Today we will open our presents here in Norway, while in Russia there will be protests against the fraudulent election earlier this month. I wish the protesters the best of luck. It would be nice if they could open up a democratic Russia when father Christmas comes this year.
I must admit I have my doubts, but this has been a year of surprises and a miracle might still be possible.
The miracle is only possible if the people of Russia takes it into their hands to make this Christmas a time of miracles. Aleksander Navalny, one of the most important people in the movement to make the Russian government responsible towards its people, writes on his blog (unofficial english version): Not coming is the same as giving national permission to the Party of Crooks and Thieves to continue cheating and stealing.
I must admit that I have seen this financial crisis unfold. I have had mixed feelings. On one hand, I have not lost any sleep over giant banks and rich financiers loosing some of their clout and some of their money. Also it is good for the poor that oil prices are falling. On the other hand. Rapidly rising interest payments, lack of credit for ordinary people and the collapse of the Icelandic economy has had me worried.
Now, it seems that the lack of credit is transforming the crisis from a finacial crisis to a real economy crisis. Solid businesses lack liquidity to keep in business, and shops lack the credit to take in new goods. Now reports are coming in that this hits food as well. The BarentsObserver.com writes:
Now the chain has ruptured with banks now longer willing to offer the credits. Subsequently, the wholesalers are no longer able to buy the foodstuff from the producers and then sell it on to the supermarkets, newspaper Komsomolskaya Pravda reports. Consequently, the shops are emptying.The situation has now made Russians line up in the shops and secure their necessary products. The result is an even more rapid decrease of good in the stores.
Russia certainly has the money to shore up its banking sector and get credit moving again. I’m less certain about Iceland, even though they are trying to loan a couple of billions from Russia. Reuters had a wire the other day stating that:
Iceland has food stocks for about 3 to 5 weeks, but needs quickly to restore a proper foreign exchange market so importers can get back to normal business and avoid shortages, importers said on Wednesday […]The problem for importers was uncertainty about whether they would get foreign exchange, which they now have to apply for under a rationing system begun by the central bank.
I don’t actually believe that we will see food riots or starving in either Iceland or Russia. Neither country i Zimbabwe. But this is an instructive lesson into how modern capitalism works. And it works through credit. Get Rich Slick puts it this way:
There WILL be plenty of food around but it would be a matter of the truck driver having the credit to buy the fuel for his truck to get the food from the farm to your grocer. It will be a matter of the grocer to have credit to pay the trucker for his services. It will be a matter of the fuel station to have the credit to buy fuel from big oil and so on…..
When access to mony stops, everything stops. Still the worlds production capacity is the same. When it comes to food, oil, steel, transport, fertilizer. Nothing has changes. This gives us one very clear signal. The market must not govern us. We must have democratic elected governments that regulates, oversees, produces and makes sure that a crisis in the market place do not ever spill over into a crisis that affect food, health or security. I believe, naively maybe, that the Nordic welfare state has come close to finding an equilibrium where entrepreneurship and safety coexists in a way that maximizes productivity, welfare and security. Recent crises in Norway stems from deregulation not overegulation. If we take Iceland as an example, the crisis stems from a total deregulation of the banking sector.
This crisis shows, yet again, that we need to govern the market, not be governed by it.
No, I’m not talking about climate change. Even though I obviously could have, the North West passage is open again this year. No, I’m talking about the international scramble to grab land (read sea bottom) in the Arctic.
The United Nations Law of the Sea gives all the countries around the Arctic bassin until 2014 to stake their claim or earlier if they ratified before 2004. This means we are in for a rush of claims. Norway has already submitted her claim, Russia, Canada and Denmark (Greenland)are ready to do so. What the US will do is uncertain. The US has not ratified the Law of the Sea treaty, while the other countries have.
There is litle doubt that some of the claims will overlap. Certainly more than one country will claim the pole. Russia surely has made her intent clear by planting a flag on the north pole.
With the ice disappearing and the US Geological services claiming that large reserves of petroleum is to be found, there is reason to believe conflict will be many and tough. Lets just hope they do not escalate. Dose.ca writes:
In the latest sign of the rising international political stakes in the Arctic, the top U.S. Coast Guard official has revealed a planned shift in American foreign policy from scientific research to “sovereignty” and “security presence” in Alaskan waters bordering Canadian and Russian
“The primary mission right now is the maritime boundary line with Russia – keeping foreigners from stealing Alaskan fish,” Rear Admiral. Gene Brooks, head of the U.S. Coast Guard’s operations in Alaska, told the radio network.
