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March 17, 2006
The Siberian Life of an Oligarch

cup_of_tea.jpg
Photo by CI

As Russia Blog has previously reported, the former richest man in Russia, Mikhail Khodorkovsky, now resides in Siberia, in a prison colony close to the Chinese border. Khodorkovsky’s wife and mother visited him just a few weeks ago. At that time, Khodorkovsky had been punished by solitary confinement twice; once for leaving his workspace without permission to find a mechanic to fix his sewing machine, and the second time for having papers from the Ministry of Justice. These documents describe the proper procedures for imprisoning a Russian citizen. The prison administration decided Khodorkovsky should not have these documents and sent him to solitary confinement again.

When Khodorkovsky was settling into his new residence he had a smile on his face. Khodorkovsky thought that he would be doing cushy research and earn his PhD while serving out his sentence. All these dreams have been ruthlessly crushed. All the mail Khodorkovsky has received and the letters he tried to send out have been confiscated and destroyed by the prison administration. The warden had decided that the contents of his papers were “inappropriate”. Also, research work is not allowed at this particular penal colony. Sewing and making cardboard boxes are the only working options. So far Khodorkovsky has stuck with sewing, but he isn’t any good at it, so he is thinking about carton box-making as his next career.

Russian prisoners are supposed to wake up at 6:30 am, eat breakfast, work 8 am until 5 pm, go through security procedures, have dinner and then enjoy the “free time” between 8 pm and 10 pm. The inmates get paid about $10 a month. To save electricity, the lights are usually dimmed so it’s hard to read, and the only well-lit rooms are in the common areas, where the prisoners can sometimes watch TV. These common rooms are noisy and the few available TV sets are used by the prisoners much younger than Khodorkovsky; they prefer action movies and TV series over news and cultural programming.

Yesterday Khodorkovsky was caught drinking tea in the common area with another inmate. They were warned that this area was not designated “for usage of food products”, and later they were punished with...seven days of solitary confinement. Having only two solitary confinement terms on your record makes early release or parole impossible. Khodorkovsky’s now had three. Seven days is the maximum legal solitary confinement one can receive in Russian prisons.

Two days ago Khodorkovsky’s lawyer Natalia Terehova visited him in the prison. Her law license was seized and she was harassed by the guards. The head of the prison, Aleksand Evstratov, apologized to her and retuned her legal credentials. For such an act of kindness, today Evstratov was fired from his job.

Because of the Siberian location, draconian prison rules and the prison administration's arbitrary behavior, Khodorkovsky is cut off from civilization, his lawyers and family. He didn’t play by the rules of paying off the government and not selling hard assets to foreigners, so today he is locked away in miserable conditions with no hope for relief anytime soon.

Other oligarchs are happy that Khodorkovsky is in jail – they shared their assets with the Kremlin and learned the lesson to avoid Khodorkovsky’s fate. The Kremlin is happy with Khodorkovsky being in jail, because the oil fields still belong to Mother Russia instead of American or Indian multinationals. And common Russian people either hate Khodorkovsky and are happy for his sufferings, because they know where his money came from, or they don’t really care, because they are busy just surviving.

Based on the article by Gazeta.Ru



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Comments

This post from the March 22, 2006 Johnson's Russia List # 70 touches on the matter of the Chinese in Siberia. Let me add my maturity in citing JRL, despite my well founded disagreements with its editor. A maturity lacking among others who blatantly blacklist great contributions for petty personal differences. Media quality is sacrificed by such pettyness:

From: "Dietwald Claus"
Subject: Myths and Realities of Russia's Population Crisis
Date: Wed, 22 Mar 2006

While at odds with each other on almost everything else, Russia watchers
and Russian officialdom seem to agree on the problem of Russia's
demographic decline. That there is a problem is out of the question.
Unfortunately, much of the debate about Russia's demography is rubbish.
Though I will not claim to have solutions for the real problems, I would
like to do debunk some obvious myths that seem to permeate a significant
part of the public debate on the issue, whether by experts or laypeople.

Myth 1) If Russia's population continues to decline, Russia will cease to
exist.

