Russia Without Putin: Money, Power and the Myths of the New Cold War by Tony Wood (2018) (read in 2019)
Published by marco on
Disclaimer: these are notes I took while reading this book. They include citations I found interesting or enlightening or particularly well-written. In some cases, I’ve pointed out which of these applies to which citation; in others, I have not. Any benefit you gain from reading these notes is purely incidental to the purpose they serve of reminding me what I once read. Please see Wikipedia for a summary if I’ve failed to provide one sufficient for your purposes. If my notes serve to trigger an interest in this book, then I’m happy for you.
I’d listened to a couple of interviews with Tony Wood (on This is Hell with Chuck Mertz and Behind the News with Doug Henwood) and became interested in his book through his eloquent discussions of Russia. The book details the last three decades of history in Russia, from Gorbachev to Yeltsin and then Putin.
More specifically, he describes a Russia that’s explicitly not its leader. Instead, it is a country that used to be much more powerful than it is now. It used to be much more advanced, more equal. Most importantly, it is not a capitalist failure. It is not retreating to its statist past. It would be better if it were. Instead, it is essentially a success story for the West: they helped suck the money and resources from a once-powerful enemy, creating a country for the 1%—in the image of its western forebears.
Mostly, Russia wasn’t able to grow in a direction that would benefit itself. Instead, its massive resources and well-educated population were wasted or channeled to purposes conducive to the rulers of the rest of the world. If Russia’s collapse benefitted the rich, then it was deemed to be “reforming”; otherwise, it was deemed to be “yearning for the USSR”. The formula was predictable and boring and effective.
All of Russia’s corruption is utterly unremarkable and non-unique. Similar corruption exists in the U.S. and Britain and, at least to some degree, a handful of other western countries. When Wood describes the degree to which large banks and industries control policy in Russia, there is no real difference from how it works in the U.S, or Germany for that matter.
Is Russia’s government saturated with industry insiders? Yes. How is that any different from Obama’s Goldman Sachs alums, chosen by Citibank? Or Trump’s coterie of industry insiders, each matched to the cabinet position that looks most like a henhouse to them?
Russia never had a chance: it was to be a vassal to the West or was to suffer until it acquiesced. There was never going to be another way. Russia is geographically huge, but has a relatively small population. It has a ton of resources and a well-educated populace, but it has a low birthrate (well-educated) and an unwelcome immigration wave is its only hope. Its economy is tied up with its resources—controlled by its enemies through control of commodity prices.
Russia occupies a middle ground. It has the low birthrate, culture, military hardware, attitude and high education of an advanced nation, but the life-expectancy and reputation of a poorer one. And America hates them, which makes their European and British lackeys do so as well, at least sometimes.
Putin and his attitudes and opinions are totally beside the point. Russia is its own thing—and its unclear how it will survive in a world with a powerful country like the US in control, bent on its submission.
“But at least there was a sizeable body of writers, scholars, activists and thinkers who could supply a more nuanced perspective, based on first-hand experience. The West’s levels of expertise and awareness about Russia have, sadly, declined steeply since then, opening the way for all kinds of ill-informed speculation – often churned out by individuals with no knowledge of the place, let alone of the people or the language – to circulate unchallenged. As a result, public opinion and policy decisions are based on a very shallow understanding of the country.”
“Personal connections like these are crucial to understanding how Russia works.9 In the Soviet period, informal influence, or blat – translated as ‘pull’ – often dictated access to scarce goods, housing or coveted jobs. Its use was widespread because it was so essential to getting by.”
This is not a distinctly Russian practice. This is how things work everywhere.
“Every time the requirements of capitalist ‘transition’ came into conflict with the principle of popular sovereignty, Russia’s post-Soviet rulers made it clear enough where their loyalties lay. Yeltsin’s attack on the parliament in October 1993 was only the first in a long line of violations designed to shield a nascent post-Soviet capitalism from being held to account by the citizenry.
“After Yeltsin’s re-election in 1996 – secured, it bears repeating, thanks to a combination of electoral fraud and Western meddling – Anatoly Chubais, one of the main architects of privatization in Russia, left the public in no doubt about what had been at stake: ‘Russian democracy is irrevocable, private ownership in Russia is irrevocable, market reforms in the Russian state are irrevocable.’”
“The Western financial press in particular saw the apparent extension of state control as an attempt to reverse the 1990s market reforms.”
They call them “reforms”. The financial press is predictable. Immoral and focused on growth of their revenue streams. They don’t care how it works: more money to them is good. Any reduction is bad.
They get mad when someone else gets to choose the winners. Who do those foreigners think they are, cutting off the children of privilege of the West?
