YouTube link here.

Due to caregiving responsibilities for a family member and my day job, I have, unfortunately, had little to no time to do any original work. (My original work can be seen here). Therefore, this blog has mostly consisted lately of cross-posting articles and analyses from other sources.

Based on some comments from readers, I’d like to reiterate some things I’ve said before that apparently bear repeating. First, I’m not pro-Putin. I’m also not anti-Putin. As I wrote previously:

As an analyst of Russia, I don’t see my job as providing people with emotional comfort. I see my job as providing factual analysis about Russia to the best of my ability. In this vein, I’m not pro-Putin or anti-Putin, but have tried to study and assess the Russian president based on the best information I could find, including the historical, social and geopolitical context of his governance. I’ve also tried to convey how Russians view him and why.

Consequently, it doesn’t make much sense to suggest that I’ve soured on Putin. I’m an analyst not a cheerleader. While it’s understandable that many people who read this blog acknowledge that Putin has done a lot of good for Russia and that western media reporting on him is typically very distorted and filled with vitriol, acknowledging that Putin is not some infallible god or may occasionally do things that aren’t perfect or are open to debate does not mean that one suddenly supports US hegemony or the CIA. There is also more to Russia than just Putin.

I expect that people who read this blog are adults. I expect adults to be able to read a variety of sources and analyses and use their discernment and critical thinking skills to draw their own conclusions. I expect adults to be able to deal with nuance.

I sometimes include sources that are critical of Putin or the current Russian government, such as The Bell, because even though they clearly have an anti-Putin bias, they occasionally have a critique that is worth considering. Even a broken clock is right twice a day. Also, The Bell often includes important data and statistics that are useful to know regardless of your view of the current Russian government.

I’ve also occasionally included the work of Riley Waggaman, a writer who has lived in Russia for about a decade and used to work for RT. He provides reporting that indicates a more complex view from Russia, often citing links to mainstream Russian media sources and Russian critiques of Putin from the right – which is more common than authentic Russian liberal critiques of the Putin government. And I’ve still had some dismiss this as pro-western anti-Putin propaganda.

If you are solely looking for a daily dose of overly-simplistic analysis on Russia that is just a reverse image of mainstream western media, this blog may not be for you.

YouTube link here.

By Gilbert Doctorow, Website, 3/27/24

To the uninitiated, I explain first that the FSB is the successor organization to the Soviet Union’s well-known and much feared KGB. However, the FSB today might be better compared with the FBI in the United States. It deals with domestic criminality of all kinds and with threats to Russian civilians such as terrorism. The agency and its head are rarely in the news.

In this respect, the FSB is less visible both at home and abroad than the Foreign Intelligence Service headed by Sergei Naryshkin, a state figure who spent five years of this millennium as chairman of the State Duma, Russia’s lower house of the legislature, and also three years as head of the Presidential Administration. In both positions Naryshkin was very often seen on television performing his duties.

By contrast, Bortnikov spent the past 15 years in his FSB offices out of sight. However, the spectacular attack on the Crocus City Hall concert venue has propelled him to center stage and yesterday he met with the Russian state television journalist Pavel Zarubin for an interview and then allowed himself to be questioned further by a gaggle of other journalists on his way out along a corridor. This spontaneous Q&A was later broadcast on the television news. What Bortnikov had to say was extraordinary and bears directly on whether you and I should now be looking for bomb shelters. Regrettably you will not find any of it in the lead stories of today’s mainstream media. The Financial Times, for example, features an account of Xi’s meeting with CEOs of American businesses to mend ties: interesting, but not very relevant if we are at the cusp of WWIII.

                                                                          *****

Bortnikov is by definition a member of Vladimir Putin’s inner circle of advisors. He, Putin and Naryshkin are all roughly the same age. At 72, Bortnikov is just several years older.

I was struck in particular by his poise and prudent, carefully weighed choice of words while setting out where the investigation is heading with transparency and a ‘let the chips fall where they may’ unaffected demeanor.

The journalists were all probing the question of who stood behind the terror attack. Bortnikov told them…and us: standing behind the terror act committed by Islamist extremists are the United States, Great Britain and Ukraine.

Bortnikov said that the preliminary findings indicate that the four perpetrators of the slaughter were headed by car to the border with Ukraine where they were awaited on the other side. He very calmly explained that the involvement of foreign powers is being clarified and that he will say nothing out of pure emotion now but will wait for the facts to be solidly collected before being presented.