That's patent nonsense. Population density has nothing to do with whether
a country can exist or not. But, even if there was a lower population
density limit at which countries magically disappear, Russia really has not
much to worry about. Even the worst case scenario of only 80 million people
on Russia's territory by 2075 would still leave Russia with a greater
population density than contemporary Canada. Russia's current population
density is about 8.5 people per square kilometer, more than three times
that of Australia, and twice that of Canada. And last time I checked,
Canada's still on the map. It's actually hard to miss there. So, Russia's
population has a lot of shrinking to do before Russia is going to
disappear, and we can stop worrying about this for the moment.

Myth 2) If Russia's population declines, other will take over its territory.

That's really just a correlate of Myth 1, and equally nonsensical. Yes,
much of Russia's territory is pretty empty. But so is that of Canada and
Australia, and quite a number of other countries, including the USA. The
reason for this is that nobody wants to live there. There is an explanation
why much of Siberia was settled by fugitives and convicts - given the
choice, people much rather settle where the weather is reasonably warm and
the soil fertile. So, folks are not exactly lining up to move into the
empty vastness of Russia's East.

Of course, some people seem to believe that if the Russian East is not
settled systematically by Russians, China might just forget the place
belongs to Russia. Tired of paying for Russian, oil, gas, and other
resources, it will instead move in and cut out the middleman. This line of
reasoning is so absurd in so many ways I will limit myself to a very
obvious rebuttal: the Chinese government is highly unlikely to start
annexing Russian territory, even if it wanted to, for the very simple
reason that Russia has a lot more relative firepower there. Russian nukes
are a lot closer to Beijing than Chinese nukes are to Moscow. I leave the
rest of this morbid scenario to those with a greater tolerance for absurd
apocalyptic visions than I have.

Myth 3) If Russia's population continues to decline, there will be an
invasion of immigrants.

That's just stupid. Whether Russia's population is shrinking, expanding, or
staying the same makes no difference to people who want to come and live
here. Population size, density, and dynamics have no bearing on
immigration; just ask the Dutch, Germans, or Pakistanis.

That being said, there is something absurd about this argument: on the one
hand, everybody seems to complain that not enough people live in Russia,
but when people try to actually come, live, and work here, it's no good
either.

Immigration has traditionally been a major factor in the economic success
of nations, just witness the US, Canada, Australia for contemporary
examples. Historic examples would be Prussia, whose rise to economic
fortune, political power, and cultural prowess had much to do with
Frederick II enlightened immigration policy. Russia, too, has fared quite
well in the past when it adopted generous immigration policies. There is no
reason in principle to assume it won't do so now.

Does this mean I am in favor of uncontrolled and unlimited immigration? Of
course not. I'm not in favor of uncontrolled and unlimited anything. A
modern society needs rules, and that includes rules for immigration. What a
modern society does not need is tribalism, which brings us to the next point:

Myth 4) If there is an invasion of immigrants, Russia will cease being Russian

This is outright xenophobic, racist, and stupid: if Russia gave citizenship
to all those Chinese, Azeris, and what have you, would Russia cease to be
Russian? Only if being a Russian citizen is conditional on being Slavic.
But, since when did being a Slav have anything to do with having Russian
citizenship? The answer to that is obvious: it never did. Any assertion to
the contrary simply displays a complete ignorance of Russia's history,
culture, and ethnography.

And even IF being Slavic was once a prerequisite for being a Russian
citizen, would it not be time to stop living with a tribal mindset? All
successful civilizations of the past and present have been and are
multi-cultural. This is no argument against Russian language and
institutions being the unifying element of Russian society - far from it -
but it's an argument against tribalism.

Myth 5) Russia needs a large population to have a good economy

Balderdash. Countries like Luxemburg and Switzerland have very small
populations, but nobody would argue their economies are anything but
stellar. Nigeria has a huge population, its economy, however, isn't doing
so well. The USA has a population about ten times that of Canada, but both
are doing just fine economically. There is no relationship whatsoever
between population size, population density, and economic performance. Any
assertion to the contrary is just ignorant.

Myth 6) Russia's shrinking population is bad for the economy.