“The vast majority were closely connected with state-owned enterprises. Often they were simply a way to siphon money into a few select hands: the ‘members’ who received dividends tended to be the managers of an enterprise rather than its workforce. Cooperatives were also allowed to set up their own financial arms, producing a plethora of ‘pocket banks’ that could borrow from the central bank at low rates – and of course issue ‘loans’ to members.”
How the fuck is this any different from America? The largest corporations are heavily subsidized with big government contracts. Money concentrates into the hands of a few shareholders. There are special rules for bank borrowing. It’s arguable that it’s impossible to get “big” in the States without government contracts. Google has them. Microsoft has them. IBM has them.
“The first was a ‘mass privatization’ scheme, launched with great fanfare in October 1992, in which citizens were issued with vouchers entitling them to buy shares in enterprises slated for privatization. By June 1994, some 15,000 enterprises, employing 17 million people – around two-thirds of the industrial workforce – had been auctioned off.
“Nominally intended to create a kind of ‘popular capitalism’, in practice this produced a concentration of ownership and control among well-placed insiders from the nomenklatura and Soviet managerial elite. Managers often gained control of their workers’ shares, either by purchasing them or through more underhand means. And because voucher privatization took place in the middle of a catastrophic downturn, many workers sold their vouchers at a fraction of their face value to get hold of desperately needed cash.”
“‘From my point of view,’ Berezovsky told one interviewer, ‘in general, power and capital are inseparable’. He added, after a pause, that ‘if something is advantageous to capital, it goes without saying that it is advantageous to the nation’.23 Wealth seemed to be dictating terms to power, in a phenomenon often referred to as state capture.”
Again, there is no perceptible difference from American oligarchs.
“In a grim satire set in 2028, Vladimir Sorokin, enfant terrible of Russian literature, reimagined them as a deeper throwback, to the oprichnina, Ivan the Terrible’s private army, which terrorized Muscovy in the late sixteenth century.34 In another phantasmagorical satire on post-Soviet reality, novelist Viktor Pelevin took a trope in wide circulation at the time, the ‘werewolf in epaulets’, and made it literal, depicting Russia’s current rulers as petroleum-worshipping beasts in KGB attire, howling at the earth to deliver the bounty on which their power depended.”
“By the end of the century, two successive ministers of fuel and energy had been recruited from oil companies, and a whole section of Putin’s early appointments to the presidential administration came directly from Alfa-Bank.”
Like Obama’s Goldman Sachs alums, chosen by Citibank. Or Trump’s coterie of industry insiders, each matched to the cabinet position that looks most like a henhouse to them.
“This two-way traffic between the worlds of the state and of private enterprise will no doubt be entirely familiar to many readers: the same kind of revolving door notoriously sustains elites around much of the globe, enabling them to waltz effortlessly between the boardrooms of Goldman Sachs and the corridors of power in Washington, London, Rome and elsewhere.”
“Why did so many Russians, during the petro-fuelled boom of that decade, rush to identify as members of a rising middle class, when by most indicators they would be classed as something else?”
You can ask the same question of Americans. It has the same answer.
“Soviet women also had to bear the main burden of housework and child-rearing, not to mention the recurrent, time-consuming task of queuing for food and other basic consumer goods. (Their partners did not offer much assistance. After comparing the time budgets of married and single women, one scholar concluded dryly that ‘the addition of a husband did absolutely nothing to ease the woman’s domestic burden’.)”
“According to World Bank data, in 1988 Russia had a Gini coefficient of 0.24, which placed it in the company of, say, Sweden; by 1993, the figure stood at 0.48, putting it on a par with Peru or the Philippines. These figures only cover officially declared income, so the actual rise in inequality was surely far greater; recent estimates based on a broader set of data show Russia’s Gini coefficient doubling in five years, from 0.32 in 1991 to 0.64 in 1996.”
“In 1992 – the year Yeltsin initiated his ‘shock therapy’, including a deregulation of prices that tripled the cost of food virtually overnight – the International Labour Organization classed 85 per cent of the Russian population as poor.10 In response, the Yeltsin government adopted a new method for measuring poverty – whereupon the figure fell to 36 per cent.”
“[A]s Russia’s GDP contracted by more than a third between 1991 and 1995 – a steeper decline than in the US during the Great Depression. According to World Bank figures from 1996, more than two-fifths of the population – some 60 million people – were living on less than $4 a day, compared with 2 million in 1989.”
“Reversing whatever gains women had made under Communism was presented as a return to the ‘natural’ state of affairs.”
