Keeping it Real: a Russophobic Guide to Reading Your Own References

Uncle Volodya says, "Oy, such a lie, your tongue should fall out already"

The Russian Flag, as it appears to all but Russophobic twits

Readers will have noticed that, in the La Russophobe articles that form the basis for these posts, the cited references often do not support the viewpoint at all.  The hotlinks, like the headlines, are deliberately formulated for tabloid shock value, and the desperate reaches to maximize any negativity toward Russia are frequently comical in their maudlin overreach. Often, yellow-journalism rags like Novaya Gazeta and the more hysterical columnists of the Moscow Times offer plenty of poorly-researched, opinion-heavy rubbish to choose from, but when those sources don’t satisfactorily predict Russia’s imminent collapse, La Russophobe is not above spinning an essentially positive story into a virulently negative one. The key often lies in methodical follow-up of her references.

Take this excellent example. The headline shouts, “Russia For Sale – Cheap!”, and the subhead promises, “Buy One, Get One Free!” Follow the link that supposedly supports this Clearance Sale of the Motherland, and you will discover how much of Russia is actually for sale – not one inch.

The opening paragraphs make clear that nothing at all has been sold yet. If and when it occurs, it will represent an offer of minority shareholder stakes in major Russian nationalized companies, characterized by the markets as a “welcome shift towards privatization”. The article makes clear that the government will retain control of the economy. While it’s true Russia is struggling with a deficit this year, owing to energy prices, the shortfall this year is forecast to be around “$80 Billion”. Always a fan of  the”go big, or go home” doctrine, La Russophobe reports the deficit is “speedily approaching $100 Billion”. Well, yes, I guess you could say that – it’s also approaching $500 Billion at exactly the same speed, or a Trillion, or whatever number you care to name. Exaggerating it by 20% certainly makes it sound more serious, doesn’t it?  This, we are told, represents a “massive deficit”. Keep that in mind for later, when we look at America’s deficit.

But right now, let’s take a look at what the two nations have in the bank. Cash reserves are an important deficit offset, and let’s recall Russia chose to spend its way out of the recession. Today Russia has around $400 Billion in the bank, the world’s third-richest country after China and Japan. The USA is 18th, with around $80 Billion. That’s misleading – America’s economy is orders of magnitude bigger than Russia’s. However, there’s no getting around the fact that Russia has a great deal more cash on hand than does the United States. Why? The difference between fiscal prudence under Vladimir Putin and fiscal profligacy under George W. Bush. You can babble on all you like about Russia being reliant on energy – so what? The USA is reliant on energy as well; however, one is a net energy vendor, and one is a net energy buyer. Who’s the more vulnerable?  You tell me.

Reading a bit further down in the Financial Post story (the Financial Post is an offshoot of the National Post, arguably Canada’s most conservative newspaper) we learn that the likely beneficiaries of this sell-off will be…..other Russian businessmen. What? How, then, does this justify the gleefully gloomy La Russophobe headline? How is this a disaster for Russia? In fact, western private investment would be beneficial, although the western big dogs often are not eager unless they can buy a controlling interest, and then do as they like with the company. As we discussed above, that’s not what is on offer here.

Just before we leave the Financial Post, look in the links sidebar to the right; you’ll find a related story entitled, “Foreigners to Keep Investing in Canada”. This sounds ominous – does this mean Canada is for sale, cheap? Apparently not. Apparently foreign investment is a good thing, that contributes to a stable economy and a solid bottom line. Therefore, attracting foreign investment should be a goal for Russia, and an essentially positive story has been spun into a virulently negative one, using deliberate falsehoods and relying on you not checking the references.

Why, I bet even America allows foreign investment. Sure enough – lookie here. Lenovo, a Chinese company, owns IBM’s PC and laptop unit. Smartmatic, a Dutch company that makes voting machines, owns Sequoia Voting Systems of California. Oooooo….look who’s another big customer: Hugo Chavez. I sure hope he doesn’t own shares in the company! NTT Communications of Japan owns Verio, a major U.S. web hosting service. Hey, I bet I know what would be fun! Investigating which country allows more foreign ownership. But I haven’t got time for that right now.

A good general rule for debunking Russophobic writing – always check the references. If there aren’t any, you know it’s just someone’s opinion; there may be something to it, maybe not. If there are references, read them thoroughly, and pay attention to their own credibility. Oftentimes you’ll find they don’t say anything like the Russophobic author suggests they do.

Oh, yes; I promised we’d take a look at America’s deficit forecast for 2010. I’m not a great fan of Wikipedia as a reference; but this seems to agree with other projections, and includes great graphic support illustrating particular problem areas. The American deficit is forecast to decline to $1.17 Trillion in 2010. That’s Trillion with a “T”.

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11 Responses to Keeping it Real: a Russophobic Guide to Reading Your Own References

  1. monkeyGrove says:

    Thank you for your sharing.

