The Parallax Brief

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Unrepentant Subjectivity on Economics, Politics, Defence, Foreign Policy, and Russia

Levine’s Lackluster Labyrinth

The Parallax Brief was last year so looking forward to the release of Putin’s Labyrinth that he pre-ordered it on Amazon and had a friend pick it up on a trip to the US. Its author, Steve Levine, had written a well respected account of the post-communist scramble for Caspian hydrocarbons, The Oil and the Glory, and penned consistently solid analysis on the activities of Big Oil for Newsweek.

But what a disappointment.

Weighing in at less than 200 pages, Putin’s Labyrinth is a shallow, banal examination of Putin’s Russia. The book suffers from tired writing, poor investigative journalism, personal subjectivity, a paucity of research and a seeming absence of understanding or experience of the subject matter, as well as an unwillingness to think in nuances rather than absolutes, on the part of the author: Nothing that hasn’t already been repeated ad infinitum is said, no new analysis is offered, no fresh insights are provided and the conclusions drawn are risibly passé and wholly, in the Parallax Brief’s view, wrong.

In fact, the Parallax Brief has been meaning for some time to get around to savaging Levine’s pathetic effort to chronicle modern day Russia, but after stumbling upon Stephen Boykewich’s review of Putin’s Labyrinth in the unlikely confines of the Virginia Quarterly Review (VQR), he decided that now was the time.

Written through the prism of his own experiences in Russia, Boykewich’s essay on Putin’s Labyrinth is sensational, and is so well written, tightly constructed and acutely observed that the Parallax Brief suddenly understood the difference between those who get paid for this stuff, and those who have to set up their own blogs on freeware platforms like WordPress in order to satisfy their burning ego.

Boykewich’s 5000 words contain more thoughtful and fresh insights into modern day Russia than Levine’s entire book – a damning indictment of Levine’s effort – and all those interested in Russian politics or foreign policy should click here for thoroughly recommended weekend reading.

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Filed under: Foreign policy, Politics, Russia, , , , , , , , ,

Boris Nemtsov: The Gift to Putin that Keeps on Giving

When Vladimir Putin’s critics craft shrill op-eds about opposition parties being ruthlessly crushed in Russia, they often miss the salient point: really, the opposition in Russia is unsuccessful and unpopular because it isn’t very good and doesn’t have many popular policies.

Of course, it is true that the Russian media and society are not as free as in the West, but more often than not, Russia’s opposition simply does Putin’s job for him. The Parallax Brief is sure that even Robert Amsterdam would agree that Putin and Medvedev are preferable to Vladimir Zhirinovky’s comedy-fascist LDPR, Gennady Zyuganov’s communists, or the array of hapless or nasty nationalists, bolsheviks or white power groups raging at Russia’s political fringes.

But beyond this gallery of unelectable extremist halfwits, even the pro-west, pro-business, supposedly democratically minded group of former Yeltsin era Young Reformers that currently call themselves Solidarity offer little.

Read the rest of this entry »

Filed under: Economics, Politics, Russia, , , , , , , , , , , , ,

Fresh Angle on US-Russia “New Era”

Sometimes the Moscow Times opinion editorial columns can be a little overbearing. While undoubtedly well written and informative, they are almost universally po-faced. Amid this environment of solemn political analysis and grave social policy, Mark H Teeter brings a delightfully light touch and sharp wit to his keenly observed bi-weekly columns on life and news in Russia.

Most weeks he addresses US-Russia relations through the prism of an American living in Moscow, and this week must have provided a bonanza for Teeter, as Barak Obama apparently “pressed the reset button” on US-Russia relations, and wants to reopen nuclear arms control talks with the Kremlin.

(Note to self: I do wish the press wouldn’t refer to the pressing of any kind of button when it comes to nuclear arms. It causes a certain… frisson. NTS2: And speaking of uncouth Obama press coverage, when will they stop referring to the fiscal stimulus bill as Obama’s stimulus package? How can I take this stuff seriously when I read things like, “Obama’s giant stimulus package was viewed for the first time by the Senate today,” and “Obama’s massive stimulus package was cut in size by a bi-partisan group of centrist Senators.”)

Anyway, back to Teeter: funny guy, sublime writer, irreverent vignettes on US-Russia relations and cultural differences through the eyes of a veteran American expat in Moscow.

Today, Teeter has managed to trump every single one of the major op-eds and foreign policy wonk notes I’ve read on the start of a another new ‘new era’ of Russo-Yankee relations. He notes that a cabal of experienced and baggage free Russia veterans sit waiting for Obama, if he chooses to use them, and outlines just what kind of benefit they can bring.

Click here for an engaging read.

Filed under: Defence, Foreign policy, Politics, Russia, , , , , , , , , , ,

Balanced Analysis on Russia

Russia lost its empire and superpower status less than 20 years ago, and is still groping to find its new role on the world stage and in its former territories. Recently, that effort appears to have become more assertive and detached from western liberal ideals. But how can the West go about building a benign, mutually beneficial relationship with a resurgent and recalcitrant Russia? And how should Russia’s new role within its old sphere of influence develop?

These questions and more are explored by Timothy Garton Ash in a erudite and balanced article for the LA Times.

Filed under: Defence, Foreign policy, Politics, Russia, , , , , , ,

Putin says he is “Too Trusting”

In an exclusive interview with Bloomberg Television to air tomorrow, Vladimir Putin, the Russian prime minister and former president, will say that his greatest fault is being “too trusting.”