“Having helped to turn an agrarian empire into a global superpower – complete with nuclear arsenal, space programme, advances in astrophysics and cybernetics – Russia’s scientists found themselves marking time amid its ruins.”
“After 1991, the depth of the crisis often gave rise to a defensive solidarity between workers and management, as they strove to keep production going. In many cases this was the only way for workers to keep not only their jobs but also the housing and other basic social guarantees that were, for now, still provided at the enterprise level.”
“In one 2010 study, people with higher degrees accounted for a fifth of those deemed ‘poor’ or ‘disadvantaged’.61 These sectors of the ‘middle class’ were being proletarianized, even as the onetime proletariat redefined itself as ‘middle class’.”
“it may well be that much stronger opposition to the ‘imitation democratic’ system will emerge from the post-Communist generations, and that new forms of collective defiance will be forged not out of nostalgia for socialism but out of their shared experiences of capitalism. The future may prove more radically stubborn than the receding past.”
“But the liberal parties’ electoral misfortunes also reflected the tremendous discredit their embrace of the free market in the 1990s had earned them.”
“This is, of course, a familiar set of recipes. In some ways, the Party of Progress platform is a digest of the last three decades of conventional Western social and economic policy. The only real surprise here is seeing these ideas being actively recommended almost a decade after they led the world into a pervasive crisis from which no exit is in sight.”
“Yet this line of thinking rests on at least two mistaken assumptions. One is a belief in an abstract, idealized capitalism that could incarnate free-market principles in an undistorted fashion. No such model exists: there is no capitalism, no market, no economic activity even, outside of history.”
“Gorbachev went much further than détente, speaking in 1989 of building a ‘common European home’. He envisaged an ultimate integration of Russia and the Warsaw Pact countries into a harmonious bloc of broadly social-democratic states, a kind of Greater Scandinavia.
“Under Yeltsin, however, what had been an impulse toward convergence turned into a project to make Russia into a ‘normal’ liberal democracy, firmly under the tutelage of the US. If Gorbachev and his Politburo had stunned their Cold War interlocutors with the concessions they had been willing to make, Yeltsin’s government went still further, at times seeming to abdicate altogether from having policy goals of its own.”
“With less than 5 per cent of the world’s population, by the mid-1990s the US accounted for a quarter of its total economic output, a fifth of its manufacturing, and two fifths of its military spending – in dollar terms committing more to its armed forces than the next eleven highest-spending countries combined.”
“Putin’s points of reference were European even when they weren’t at all flattering: at the end of 1999, he said that it would take fifteen years of rapid growth for Russia to draw level with Portugal’s current per capita GDP.31 (Russia reached that milestone in 2011; but by then Portugal was further ahead, and even amid the deep recession sparked by the eurozone crisis, its GDP per capita was”
“In early August 2008, Georgian President Mikheil Saakashvili – seemingly with encouragement from the US – suddenly moved to recapture South Ossetia, providing Russia with a ready pretext for armed intervention. Militarily, the conflict was a mismatch, and was over after five days of fighting.
“Politically, it was far more consequential. It was partly a kind of retaliation on the plane of international law for previous Western actions: Medvedev invoked the West’s own doctrines of ‘humanitarian intervention’ and the ‘responsibility to protect’ (‘R2P’), as deployed in Kosovo in 1999 and agreed at the UN’s 2005 World Summit, respectively. In the immediate aftermath of the war, moreover, the Kremlin recognized South Ossetia and Abkhazia as independent states, citing the barely six-month-old precedent of Kosovo.
“The staggering hypocrisy of this gesture, from a government that had fought two wars to prevent Chechen independence, hardly needs emphasizing. But the Georgian operation was more immediately intended to call the West’s bluff on further NATO enlargement, effectively asking if it was willing to start a full-scale global war for the sake of tiny Georgia. The answer, despite much bluster from US Republicans such as John McCain, was no.”
“It was, of course, Yanukovych’s abrupt U-turn on the EU Association Agreement that sparked the Maidan protests in late 2013. Ukraine seemed to be caught in a choice between the EU’s free-trade agreement and the Kremlin’s project for a Eurasian Customs Union – a choice often framed by Maidan supporters in civilizational terms, as being between ‘Europe’ and ‘Asia’, between a modernizing European destiny and the backwardness of the Soviet past. Yet there were many other factors behind Yanukovych’s decision – not least a concern over the potential impact of free trade on an economy already reeling under the impact of IMF-decreed budgetary austerity.”