  2. Alex("zed" one) says:

    Well, if Chunbais’s past performance is any indicator of what he will do in the future & considering that the past included such notable deeds as “privateering” (spelling is intentional) of the Russian economy (with notable help from Harvard) in 1990 and then masterful handling of the previous sale of UE with some USD 32 Billon evaporating from the budged as the result, one may only wonder which new heights will be achieved this time. Or why he is where he is and not sharing his experiences full time with Khodrkovsky. Another problem – with “Russian businessmen” benefiting – is that they never invest in their own country.

    • marknesop says:

      I hope I haven’t been that delinquent in my reading – is Chubais involved in this scheme? I think of him as the gift that keeps on taking, and I seem to recall his having been involved in Khodorkovsky’s acquisition of YUKOS for a fraction of its actual worth. And he’s a pal of Boris Nemtsov. How he’d ever be allowed around state money ever again staggers the imagination.

      Have you a link for the Harvard connection? I’m intrigued….

      Sadly, you’re right about Russian businessmen not reinvesting in the country, but more often moving their profits offshore. Any ideas on how that could be changed? What would it take for Russian businesses to get philanthropic about the nation? Tax breaks? Preferred status?

      • Alex ("zed" one) says:

        Mark – check your spam filter – Word Press claimed it was very good – maybe it is?🙂

        • Alex ("zed" one) says:

          In plain language – I posted you some links – twice, but they did not appear.

          • marknesop says:

            Hi, Alex; as you can see, I got it. You’re right, it was in the spam filter. There’s not much I can do about that, as its discriminator is automatic. However, every comment that went to the spam filter so far has been recovered and posted (I deleted one of yours because they were exactly the same). I guess it just acts as a bit of a moderator. Anyway, I’ll look through your links with great interest, thanks!

            I guess I didn’t think much about the tax angle; you’re right about that, too – Russian businesses already pay very low taxes. But there must be a way, and I bet an economist (I’m not) could figure it out. It can’t be a straight cut based on profit, because that would encourage more hiding of income or encourage businesses not to show a profit, which is obviously not desirable. Appeals to invest in Russia will be met with cocky questions like, “Oh, yeah? What are you planning to do with that $400 Billion you’re sitting on?” I encourage you and others to think about it. If it’s any comfort, the government apparently hasn’t come up with much, either.

  3. Alex ("zed" one) says:

    You mean I mixed up something? Not impossible, as he was a side issue, but from memory a part of Unified Energo System (or what had left of it) was included in the package for new sale & his name was mentioned as one of the major shareholders. Maybe related to this ?

    About 1990 privatization Chubais & Harvard I have plenty – eg. one of them .

    About Chubais in general – ooh! just start with wiki . Continue here (look at the side bar too) and here – some x-references to verify claims there, are easy enough to find. Google Chubais + Luzhkov or Chubais+Illarionov or Chubasi +UES (in Rus) – you will have a lot of fun.

    Russian business and tax breaks? If I am not mistaken, they already pay one of the lowest tax in the world (when they pay) – does not seem to help much. IMHO the problem is that those who have money in Russia are not even “capitalists” – they are legalized criminals. The difference is that “proper” capitalists (not in finance industry) always have some creative streak & skill which is not related to simply stealing money – they want and know how to *do* something. The criminals have just one creative streak – to steal. I did not think about the problem – how to prevent etc. , though.

  4. Alex("zed" one) says:

    Mark, it is an interesting question – about keeping the business inside Russia. And I am not the best person to answer it – one needs a group of people with more specialized (and practical) knowledge.

    Nevertheless, I’ll give you a rough outline of what I think.

    There is a paradox here – even criminals need a stable, predictable and “fair” system to keep their money and invest i.e. everyone with the money/profits wants a system where the official law always works. Which means a *not* corrupted government structures and courts. To do this, the government at all levels must be completely separated from the business. And this must be striictly enforced i.e. corruption in MVD and tax system must be liquidated first. How? Maybe to study Georgian example? (I know it is not perfect, but much better than what Russia has). IMHO this alone would attract investors and with comparatively high returns – keep the capital inside Russia. Even Browder would have been welcome in such system. Of course, stolen capital will always be transferred abroad, but there also will be less of it. I can think of other issues, but they IMHO are secondary.

  5. marknesop says:

    That’s an interesting theory, and I suppose it should be obvious that government figures should not also be CEO’s of operating businesses. That makes sense, although I’m not sure how the government would go about weeding it out, since anyone in that position would just put a puppet place-holder in charge of the company and continue to run it under the radar (like Dick Cheney and Halliburton).

    However, Georgia is likely not as good an example as you think. Foreign investment in Georgia has decreased under Saakashvili, and the minimum wage is a tenth what it is in Russia.

  6. Pingback: Exhibit A | The Kremlin Stooge

  7. Pingback: Freedom is Slavery: Ignorance is Strength | The Kremlin Stooge

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