With one of every five Israelis a Russian ‚migr‚ and confronted with

the common enemy of Islamic militancy, Israel and Russia have embarked

on a path of close cooperation. Prime Minister Sharon's visit to Russia

last month was a resounding success. Faced with these millennial

geopolitical developments, anti-Semitic conspiracy theorists are having

a field day.

The Jewish lobby, they say, is coercing America, its long arm, to

hijack the Iraqi oil fields in the forthcoming war and thus to

counterbalance surging Russian oil exports. Israel, they aver, planned

to carry out, in October 2001, an operation - "Mivtza Shekhina" - to

secure southern Iraq's oil fields while also mitigating the threat of

weapons of mass destruction aimed at its population centers.

Conspiratorial paranoia notwithstanding, it is unlikely that the USA is

motivated by oil interests in its war on Saddam. A battle in Iraq aimed

solely at apprehending its crude would be fighting over yesterday's

oilfields. Only an easily replaceable one tenth to one eighth of

American oil consumption emanates from the Gulf, about a million

barrels per day of it from Iraq. Moreover, the war is likely to

alienate far more important suppliers, such as Russia - as well as the

largest European clients of Gulf oil extracted by American firms.

Strictly in terms of oil, a war in Iraq is counterproductive.

Additionally, such a war is likely to push oil prices up. According to

the Council on Foreign Relations, "for every dollar-per-barrel increase

in oil prices, about $4 billion a year would leave America's $11

trillion economy, and other importing countries would lose another $16

billion per year."

Israel understandably did discuss with the USA its role in a showdown

with Iraq. Russia, unsettled as it is by America's growing presence in

central Asia and exercised by its determination to take on Iraq - may

be trying to lure Israel away from its automatic support of US goals by

dangling the oiled carrot of a joint pipeline.

Russia also hopes to neuter the rapprochement between Israel and the

Islamic nations of Turkey and Azerbaijan, traditional adversaries of

Moscow. Israel is the second largest buyer of oil from Azerbaijan. It

is one of the sponsors of a pipeline from the Baku oilfields to the

port of Ceyhan in Turkey. The pipeline stands to compete with a less

costly and more hostile to the West Russian-Iranian route.

These are momentous times. Oil is still by far the most strategic

commodity and securing its uninterrupted flow is essential to the

functioning of both developed and developing countries. There is a

discernible tectonic shift in production and proven reserves from the

Persian Gulf, the US except Alaska, the North Sea, and Latin America to

northern Europe, Russia, and the Caspian Basin. Yet, oil is still a

buyers' market. OPEC has long been denuded of its mythical power and

oil prices - even at the current interim peak - are still historically

low in real terms.

But Russia stands to gain whichever way. Middle East tensions, in

Palestine and Iraq, have ratcheted oil prices up resulting in a

much-needed budgetary windfall. Russia's mostly-privatized oil industry

has cleverly ploughed back its serendipitous profits into pipelines,

drilling, and exploration. When the dust settles in the deserts of

Arabia, Russia will emerge victorious with the largest oil market

share. Israel is not oblivious to this scenario.

Russia's Idled Spies

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

The Industrious Spies

Russian Roulette - The Security Apparatus

Sweden expelled yesterday two Russian diplomats for spying on radar and

missile guidance technologies for the JAS 39 British-Swedish Gripen

fighter jet developed by Telefon AB LM Ericsson, the telecommunications

multinational. The Russians threatened to reciprocate. Five current and

former employees of the corporate giant are being investigated.

Ironically, the first foreign buyer of the aircraft may well be Poland,

a former Soviet satellite state and a current European Union candidate.

Sweden arrested in February last year a worker of the Swiss-Swedish

engineering group, ABB, on suspicion of spying for Russia. The man was

released after two days for lack of evidence and reinstated. But the

weighty Swedish daily, Dagens Nyheter, speculated that the recent

Russian indiscretion was in deliberate retaliation for Swedish

espionage in Russia. Sweden is rumored to have been in the market for

Russian air radar designs and the JAS radar system is said by some

observers to uncannily resemble its eastern counterparts.