Nonetheless, it was entirely newsworthy that he named the United States, Great Britain and Ukraine as the likely puppet masters of the terror act. Let us remember that following the bombing of the Nord Stream pipelines, the most significant attack on critical civilian infrastructure globally in the last 50 years, Russian officials did not point the finger directly at any country. There was innuendo but no direct accusations such as we heard from Bortnikov yesterday.

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Meanwhile, quite apart from Mr. Bortnikov’s chat with journalists, a lot of new elements to the terror attack at Crocus City Hall were posted yesterday on the Russian state television news and analysis program Sixty Minutes. In particular, we learned that in the last days of February and first couple of days of March two of the four attackers were in Istanbul. The departure and arrival of one at a Moscow airport was recorded on video. We were told which hotels they stayed in, and the selfies and other photos taken by one in Istanbul were put up on the screen. It is still not clear with whom they met in Turkey. However, the timing itself is very important, because the point was made that they returned to Moscow to carry out a terror attack on 8 March, International Women’s Day, a sacred date on the Russian calendar. Had they done so on that day, the effect would have been catastrophic for the presidential elections in Russia one week later.

However, per Sixty Minutes, it was determined that Russian state security on 8 March was too tight for the terrorist mission to succeed and the United States decided to pull the plug on that operation. Note that this is approximately the time when Victoria Nuland tendered her resignation at the State Department (5 March). The possible causal link here surely deserves attention by my peers in the U.S. ‘dissident’ community.

In any case, the scenario which was explored later in the day on the Evening with Vladimir Solovyov talk show is that the Ukrainians decided to proceed with the terror attack a week after the Russian presidential elections, when it lost most of its rationale. They did so over the objections of Washington.

                                                                   *****

From time to time, readers ask why I pay attention to talk shows like Vladimir Solovyov’s. These skeptics tend to ignore that Solovyov invites not just the usual irresponsible academics and journalists who can amuse the public but also some very serious statesmen who are close to the center of power in Russia and exert influence on the conduct of foreign and domestic policy, including in particular committee chairmen and other key personalities from the State Duma.

So it was last night when we heard from a member of the Committee on Relations with the Commonwealth of Independent States (Former Soviet Union). With reference to the never ending terror attacks on civilians in the Russian border region of Belgorod coming from nearby Kharkiv (Ukraine), he said it is time to raze Kharkov to the ground: issue a warning to the population to get in their cars and head West, then blow it all to bits. Kharkiv is, by the way, Ukraine’s second most populous city after Kiev.

In general, the mood of panelists and of the host Solovyov himself is now changing in a cardinal manner: Ukraine is seen as an enemy state and the sooner it is finished off the better. There was talk last night on the need for missile strikes to flatten the presidential palace in Kiev along with all military and other decision making government centers in the capital.

As we have observed repeatedly over the past two years. President Putin has been a voice for moderation and restraint, resisting actions that might precipitate WWIII. That is clearly coming to an end when his own FSB director names the United States and the UK as planners of the biggest terror attack in Russia in 20 years.

The Bell, 3/1/24

Putin’s state-of-the-nation address offers Soviet vision of Russia’s future

Russian President Vladimir Putin’s state-of-the-nation address Thursday broke records, both for length and the number of “spontaneous” outbreaks of applause (there were 116 of them, according to one count). But the parallels with the Soviet Union don’t end there. Putin spent only a short time talking about the main threat to the economy – Russia’s war in Ukraine – and instead threatened the West, engaged in nuclear saber-rattling, and appeared to promise a far greater role for the state in the Russian economy.

Putin competing with Putin

Unlike last year, Putin radiated confidence in his speech to lawmakers. He is clearly satisfied with the situation at the front, and believes there are enough resources to continue fighting for at least another year. However, opinion polls suggest that the most popular candidate in presidential elections next month would be someone who does not harp on about the war, but who offers solutions to Russia’s domestic problems. So, once he’d got the saber-rattling out of the way, the lion’s share of Putin’s speech was about his plans through 2030.

According to the president, Russia needs more social spending, higher birth rates, longer life expectancy and fewer imports. Of course, that’s basically what the country needed during his previous six-year presidential term. Putin continues to compete with himself.

One of the new initiatives that Putin announced was five “national projects.” Four of these (Family, Youth, Long and Active Life, and Personnel) are related to human capital. Only one, Data Economy, relates directly to the economy. 

