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Thursday, May 11, 2006

Time Out!

Time magazine offers readers three features on Russia this week. Gag me with a spoon.

First there's Peter Gumbel's interview of Andrei Illiarionov. Gumbel states: "Putin insists that he is merely pursuing his nation's best interests. And he can claim some success: growth is a robust 6%; foreign debt has been slashed to one-tenth of what it was (as a percentage of the total Russian economy) six years ago; and, like Norway, the nation has been stashing away a part of its oil revenues in a 'stabilization fund' that can be tapped in the future if oil prices drop sharply, causing a shortfall in the state budget." However, Gumble does manage to temper his enthusiasm just a bit: "But critics, including Illarionov, say that Russia's economy is actually underperforming. Given the windfall profits it has been receiving from high oil prices, Russia's growth rate should be more like 15% than 6%, says Illarionov."

Then there's Gumbel's main piece from the print edition, about Kaluga and Ekaterinburg (a new shopping mall from E-burg is show in the above photo). Here, Gumble claims: "With oil prices now more than $70 per bbl., Russia is awash in cash--and more of it is trickling down to ordinary people in ordinary places. Seven consecutive years of robust growth--currently about 6% a year after inflation--have transformed the country, giving birth to a consumer class and bringing signs of prosperity to the long-suffering hinterland." He continues:

Although the distribution of wealth is far from egalitarian--the rich are getting a lot richer, corruption is endemic, and millions continue to struggle--the good life is in reach for more Russians than ever before. Victoria Grankina, a Moscow-based retail expert, estimates that 30% of the population lives "fairly comfortably" on monthly incomes averaging $1,000 for a family of four. The number of mobile phones has soared from 12 for every 100 Russians in 2002 to 88 today. Sales of new foreign cars jumped 60% last year. The poverty rate dropped from 41% to 20% from 1999 to 2002, according to the World Bank, and other studies suggest it is now even lower.

Gumbel coos: "President Vladimir Putin is reaping the benefit of the soaring economy. His approval rating is a rock-solid 70%". In E-burg things are even more wonderful, he sighs: "There's an Egyptian-themed bowling alley, a Scottish pub where the barmen wear kilts, a chain of eight fast-food restaurants called McPeak (which McDonald's considered buying), countless sushi bars and a huge German cash-and-carry hypermarket near the airport." He tempers his enthusiasm only by admitted that "economists are worried that the Kremlin hasn't used the fat years to cut back on the remnants of Soviet-era bureaucracy, modernize Russian industry or improve the overall investment climate" and "without a more generous safety net, millions of Russians risk being left behind. At the Shartashky open-air market in Yekaterinburg, Victor Shkola, 66, hovering by his collection of wrenches, screwdrivers and metal widgets, says he can barely pay the rising rent and utility bills, which eat up about $75 of his $95 monthly pension. On a good day, he can earn $8 from sales of his hardware, but that's not enough."

Finally, Tony Karon writes in a web-exclusive: "Putin is running a booming oil state, which earned around $113 billion from oil exports last year (and a further $30 billion from natural gas exports)."

It's impressive, isn't it, that so much lame-brained nonsense can be crammed into to such a small space?

Growth of 6% is "robust"? Well, on a base the size of the U.S. economy, it sure is. But on a base the size of Russia's, even the 15% that Russia should have is totally meaningless with such a huge population to divide it. But Time doesn't care to tell readers about Russia's economic base.

Russia is "awash in cash" from oil revenues? Oh, if only Mr. Gumble read La Russophobe. Then he'd know that Russia's gross revenues from the sale of oil amount to less than $4 per person per day, and when netted for the expense of production they come down to pennies. That's not "awash in cash" even by puny Russian standards.

A family of four lives "fairly comfortably" on $1,000 per month? Again, Mr. Gumbel gives readers absolutely no basis for defining these terms. Is it enough to go shopping the the mall pictured above? Doesn't seem likely, does it? I wonder what economist told Mr. Gumbel that the percentage of cell phones is a good indicator of economic comfort.

The "poverty rate dropped"? Again, Gumbel is floating in the ether. First of all, Why talk about what happened from 1999-2002? What about 2002-2006, isn't that at least as interesting? Much more important, though, just as the reader might think 6% growth is meaningful without context, assuming Russia's economy is like America's, they'd assume Russia defines "poverty" the same way America does. But in fact, the people at the bottom of Russia's economy are so poor that America has no way of comprehending them, and using this language is only misleading. 90% of the population has a salary of $300 per month or less. You'd need a course in philosophy before you could understand the meaning of "poverty" in Russia as a lay person.

But "rock solid 70% approval" is the one that really gets La Russophobe's goat. Vladimir Putin is a proud KGB spy who's spent his entire life learning how to be professional liar. His own resume is a state secret. He's shut down or co-opted every single independent media outlet and destroyed his political opposition. Nobody knows what Putin's approval rate is, because Putin himself is the only source of information about that. If Putin were "rock solid" he wouldn't be so afraid of things like regional elections and newspaper columnists.

One day, someone should tell Mr. Gumbel the story about the village of Potemkin. But not today, La Russophobe simply doesn' t have the strength.

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