Putin's Russia and the Big Lie
With his nation's economy on the ropes once again due to his gross mismanagement, Vladimir Putin is falling back on a tried-and-true Russian response to bad news: The Big Lie. And he's bringing as many Americans on board as possible to help him carry out his plan.
In a stunning snub, at the World Economic Forum in Davos financier George Soros gave Russia the red light. He declared:
"Investing in Russia, I think, is a big mistake." The Putin regime, he said, "doesn't respect the rule of law." As a result, Russia is suffering capital flight and brain drain, and is growing weaker. "So I think Putin has to cling to power because it the only place he can feel safe; for his personal safety," he said. "Inevitably, things are moving, and I think Russia will open up, but not necessarily in my lifetime."
Soros has been, of course, a massive booster of the Obama administration, which in turn has recklessly pursued a policy it calls "reset" towards Russia but which can only properly be called appeasement. So for Soros to trash Obama's best buddy, you know things have to be pretty bleak indeed in the Land of the Midnight Gun.
The Russians themselves are right behind Soros. Listen to Alexei Golubovich, the managing director of Arbat Capital, which has $500 million under management: "Our main call for the next six months is global equities outside of Russia." Golubovich believes that "the low price to estimated earnings ratio of Russia's Micex Index is skewed by the weighting of big stocks with low valuations" and therefore is illusory. He's urging his clients to get out of Russian equities while they still can, and he has an equally bleak view of the Russian bond market.
The reason for this dark view is pretty simple: Russia's economy is still neo-Soviet in character, not a market governed by the rule of law. Russia currently ranks in 139th place out of 185 countries and is classified as "mostly unfree" on the Index of Economic Freedom put out by the Wall Street Journal. In fact, the only folks who have any real freedom in Russia are the criminals. According to Transparency International, Russia ranks in 133rd place out of 174 countries for economic corruption.
Putin's response to this tidal wave of bad economic news is predictable: He just lies about it. In fact, he's just handed over half a million dollars to Wall Street gurus Goldman Sachs to have them do it for him. Russia Today, one of the Kremlin's numerous versions of Voice of America, proudly reports: "The Ministry for Economic Development and Russian Direct Investment Fund agreed to pay up to $500,000 over three years to Goldman Sachs to have the country's success stories delivered to foreign investors, according to Vedomosti daily."
Another version of Voice of America is Voice of Russia. VOR hosts a blog by NYY Professor Stephen F. Cohen, who tirelessly beats the drum for Putin just as if he were on the Kremlin's payroll. To say the least, it's rather disturbing that Americans like Cohen and the Goldman staff are so willing to assist Putin in misrepresenting his nation to the world and consolidating his malignant neo-Soviet grip on the nation's throat.
Putin's approach is just as dishonest when it comes to the nation's economic data, just as in Soviet times. For instance, he sets the standard for poverty artificially and absurdly low, so that far fewer people appear to be "poor" than actually are. While the USA you are poor if you earn less than about $1,000 per month, in Russia you have to take home less than $200 per month to qualify. And even by that miserly standard, there are 400,000 more Russians living in "poverty" today than there were in 2007.
If half of Putin's strategy is to lie about the Russian economy, the other half is to silence those who would tell a different story. Russia is also spurning cooperation with foreign governments related to the rule of law, particularly the USA. It is imposing draconian restrictions on the media, making it one of the most anti-journalist nations on the planet (it ranks in 148th place out of 179 nations for press freedom according to Reporters without Borders), and Putin is doing all he can to recreate the Soviet environment in which Russians are simply cut off from information about their own government so that it can act with impunity. And Putin has a straightforward response to those who seek reform through political measures: they are simply shot and killed.
Few will forget how badly Putinomics fared in the global economic downturn of 2008, certainly not anyone who invested in Russia just before then. With no fundamentals in place, Russia was among the worst-performing economies on the planet under stress. Nearly three quarters of the value of the Russian equity market was wiped out within weeks, the currency plummeted and only through a massive infusion of reserves was total disaster averted.
Because of his hatred for the United States, Putin would prefer to continue giving aid and comfort to our enemies rather than to reform and make Russia a legitimate partner in the global market economy. He continues to seek out economic ties with rogue nations like Venezuela, Syria, and Iran, while spurning Europe and the U.S. at every opportunity. He's able to get away with this policy because Obama won't call him on it. To the contrary, as incoming Secretary of State John Kerry has stressed, Obama just wants to hand Russia unilateral concessions in the hope that Russia will offer less military support to its rogue allies.
Indeed, Obama's failure to tell Americans the truth about Russia has probably misled many into investing their money in the Putin dictatorship. As dark economic clouds continue to gather over Putin, those Americans are going to learn the cost of having Obama as their leader.
Follow Kim Zigfeld, who also writes about Russia for Pajamas Media, on Twitter @larussophobe.