Tuesday, April 29, 2014

Book Review - The Russians - The Power Behind the People

Book Review – Russians – The Power Behind the People, by Gregory Feifer, 2014, Twelve, Hachette Book Group

The Russians: The Power Behind the People does not paint a pretty picture of the country. Political repression, corruption, crony capitalism, a natural resource-based economy, expanding state influence, a compromised press, and a strongman in charge surrounded by those loyal to him.

However from my own experience in emerging markets it seems like more of the same old stuff. The summary paragraph above could describe many developing countries today and almost all countries at some point in their history.  It could just as easily describe Suharto-era Indonesia of which I witnessed first hand many years ago.

The difference – as this book points out – is that Russia appears to be going ‘backwards’. Today’s Indonesia – as well as most countries in Asia that I've followed over the last almost 30-years – are much freer and more open than they were in the past.  However the book makes the point that Russia seems to be heading back to the Soviet era in many respects.  Press freedoms are being curtailed, democracy is not as widespread as before, and respect for private property seems to be decreasing. People in power take over successful private companies.

Cold-war ear expressions, organizations and ideas feature prominently throughout the book.  Words and organizations that I thought were confined to history such as “the Kremlin”, and KGB (now called the Federal Security Services or FSB), are used widely to describe today's Russia.

What I find most interesting – and actually bizarre – is that Russians don't consider themselves Western.  How can a nation of mostly Christian white people not be Western?  Their names are Christian derivations (Mikhail is the Russian or Slavic version of your author's name), they drink like Europeans, and their food and eating habits are distinctly Western.  For this insight, the book was a real eye-opener.

Below are small snippets from the book that I found interesting.  There is a lot more but I found it difficult to cut down this already long list. 
  • State-controlled economy.  “Although entrepreneurs continue earning immense fortunes, it’s now at the pleasure of those ruling bureaucrats, who tend to see private business as an extension of the state, an attitude nowhere more evident than in the rise of massive state industries run by Putin’s former KGB cronies.”
  • Increasing government control. “ …the Kremlin’s share of the world’s largest oil industry (increased) from 40% percent to more than 50% and cemented Putin’s drive to put the energy industry back in state hands”"
  • Using Russian oil and gas to influence countries abroad: “The Kremlin hopes Europe’s current reliance on Russia for a third of its natural gas will inevitable grow as demand inexorably increases.”
  • Private property not protected.  ‘…Khodorkovsky is hardly an isolated case: in the space of a decade, one of every six businessmen in Russia faced some form of prosecution” (referencing an April 2012 Moskovskiie Novosti article).
  • Russia seems to be suffering from the natural resource curse.  “The current lack of drive also derives form Russia’s natural-resources economy, in which what really matters is how to take – including by theft – rather than how to produce”
  • Capital flight is nothing new.  “ Estimates for the amount of illegally spirited abroad from Russia each year reach above US$70b.  One especially well-placed source put the 2012 figure at US$49b, or 2.5% of the GDP”.
  • Alcohol is a problem.  “…A 2011 WHO report estimated that every fifth male death is attributed to the effects of alcohol.“ “According to the government, 38% of Russians between twenty and thirty-nine suffer from alcoholism.  The number jumps to 55% for those between forty and fifty-nine.”
  • Rampant corruption.  “The government’s own figures put the country’s ‘corruption market’ at an estimated three hundred billion dollars a year.  In 2011, the police said the average bribe paid to officials was ten thousand dollars, while Transparency International ranked Russia 143rd out of 182 spots on its corruption index.”
  • Decrease in press freedoms. ‘…(there have been) more than a dozen reporters who have been killed – probably assassinated – since Putin came to power’.  
  • Russia has not reconciled or acknowledged the abuses it heaped on its own citizens during the Soviet era. “…the vast majority of Soviet archives, including informers’ names, remain secret, and only a quarter of the USSR’s mass grave sites are known.”
  • Police aren't much help.  “Instead of tackling crime, the police spend much or their time falsifying statistics to meet Soviet-era quotas for cases they’re required to solve, sometimes by framing innocent people.
  • On Ukraine and Russia’s expansion: “As Richard Pipes has argued, countries such as England and France, which created national states before forming overseas empires, found it easier to deal with the end of colonialism.  The Russian nation-state, by contrast, developed concurrently with an empire it directly bordered.  'As a result, the loss of empire caused confusion in the Russians’ sense of national identity,' he wrote.  'They have great difficulty acknowledging that Ukraine, the cradle of their state, is now a sovereign republic and fantasize about the day when it will reunite with Mother Russia'"
  • Mistreatment of minorities. “’Tajiks in Moscow are slaves in the twenty-first century,’ one soft-spoken worker named Said Chekhanov remarked.  ‘We’re treated like animals.  The police insult us, and our employers forbid us even to talk at work.’ Everyone at the construction site had stories of attacks by masked men in the middle of the night”.  “Russia is a dangerous place to live if you’re not a white Slav.”
  • Fundamental disbelief in openness and distrust of government.  “ Many foreigners also fail to notice another key trait: Russians tend to believe the rest of the world functions as their country does.  When American newspapers publish articles critical of Putin, for example, Russians often perceive them to be ordered by the White House because that’s how things are done aren't they?”. 
  • Not likely to engage with the rest of the world.  “The world’s biggest country in area and volume of energy resources, it has nuclear weapons, a sizable economy and seemingly every reason to engage constructively with an international community in which it still holds considerable influence.  But Moscow, seeing conspiracies everywhere that reinforce its assumption that the rest of the world functions as it does, rarely responds to constructive engagement.”
  • Bleak outlook for Russia’s future global relations: “It (Russia) will probably continue to act according to that zero-sum calculus…”.  “For Westerners in general and Americans in particular, that means Russia’s perennial instability will almost certainly create problems far into the future because even more than in Western societies, its leader’s personal needs will continue determining the direction of foreign policy."
While much of the world and “Westernized” Russians may see the above as a country heading in the wrong direction, the majority of its citizens don’t share that view.  “The Russians” note that the current government and Putin in particular are popular.  
  • When Putin was preparing to step down as President in 2008, “an astounding 80-plus percent of the population said he’d done a good job"
  • Russian citizens expect the government to provide for them.  "...decades of Soviet cradle-to-grave care have conditioned Russians to expect the state to provide pensions, education and subsidised utilities..."
  • They are not prone to protesting.  “A Levada Center Poll in 2013 reported that more than 70% of respondents said they would refuse to take part in protests against falling living standards or in support of their rights.”
  • In March this year, and soon after the book’s publication, a poll put Putin’s approval rating at some 80%.    His popularity went up after Crimea was annexed.
Much of this may come down to a real or perceived decline in living standards for the average citizen.  As the book notes, in some areas, Russia hasn't done well since the downfall of the USSR. Although their constitution guarantees free medical care, only the rich can afford it. The World Health Organisation ranks Russia’s health-care system at 130th in the world, down from 22nd in the 1970s.