The same day, a Russian military intelligence (GRU) colonel, Aleksander

Sipachev, was sentenced in Moscow to eight years in prison and stripped

of his rank. According to Russian news agencies, he was convicted of

attempting to sell secret documents to the CIA. Russian secret service

personnel, idled by the withering of Russia's global presence, resort

to private business or are re-deployed by the state to spy on

industrial and economic secrets in order to aid budding Russian

multinationals.

According to the FBI and the National White-collar Crime Center,

Russian former secret agents have teamed with computer hackers to break

into corporate networks to steal vital information about product

development and marketing strategies. Microsoft has recently admitted

to such a compromising intrusion.

In a December 1999 interview to Segodnya, a Russia paper, Eyer Winkler,

a former high-ranking staffer with the National Security Agency (NSA)

confirmed that "corruption in the Russian Government, the Foreign

Intelligence Service, and the Main Intelligence Department allows

Russian organized criminal groups to use these departments in their own

interests. Criminals receive the major part of information collected by

the Russian special services by means of breaking into American

computer networks."

When the KGB was dismantled and replaced by a host of new acronyms,

Russian industrial espionage was still in diapers. as a result, it is a

bureaucratic no-man's land roamed by agents of the GRU, the Foreign

Intelligence Service (SVR), and smaller outfits, such as the Federal

Agency on Government Communications and Information (FAPSI).

According to Stratfor, the strategic forecasting consultancy, "the SVR

and GRU both handle manned intelligence on U.S. territory, with the

Russian Federal Security Service (FSB) doing counterintelligence in

America. Also, both the SVR and GRU have internal counterintelligence

units created for finding foreign intelligence moles." This, to some

extent, is the division of labor in Europe as well.

Germany's Federal Prosecutor has consistently warned against $5 billion

worth of secrets pilfered annually from German industrial firms by

foreign intelligence services, especially from east Europe and Russia.

The Counterintelligence News and Developments newsletter pegs the

damage at $13 billion in 1996 alone:

"Modus operandi included placing agents in international organizations,

setting up joint-ventures with German companies, and setting up bogus

companies. The (Federal Prosecutor's) report also warned business

leaders to be particularly wary of former diplomats or people who used

to work for foreign secret services because they often had the language

skills and knowledge of Germany that made them excellent agents."

Russian spy rings now operate from Canada to Japan. Many of the spies

have been dormant for decades and recalled to service following the

implosion of the USSR. According to Asian media, Russians have become

increasingly active in the Far East, mainly in Japan, South Korea,

Taiwan, and mainland China.

Russia is worried about losing its edge in avionics, electronics,

information technology and some emerging defense industries such as

laser shields, positronics, unmanned vehicles, wearable computing, and

real time triple C (communication, command and control) computerized

battlefield management. The main targets are, surprisingly, Israel and

France. According to media reports, the substantive clients of Russia's

defense industry - such as India - insist on hollowing out Russian

craft and installing Israeli and west European systems instead.

Russia's paranoid state of mind extends to its interior.

Uralinformbureau reported earlier this year that the Yamal-Nenets

autonomous okrug (district) restricted access to foreigners citing

concerns about industrial espionage and potential sabotage of oil and

gas companies. The Kremlin maintains an ever-expanding list of regions

and territories with limited - or outright - forbidden - access to

foreigners.

The FSB, the KGB's main successor, is busy arresting spies all over the

vast country. To select a random events of the dozens reported every

year - and many are not - the Russian daily Kommersant recounted in

February how when the Trunov works at the Novolipetsk metallurgical

combine concluded an agreement with a Chinese company to supply it with

slabs, its chief negotiator was nabbed as a spy working for "circles in

China". His crime? He was in possession of certain documents which

contained "intellectual property" of the crumbling and antiquated mill

pertaining to a slab quality enhancement process.

