While tuning up on Russia the other day over Vladimir Putin’s decision to skip the G8 summit at Camp David, Anders Aslund – economics busybody and pompous think-tank know-it-all – suddenly paused, mumbled, “What was that purple flash? I….I smell bacon!!”, and collapsed. A bright red-and-yellow air ambulance supplied by Lego rushed him to Emergency Admissions at Miller Children’s Hospital in Long Beach, where he was given 6 units of chocolate milk by IV and put to bed in Room 212 of the Spoiled Brat Wing. Surgical resident Kanchu Getoveryourself emerged later drenched in sweat, smudged with chocolate handprints and with part of a lollipop stuck to his hair, and assured reporters that although Mr. Aslund had to have an emergency petulance bypass, he was in no immediate danger. He is expected to make a full recovery to self-important windbaggery after a short convalescence.
Okay, obviously the above paragraph is satire, and Anders Aslund has not actually been hospitalized for anything. But if throwing a great big I-dropped-my-ice-cream childish tantrum were a medical condition, Mr. Aslund’s crybaby performance in this article (thanks to Mike Averko) would have had pediatric wings across the country on red alert.
Kick Russia out of the G8, says Aslund. If Putin doesn’t want to come to the G8 summit at Camp David; fine. He doesn’t belong there anyway. The G7, he confides, does not need Russia. It is obvious from the outset that Aslund much prefers Dmitry Medvedev – who ” improved Russia’s relations with virtually everybody” and who “accepted international action in Libya”. His fury seems to have wiped out his memory circuits; whatever Medvedev did was never even close to enough or ever won him more than the most grudging praise, and for his own part, Aslund only expressed fondness for him as a leader when it was hoped he would do something stupid, like replacing the Energy Charter of 1991 and entering into an “agreed legal framework for global energy cooperation” with Europe that would see the Russian government relax its hold on Gazprom. As substantiation for his opinion that Gazprom in 2009 was failing, propped up by the Kremlin and a staggering tower of egregious waste, he cited the “excellent book” Putin and Gazprom, by former Deputy Prime Minister Boris Nemtsov and former Deputy Energy Minister Vladimir Milov. He spices up his delivery with apocalyptic figures that show plunging profits, plummeting production and falling exports, capping it with a prediction of multibillion dollar losses. As most are aware, in summer of the following year Gazprom overtook ExxonMobil as the world’s most profitable company. Anders Aslund, back in those giddy days when he hoped the “snow revolution” would take off, suggested that since nothing had come of Medvedev’s many statements, nobody takes him seriously. That certainly paints a picture of a leader who improved relations with everybody, what? As far as accepting international action in Libya, Mr. Medvedev simply did not stand in its way, chastised his Prime Minister for referring to it as a crusade when that’s exactly what it was but walked back his criticism shortly thereafter, and did not publicly make an issue of the west’s apparently deliberate installation of an extremist Islamic “government” where there had been none before. And look at the smoldering wreck Libya is now. Anybody want to take it home, be a foster-parent to it? I don’t see a lineup.
You almost have to wonder how Aslund gained such a reputation as an economist, because – just as in the example above – those who listened to him and took his advice would find themselves making concessions that in retrospect would not have needed to be made or would have been wiped out in a tide of red ink. But Aslund sweeps breezily from one disaster to the next. As a close adviser to the Russian government during the Yeltsin years and a member of Jeffrey Sachs’ “Harvard Boys” team in the 90’s, Aslund was a strong supporter and architect of the controversial “shock therapy” program, that brought about Russia’s default on its domestic debt, the rise of the oligarchy so reviled in the west – when it is not sucking up to its favourites, like Boris Berezovsky, Alexander Lebedev and Mikhail Prokhorov – and the wiping out of many Russians’ life savings, such as my parents-in-law. But you’d never know it was not a roaring success, to hear Aslund tell it: listen to him argue here, in Think Again: Russia (published by his usual refuge from reality, Foreign Policy) that (1) shock therapy was not a failure; that Boris Yeltsin had had no other choice – although Putin didn’t do anything the way Yeltsin did it, curbed the runaway profiteering of the oligarchs, restored state control to the economy and paid back Yeltsin’s insane debt load in record time while accumulating enormous cash reserves. Putin is probably not smarter than Yeltsin, so the notion that Yeltsin had no choice but to do as his western advisers told him is pure unadulterated horseshit. A little later on, in fact just last year, Anders Aslund remembered that shock therapy really was a failure – but it was because the government ran large deficits for too long: (2) Privatization did not generate corruption, it generated national wealth (we’ll come back to this one), (3) rather than collapsing, Russian infrastructure actually underwent a dramatic improvement during the shock therapy years, (4) Russia does not need foreign capital to boost its investment rate. You’ll want to keep this one bookmarked for the next time the Russophobes start chinning about capital flight, and (5) Russia’s health crisis is exaggerated, which is particularly hypocritical considering that during the turbulent Yeltisn years, life expectancy for men fell by six years.