Nonsense. Changes in the number of people in a country have nothing to do
with its economic performance. Let's assume we are having an annual
population growth of 10%, and the productivity of every member of the
population is equal and does not change, then the economic growth should be
10% as well. 10% economic growth seems like a good thing, but in reality,
if it is caused by a 10% population growth, this economic growth really
means nothing. Nobody in such a country is better off. All you are having
is more people who live no better or worse than before.

Of course, the inverse is equally true. If the population declines by x%,
while each member of society remains equally productive, overall GDP
shrinks by x%, while per capita GDP remains unaffected. In other words,
changes in total population are neutral in respect to GDP per capita.

Myth 7) Russia needs to increase its birth rate.

That's actually a really, really dumb idea. Russia needs an increased birth
rate as much as it needs more snow. Children may be a biological necessity,
but since infants and children are not economically productive members of
society, they are bad news for the economy. If a lot of children are born,
a lot of economic resources will go into feeding, clothing, housing, and
educating them - these expenses are, at least in the short run, an economic
net-loss. So, obviously, children do not contribute to the growth of GDP.

In fact, children decrease the productivity of a society. After all,
somebody has to look after them - and time spent looking after children is
time not spent engaging in economically productive activities. Logically,
the more children somebody has, the less economically productive this
person will be. Thus, high birth rates also mean decreased general economic
productivity, negatively impacting GDP growth.

At the risk of offending mothers and romantics everywhere, I'll state it
bluntly: children make us poorer. In order to maintain any given level of
GDP per capita, productivity of the working population has to increase at
the same rate as the birth rate just to maintain current levels of GDP per
capita. Anything less would lead to a decrease in GDP per capita and
consequently to a pauperization of the general population.

Birth rates around the replacement level (2.1 children per woman, on
average) seem to be economically harmless. Anything much above that,
however, leads to trouble. If you don't believe this, just look at the
facts: no country with a birth rate significantly above replacement rate is
doing well on any scale, whether economically or politically.

Myth 8) Russia needs to grow its GDP

Wrong. Russia needs to grow its GDP per capita. Economic growth by itself
does not mean increased average economic welfare. Economic growth only
leads to an increase in overall economic welfare if it is the result of an
increased GDP per capita. GDP per capita matters. GDP doesn't. Write that
down. Any economic policy not targeted at increasing GDP per capita,
preferably through increased productivity, is meaningless.

These aren't exactly new insights, but considering the debates currently
taking place about Russia's economy in and outside Russia, the obvious does
seem to need repeating.

Myth 9) Russia's low life expectancy is a bad thing.

Not necessarily true. Those of you with no stomach for a little cynicism
may want to skip this section, the rest, please bear with me.

This point is not about economics per se, but about some larger
sociological factors, which also impact on economics. There is no adult in
Russia today who was not born under the previous regime. In other words,
the vast majority of the population has been brought up to think along
lines of official Marxist-Leninist ideology about a wide range of things,
including public policy in generale, and conomics in particular. As time
passes, these generations seem to forget all the bad things about the
previous regime, and increasingly become rather nostalgic about Soviet
economic policies. Since these generations also tend to vote more than
younger people who are not overly affected by such ideas, government
policies in Russia must by necessity take into considerations the
sentiments of the older generations. But since Marxist-Leninist ideas are
not exactly a good basis for sound public policy, accommodating ideas based
on Marxist-Leninist thinking cannot be good public policy. If Russia's
current low life expectancy means that the generations whose ideas about
public life are largely informed by Marxism-Leninism is dying off quickly,
this means that demand for public policies based on Marxist-Leninist ideas
is decreasing. Politically, this can only be a good thing, with definite
benefits for the economy.

There, I've said it. Breath in, breath out, breath in. Calm down. This is a
'there's a good side to almost everything' kind of situation, not a Soylent
Green scenario.

Myth 10) Russia needs a big population because it needs a big army.

