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Russian government resignations and possible constitutional changes

Inquisitor Solarion

Well-known member
This will make some liberal discussions of Crimea very awkward :)
As to the elites, I think it was Putin in his interview on Ukraine as part of the 20 Questions who said that Porky and his kin betrayed Ukraine not to gain more money, but to not lose that which they already had, stored in Western banks. And recently Vadym Karasiov was on UkrLife.tv where he complained that while Russian elites have long ago realized that they will never be accepted as equals by the Anglosaxons and that they need to have a strong state of their own, Ukrainian elites are just now starting to come to this (unavoidable, really) conclusion - and that is what's behind the recent change of priorities in the Ukrainian government. Well, 29 years - a long time to get such a basic thing :)
WHo's this Vadym Karasiov fellow?
 

Wakko

Well-known member
WHo's this Vadym Karasiov fellow?
He's a Ukrainian political commentator (expert is what they call people like him, I guess). He's pretty well known in Ukraine and also in Russia, and used to he a guest at Russian talk shows a lot. Here's some info and a pic. He's one of the more rational people mainly looking out for Ukraine's prosperity, without much ideological garbage.
The UkrLife.tv channel on YouTube is pretty interesting. I watch it a lot and I think it can give a person pretty good understanding of what's going on in Ukraine right now. The spectrum of visitors there is very varied, from Russia-friendly people through economic and energy experts, liberally-leaning economists to hard-line Ukrainian nationalists oozing russophobia. It's a pity it's all in Russian or Ukrainian.
 

Vorpal

Administrator
Administrator
And recently Vadym Karasiov was on UkrLife.tv where he complained that while Russian elites have long ago realized that they will never be accepted as equals by the Anglosaxons and that they need to have a strong state of their own, Ukrainian elites are just now starting to come to this (unavoidable, really) conclusion - and that is what's behind the recent change of priorities in the Ukrainian government. Well, 29 years - a long time to get such a basic thing :)
I don't disagree, but I suspect that may be an somewhat overly optimistic interpretation of the same phenomenon. For example, do you remember last fall Kolomoisky commented on another round of budget troubles and negotions with IMF:
NY Times said:
He said financing from Russia could replace loans from the I.M.F., which has pushed for anticorruption reforms that annoy Ukraine’s entrenched business interests.

“We’ll take $100 billion from the Russians. I think they’d love to give it to us today,” Mr. Kolomoisky said. “What’s the fastest way to resolve issues and restore the relationship? Only money.”
This was some of the most ridiculous nonsense, and everyone had a bit of a laugh. But if one assumes that Kolomoisky is not actually a drooling moron and is not channelling the comic-hetman (prezedent), this kind of thing makes sense as some combination of (a) desire to get a better price from the Americans, and (b) the desire or hint toward increasing the presence of Russian interests in Ukraine so that they can be played off against the Americans in order to extract said better deals. So the Ukrainian turn toward sovereignty and Kolomoisky group's war against the so-called Sorosites, is well-explained by the realisation that old pre-2014 multi-vectorness would bring them more money opportunities than their current position as US vassals.

Well, Karasiov probably isn't wrong, because in general how would the elites come to such a conclusion that they need sovereignty? By some kind of calculation that they may be better off with such a strategy, rather than by some notion of equality with some other elites (which is relevant, but mostly indirectly in terms of how it affects the former consideration).
 

Wakko

Well-known member
the desire or hint toward increasing the presence of Russian interests in Ukraine so that they can be played off against the Americans in order to extract said better deals
Haha, that is so Ukrainian :) Of course it's so, and I think everybody involved understands it, just as they understand that it will be a loooong time before Russia gives Ukraine another loan.

By some kind of calculation that they may be better off with such a strategy, rather than by some notion of equality with some other elites (which is relevant, but mostly indirectly in terms of how it affects the former consideration).
I am a proponent of the theory that the 2014 coup was acutally a runaway war between Ukrainian elites. Well, not so much "runaway" as "hijacked." They have hijacked the popular unrest, and their effort to skin Janukovich got hijacked by something much, much worse. The problem is, they were greedy and stupid, they got played by those they considered allies, and now they can never go back to the pre-2014 multivectorness. Many of their products are no longer needed in Russia, the exchange rate is another big problem, especially now that USDRUB is over 70. And now everybody in Russia understands that state security and buying hi-tech from Ukraine don't go together.
 