It’s worthwhile reading that whole article word for word, and balancing it against the tirade in the article that is the subject of this post, because there are so many nuggets of pure gold in Think Again: Russia. Some of them directly contradict his red-faced screaming that Russia does not belong in the G8 because that is the Big Folks Club and Russia is unimportant, such as, “Although Russia no longer is a superpower, it remains a huge sovereign country with great influence on world affairs“. Some highlight the hypocrisy of a tantrum that condemns the entire country just because he hates Vladimir Putin, like “Russians increasingly believe that President Yeltsin was wrong in trying to establish friendly relations with the United States, complying with its many demands, while China’s hard-line foreign policy toward Washington was more successful. The United States expanded NATO against Russia without offering anything in return. The U.S. media and Congress persistently criticize Russia more often than China“. Some make you wonder how in hell he ever established a reputation as an economist, like, “Much of the anti-democracy sentiment stems from the perception that political stability is good for reforms. But, in practice, the opposite is true. The long tenure of the infirm President Yeltsin and the passive Prime Minister Viktor Chernomyrdin provided Russia with a “stability” that favored the corrupt elite. Poland, the three Baltic countries, and Bulgaria have changed governments on average almost every year for the last decade, and they are among the most successful reformers”. Perhaps political turmoil is great for reform, but that’s small comfort when you have no job: between 1990 and 2001 – the decade Aslund speaks of, Poland’s unemployment rate went from near-zero to more than 15%. Bulgaria’s figures didn’t go back that far, but the unemployment rate in 2001 was 19.4%. Lastvia’s was 13.1%, Estonia’s went from near-zero in 1990 to 14% in 2001. Lithuania’s figures only went back to 1998, when it was 13.6%, and it had surged to nearly 17% by 2001.
What was Russia’s rate like, during the stodgy, boring “stability” of Yeltsin and Chernomydrin? The numbers only went back to 1999 (in the reference I was using, TradingEconomics), but the rate slid from 15% in 1999 to less than 9% in 2001. Look, you can make statistics say almost anything you like, but it is apparent that Anders Aslund’s idea of “reforms” do not necessarily spell success for the country. Yet it is equally apparent that stability is to be shunned, while constant reform is desirable. I’m probably stupid, but I don’t get it at all and if asked to choose between reform, which would see more of my fellow citizens on the bread line, and stability, which would mean less of a personal outlet for agitating against the government and more illusory freedoms, I would choose stability. And I’m not alone. Aslund’s fellow Swedes Dan Josefsson and Stefan Lindgren discuss Aslund’s concept of reform from a greatly different viewpoint in Shock Therapy – The Art of Ruining a Country (With Some Professional Help From Sweden). The numbers start out grim right from the starting gun, and shine a harsher light on Aslund’s breezy assurances. Between 1991 and 1997, encompassing the bulk of Aslund’s “great leap forward”, Russia’s GDP declined 83%. Agrarian production decreased 63%. The bottom fell out of investment…down 92%. This last figure seems borne out in Think Again: Russia, in which Aslund points out that the west really spent very little money in Russia as a corollary of shock therapy, and pointed out that it had worked out very nicely for the United States, who had reaped a “peace dividend” owing to Russia’s dismembering of its armed forces which equated to $300 Billion a year it did not have to spend to compete. We’ve agreed Aslund is as full of shit as Elvis was full of peanut butter, so it’s not really fair to use him now to support my argument, but to me it illustrates perfectly how unstable he is.