I have heard Mr. Putin accused of many things, but I suspect nobody has even considered him “too trusting.” One wonders how paranoid Russia would be if he thought he was ‘trusting enough’.

I guess we can be thankful he didn’t go for the ultimate interview cliché and say he was “too enthusiastic.”

Filed under: Politics, Russia, , ,

Ruble Devaluation Enters Endgame

The Russian ruble finished stronger against the bi-currency basket yesterday (Tuesday 20 January), and has this morning strengthened again, perhaps signaling that ruble devaluation is approaching its end.

The ruble is ‘pegged’ by the Central Bank of Russia (CBR) against a currency ‘basket’ of 55% US dollars and 45% euros. The CBR intervenes in the market — either by selling rubles or buying them to weaken or strengthen the currency, respectively — in order to keep the ruble within a designated trading band against the basket. However, even a pegged currency must bow to economic reality, and with Brent crude at USD41 instead of USD141, the ruble had to be weakened.

But instead of a one-off drop of, say, 25%, the CBR embarked on what many viewed as a costly fudge: a step-by-step devaluation. Economists didn’t like it. Chris Weafer, chief strategist at Moscow based investment bank UralSib argued,

“If the government had actually announced a one-off devaluation of around 30 percent in the autumn the issue would probably be done and dusted by now. Instead, the salami-slice approach that the central bank is using has created considerable uncertainty and the expectation of further weakness”

The managed devaluation was a mechanism born not out of economic orthodoxy, but political expediency. It was designed to avoid spooking a population thrice savaged by devaluation – which might have led to a run on the banks – and as a face-saver for the government. But paradoxically, Russia’s slow devaluation ended up increasing the pressure on the ruble by raising expectations that more would follow, encouraging both speculators to place bets on further slippage and the population to switch savings into ‘harder’ currencies.

Further, the CBR still has to use its dollar reserves to stop the ruble dropping more than a percentage point or so every day, meaning that reserves are eaten up almost as fast as they would have been holding steady.

We are now approaching the point where the ruble must be held at a sustainable level. Russia may have had the third largest reserves in the world, but they are not infinite, and by the end of last week, which saw the fastest rate of devaluation so far, the real amount available for defending the currency had dropped to around USD200 bn.

At the same time, the ruble has lost between 20 and 25% of its value against the basket since the process started, approaching a valuation that makes economic sense, and is sustainable. The CBR now needs to force speculators to close their positions against the ruble in order to relieve pressure. It also needs to signal that the end has arrived, and the ruble will be defended at a position of the central bank’s choosing.

But how would it achieve this?

The CBR has two options: First, it can hold the ruble steady against the basket, sending a strong, if tacit, signal that the process is over and short positions should be unwound. Second, it could squeeze ruble liquidity. The Russian banking system as a whole owes the CBR vast quantities of money, and at the same time the CBR is the main source of liquidity. If the CBR tightens supply, demand for ruble liquidity will increase.

And in the last two days, we have seen something like option two. For the first time in years (perhaps ever) short term indebtedness to the CBR exceeds the liquidity banks have available in CBR deposit accounts. Further, the CBR plans to offer ‘only’ RUB80 bn at its ‘deposit auctions’ this week. Ruble liquidity is being throttled. Yesterday, the ruble actually gained against the basket for 50 minutes, during which time, according to my contact, only a few hundred million dollars were traded – a miniscule volume.

The problem with this method is that banks are already gasping for liquidity. If the CBR squeezes too hard, large swathes of the banking system – even those who haven’t been playing ruble devaluation arbitrage – may go bust.

Readers who have been converting savings or wages into ‘harder’ currencies may want to pause. Those with money saved in smaller banks might want to watch carefully what happens next.

The slow drift of devaluation is coming to a close.

Filed under: Economics, Russia, , , , , , , ,

Putin and the Cult of Slothful Journalism

The western media is obsessed with the doings of Russian prime minister Vladimir Putin. Virtually everything the former president does is lavished with newspaper coverage. But being firmly in rapacious anti-Russia mode, the western media seem to have turned his PR activities into something more sinister: the construction of a cult of personality.

It makes for a neat argument. Wrestling tigers, teaching kids judo, and fishing topless are all part of an attempt to build a cult of personality; cults of personality are unique to totalitarian regimes; therefore, Russia is necessarily a totalitarian regime, which – whoda thunk it? – fits neatly with the line currently peddled by much of the Western media that Putin’s regime is despotic, while simultaeously making mundane politicians’ photo-ops into something interesting enough to sell papers. Perfect!

The latest similar news item to be given the hysterical tint now commonplace in western coverage of Russian politics is word that the Russian PM has painted a picture to contribute to a charity auction. This time, nobody has explicitly linked the painting to the cult of personality theory, but they have done so with similar stories in the past and the implication is there this time.

But before neo-con knickers get in a twist about Putin leading another Red Scare, I’d like to ask whether this isn’t the kind of thing all politicians do everywhere? Their PR people try to cultivate a certain image, and invite journalists along to official trips that will show off their man or woman in an attractive light, do they not?

Such practice is considered normal practice in the West, but apparently when Putin does likewise it’s cast as some kind of nefarious retread of Stalinist propaganda.

I’m no apologist for Putin, but this is absurd. And let’s be honest, the idea of having an all-action hero as president proved incredibly popular in the US back in the day.

Filed under: Russia, , , , ,