Future of Russian Government

[BC]

You actually believe what "a Kremlin spokesman" says about how much Putin is worth?

Did I say I believed?

Read please..

[Misha]

Did I say I believed?

Read please..

No, but you post a link to an article where the lede states: "MOSCOW (Reuters) - Russian President Vladimir Putin has seen his modest wealth decline still further during his second term in office, with the drop blamed on a fall-off in book royalties, a Kremlin spokesman said on Monday."

He is another article that argues that Putin is worth a lot more: http://www.themoscowtimes.com/stories/2007/11/28/006.html.

[BC]

Like I said... there are lots of reports.. - unfortunately little substance and lots of conjecture..   

[Misha]

Like I said... there are lots of reports.. - unfortunately little substance and lots of conjecture..   

That is the nature of the beast. GAZPROM and the other semi-nationalized companies are not accountable to stockholders and they are not accountable to the public. The books of these companies are closed to all and, consequently, a lot of money is being made and redistributed to people very close to Putin. Of course we will never know for sure until real democracy and transparency is established in Russia, but what I do know for sure is that Putin is maintaining a system whereby there is no accountability and close associates of Putin can make fortunes.

[timothe]

That is the nature of the beast. GAZPROM and the other semi-nationalized companies are not accountable to stockholders and they are not accountable to the public. The books of these companies are closed to all and, consequently, a lot of money is being made and redistributed to people very close to Putin. Of course we will never know for sure until real democracy and transparency is established in Russia, but what I do know for sure is that Putin is maintaining a system whereby there is no accountability and close associates of Putin can make fortunes.

Which is why many people won't buy Russian stocks like Gazprom, regardless of their growth rate.  (or ETFs Bruce)

[BC]

That is the nature of the beast. GAZPROM and the other semi-nationalized companies are not accountable to stockholders and they are not accountable to the public. The books of these companies are closed to all and, consequently, a lot of money is being made and redistributed to people very close to Putin. Of course we will never know for sure until real democracy and transparency is established in Russia, but what I do know for sure is that Putin is maintaining a system whereby there is no accountability and close associates of Putin can make fortunes.

This from the Gazprom homepage link I posted upthread in their FAQ

Who performs an independent audit of OAO Gazprom?

PricewatersCoopers Audit international highly reputed company performs the audit of Gazprom's accounting.

btw according to http://en.wikipedia.org/wiki/PricewaterhouseCoopers

PricewaterhouseCoopers earned aggregated worldwide revenues of $25 billion for fiscal 2007, and employed over 146,000 people in 150 countries.[1]

In the United States, where it is the third largest privately owned organization, it operates as PricewaterhouseCoopers LLP

Think these guys are going to risk their reputation (that supports 25B revenue) messing around with Gazprom's books?.. naa.. me thinks they wouldn't touch it.

As far as bookkeeping goes, democracy has no effect.

If we want to talk about accounting practices and shareholders getting screwed, look no further than the good ol USA. - Short memories maybe? Remember Enron?

So you know for sure that Putin is screwing his own country? Call your local newspaper and give them the details but be sure to have your duckies in a row, not like here.

[BC]

Which is why many people won't buy Russian stocks like Gazprom, regardless of their growth rate.  (or ETFs Bruce)

From the same link I mentioned before:

Can a Gazprom's shareholder sell shares to a foreigner?

Yes. But only in case, when the foreigner possesses permission issued by the Russian Federal Financial Markets Service in compliance with the resolution of the Government of the Russian Federation.

They won't buy?? - they probably can't.

I'd do it in a heartbeat - if I could. 

[Misha]

This from the Gazprom homepage link I posted upthread in their FAQ

btw according to http://en.wikipedia.org/wiki/PricewaterhouseCoopers

Think these guys are going to risk their reputation (that supports 25B revenue) messing around with Gazprom's books?.. naa.. me thinks they wouldn't touch it.

Well, there were complaints leveled against PwC and GAZPROM and their bookkeeping and audits. This article from the BBC in 2002: http://news.bbc.co.uk/2/hi/business/1930508.stm.

They write: "A minority shareholder in Russia's state controlled gas behemoth Gazprom has launched a series of legal actions against PricewaterhouseCoopers (PwC), the energy giant's auditor, "to officially expose as false and misleading" audit conclusions reached last year.

"By launching the lawsuits against PwC, we want to show auditors that there are rules and laws in Russia, and those who choose to violate them will face serious consequences," said William Browder, chief executive of Hermitage Capital Management Fund, which is bringing the case."

