Thursday, December 15, 2011

Visiting Russia

When I first visited Russia, I was taken one afternoon to one of the new markets that had sprung up in Moscow, full of traders, selling everything from cheap Turkish knickers to slabs of dark red-brown meat that slid from plastic bags, that had been stored in battered suitcases, onto makeshift tables. These were the people who were 'making it' hustling through disturbed times with grit and determination and guile.

On the edge of the market was a woman in a well-kept fur coat holding a single crystal glass, hoping to sell it, needing to sell it, to supplement the shrunken pension that might not even come. She had been a public, municipal official, we discovered, and her comfortable, pre-fall life, had disintegrated and she was now surviving on meagre help from her equally pressed, public servant children, and selling items accumulated in the 'good times' (of late Brezhnev to which Mr Putin recently referred in nostalgic terms).

You can imagine that if your life was framed by the latter experience, Mr Putin's arrival (though the economic revival began before he did) was a godsend. With the tax reform, and then the oil price, swelling the state coffers and pensions (and wages) rising (and being paid), it was easy to see him through salvation tinted spectacles (and genuinely so).

But after a first reformist burst (and the brutality of the suppression of the North Caucasus, only partially successful, and only for the time being), Mr Putin proceeded to do precisely nothing except push money through a sclerotic system and tinker with it at the edges - rather like pumping air into a burst tyre, keeping it inflated and moving along, but offering no meaningful fixes.

And with each passing year of stagnation the air needed grows - in 2008 the Russian budget would balance if oil stood at $80, now it needs to be $110.  With a crippling lack of investment (either in technological or financial terms), the world's second largest oil/gas producer struggles to meet its forward contracts without buying supplies from Central Asia.

And so it goes, even without touching on the triggers of corruption or electoral fraud, Mr Putin's vaunted 'stability' is a house built upon if not sand, sandstone. It is not an economic structure that is going to collapse overnight but rather like the nostalgic Brezhnev era wither away over time until it crumbles.

It is very sad. A few weeks ago, I was at an 'innovation event' and was surprised to see that many of the presenters, setting up new technological businesses in the UK, were young Russians. Surprised partly because I carry about with me (in spite of myself) a forlorn English sense of why here? I asked one why? The first response was a business one - London is an exciting place to develop such ventures, a critical hub does appear to be emerging, enabling cross-fertilization and angel financing. The second one (after more wine and establishing that I had lived in Moscow) was more personal - if I am successful, said one, I can be sure I can keep my wealth and my company will be legally secure (and, after more wine, in fact, I myself will be safe)!

It is difficult to imagine that a man whose first became President promising the oxymoron of the 'dictatorship of law' can, in fact, be such a failure against his own declared intentions but, sadly, he is; and, you can only hope that if this is not the end (as it almost certainly is not), it is the first signs of the beginning of the end.

Back to the 90s, it was an extraordinarily difficult period for Russia (no one can doubt that) though I doubt whether anyone faced with the calamity of Brezhnev stagnation could have untangled the situation without considerable pain but it was too genuinely exciting, alive not stagnating, with real debate and real options to build a more flourishing, open society.

Another person I met on that first visit was the Director of the State Geological Institute in Nizhny Novgorod. I met him, not in his office, but in a basement, cramped and chilly but a hive of industry. He had started a business making pelmeni as his salary (of $20 a month) was inadequate, and often failed to arrive. I asked him, "Did he not want to go back to the old system?" He thought quietly for a moment, smiled and said, "No, never. I am for the first time making my own life. It is very hard but it is working. I am free."

It is to be hoped that more people can find that there is a balance to be struck between the real challenge and real fruit of being free (something it is easy for us 'here' to complacently forget) and that the most successful societies continue to be one's that enable their citizens (however imperfectly) to craft decisions together, and where power is exercising legitimate authority within the checks and balances of individual's rights. But it may require (sadly) a greater sense of economic and social crisis to push them over that particular edge.

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