Ukraine President Petro Poroshenko will speak in Sydney on 12 December at a Lowy Institute function:
Why is he doing this? And why it is a bad idea!
During the first few weeks of November, I conducted two surveys regarding the attitudes of Chinese and Russians to closer economic and financial relations between their two countries. The surveys were conducted in Shanghai and Moscow, and showed an overwhelming desire — over 90% of respondents in both cases – for closer relations between China and Russia.
The Moscow and Shanghai responses to other questions in the surveys showed more divergence, and in particular seemed to point to the effect of the events in the Ukraine and of US led sanctions on Moscow attitudes.
In the first week of November I conducted an emailed survey of Russian (mainly Moscow) “educated middle class” attitudes to (mainly) financial issues in Russia and attitudes to Russia’s financial relations with China, the US, Europe, and the UK. Most of the over 1,000 people to whom I sent the survey were my LinkedIn “connections”. (I cast the net quite wide even though I suspected that many of my “connections” would have little interest in such financial matters.)
I wanted to get “financial expert” Russian feedback so, for the purposes of this article, I subsequently pruned the data to remove all non-Russian respondents and also remove any who did not indicate that “about 50% or more” of their work time involved “thinking about financial issues”.
In June I spent some time in Moscow talking to Russian banks about financial developments in China, where I am conducting research on “Opportunities and challenges in developing an international financial centre (IFC): Learnings relevant to Shanghai” for the Shanghai Institute of International Financial Centre (SIIFC), Shanghai University of Finance and Economics.
I decided to go to Moscow for several reasons.
The Russian Liberal Democrat party is reportedly seeking legislation to stop the “conquering march” of foreign words into the Russian language. It wants to punish those responsible for any “violation of the norms of the contemporary Russian language”.
But it might be that the Russian language — and economy — needs some help from the Chinese language!
On my first trip to Russia many years ago I realized that I would need to learn Russian if I wanted to seriously understand the Russian economy and its politics. I put more emphasis on learning to read Russian than to speak it.
The Chinese language, however, is a different matter! Learning to read Chinese is extremely difficult and time consuming. Thus, I have concentrated on learning to speak Chinese rather than read. Fortunately, Chinese spoken grammar is simpler than either English or Russian grammar.
For example, the simple Chinese expression “wǒ” (written 我 ) is equivalent to “I” and “me” in English, and equivalent to each of “Я”, “меня”, “мне” and “мной” in Russian.
In reality, except for the rules of grammar, the English “I” and “me” are completely interchangeable – ie they mean exactly the same thing. The Russian case system means that “Я”, “меня”, “мне” and “мной” do often convey different meanings, but in my view Russian could be somewhat simplified (particularly in the presence of prepositions). For example, instead of “У меня” could have “У Я” !!!
What are the consequences (economic and political) of language differences?
David Brooks (“The New York Times”) and Gillian Tett (“Financial Times”) have each produced a useful article on the relationship of individual psychology (or personality) to the wider world of government policy – although the articles do it by heading in different directions from essentially the same starting point. The Brooks article suggests that not enough attention is presently paid to the effect of individual psychology (personality) on leadership decisions – and thus on personality when choosing leaders. The Tett article, largely based on the work of Prof. Dennis Smith (a “historical sociologist”), relates individual psychology (personality) concepts to the whole populations of countries. Taken together, the articles act almost like a circle with the two directions eventually meeting each other and encompassing a lot of wisdom that is all too often overlooked when considering issues of public policy.
The motivation for the Brooks article seems to have been the US presidential election, while the motivation for the Tett article is the Euro-crisis and the effect of subsequent policies on the populations of countries such as Greece.
To some degree, the concepts covered in the Brooks and Tett articles might also be applied at the intra-country group level.
