A Season for Settling Scores
Research by Dengi financial weekly has shown that Russian business changed drastically in the third quarter of the year. And the changes were for the most part not economic. They were criminal.
The events rated are divided into three categories: events influencing the current situation in the Russian economy, events influencing the long-term development of the Russian economy and events causing the greatest public resonance. The final rating is based on the arithmetic average of the three categories. Ratings were provided by more than 30 experts – prominent economists, officials, politicians, professional leaders, activists and scholars.
A Purely Russian Murder
We did not doubt that the murder of deputy chairman of the Central Bank Andrey Kozlov would place high in the rating. But we did not expect it to be in first place in the final rating and place in the top ten of all the ratings, including events influencing the long-term development of the Russian economy.
Of course, as has been said before, they don't kill officials of that stature in Russia. And the nature of the attack, with homemade pistols that misfired at the critical moment, raises many questions.
There were, of course, many theories about who was responsible for the killing. Hit men from the corrupt banks that Kozlov crossed, the special services that protected those banks – if you watch TV at all, you heard it all.
A crime against one person (excluding the theory that a coup d'etat was being prepared by a group of persons who were laundering money for that purpose) does not merit first place in our rating, no matter how good, or bad, he was.
The conclusion is that it was not Andrey Kozlov individually or even his rank that is the key here. In our opinion, the heart of the matter was expressed by one expert who did not want to be identified in this context. “Do you see,” he asked, “the murder of Kozlov, for those who understand what is going on, is a sign. It's a hint to everyone who is trying to build an economy in Russia that is not a bandit economy, or an economy of the intelligence services or a “family” economy: Keep going and we will do this to you too. The saddest thing is that the hint is already understood.”
There is nothing to add to that, except that nothing had ever attained a 9.9-point rating before.
Foreign Policy
The murder of Andrey Kozlov has a large lead over even the second-lace event in the rating. But the other events in the top five are also of interest, if only because the events in second through fourth place, while they influence the Russian economy, are events that influence it from outside. In second place (first place in the list of events influencing the current situation) are the market conditions that led to the fall in the price for natural resources.
There can be no doubt that too much in Russia has depended on the price of oil in recent decades. But the panic inspired in analysts by the latest rather insignificant fluctuations in indicators is telling. It particularly shows that the discussion by Russian officials of diversification is very far from reality. Why else would oil and metals worry everyone that much?
Of course, our experts can be wrong too. The authors f this article, for instance, were quite amazed that Russia's early payment of its debt to the Paris Club was in third place. The repayment of a debt is a positive factor for a country, of course, and especially when it is such a serious organization, and if only so that the other creditors will be less nervous and therefore ready to loan ever more.
But this particular deal has a dark side as well. First, Russia had to pay its creditors a premium to repay its debts early. A similar operation was carried out few years ago without such a contribution, and if the question of early repayment had come up in 2000, the creditors would have been lined up for their money without a thought of penalties.
Second, as the state debt was falling, the debts of private companies were rising, and in those with state shares most of all. Since the Russian authorities are responsible for the debts of its “subsidiaries,” it can be suggested that the total state debt effectively increased. And that with a record influx of petrodollars. What will happen if raw materials prices fall? Will the early repayment of Paris Club debts help anything then? Considering that that was the event in second place in the final rating, it looks like not.
But that is forgetting about the head of state, who cannot help but think about oil, gas and everything connected with them as he rules our peculiar country. Our experts took him into account when they placed the G8 summit in St. Petersburg, at which global energy security was discussed, in fourth place in the final rating.
That meeting occupied much lower places in the ratings of economically important events, barely placing in the top ten events influencing the long-term development of the Russian economy. Its high place in the final rating was due to its wide public resonance. And that was created by television, which shows what is of greatest interest to its main owner – the state.
We are inclined to agree with the experts about the energy problems that are less closely tied to politics. The top two places in the rating of events influencing the long-term development of the Russian economy are the approval by the government of the reform of the electricity sector and the formation of the NOREM electricity free market. It is not even a matter of the scale of the project. One of the directors of RAO UES of Russia told Rossiiskaya gazeta newspaper a few weeks ago that domestic enterprises will be to buy no more that 95 percent of their electricity on the regulated market in a few years – all the rest will be at market price.
Of course, a 5-percent free market is no great shakes. On the other hand, there will be real competition. In the absence of energy-saving technology, many will have to pay big money. From the strategic point of view, that is a good thing. Maybe people will at least learn to close the windows before they go to work.