Foreigners are also being arrested, though rarely. An American

businessman, Edmund Pope, was detained in April 2000 for attempting to

purchase the blueprints of an advanced torpedo from a Russian

scientist. There have been a few other isolated apprehensions, mainly

for "proper", military, espionage. But Russians bear the brunt of the

campaign against foreign economic intelligence gathering.

Strana.ru reported last December that, speaking on the occasion of

Security Services Day, Putin - himself a KGB alumnus - warned veterans

that the most crucial task facing the services today is "protecting the

country's economy against industrial espionage."

This is nothing new. According to History of Espionage Web site, long

before they established diplomatic relations with the USA in 1933, the

Soviets had Amtorg Trading Company. Ostensibly its purpose was to

encourage joint ventures between Russian and American firms. Really it

was a hub of industrial undercover activities. Dozens of Soviet

intelligence officers supervised, at its peak during the Depression,

800 American communists. The Soviet Union's European operations in

Berlin (Handelsvertretung) and in London (Arcos, Ltd.) were even more

successful.

Russia's Middle Class

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

Women in Transition

A conference held, at the beginning of the month, in St. Petersburg,

was aptly titled "Middle Class - The Myths and the Reality". Russia is

way poorer than Slovenia, the Czech Republic, Hungary, or even Poland.

But, as income disparities grow, a group of discriminating consumers

with the purchasing power to match, is re-emerging, having been

submerged by the 1998 implosion of the financial sector.

The typical salary in the large metropolises is now more than $600 per

month - four times the meager national average. Some 20 percent of the

workforce in Moscow earns more than $1700 a month, comparable to many

members of the European Union. Real average wages across Russia have

surpassed the pre-1998 level in May.

Moreover, Russians are unburdened by debt and their utility bills and

food are heavily subsidized, though decreasingly so. Few pay taxes -

lately dramatically reduced and simplified - and even fewer save. Every

rise in disposable income is immediately translated to unadulterated

consumption. Takings are understated - Russia's informal economy is

probably half as big as its formal sector.

A study, financed by the Carnegie Foundation, found that only 7 percent

of Russians qualify as middle class. Another 12 percent or so have some

bourgeois characteristics. Sixty percent of them are men, though the

Komkon marketing research agency says that the genders are equally

represented.

Figures culled from the census conducted this year throughout the

Russian Federation - the first since 1989 - are expected to confirm

these findings. About one fifth to one quarter of all Russian

households earn more than the average monthly income of $150 per

person.

Political parties which purport to represent the middle class - such as

the Union of the Forces of the Right (SPS) - garnered 10-15 percent of

the votes in the 1999 parliamentary elections. Direct action groups of

the "third estate" may transform the political landscape in forthcoming

elections.

In a recent study by sociologists from the Russian Academy of Sciences'

Institute of Philosophy, more than half of all Russians

self-flatteringly considered themselves middle class. This is

delusional. Even the optimistic research firm Premier-TGI pegs the

number at 19 percent at most.

Businesses adapt to these new demands of shifting tastes and

preferences. The St. Petersburg-based cellular operator Delta Telecom,

owner of the first license to provide wireless-communications services

in Russia, intends to test the market among middle class clients.

Ikea, the Swedish home improvement chain, has plunged $200 million into

a new shopping center. French, German and Dutch cash-and-carry and

do-it-yourself groups are slated to follow. Russian competitors, every

bit as sleek, have erupted on the scene. The investment spree has

engulfed the provinces as well.

Last month, Citibank opened a retail outlet for affluent individuals in

Moscow - though its standards of transparency may yet scare them off,

as Gazeta.ru observed astutely. A private cemetery in Samara caters to

the needs of the expired newly rich. Opulently-stocked emporiums have

sprouted in all urban centers. TV shopping and even online commerce are

on the up. According to the Washington Post, Moscow retail space will

have tripled by the end of next year from its level at the beginning of

2002.

The Russian Expert magazine says that the middle class, minuscule as it

is, accounted last year for a staggering 55 percent of all consumer

goods purchased and generates one third of Russia's gross domestic

product. The middle class is Russia's most important engine of wealth

formation and investment, far outweighing foreign capital.