The initial jump away from communism was a mess.  Many lost their savings and “…GDP fell 34 percent between 1991 and 1995 – a larger contraction than in the United States during the Great Depression – while wages plummeted along with employment.  Crime, including murders, doubled”.

With a controlled press, a history of a strong central government and a relatively old population who remember a more secure life under the communism, it does not take much imagination to understand the current leaders’ appeal to the man-in-the-street.  

Summary and Criticism

“The Russians” is a good book and I agree with another review which notes that it's a good introduction to the country.  This is a nice endorsement from someone who knows the country as my knowledge of it before reading this was virtually nil.

The book is also good reference for today’s news flow.  Backgrounds of many of the Russians that the US/EU has recently imposed sanctions on are referred to in the book (see link here).

One criticism I have is that the book seems to focus too much on negative aspects and may have left out some positive ones. This seems typical for this kind of book.  Adam Schwartz’s very good A Nation in Waiting, which provides a summary of Suharto-era Indonesia, mostly focused on what was wrong with that country while glossing over many its positive accomplishments.

While these books tend to provide a critical view, they would likely be pretty boring and not taken seriously if they emphasized the good stuff.  Who really wants to read a puff-piece?

Still, I thought this could have been more balanced as the author did leave out some positive news.  In the World Bank’s Doing Business 2014 report - which evaluates regulations affecting small and medium sized companies (SMEs) – Russia was amongst the top-10 countries that is improving its SME regulations.  If an amateur hack like me can find this I suspect that the author may know other positive news and could have presented a more balanced view. 

The book also does not provide details – or at least as much as I’d like – to support many of its assertions.  The writer states “…the government today is far more dependent on energy then the Soviet Union ever was.”  However this is not supported by any figures, footnotes or references.  More tables, graphs and charts to support his arguments would be a big help and add weight to his and the opinions of others that are included.

Anther criticism is that I got a bit bored with much of the author's family history that is interspersed in the book.  But that’s me and I can see how the human side of things emphasizes key points.  His ancestors’ and relatives’ live in Russia do not have a happy history.  I suspect this may have lead him to focus on the country's negatives. 

I also found myself zoning out reading the rather long section on arts and culture.  But this would likely interest someone less boring than myself.

All in all, I recommend the book.  While I have my criticisms, the writing flows well, and it is an easy yet very insightful, and certainly eye-opening read.  

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