The Most Significant Events of the Third Quarter of 2006
Events that Had the Greatest Influence on the Development of the Russian Economy
| Rating |
Event
|
Points out of 10
|
| 1 |
The murder of first deputy director of the Central
Bank Andrey Kozlov
|
7.7
|
| 2 |
The sharp fall in prices for oil and metals |
6.9 |
| 3 |
Early repayment of the Soviet debt to the Paris Club |
6.5
|
| 4 |
The G8 summit in St. Petersburg |
6.3
|
| 5 |
Final approval of the plan to reform the electricity sector and
issue stock in generating companies |
6.0 |
| 6 |
Stable influx of capital recorded in the first half of 2006 |
5.8 |
| 7 |
Annual inflation remaining significantly above 9%
|
5.7 |
| 8 |
Introduction on July 1 of charges for calls to cellular telephones in Russia |
5.4
|
| 9-10 |
In August, the money mass grew by 45% as calculated annually the new wholesale
electricity market
|
5.1
|
| 11-12 |
The U.S. Federal Reserve Board left the refinancing rate
unchanged for the first
time in two
years
|
4.7 |
| 13 |
Amendments to Russian legislation to stop the uncontrolled
downloading of
books, films and
music
in mp3 format
come into force |
4.6 |
| 14 |
The Federal Antimonopoly Service
sues the “big three” cellular
operators,
VimpelCom, MTS and MegaFon |
4.3 |
| 15 |
The State Duma passes amendments
to laws to combat
terrorism (including the
restoration of confiscation
of
property, conviction in
absentia and increased
authority
for the special services
to fight terrorism abroad |
4.2 |
| 16 |
The Russian government
passes a decision on a
more
active industrial policy
support for diversification
of the
economy |
4.0 |
17-18
|
The State Duma passes a resolution
on amnesty for
persons
convicted of non-felony crimes
during the period of the
antiterrorist operation in
the North Caucasus |
3.2 |
| 17-18 |
The use of sirens, flashing
lights and special
license
plates is severely reduced
by the order “On Primary
Measures to Guarantee
Road Safety”
|
3.2 |
| 19 |
Moscow and federal authorities
settle a dispute over more than
1000
architectural monuments
that had been going on
since
2002
|
3.1 |
| 20 |
Amendments to the law
“On Counteracting
Terrorist
Activities” come into force
that expand the
definition
of extremism. The first reading
is passed of
amendments
to voting law to prevent
participation in
elections on the
basis of association
with extremism
|
3.0 |
Events Influencing the Current Situation in the Russian Economy
| Rating |
Event
|
Points out of 10
|
| 1 |
The sharp fall in prices for
8.2
oil and
metals
|
8.2
|
| 2 |
Stable influx of capital recorded in the first half of 2006
|
7.8 |
| 3 |
The murder of first
deputy director of the Central
Bank
Andrey Kozlov
|
6.7 |
| 4-5 |
Annual inflation
remaining significantly
above 9%
|
6.4 |
| 4-5 |
Early repayment of the Soviet
debt to the Paris Club |
6.4 |
| 6-7 |
In August, the money mass
grew by 45% as
calculated
annually
|
6.1 |
| 6-7 |
The U.S. Federal Reserve Board
left the refinancing
rate
unchanged for the first
time in two years |
6.1 |
| 8 |
Final approval of the plan
to reform the electricity sector
and
issue stock in generating companies |
5.8 |
| 9 |
The first reading of the
2007 federal budget is passed
|
5.2 |
| 10 |
The launch of NOREM - the new wholesale
electricity market
|
5.0 |
Events Influencing the Long-Term Development of the Russian Economy
| Rating |
Event
|
Points out of 10
|
| 1 |
Final approval of the plan to reform the electricity sector and
issue stock in generating companies
|
8.6 |
| 2 |
The launch of NOREM –
the new wholesale
electricity
market |
7.9 |
| 3 |
Early repayment of the Soviet
debt to the Paris Club
|
7.8 |
| 4 |
The sharp fall in prices for
oil and metals |
7.3 |
| 5 |
Stable influx of capital recorded
in the first half of 2006 |
7.2 |
| 6-7 |
Annual inflation
remaining significantly
above 9% |
6.9 |
| 6-7 |
In August, the money mass
grew by 45% as
calculated
annually
|
6.9 |
| 8 |
The murder of first
deputy director of the Central
Bank
Andrey Kozlov |
6.8 |
| 9 |
Amendments to Russian legislation
to stop the
uncontrolled
downloading of
books, films and music
in mp3
format
come into force |
6.1 |
| 10 |
The G8 summit in St. Petersburg
|
5.7 |
Events Causing the Greatest Public Resonance
| Rating |
Event
|
Points out of 10
|
| 1 |
The murder of first
deputy director of the Central
Bank
Andrey Kozlov
|
9.9 |
| 2 |
The G8 summit in St. Petersburg
|
9.2 |
| 3 |
Introduction on July 1 of charges for calls to cellular
telephones in Russia |
8.4 |
| 4-5 |
Guus Hiddink, chief coach
of the Russian national
soccer
team coaches
his first official match |
6.7 |
| 4-5 |
Maria Sharapova wins
the U.S. Open |
6.7 |
| 6 |
The use of sirens, flashing
lights and special
license
plates is severely reduced by the order “On Primary Measures to Guarantee Road Safety” |
6.1 |
| 7 |
Early repayment of the Soviet debt to the Paris Club
|
5.6 |
| 8 |
The State Duma passes a resolution on amnesty for
persons convicted of non-felony crimes during the period of the antiterrorist operation in the North Caucasus |
5.4 |
| 9-10 |
The Russian national tennis
team plays in Davis Cup finals |
5.3 |
| 10 |
The sharp fall in prices for
oil and metals
|
5.3 |
Maria Glushenkova, Petr Rushailo
All the Article in Russian as of Oct. 09, 2006
|