Putin’s speech suggested the state intends to act as the major player on the market – not just as a guarantor. He set a target to double capitalization on the Russian stock market by 2030 – not a hugely ambitious goal considering that the S&P 500 Index in the U.S. doubles in value roughly every seven years (and inflation in Russia is much higher than the U.S.).

Putin also pledged billions of dollars of spending. The promised new spending over the next six years comes to around 6 trillion ($66 billion), or about one trillion rubles a year. It may sound like a lot, but in reality it is relatively little – about 0.6% of GDP each year. 

New taxes?

However, even these relatively modest sums must come from somewhere. And Putin hinted that the state could impose new taxes, or raise existing ones, to pay for its additional social spending, as well as to boost productivity and to wean the country off imports.

In particular, Putin suggested raising corporate taxes and hiking income tax for the wealthy. Coincidentally, just three days before the speech, pro-Kremlin media reported the existence of legislation that would raise taxes for high earners. That legislation was not backed by the United Russia party, so it is unlikely to gain traction. It should be seen as a trial balloon. However, the idea of raising income tax to 25% on those who earn above 500 million rubles a year would raise about 1 trillion rubles a year – enough to fund all Putin’s spending promises. 

Russian officials have spent years talking about shifting from Russia’s flat rate 13% income tax to a more progressive system. In 2021, income tax rate was increased to 15% on individuals who earn more 5 million rubles ($55,000) a year. The higher tax applies to all earnings above this threshold. From a bureaucratic point of view, however, implementing a progressive income tax presents several major problems:

• Income tax goes to regional governments, which means that raising taxes will increase Russia’s already significant level of regional inequality;
• Progressive taxation could cause companies to take salaries off the books and pay wages in cash – resulting in an overall fall in revenue;
• Progressive income tax is first and foremost a tax on the middle class. In modern Russia, a large proportion of the middle class are state employees, particularly security officers and soldiers who the Kremlin would not like to irritate by taking money out of their pocket. They would likely need preferential treatment.

A more realistic alternative to hiking income tax would be a review of corporate income tax, which currently stands at 20%. Indeed, businesses have already suggested they would not be unhappy with higher taxes. Alexander Shokhin, chairman of the Russian Union of Industrialists and Entrepreneurs, a lobby group, said in December that businesses had no objection to a tax rise if the government stopped levying one-off payments. 

A new elite

Another important takeaway from Putin’s speech was that those pursuing private business have, in effect, been erased from the national elite. Putin put it bluntly. “The word “elite” has discredited itself, especially when applied to those who lined their pockets in the 1990s,” he said. “The real elite are the workers and warriors who serve Russia.”

Putin confirmed what businessmen already understand: the nationalization of assets will continue. Strikingly, up until now, Putin has acted as guarantor of the outcome of the 1990s privatization. And as recently as last year he said there would be no new nationalization. But a creeping reversal is well underway. The former assets of Mikhail Abyzov and Andrey Melnichenko’s Metafrax company reverted to state ownership in 2023, and, so far this year, the state has taken control of leading auto-dealer Rolf, and a large metals holding formerly owned by Yuri Antipov, a 1990s billionaire who was detained on fraud charges.

Putin believes the true elite are the “heroes” of Russia’s armed forces fighting in Ukraine. And he called for military veterans to play a greater role in managing enterprises, teaching and state service. Starting March 1, veterans will be able to sign up for a special program called “Time of Heroes.” Soldiers in Ukraine already enjoy more social benefits than anyone else in Russia. Among the most recent proposals, the Finance Ministry suggested exempting them from interest payments on outstanding loans.

Come again? 

There were also some odd moments in Putin’s speech. The president praised Russians for drinking less, despite the fact that recent official figures showed the first increase in the number of alcoholics in Russia for a decade. He also said the number of people in poverty should be reduced to 7% of the population – even though six years earlier he had set a far more ambitious target. 

Ominously, Putin promised to prevent an economic collapse like the one that occurred in the late Soviet Union. Putin said that military spending accounted for 13% of GDP in the1980s (a figure that tallies with accepted Western estimates). However, Russian military and related expenditure is currently estimated to be running at 10% of GDP.

Why the world should care

State capitalism in Russia is becoming more and more about the state, and less and less about capitalism. State spending, national projects and inflated government outlays are now a much better pathway to wealth than the free market. Nor did Putin much bother with presenting a new vision for the future in his speech. His new six-year plan can be summed up as: everything will be like before, only better. Some of Putin’s planned projects have obvious beneficiaries, such as the construction sector, and the new military elite. But who exactly will be better off, and how exactly this will work, is not at all clear.