Wakko

Well-known member
I'm reading that the constitutional changes will be voted on as a single package. By now I would actually like if people were to reject them, maybe the arrogant pricks in Duma would get scared enough to provide a better mix in the 2nd round (+no property abroad, -Putin forever). Or at least let people vote on separate items.
 

Vorpal

Administrator
Administrator
The weird scheme with purchase of Sberbank by the government from the central bank now looks a bit more planned. A revised proposal by Anton Siluanov (First Deputy PM) is that instead of going for multiple tranches spread over the next few years, the deal should be be concluded in this year.
Jan 2020: 265 rub/share
Present: 175 rub/share​
This is -1/3 fall in rubles. However, the deal is to be through sale of gold and foreign currency reserves from the government to the central bank, so the actual price the state pays is in terms of foreign currencies. This means that since the ruble has has recently lost a chunk of its value (1EUR = 70RUB ↦ 80-85RUB), the governments wants to nationalise Sberbank at almost -50% price compared to its Jan peak (17.73USD ↦ 9.82 USD as of today), which is possible to due the impending global economic crisis.
 

Wakko

Well-known member
So you're saying that the government saw the crisis coming? If so, they have some very good analysts.
What I have seen previously was the ability of the Russian government to quickly adapt to changing conditions and to use the positive aspects of a new situation (the opportunities), not just react to the negative side (the threats). Quick and effective SWOT analysis. Could be that this is also the case? Paying the whole price while it's low?
 

Vorpal

Administrator
Administrator
What I have seen previously was the ability of the Russian government to quickly adapt to changing conditions and to use the positive aspects of a new situation (the opportunities), not just react to the negative side (the threats). Quick and effective SWOT analysis. Could be that this is also the case? Paying the whole price while it's low?
It's definitely also the case.

So you're saying that the government saw the crisis coming? If so, they have some very good analysts.
Well, some people saw a crisis coming, even if I don't think anyone could tell exactly when (but with a three-year window this purchase was supposed to be financed over, it doesn't take that much of a Nostradamus to plan for), with industrial production stalling throughout many important economies for a many consecutive months before anyone has even heard of COVID-19*. More immediately, the devaluation of the ruble is at least as much (and probably more) caused to the dissolution of the OPEC+ arrangement, which I'd bet was planned for long before it actually happened. So I'd actually be surprised if a huge transfer like the nationalisation of Russia's largest banks would have no planned cross-over with another big operation that would devalue the ruble. It'd be silly at that point.

*For example, the world trade in physical terms (e.g. TEU, tonnes, etc.) was shrinking for several months (Jun-Nov), with extremely low growth in Dec, which is an antirecord not seen since 2008-2010. Industries of many countries, including the US, Germany, Italy, etc. were shrinking for a most months. The S&P report at the end of last year made it clear that increased capitalisation involved a large move from real assets to financial assets, etc.
 

Alcibiades

Well-known member
Right, and ever before that, fostering uncertainty on this matter inhibits the ‘lame duck’ effect lots of presidents have.


Quoth the Zbig: “Because our banks hold $500 billion owned by Russia's so-called elite, you must first understand whose elite it is!”
But because the current Russian economic and political elites are not the same groups (the latter being much more narrow than the former), it's not super-effective. Still, that's exactly the method of foreign control the proposed rule was supposed to neuter.
Has anyone actually tracked, as much as possible, where the economic elites have their money?
 

Wakko

Well-known member
Has anyone actually tracked, as much as possible, where the economic elites have their money?
I'm sure a lot of them still keep it in Cyprus, Switzerland and the UK. But I think that's nowhere nearly as important as it was in the 1990's. Russia is no longer an oligarchy. The economic elites are able to express their opinions in high political circles, but it's clear that they no longer create policy in Russia.
 
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Alcibiades

Well-known member
I'm sure a lot of them still keep it in Cyprus, Switzerland and the UK. But I think that's nowhere nearly as important as it was in the 1990's. Russia is no longer an oligarchy. The economic elites are able to express their opinions in high political circles, but it's clear that they no longer create policy in Russia.
I'm pretty sure that they do, but I've never actually seen evidence to the effect. Just received wisdom.
 

