also be a strong contender in civil aviation with the superjet 100 in production to be followed shortly by the MS-21
The life in all Major Russian cities is already better than that in American cities and most European cities. Some of the 2nd and third tier cities have only started to develop, but they have had only had 8 years , where as Western cities have had 80 years.
Hopefully Russia will learn from USA&UKs mistakes and develope in a more sustainable way.Iif they continue down this track without moderation,they will collapse like the USA & UK. They need to develop in a more sustainable way than the USA. Attempting to subjugate the middle east for O&G is not a good long term strategy.
BTW: 40-50% of the Russian is middle class - cars, foreign vacations, new apartments. All European resorts treasure Russian tourists as they spend more than than europeans/americans. This is not surprising as it was calculated that the Russian middle class has more disposable income than their western counterparts. (no mortgages, cheap utilities)
From www.cgi.stanford.edu:
GDP per capita in Russia has now passed $15,000. Russians don’t
typically pay much in the way of mortgages (less than 3% of the
population has a mortgage), rent (I don’t know the statistics, but
very few Russians, I suppose less than 1%, rent their homes),
utilities (natural gas is almost free), or taxes (flat 13% rate). So
consumer spending is similar to that in Western Europe, where GDP per
capita is higher. GDP per capita in France, Germany or the U.K. is
about double, but disposable income is about the same because the
French, Germans and British bear a crushing burden of taxes, housing
costs, and expensive fuel and heating costs, to an extent which
Russians don’t have.
more:
http://www.euromonitor.com/Top_10_consumer_trends_in_Russia
From Frost and Sullivan:
http://rbth.ru/articles/2008/12/15/151208_investment.html
Frost & Sullivan's Director Beatrice Shepherd states, "The unfavourable press on doing business in Russia overshadows this country true potential. There is limited objectivity and willingness, coming from Western enterprises, to accept the differences of working with a different culture and business environment. At Frost & Sullivan we have been working on projects in Russia for global companies from the US, Europe and Asia but also for Russian companies. This gives us a unique perspective on this country, a truly objective view
Sorry to break reality to you all. Learn to think independently and not regurgitate, do more research. This will aid you in the tough times ahead.
postscript:
USA is several orders of magnitude more corrupt than Russia if you hadn't noticed.
2. military hardware(Russian hardware is still better and cheaper than USA hardware and has only recently started to upgrade) - they are # 1 exporter now.
'Still' better? Which of course explains why the Middle East is littered with wrecked Russian military technology.
3. oil&gas production
Did you actually read the article you are commenting on?
4. nuclear reactor manufacturing
...From the people who brought the world Chernobyl...
5. Auto manufacturing (for Europe)
Oh yes, Russian cars are much in demand, you see them everywhere. Actually... I have never seen a single post-communist Russian car anywhere in Western or Central Europe. Not one. Not a single one. Skodas on the other hand...
6. nanotech
Which as it happens is my field. I know several outstanding Russians in nanotech, all of who live and work in the USA or Switzerland. if you think Russia is a nanotech leader, you do not know what you are talking about.
Epic fail.
Dan, is there something in Mr. Bourbaki's essay above which you don't understand? His chronicle of Western investment, Russian nationalization, and Western disengagement, resulting in oil and gas production downturn and unserviceable debt, will be repeated in any industry where Western investment is resulting in some success. The wholly Russian sectors (are there any?) will not prosper in the general downturn. The smart money is staying away in droves, those with existing investments are quietly (but frantically) trying to divest before nationalization. The recent experiment is a failure, profitable concerns in a third world country are a plum too tempting for the oligarchs to avoid picking.
LWP,
What you Janine, Mr Bourbaki and others don't understand is that your perceptions are not reality. I have linked concrete facts which you choose to ignore. This is indicative of a rigid intellect incapable of a paradigm shift. More links for your concretely refuting your panicky assumptions:
Siemens, Russia eye poweful nuclear alliance(FEB 3):
http://uk.reuters.com/article/tnBasicIndustries-SP/idUKL349564720090203
Daimler Trucks Acquires 10% of Russian Truck Manufacturer Kamaz:(Dec 10, 2008)
http://www.daimler.com/dccom/0-5-7145-1-1159761-1-0-0-0-0-0-11979-0-0-0-0-0-0-0-0.html
Caterpillar builds factory in NOvosibirsk:(Jan 5, 09)
http://www.marchmontcapital.com/story.php?story_id=5722&story=Caterpillar-crawls-into-Novosibirsk-with-truck-plant--
Agco to announce Major deal with Russian firm(Jul 28, 08)
http://www.ajc.com/business/content/business/stories/2008/07/28/agco_russia.html
Volvo Truck starts production at Kaluga plant
http://www.just-auto.com/article.aspx?id=97595
I could go on and on but this amply refutes you silly hypothesis.
Janine - who buys Russian cars? That's why BMW, Mitsu, VW, Ford, GM,Renualt, HYundai, Daewoo, Fiat & others have factories in Russia. Do you feel foolish now? That's why Russia was the Europes leading new car market in 08. Russia is now the world's leading gas & oil producer. Saudi could pass them if they would produce at their full capacity with their recent expansions- but the saudis keep cutting production.
I have offered fact after fact and you provide nothing but unsubstantiated falsehoods like this:
"will be repeated in any industry where Western investment is resulting in some success. The wholly Russian sectors (are there any?) will not prosper in the general downturn. The smart money is staying away in droves, those with existing investments are quietly (but frantically) trying to divest before nationalization"
Completely contradicted by fact as I have demonstrated. Russia has not nationalized 1 company since the revolution and will not be doing so in the future. Do you know anything about Russia? or do you enjoy making a fool of yourself?
