WikiLeaks is comforting to those of us who live outside the inner circle of embassy gossip because it confirms what we already know or strongly suspect. Nothing is really suprising, only entertaining. We learn that President Sarkozy of France is "thin-skinned and authoritarian", that Saudi Arabia hates Iran and that China is fed up with North Korea. On Wednesday, WikiLeaks published more embarassing diplomatic cables suggesting that Russia is a "virtual mafia state" presided over by Vladimir Putin, the former president and current prime minister, who is running a "corrupt autocracy" and who is said to be personally enriching himself with oil deals.
It makes exciting, albeit depressing reading, but it fails to enlighten because anyone with a jot of interest in Russia already knows the depressing truth: since the collapse of communism, the Russian state has withered into a kleptocracy in which government officials not only tolerate crime but are actively engaged in it at a high level. The extent of official corruption goes way beyond police protection rackets and the extortion of bribes for business permits by petty bureaucrats. Such corruption is common throughout emerging markets but in Russia, crime has become a way of life for many in the government apparatus and what Wikileaks suggests is the inspiration comes from the top.
There is ample evidence of the scale of the problem, not least the case of Sergei Magnitsky, a Russian lawyer who exposed the crimes of senior Kremlin tax officials . He was beaten by police, arrested and imprisoned after accusing top officials in the tax ministry of embezzling $230-million in fraudulent tax rebates. He died in prison after being refused medical treatment. His torture and death provoked diplomatic protests and even outrage among the Russian elite in Moscow and resulted in several sackings of prison officials, but no prosecutions of the individuals accused by Mr. Magnitsky, despite their egregious crimes against the Russian state.
Russia is becoming a first-class argument for the rule of law because it is chaos and corruption that holds it back. Russia's membership of the so-called Bric countries, fast-moving and industrialising emerging economies, is in doubt because it is a persistent laggard. Unlike, Brazil, India and China, Russia's currency is sagging against the dollar. Despite soaring commodity prices, Russian GDP grew only 2.7 per cent in the last quarter, a pathetic performance compared with 9 per cent for India and China and it is expected to fall well short of Kremlin forecasts of a 4 per cent gain this year. Meanwhile inflation is at 8 per cent and running out of control.
Russia's perennial problem is its reliance on boom-bust commodities; officials talk solemnly about diversifying the economy into manufacturing and services, but who will build such businesses in an environment of rampant corruption and graft where government officials and former KGB officers work hand in glove with the mafia to shake down legitimate businesses, often with threats of violence.
For Russia, the future currently looks bleak; this week Royal Dutch Shell announced a joint venture with Gazprom, the Russian state gas utility. The latter is struggling to raise its game after a global collapse in the gas price. It must make huge investments to expand its production and transport networks to cope with new demand over the coming decades. It needs to acquire liquefied natural gas technology and it has therefore made peace with Shell after a bruising confrontation four years ago in which the Dutch company was bullied by the Kremlin into selling to Gazprom a stake in a Siberian gas field.
Such deals will continue: high level ventures blessed by Russia's leaders are relatively safe for corporate giants. But such deals do nothing to transform Russia into a sophisticated, diversified modern economy. A hungry world will suck oil and metal out of Russia, paying tithes to a state looted by gangsters and the Russian people will continue to fester and suffer until they finally lose patience with authoritarian rule. On present evidence, that will not happen soon.
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