“But despite the Kremlin’s references at the time to ‘Novorossiia’ – the old tsarist name for the lands along the Black Sea’s northern shore, hinting at a potential claim to more of Ukraine’s territory – these actions were tactical improvisations rather than part of a long-held plan to dismember Ukraine. The Kremlin was in effect frantically drawing one line in the sand after another, lines the West kept blithely ignoring. The rapid escalation of Russia’s response and the very crudity of its methods were in themselves a measure of the asymmetry of power between it and the West.”
“Sergei Lavrov told a TV interviewer that the US ‘needs to be taught that affairs can only be conducted on the basis of equality, balance of interests and mutual respect’.51 After the Maidan, and with the US and its allies bent on a policy of isolating Russia internationally, the urge to claim parity gave way to a more pressing need to reassert Russia’s relevance.”
“Even though Russia is by far the largest state in the Eurasian Union, the Union itself is nonetheless a deal made by sovereign governments, rather than an imperial Anschluss in the name of Russian ethno-national chauvinism.”
“The escalating confrontation with the West may have struck some in Russia as proof of Dugin’s ‘civilizational’ diagnoses – the Ukraine crisis and its aftermath finally confirming Russia’s definitive exclusion from, and opposition to, the Western liberal order. But neo-Eurasianist ideas had no role in producing the confrontation itself. As we have seen, from the start of the post-Soviet era there were fundamental mismatches in power and strategic interests between Russia and the West. These generated tensions that steadily rose over time, and notably burst into the open in Ukraine in 2003–04, Georgia in 2008 and Ukraine again in 2013–14, among other places.”
And the West shut out Russia as anything but a vassal from the beginning.
“The most decisive feature of Russia’s present-day role in the world, which flows into every calculation it makes, is its intermediate status. Too big to be digested by regional blocs such as the EU, too independent of the US to admit into NATO, Russia is nonetheless no longer powerful enough to form a significant geopolitical or economic pole on its own.”
“Yet in 2015, for example, Russia devoted about a tenth as much money to its armed forces in absolute terms as the US did, and only slightly more than the UK; in per capita terms, it spent somewhat less than Germany or Greece. All told, its 2015 military budget came to around 8 per cent of the total for NATO as a whole, almost 70 per cent of which was spent by the US alone.”
“For all the concern about the tentacular spread of Putin’s influence, its actual capacity to shape political outcomes has proved negligible to non-existent – the 2016 US elections very much included.”
“For now, however, any post-American world seems a long way off. What happens in this long interregnum depends to a large extent on what the West does, since the basic power imbalance between it and Russia still governs strategic calculations on both sides. This leaves Russia hovering in a kind of geopolitical and historical limbo while the world is reconfigured around it. Yet during this interval Russia itself will not be standing still: several different far-reaching transformations will remake it from within.”
“The disproportionate size of the primary-resource sector spells trouble for the rest of the economy, as the experience of many other countries has shown, from the ‘Dutch Disease’ of the 1960s to the impact of oil on Nigeria and Venezuela. The overwhelming weight of lucrative export commodities causes currency appreciation that leaves other industries uncompetitive; this makes it all the more difficult to pursue alternative strategies for growth, deepening the ‘resource trap’.”
Russia occupies a middle ground. It has the low birthrate, culture, military hardware, attitude and high education of an advanced nation, but the life-expectancy and reputation of a poorer one.
And America hates them, which makes their European and British lackeys do so as well, at least sometimes.
“It remains the world’s largest country, with a still numerous and well-educated population, not to mention a nuclear arsenal and significant natural resources. But at the same time its economic weight is dwindling: in 2015, its GDP per capita was around a sixth that of the US, a fifth that of Germany and a quarter of the OECD average;”
“Nominally, Russia today is a federation, comprising eighty-three territorial ‘subjects’ – plus two more since 2014, with the Republic of Crimea and the city of Sevastopol – each of which possesses its own constitution, government, parliament and flag. On paper, these entities have many of the attributes of statehood, and only delegate certain powers to the federal centre in Moscow. But the reality is very different: in practice, Russia is a highly centralized polity, and the country’s supposedly federal subunits are little more than administrative divisions within a clear hierarchy”
“Although its options are limited in various ways, much nonetheless hangs on how the current system of government in Russia, whether under Putin or his eventual successors, responds to changing circumstances. The spike in tensions with the West has for the moment given the Putin-led system a certain amount of leeway, since it can ascribe many of the problems the country experiences to foreign enemies. It helps that this is not, factually speaking, incorrect: the sanctions regime imposed in 2014 prolonged Russia’s economic difficulties, and in the wake of Crimea and especially the 2016 US elections, Western media, pundits and politicians eagerly fanned a hostility to Russia that mirrored the hysteria of Russia’s own pro-Kremlin outlets.”