…prompted the Conservative government to promise a new year-round icebreaker for Arctic waters and a fleet of up to eight ice-reinforced patrol boats.
But we should be careful not to look at this potential conflict with old cold war glasses. The potential disputes between Canada and the US, Canada and Denmark are equal poignant as the potential conflict between all the Arctic countries and Russia.
As the polar powers have got out their maps in the last couple of years, four of them – Norway, Denmark, Canada, and the USA – have made the unpleasant discovery that the fifth – Russia – is far ahead of the game. As Russian forces consolidate their grip on her messy southern frontier in the aftermath of the war with Georgia, her diplomats, oilmen and military have been pressing their advantage in the north, a border region which is on a far vaster scale but equally confused and disputed.
Cleo Paskal, an Assistant Fellow at Chatham House and an expert on how climate change will affect borders, said: “The Russians have a big head start. Their nuclear submarines have been all over the Arctic for decades, they have 16 icebreaking ships to the Americans’ four, they have a lot of experience and a lot of the right gear.
So as all countries are beefing up their military capabilities in the Arctic, lets just hope the dispute settlement mechanisms in the Law of the Sea treaty will be robust – and enough.
The russiablog.org had a very interesting post by Nikolai N. Petro today. He argues that the young people have a stronger weberian protestant ethic than you find in Western Europe. Wikipedia quotes Max Weber as having written:
In order that a manner of life well adapted to the peculiarities of the capitalism… could come to dominate others, it had to originate somewhere, and not in isolated individuals alone, but as a way of life common to the whole groups of man.
This fits very well with what Petro reports from Russia. He writes that:
Recently, however, young Russians have begun to display new patterns of both political and economic behavior that have led pollsters to refer to them as the “Putin Generation.” … They tend to be bolder than their parents, viewing aggressiveness as a manifestation of self-confidence and initiative. Unlike their parents and grandparents, who are appalled by the emergence of the “super rich,” they are proud that Russia has the world’s second largest number of billionaires and either hope to make the list of Russia’s richest individuals themselves or see their children on it. … A 2007 study of 17-26 year olds, conducted by the Russian Academy of Sciences, concludes by describing them as “relaxed about planning for the future. They not only talk of wanting to achieve success in various forms – they actually believe they can do it.”
I believe this is great news. While I don’t long for yet another big supercapitalist country, I do believe that Russia only can rise to the heights that she should and could reach if the people of Russia shed the lethargy of Soviet communism. My experience from living in Vladivostok (OK it is 10 years ago and a lot has changed) was that most individual responsibility for the common good had disapeard, and I believe been destroyed by soviet communism. If the new generations of Russia can work not only for themselve but also for the common good Russia can again be a force for good in the world.
The mayoral election in Archangelsk is over. I must admit I was somewhat surprised that Larisa Bazanova won the election with 37,55% of the vote against the governors candidate 37,41%. Read more about the five candidates here.
Put my puzzelment was soon over. The votes are recounted and Viktor Pavlenko was declared winner. No big surprise at all. The surprise is maybe that they needed a recount? Most interesting was the fact that only 18% of the electorate bothered to vote.
The Russian Federation has increased the export duties on timber. This shows that the Russian government has understood a few basic about the economy that most of western and Norwegian economists has allowed to be forgotten.The forgotten lesson is that no country can get rich by exporting raw materials and importing finished goods. This is really so easy to understand that it is inexplicabel that common economic theory denies this fact. Is it not strange poor countries remain poor when economists in the worldbank and elsewhere argues that they can get just as rich by raising camelsl as if they build a national industry that can add value and increasing salaries.
Maybe Norway can be a examplesthat exporting raw materials can make a country rich – because of its oil. But it is important to note that one of the most important reasons that oil has made Norway rich is all the industries that have been built up around its oil. That talented Norwegian politicians early decided that we should use oil to build up knowledge and industry is one of the most important difference in Norway and countries as Angola or Nigeria with the corresponding oil revenues.
Should a country be rich, it must be permitted to build up it’s industry protected behinds custom barriers, like all the rich countries have done. Free trade is the scourge of poor countries, but good for the rich.
What is the most special thing about the upcoming mayoral election in Archangels? You could not guess? Five of the candidates have the same name. They are all called Sergei Moiseev.
One could of course speculate how this may come about. The fact is that one of the Sergeis is a strong candidate, and a leader of the organization “People’s Control”. However, he is not the governors candidate. The governors candidate is called Viktor Pavlenko who is the acting mayor. Maybe is it a good tactics to split the opposition votes among the Sergeis? Pavlenko was, by the way, the only candidate that did not attend the only debate in the campaign. The students at the university arranged the debate.