For example, the humiliation that Putin and Co. are willingly to attempt to inflict on the aspiring Russian “middle class” (for want of a better word) may result in some of the responses mentioned by Tett:
“Typically, it occurs in three steps: first there is a loss of autonomy, or control; then there is a demotion of status; and last, a partial or complete exclusion from the group. This three-step process usually triggers short-term coping mechanisms, such as flight, rebellion or disassociation. There are longer-term responses also, most notably “acceptance” – via “escape” or “conciliation”, to use the jargon – or “challenge” – via “revenge” and “resistance”. Or, more usually, individuals react with a blend of those responses.”
But Tett also wrote that Prof. Smith believes that “Ireland already has extensive cultural coping mechanisms to deal with humiliation, having lived with British dominance in decades past. This underdog habit was briefly interrupted by the credit boom, but too briefly to let the Irish forget those habits. Thus they have responded to the latest humiliation with escape (ie emigration), pragmatic conciliation (reform) and defiant compliance (laced with humour).”
Thus, the responses of the “national psychologies” of Ireland and Greece to their “humiliation” resulting from the Euro-crisis may exhibit significant differences.
The Russian “middle class” is certainly using Irish-style escape, pragmatic conciliation and defiant compliance to cope with its humiliation—- but in the longer term the coping mechanism could become more “pathological”. If this were to happen, I suspect Putin’s response would largely be determined by his personality.
Read more at: http://www.jeffschubert.com/index.php?id=115
I have up until now avoided writing much about Russian pension reform (mainly because of the very long-term nature of the calculations, which means that it is generally not a very exciting issue as well as having a high degree of uncertainty), but both recent events in Russia and a useful recent IMF Working Paper entitled “Reforming the Public Pension System in the Russian Federation” mean that it is time to tackle the issue in more depth – at least in terms of giving an overview of the situation.
At this time Igor Sechin seems to be facing defeat in his attempts to increase the influence of Rosneftegas (and himself) in the privatization of government owned assets in Russia’s fuel and energy sector. Prime Minister Medvedev (and his economic ministers) are demanding that Rosneftegas hand over most of its accumulated cash to the official budget in order to help pay for President Putin’s pre-election expenditure promises.
This has further stimulated Sechin to seek to develop a relationship between Rosneft and BP.
Are these developments good or bad for “Russian economic reform”?
Both Russia and Australia are experiencing some sort of increase in official interest in Asia. There is nothing cultural in this, as Russians would in their hearts prefer to look toward Europe and Australians would prefer to look toward the US and UK.
Despite the fact that in many ways Russia is geographically better placed to take advantage of the economic growth of China, Australia is likely to continue to outperform Russia in taking advantage of the economic rise of Asia. But with one proviso – which I will address later!
In Russia, the most obvious manifestation of the interest is the huge spending (and often stupidly excessively, a la bridge to Russky Island) on the APEC Summit in Vladivostok and recent creation of a “Far East” Ministry.
In Australia, the most obvious manifestation of the interest is an “Australia in the Asian Century” report being prepared by a team led by former head of the Australian Treasury, Dr. Ken Henry. See: http://asiancentury.dpmc.gov.au/about
At a forum last week, Prime Minister Medvedev was questioned by a German businessman about Russia’s notoriously bad customs procedures.
Medvedev replied:
«Когда я разговариваю с руководителем нашей таможенной службы [Андреем Бельяниновым], он мне задает вопрос, на который не так просто отвечать, он говорит: вы сами определитесь, чего вы от нас хотите, чтобы мы просто контролировали порядок ввоза и вывоза товаров, чтобы законы соблюдались — это одна цель, или вы хотите, чтобы мы зарабатывали для государства большие деньги — это другая цель, и мы [сейчас] этим занимаемся».
“When I talk with the head of our Customs Service (Andrei Belyaninov), he asks me a question that is not so easy to answer when he says: you decide what you want from us; that we just control the order of entry and export of goods so that the laws are respected – this is one aim; or do you want us to earn big money for the state – this is another aim, and we are (now) doing that.”
Medvedev went on to say Russia needs to get the “proportions” right between “opening the road for business” and raising revenue. While too much can be read into Medvedev’s choice of words, I am tempted to ask whether the choice being offered by Belyaninov is really between enforcing the law or acting as a “by any means” revenue raiser for whoever can get their hands on it!