"Alexander Dobrovinsky, Mr Browder's lawyer, described the case as "a black-and-white case of a false audit report."

"PwC presented audit reports that contradicted the facts they had available to them," he said in a statement."

[BC]

Well, there were complaints leveled against PwC and GAZPROM and their bookkeeping and audits. This article from the BBC in 2002:

Your article is quite dated (2002), in fact pre Yukos.. Long before RU Government took control. Any idea what the outcome was?

IIRC that was a crazy time in RU.. is quite interesting how the US objected to the Yukos situation, but then total silence thereafter.

Maybe RU folks are happy that finally the government managed to take control of the mess?

[timothe]

Gazprom trades as a pink sheeter only in the USA.

http://finance.yahoo.com/q?s=OGZPY.PK

And it's not so much the question of the company's own audit which makes all Russian stocks volatile, it's that they are owned by the Russian government which could simply retain 100% of the ownership at any time, leaving the stockholders high and dry.  They are the least desirable of the emerging markets due to perceived risk.  (I prefer India and Brazil myself.)

In the markets, perception oftentimes means far more than reality and it is the institutional buyers that cause the stock to move, not hacks like me or you.  As long as the Russian government is perceived as corrupt, Russian stocks will lag.

A perfect example of this is Vimpel Communications, Russia's wireless company. 

http://finance.yahoo.com/q?s=VIP

Based on the standard formula of stock price P/E ratio = growth rate * 2, this stock should be trading at over $80.  But it only trades now at half that amount now despite a lot of good indicators.  (strategic acquisitions, continued dividend, no competition)   Institutions only own 21% of the stock whereas a company like Verizon has 63% of its stock owned by institutions.

[Eduard]

Serebro, maybe Russia's radical changes aren't radical enough. Someone needs to get a set of balls and start getting rid of corruption and keep the mafia from having a major influence in the government and in business. Then you may see if real democracy has a chance there.

this sounds so naive...do you realise who the main mafia is in Russia? Democracy in Russia? yeah, that will be the day...do you realise that majority of Russians don't really care about democracy? They mostly just want a little stability and a better standart of living for the working people. Putin and his gang consolidated power, has been racking in billions and occasionally throws a bone to the people to keep them in line. People seem to be happy with that especially in big cities.
The Russian way is "grab as much as possible when you can, and run somewhere abroad to raise you children in a safer environment."
And if a true patriot comes alone and starts talking about democracy, corruption, money dissapearing...they will make him (or her) dissapear quickly. They are professionals. And they are the real mafia in Russia with absolute power, who controls lower level street level gangsters. Most big mafioso types who survived the gang wars of the 90s are now legitimate "businessmen" they own big businesses like insurance companies and banks.
But at the same time Putin and his organization are angels compared to people like Stalin...
as one famous Russian writer said "Umom Rossiyu ne poymesh" Which basically means "you can't understand Russia with a logical mind" They also say, that you can't comprehend Russia, you just have to love it...well, many Russians choose to love it from far away aperently! Seems like anywhere we go now here in the US I hear Russian language!  The numbers of Russians who live here in the States are amazing. No I don't have the exact stats for the A.R. people, but I know that I have to be careful and not to sware in Russian out loud in a store, because most likely there will be a few Russians shopping there.

[BillyB]

do you realise that majority of Russians don't really care about democracy?

There are at least 5000 FSU families in the greater Seattle area and estimates up to nearly 100,000 FSU people in the area. I've associated with quite a bit of them and most every one are very happy with the democracy that we've come to know. I'm sure if you brought most Russians from Russia here, they would change their tune too.

[Eduard]

There are at least 5000 FSU families in the greater Seattle area and estimates up to nearly 100,000 FSU people in the area. I've associated with quite a bit of them and most every one are very happy with the democracy that we've come to know. I'm sure if you brought most Russians from Russia here, they would change their tune too.

I didn't mean that they wouldn't like to live in a stable democratic society like in the USA, therefore you do see so many living here now, including myself. But most Russians don't believe that much will change in Russia, at least not in terms of democracy.Life got a lot better in Moscow and somewhat better in smaller cities, so people are more optimistic than they used to be. They like Putin and majority don't care about the dead journalists and many feel that the new "Zar" is good for Russia. To destruct people from any thoughts of lost democracy the government and the media is spreading a strong anti-American sentiment. A westerner probably won't recognise this, but when I'm in Russia and watch news shows or anything to do with the US type shows, an anchor always puts a very slight bit of sarcasm when talking about America. Sometimes it's not what they say, but how they say it - the intonation, the eye movement...