Obviously you have not read the essay as he points out Western oil firms are still eager to invest in Russia: "Perhaps surprisingly, the cash rich western oil companies still have an appetite for investment in Russia, and several are showing an interest in partnering Gazprom in the giant Yamal development in Arctic Siberia"
Russia with communism was 1 of 2 superpowers. Russia with capitalism is like a 100 ton locomotive headed down the track. It is now just starting to depart the station. Unfortunately the USA&UK are the helpless maidens tied to the rails a few miles down the way. This didn't have to be, but the USA&Uk did there best to break up Russia in the 90s and I expect that Russia will not have any mercy now that the tables are turning.
LWP,
What you Janine, Mr Bourbaki and others don't understand is that your perceptions are not reality. I have linked concrete facts which you choose to ignore. This is indicative of a rigid intellect incapable of a paradigm shift. More links for your concretely refuting your panicky assumptions:
Siemens, Russia eye poweful nuclear alliance(FEB 3):
http://uk.reuters.com/article/tnBasicIndustries-SP/idUKL349564720090203
Daimler Trucks Acquires 10% of Russian Truck Manufacturer Kamaz:(Dec 10, 2008)
http://www.daimler.com/dccom/0-5-7145-1-1159761-1-0-0-0-0-0-11979-0-0-0-0-0-0-0-0.html
Caterpillar builds factory in NOvosibirsk:(Jan 5, 09)
http://www.marchmontcapital.com/story.php?story_id=5722&story=Caterpillar-crawls-into-Novosibirsk-with-truck-plant--
Agco to announce Major deal with Russian firm(Jul 28, 08)
http://www.ajc.com/business/content/business/stories/2008/07/28/agco_russia.html
Volvo Truck starts production at Kaluga plant
http://www.just-auto.com/article.aspx?id=97595
I could go on and on but this amply refutes you silly hypothesis.
Janine - who buys Russian cars? That's why BMW, Mitsu, VW, Ford, GM,Renualt, HYundai, Daewoo, Fiat & others have factories in Russia. Do you feel foolish now? That's why Russia was the Europes leading new car market in 08. Russia is now the world's leading gas & oil producer. Saudi could pass them if they would produce at their full capacity with their recent expansions- but the saudis keep cutting production.
I have offered fact after fact and you provide nothing but unsubstantiated falsehoods like this:
"will be repeated in any industry where Western investment is resulting in some success. The wholly Russian sectors (are there any?) will not prosper in the general downturn. The smart money is staying away in droves, those with existing investments are quietly (but frantically) trying to divest before nationalization"
Completely contradicted by fact as I have demonstrated. Russia has not nationalized 1 company since the revolution and will not be doing so in the future. Do you know anything about Russia? or do you enjoy making a fool of yourself?
Obviously you have not read the essay as he points out Western oil firms are still eager to invest in Russia: "Perhaps surprisingly, the cash rich western oil companies still have an appetite for investment in Russia, and several are showing an interest in partnering Gazprom in the giant Yamal development in Arctic Siberia"
Russia with communism was 1 of 2 superpowers. Russia with capitalism is like a 100 ton locomotive headed down the track. It is now just starting to depart the station. Unfortunately the USA&UK are the helpless maidens tied to the rails a few miles down the way. This didn't have to be, but the USA&Uk did there best to break up Russia in the 90s and I expect that Russia will not have any mercy now that the tables are turning.
Dan, I have the advantage of having lived in Russia for 4 lousy years until fairly recently, which is why I understand your psychosis very well. Although I was in the financial sector unlike Mr. Bourbaki, like him I've seen it all up close and so wasn't at all surprised when Shell and Exxon came to grief after investing in a country run by thieves ever more rapacious than those in my country (which is saying something). I too knew about how the oil stabilisation fund was heavily invested in the energy sector. As they say on the internet: WTF? That is the sort brilliant move your "capitalist" country's leaders make.
No one would deny that the neo-Soviets are fools, at the grand-strategy level, or that they are murderers. The redundant donkey business might seem a hair over the top, but neo-Soviet rhetoric has been so ludicrous for so many years that, well, you know an ass by its ears, prav li ja? Mistaking colorful, perhaps cryptic, language for an emotional rant is a rather elementary error in reading comprehension, and while it has happened more than once on samizdata.net, it does have a little entertainment value.
Intel's use of Russian labor doesn't constitute anything significant in terms of capital investment. Further, since top-notch Russian programming talent was hired out years ago, it makes you wonder what, exactly, Intel is stuck with, doesn't it? Their manager's remarks to the effect that Russians were last-resort miracle workers smacked more of morale building or wishful thinking than of an attaboy or a solid grasp of reality.
Don't get me wrong. I love St. Petersburg. (The one in FL isn't too bad, either, with its great little Dali museum.) The only thing wrong with it, apart from that vile, gaudy Church on Spilled Blood, is that it's in Russia. There was a secession movement a decade or two ago, but it's a virtual certainty that it was the neo-Soviets who committed the murders that cut that short.
Of the capital investments now taking place in Russia, you have to wonder how well managed the companies are, and who, exactly, is insuring those investments. I wouldn't be surprised to find US taxpayers on the hook for some of them; that was US policy for decades.
Facts do not speak for themselves (especially when they're merely factoids instead). Most often, they need quite a bit of help.
Concretes without sound connections are not surprising coming from a wildly enthusiastic Russia booster.
The life in all Major Russian cities is already better than that in American cities and most European cities.
-'Dan'
That must be why so many Russians are so eager to get out of Russia so much- life is just too good in Russia! They yearn for the simple, spartan life found in the west! Yeah, that must be it.
XD
Dan/Beatrice from Frost & Sullivan: I see you're still as deluded as ever. But I suppose that's a necessary condition of employment for you, so you're excused.