Russia's post-1998 fledgling middle class is described as young,

well-educated, well-traveled, community-orientated, entrepreneurial and

suffused with work ethic and a desire for social mobility. It is almost

as if the crisis four years ago served as a purgatory, purging sins and

sinners alike and creating the conditions for the revival of a

healthier, longer-lived, bourgeoisie.

But being middle class is a state of mind more than a measure of

wealth. It is an all-encompassing worldview, a set of values, a code of

conduct, a list of goals, aspirations, fantasies and preferences and a

catalog of moral do's and don'ts. This is where transition,

micromanaged by western "experts" failed.

The mere exposure to free markets was supposed to unleash innovation

and entrepreneurship in the long-oppressed populations of east Europe.

When this prescription - known as "shock therapy" - bombed, the West

tried to engender a stable, share-holding, business-owning, middle

class by financing small size enterprises. It then proceeded to

strengthen and transform indigenous institutions.

None of it worked. Transition had no grassroots support and its

prescriptive - and painful - nature caused wide resentment and

obstruction. When the dust settled, Russia found itself with a putative

- and puny - middle class. But it was an anomalous beast, very

different from its ostensible European or American counterparts.

To start with, Russia's new middle class is a distinct minority.

Prism, a publication of the Jamestown Foundation, quoted, in its August

2001 issue, the Serbian author Milorad Pavic as saying that "the

Russian middle class is like a young generation whose fathers suffered

a severe defeat in a war: with no feeling of guilt and no victorious

fathers to boss them around, the children of defeat see no obstacles

before them."

But this metaphor is misleading. The Russian middle class is a nascent

exception - not an overarching rule. As Akos Rona-Tas, Associate

Professor in the Sociology Department at the University of California,

San Diego, notes correctly in his paper "Post Communist Transition and

the Absent Middle Class in Central East Europe", a middle class that is

in the minority is an oxymoron:

"In democracies the middle class is the nation proper. The typical

member of a national community is a member of the middle class. When

democratic governments need a social group they can address, a

universal class that carries the overarching, common interest of the

country, they appeal to the middle class. This appeal, while it calls

on a common interest, also acknowledges that there are conflicting

interests within society. The middle class is not everyone, but it is

the majority and it represents what everyone else can become."

Russia has a long way to go to achieve this ubiquity. Its middle class,

far from representing the consensus, reifies the growing abyss between

haves and haves not. Its members' conspicuous consumption, mostly of

imports, does little to support the local economy. Its political might

is self-serving. It has no ethos, or distinct morality, no narrative,

or ideology. The Russian middle class is at a Hobbesian and primordial

stage.

Whether it emerges from its narcissistic cocoon to become a leading and

guiding social force, is doubtful. The middle class' youth, urbaneness,

cosmopolitanism, polyglotism, mobility, avarice and drive are viewed

with suspicion and envy by the great unwashed - the overwhelming

majority of Russia's destitute population. Empowered by their wealth,

the new bourgeoisie, in turn, regards the "people" with naive

admiration, patronizing condescension, or horror.

Granted, this muted, subterranean, interaction is not entirely

deleterious. It is the social role of the rich to generate demand by

provoking in the poor jealousy and attempts at emulation. The wealthy

are the trendsetters, the early adopters, the pioneers, the buzz

leaders. They are the engine that engenders social and economic

mobility.

A similar dynamic is admittedly evident in Russia - but, again, it is

tampered by a curious local phenomenon.

Writing for the Globalist, two Brookings Institution scholars, Carol

Graham, a Senior Fellow of Economic Studies and Clifford Gaddy, a

Fellow of Foreign Policy and Governance Studies described it thus:

"The eyes of Russia's middle class, on the other hand, are figuratively

directed downward, towards the poor. In fact, as poverty in Russia

increased dramatically in the 1990s, the middle class's reference norms

shifted downward as well. As a result, Russia may be the only country

in the world where the "subjective poverty line" is falling.