[deccie]

. But most Russians don't believe that much will change in Russia, at least not in terms of democracy.Life got a lot better in Moscow and somewhat better in smaller cities, so people are more optimistic than they used to be. They like Putin and majority don't care about the dead journalists and many feel that the new "Zar" is good for Russia.

I don't quite agree with this. I beleive the prevalent attitude is more one of apathy and of powerlessness. People have no expectation that they could change things for the better. And for as long as people beleive they can't change things it will always be that way.

As for the new Tsar, I am sure many Russians recognise that the power of the Tsar was bought at the expense of the people. So likening Putin to a Tsar may be a two edged comment.

[Eduard]

I don't quite agree with this. I beleive the prevalent attitude is more one of apathy and of powerlessness. People have no expectation that they could change things for the better. And for as long as people beleive they can't change things it will always be that way.

As for the new Tsar, I am sure many Russians recognise that the power of the Tsar was bought at the expense of the people. So likening Putin to a Tsar may be a two edged comment.

You actually seem to agree with what I said because what I said is a natural consequence to what you said - the feeling of apathy and powerlessness

[Shadow]

All people really want is stability and food on the table.
Do not forget that people remember what happened when the USSR broke up. What were expectations of a Western style democracy and money brought them only less stability and security. Right now things are not the best they can be, but there is stability sand reasonable security. It is not perfect, but would a revolution really bring people up in a short time ?

[Phil dAmore]

do you realise that majority of Russians don't really care about democracy?

How can they care about something that they have never experienced?  How can you miss something you have never had?

The upcoming 'election' in March has got to be the biggest insult to the Russian people to date. It's like ordering dinner at Mrs. Knotts Chicken Dinner Restaurant.  You can have chicken or... chicken.

An interesting question:  Medvedyev is the only candidate.  What if nobody voted? 

[deccie]

All people really want is stability and food on the table.
Do not forget that people remember what happened when the USSR broke up. What were expectations of a Western style democracy and money brought them only less stability and security. Right now things are not the best they can be, but there is stability sand reasonable security. It is not perfect, but would a revolution really bring people up in a short time ?

So why did the Ukranians do what they did with the Orange revolution? Why did Russians stand with Yeltsin to stop the communists taking back power?

I disagree with the idea that people ONLY want stability and food on the table. They wants lots of other things too. The ability to keep as much as possible of what they earn. A good health system. A decent environment in which to live in and food to eat. A good education system for their kids.

Don't forget that a lot of those that have been killed in Russia are Russians themselves and I don't beleive all of them were naive about the risks they took.

[Shadow]

So why did the Ukranians do what they did with the Orange revolution? Why did Russians stand with Yeltsin to stop the communists taking back power?

I disagree with the idea that people ONLY want stability and food on the table. They wants lots of other things too. The ability to keep as much as possible of what they earn. A good health system. A decent environment in which to live in and food to eat. A good education system for their kids.

Don't forget that a lot of those that have been killed in Russia are Russians themselves and I don't beleive all of them were naive about the risks they took.

What did Yeltsin bring Russians ?
What did the Orange revolution bring Ukraine ?

A small time of euphoria and then nothing but more trouble as usual.

Good health system ? Good education system ? Both have deteriorated since the fall of the USSR and the rise of 'paid services'.
Why should they try again what did not work the first time, and not choose what at least is a stable situation.

[Misha]

What did Yeltsin bring Russians ?

Freedom. In spite of all his failings, Russians had much more freedom under Yeltsin than they had under the Communists and more than they have now under Putin.

Why is Yeltsin seen so critically? Well it is because of the economic challenges that he faced. Yet, few remember that the price of oil (one of Russia's main exports) had collapsed. Also, after the Soviet Union there were too many roubles in circulation. In the Soviet Union, people had lots of money, but little they could actually buy in terms of consumer goods which were in short supply. There was no way that you could make the transition from Communism to a form of capitalism with all this "excess" money in ciruclation. Sadly, one of the consequence was inflation and hyperinflation.

The babushki fondly remember that they had X thousand roubles in their saving accounts at the end of Communism, yet forget that there was not really much that they could have bought with those roubles. In theory, they could have bought a car, but to buy that car you had to put your name on a waiting list as there were not enough cars being produced to satisfy demand. 