This one is so inane, it hurts. If population size was the main factor
determining military capacity, China would have taken over Korea, the USA
would have beaten the Vietcong, Afghanistan would be part of Russia, Taiwan
part of Red China, Canada part of the USA. you get the idea. Throughout
history, size did not matter much in military affairs. The Greeks were
hopelessly outnumbered by the Persians, the dreaded Mongol hordes, contrary
to common belief, were actually much fewer in number than most of the
armies they defeated, and Frederick II of Prussia was significantly
outnumbered in almost all the wars he fought. What matters in military
affairs are first and foremost training, equipment, and morale. Numbers do
make a difference, but are far less important than most civilians believe.

Russia's armed forces face a lot of problems, no question. Military reforms
should focus on training, equipment, and morale - worrying about its size
really isn't an issue, at least not from a purely military security point
of view.

Myth Busting Summary:

Much of the current debate on Russia's demographic situation is nonsense.
Russia is not going to disappear from the map because of its shrinking
population. It's not going to lose territory to the Chinese, it's not going
to be overrun by hostile armies, and it's not going to be taken over by
those swarthy immigrants from the South. Neither Russia nor the Russian
narod are going the way of the Dodo any time soon.

Now that we have dealt with the nonsense, let's take a brief look at the
real issue:

The Real Issue: Quality, not Quantity

Not Russia's overall population is too small or shrinking too much: the
share of economically productive people in Russia is too small, and
arguably shrinking. Russians smoke more, drink more hard liquor, have more
abortions, have more preventable diseases, drive more dangerously, and eat
less healthy than most people in other industrialized nations. Sick people
are not productive workers. As a result, for each unit of GDP per capita,
each Russian worker has to work harder and longer than each Canadian
worker, and each Russian unit of money has to be more productive than each
Canadian unit of money.

Consequently, it does not matter whether Russia has 100 or 500 million
inhabitants: if the proportion and productivity of economically active
population does not increase, GDP per capita will not increase, and nobody
will be better off. The most important task for Russia's government is to
increase the proportion and productivity of its economically active
population.

If Russians drank as little as the Swiss, ate as well as the Japanese,
drove as carefully as the Dutch, and continued to work as hard as, well,
Russians, doubling Russia's GDP per capita in ten years would be a very
modest goal.

The Real Solution: Decreased Mortality

Too many Russian men drink, smoke, drive, and infect themselves to
premature death. Too many Russian women suffer from the health effects of
too many abortions, or have too many babies who die too early.
Demographically, it does not matter whether people aren't born at all, or
whether they die prematurely. Economically, the difference is significant,
since bearing and raising children only to have them die early is a waste
of resources. A single healthy person with a good education employed in a
good job when he reaches maturity is better than two sickly people who line
up for government handouts.

Historically, this is how the rich countries became rich: they improved
labor productivity by simultaneously reducing birth and mortality rates.
Incidentally, these factors also contributed to a significant population
growth. But, since this population growth went hand in hand with an even
greater increase of the size and productivity of the economically active
population, today's rich nations were able to combine rapid population
growth with rapid economic development.

What Russia needs is not more babies, but more healthy people who are able
to work. For this, it has to find both short- and long-term solutions,
including, but not limited to, a significant increase of excise taxes on
alcohol and cigarettes, smart immigration policies, public education
campaigns on general and reproductive health, more stringent enforcement of
traffic and workplace safety rules, and improved medical care. Some of
these policies will cost little, while others may prove expensive in the
short term.

Clearly, none of this should come as news to any literate person. But,
considering the tendency of the current demographic debate in Russia to
focus on non-issues such as population size, birth-rates, territorial
integrity, or military security, it seems necessary to point out the
trivial. There have been serious voices suggesting natalist policies - it
should be clear to anyone that this would be a serious blow against the
future of Russia. Any fear mongering regarding the security of Russia's
territory or identity due to a decreased overall population should be
nipped in the bud, and natalist m ideology should be exposed as the idiocy
it really is.

Dietwald Claus
Kirov, Russia


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Russia Blog presents up-to-date news, facts and commentary on the state of events in Russia and the former Soviet Union. The blog is managed by Yuri Mamchur, Director of Discovery Institute's Real Russia Project, a member of MBA class 2011 at Vanderbilt University's Owen Graduate School of Management, and a composer in his spare time.


 






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