That is, the amount of money that Russians say that they need in order

to stay out of poverty has been steadily falling over the past five

years. It is even below the objective poverty line. For the time being,

at least, these curious Russian attitudes, along with the existence of

the non-monetary virtual economy, have insulated the country against

political upheaval."

The list of anomalies is not exhausted.

The new middle class comprises the embryonic legitimate business elite

- entrepreneurs, professionals and managers - but not the remnants of

the financially strapped intelligentsia. It is brawn with little

brains. In dissonance with western Europe, according to a survey

published in the last two years by Expert magazine, the majority of its

members are nationalistic, authoritarian and xenophobic. Their

self-interested economic liberalism is coupled with social and

political intolerance. But two thirds of them support some kind of

welfare state.

Thus, there are major differences between the middle class in the West

and its ostensible counterpart in Russia.

The Russian parvenus - many of them women - do not believe their state,

their banks, or their compatriots. They fear a precarious future and

its inevitable calamities though they are not risk averse and are

rather optimistic in the short run. They keep their money under the

proverbial mattress, invest it surreptitiously in their ventures, or

smuggle it abroad. They are not - yet - stakeholders in their country's

stability and prosperity.

Often bamboozled by other businessmen and fleeced by a rapacious

bureaucracy, they are paranoid. Tax evasion is still rampant, though

abating. They trust in equity and avoid debt. Some of them have

criminal roots or a criminal mindset - or are former members of

Russia's shady security services.

Three fifths, according to the Expert-Komkon survey, find it "hard to

survive" when "observing all laws". "Strong leaders are better than all

sorts of laws" is their motto, quoted by Izvestia. Generally, they are

closer to being robbers than barons.

Early capitalism is always unruly. It is transformed into a highly

structured edifice by the ownership of land and realty (the prime

collateral), the protection of private property, a functioning

financial system comprised of both banks and capital markets and the

just and expedient application of the rule of law.

Russia has none of these. According to Business Week, bank deposits

amount to 4 percent of the country's mid-size GDP - compared to half of

GDP in other industrialized countries. Mortgages are unheard of,

deposits are not insured and land ownership is a novel proposition. The

judiciary is venal and incompetent. Might is still right in vast

swathes of the land.

The state and the oligarchs continue to represent a rent-seeking

opportunity. Businessmen spend time seeking concessions, permits,

exemptions and licenses rather than conducting business. The "civic

institutions" they form - chambers of commerce, clubs - are often mere

glorified lobbying outfits of special and vested interests. Informal

networks of contacts count more than any statute or regulation. In such

a mock "modern state" no wonder Russia ended up with a Potemkin "middle

class".

Russia in 2003

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Contrary to recent impressions, Russia's Western (American-German)

orientation is at least as old as Gorbachev's reign. It was vigorously

pursued by Yeltsin. Still, 2002 marks the year in which Russia became

merely another satellite of the United States - though one armed with

an ageing nuclear arsenal.

Russia's economy has revived remarkably after the 1998 crisis, but it

is still addicted to Western investments, aid and credits. Encircled by

NATO to its West and US troops stationed in its central Asian

hinterland, Russia's capitulation is complete. In the aftermath of

conflicts to be engineered by the United States in Afghanistan, Iraq,

North Korea, Iran, Syria and, potentially, Cuba - Russia may feel

threatened geopolitically as well as economically. Both Iran and Iraq,

for instance, are large trading partners and leading export

destinations of the Russian Federation.

If anything can undo the hitherto impressive personality cult of

Russia's new "strong man", Vladimir Putin, it is this injured pride

among the more penumbral ranks of the country's security services.

Russia's history is littered with the bloodied remains of upheavals

wrought by violent ideological minorities and by assorted conspirators.

Hence Putin's tentative - and reluctant - attempts to team up with

China and India to establish a multi-polar world and his closer

military cooperation with Kyrgyzstan and Armenia - both intended to

counter nationalistic opposition at home.

Luckily, the sense of decline is by no means prevalent.

Russian Roulette: Russia's Economy in Putin's Era · 第 5 / 7 段