Many of the economic problems faced under Russia were the result of the failings of Communism. Too often you had factories producing goods that people no longer wanted: if they could, how many Russians today would want to trade in their Japanese televisions for a brand new Soviet model?

Yeltsin did at least have the courage to bring about economic reforms many of which did bring about results.  We can debate whether they were the best reforms or whether they were properly implemented, but Yeltsin at least had to courage to push through necessary reforms, and I would argue that the greater prosperity that Russians now have are the consequence of these reforms.

[Admin]

So why did the Ukranians do what they did with the Orange revolution? Why did Russians stand with Yeltsin to stop the communists taking back power?

I disagree with the idea that people ONLY want stability and food on the table. They wants lots of other things too. The ability to keep as much as possible of what they earn. A good health system. A decent environment in which to live in and food to eat. A good education system for their kids.

Don't forget that a lot of those that have been killed in Russia are Russians themselves and I don't beleive all of them were naive about the risks they took.

Having spent a lot of time in Asia and Europe (West and East), with a little time in the Middle East, my simple conclusion is that most people's grandest aspiration for their home country is to have a place which is a better place for their children than it was for them. This, in my experience, is universal. It is the one thing which binds all people from all countries. I have found this true of the Jews in Israel, Muslims in Jordan, Catholics in The Philippines, Muslims in Indonesia, Christians in the US and Germany, and Orthodox in Ukraine. It crosses religious belief and national borders. It is, as I say, universal. Obviously, it does not consider the miniscule percentage of radicals.

Because it is universal - it offers the one small hope we have of finding common ground to build on.

FWIW

- Dan

[Admin]

What did Yeltsin bring Russians ?
What did the Orange revolution bring Ukraine ?

A small time of euphoria and then nothing but more trouble as usual.

Good health system ? Good education system ? Both have deteriorated since the fall of the USSR and the rise of 'paid services'.
Why should they try again what did not work the first time, and not choose what at least is a stable situation.

Your point serves to illustrate a couple of things.

The population's responsiveness to 'hope'. The hope for a better future.

And the difficulty in altering inertia. There is so much history, and people are so entrenched in the past, it is almost impossible to make big changes - even though the population would seem to be in favor of it - until it is time to actually DO it.

- Dan

[Eduard]

How can they care about something that they have never experienced?  How can you miss something you have never had?

The upcoming 'election' in March has got to be the biggest insult to the Russian people to date. It's like ordering dinner at Mrs. Knotts Chicken Dinner Restaurant.  You can have chicken or... chicken.

An interesting question:  Medvedyev is the only candidate.  What if nobody voted? 

Like I said, not much has changed in the election process. I remember right before we left Russia for good, I HAD to vote! That wasn't a matter of choice in those days and everyone had to vote so that they could get  the feeling of great communist style democracy at worki!
Well I remember the 2 choices they were presenting to the voters: 1. for Brezhnev 2. against Brezhnev.
Obviously I had to vote for Brezhnev since after all he made it possible for me to get the hell out of mother Russia!!!

[Shadow]

Freedom. In spite of all his failings, Russians had much more freedom under Yeltsin than they had under the Communists and more than they have now under Putin.

What freedom are you talking about ? Perhaps the freedom to put your opinion in a newspaper without fearing a visit.
Yeltsin was probably the only free chosen leader in the history of Russia. But he did not organize the elections that chose him the first time.
The results were not lack of trying or lack of popularity, it was just the system that failed because of a lack of transition. Going from a fully government regulated society to an unregulated one is asking for trouble unless there could be a transitional phase.
IMO this is what caused a drawback to a more government controlled society, and why people inside Russia perceive it as a good job.

The rising of middle class in Moscow is what gives hope for the future, if it can be repeated in other cities as well. A free economy and healthy government thrives on middle class. People who have money to pay taxes, and can afford some luxuries to keep business floating.

In due time the people will probably find a leader who can bring back a more open political climate. But this leader should come from within, Russians will not easily accept a puppet sponsored by the West. 

[Misha]

IMO this is what caused a drawback to a more government controlled society, and why people inside Russia perceive it as a good job.

It is easy to "perceive" something as a good job when all the television stations sing your praises 24/7. Also, in spite of a more "government controlled society" the state is accomplishing less in many ways. If we look at murder rates, they actually went up under Putin and corruption has gotten worse, though more centralized. Again, you have to remember that under Yeltsin, the price for a gallon of dropped down to $8 a barrel. Now it is closer to $100. The "new middle class" you cite is a mainly a consequence of rising oil prices as opposed to Putin's government controlled society.