Vorpal

Administrator
Administrator
But the final cherry on top of this is using the coronavirus to continue the same politics he's been pushing: since currently the income tax is 13%, while most of the those that put their income into offshores banks pay effective rate of 2%, to raise the latter income taxes to 15%. If this is inconsistent with double-taxation treaties with another countries, and cannot be renegotiated with them, Russia will unilaterally exit such agreements. Also, the introduction of an tax of 13% on income from securities, which currently doesn't exist in Russia, for those that hold securities in excess of 1Mrub.
This is potentially a huge geopolitical development, snuck through as part of a general package of dealing with the potential economic effects of coronavirus.
Putin said:
All interest and dividends leaving Russia into offshore jurisdictions must be taxed adequately. Right now, two-thirds of such incomes—and essentially these are incomes of concerete individuals—using various schemes of so-called optimisation, are subject to an effective rate of only 2%. Meanwhile, ordinary citizens of even modest means pay an income tax of 13%, and this is is of course, to put it midly, unjust. Therefore, I propose that for those that transfer their income from interest and dividends to foreign bank accounts, to provide a tax rate on such dividends of 15%. Of course, this is will require correction of our agreements against double taxation with certain countries. I ask the government to organise such work. If our foreign partners do not accept our proposals, then Russia will exit these agreements unilaterally; we will begin with those countries that pass significant resources of Russian origin, which is more sensitive for our country.
TL/DR: Russia does not intend to continue to be a financial colony of the West.
 

Wakko

Well-known member
This is potentially a huge geopolitical development, snuck through as part of a general package of dealing with the potential economic effects of coronavirus.
Yup. I was watching his speech with open mouth. People were expecting words of hope and support, and delay of the April referendum, not a total financial rebellion. I can't wait for some good analyses of how this all will actually work and what it will mean for Russian businessmen (calling anybody an oligarch now is just sad) and foreign investors.
 

Vorpal

Administrator
Administrator
Yup. I was watching his speech with open mouth. People were expecting words of hope and support, and delay of the April referendum, not a total financial rebellion.
Nah, that was unlikely as a focus without a quarantines/lockdowns first, which don't make sense at this point and so far seem contrary to overall Russian strategy so far. I think the mostly such expectations were initiated by the usual people shaping the narrative that Putin is silent while some others like Trudeau make uplift the whole world, etc. Anyway, that there would be something significant from Putin is natural because one should never let a good crisis go to waste, although yeah, I very much doubt anyone predicted this.

ETA: However, some closings are starting to happen in Moscow now, as a decision of city authorities.
 
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Inquisitor Solarion

Well-known member
Hm. The measures aren't as tough as what the Chinese are using to keep money from leaking out from the country, but it looks like they are trying to make it expensive for rich Russians from moving their money out of the country. Given how it is with the USD being so strong relative to the ruble and investors are piling into that, it makes some sense.
 

Wakko

Well-known member
Hm. The measures aren't as tough as what the Chinese are using to keep money from leaking out from the country, but it looks like they are trying to make it expensive for rich Russians from moving their money out of the country. Given how it is with the USD being so strong relative to the ruble and investors are piling into that, it makes some sense.
Current situation is not the reason to do it, it's the excuse. Just like the sanctions were an excuse to start an anti-corruption campaign (which would be impossible without the perceived outside attack) and the constitutional changes were an excuse to limit access to power for people tied to foreign powers by citizenship or property (though it didn't go all as planned, damn the Duma). Putin, being an incredibly patient man, has plans some of which may wait years and years for the right moment to implement them. You're seeing some of those plans being implemented now.
It's also possible that the current economic situation makes it easier to implement the higher taxes on capital leaving the country, but I don't yet understand how.
 
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Inquisitor Solarion

Well-known member
Current situation is not the reason to do it, it's the excuse. Just like the sanctions were an excuse to start an anti-corruption campaign (which would be impossible without the perceived outside attack) and the constitutional changes were an excuse to limit access to power for people tied to foreign powers by citizenship or property (though it didn't go all as planned, damn the Duma). Putin, being an incredibly patient man, has plans some of which may wait years and years for the right moment to implement them. You're seeing some of those plans being implemented now.
It's also possible that the current economic situation makes it easier to implement the higher taxes on capital leaving the country, but I don't yet understand how.
Well, as the saying goes, never waste a good crisis.

Just like my own government is trying to sneak in an election while they are looking good at handling the Coronavirus nonsense.
 
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