In a country formerly without unemployment – although I was in China in 1988 and saw quite a lot of make-work projects that stressed employment greatly over efficiency – 13 million people lost their jobs. Some 70,000 factories closed. Male life expectancy – long a fat target for Russophobes – dropped by 6 years during the very period of shining reforms that was supposed to lead the barbarians to capitalist bliss.
How’d that hopey-changey thing work out for them? Well, let’s look at McDonalds, symbol of capitalist triumph and the freedom to eat yourself into somebody who will have to be buried in a piano case. The first McDonalds in Russia – in Moscow, naturally – became increasingly popular in the year after it opened. Price deregulation fixed that, when the price of a hamburger leaped from 38 rubles to 100 rubles at a time when an average monthly salary was still between 500 and 800 rubles. By 1995, four years into deregulation, the price of products in shops was more than 3000 times what it had been in 1990. A kilo of meat went from 2 rubles to over 3000. Although wages rose, real buying power was halved between 1990 and 1995.
The voucher scheme was a beauty, too: according to, yes, Anders Aslund, it was a “politically acceptable” way to create “an owner class”. What is rarely mentioned is that between the time the privatization voucher scheme was introduced and the time people were ready to exchange their vouchers, inflation had taken their value from about a month’s wages to about the cost of a bottle of vodka. By far the majority of the new “owner class” was ready to sell its cheap, shitty, worthless vouchers for whatever someone with cash would pay…utterly ignorant that the vouchers’ worth had not diminished at all provided they were exchanged for shares, which were not adjusted for inflation. Entire companies vanished into the pockets of the oligarchy, virtually overnight. Those are the people Aslund described approvingly as “engines of capitalist development”.
Well, they chose the right name for it, at least. Sounds pretty fucking shocking to me, if you’ll pardon my resorting to profanity. By the time I read my way to the end of that article, there was a vein throbbing in my right temple that was so engorged that it pulled the corner of my right eye sideways, and one phrase kept pounding in my brain, over and over: show me any country, any country on this big blue marble, that would let you do that to them and not murder you in your beds one by one for what you did.
I can’t talk about this any more. Instead, let’s take a look at what Anders Aslund is ready to throw away in order to satisfy his temper and his ego. Is Russia important to the G8? Let’s look.
In the past decade, Russia forgave Afghanistan $11 Billion in debts. Russia provided a field hospital and a hospital in Kabul, logistic and intelligence support and right of transit to U.S. forces. At America’s urging, in 2004, Russia wrote off nearly $8 Billion in Iraqi debt, to help it achieve “political stabilization”. Russia has written off more debt than any other G8 nation. Are you curious what Russia got for that? The governments of Jimmy Carter and Ronald Reagan, mostly through the Pakistani intelligence service (ISI), financed and supported the Afghan Mujaheddin against Russia, and in Iraq, elements of the western press circulated the rumor that Saddam Hussein was hiding out at the Russian Embassy in Baghdad. How many countries would provide material help toward achievement of the goals of an alliance that has so continuously schemed against it and made of it a convenient villain? The global non-proliferation monitoring against covert transfer of missiles and missile technologies largely results from a Russian proposal from within the G8. Russia is an active member of the Counterterrorism Action Group (CTAG). Vladimir Putin signed an agreement in 2008 with George W. Bush to build uranium enrichment centres in Russia, to be used by developing countries in their own civil nuclear energy programs, as a way to avoid further potential nuclear arms proliferation. In the year of its G8 presidency, Russia was awarded the highest compliance rating by member states. Russian support for global health initiatives such as the fight against HIV/AIDS and other communicable diseases has been strong and valuable.
Boycotting the G8 Summit is apparently like farting in church – it’s just not done. And mature, well-adjusted leaders don’t skip important international forums out of spite. Absent from Aslund’s pontificating is recall that U.S. Senator John McCain called for a year for a western boycott of the G8 over Russia’s presidency in 2006. John McCain was the Republicans’ pick for president in 2008. Joe Lieberman, also a past presidential candidate, also called for a G8 presidential boycott. But then, it was OK.
When I asked him for a comment on that, Mr. Aslund did not respond, because it was nappy-time.