John Lloyd

Russia is now in a hard, even dangerous, place. A series of shocks are coming, and it is not well placed to weather them. It has, to be sure, little debt: Vladimir Putin’s administration is proud that the state has borrowed little and has built up a multibillion-ruble national reserve fund. Yet even that is ending, and the basics of the economy are weak. The former Marxists among Russia’s ruling class will know that the economic base determines the political and social superstructure. It is not looking good for them.

What’s worse, Russia isn’t a major player in the global economy. According to Eurostat figures, it has 2.4 percent of world gross domestic product, slightly under that of India; and 2.6 percent of world trade, slightly more than India has. It’s important, especially to Europe, in one significant economic aspect: It ships very large amounts of energy: 63 percent of European Union imports from Russia is oil, a further 9 percent is natural gas, with a further 3 per cent for coal. Icy Russia heats Europe. In return, Russia has, for the past decade, been enriched, as a once impoverished nation, which defaulted in 1998, surged to a lifestyle that supports a burgeoning middle class.

But oil and natural gas prices are falling now, and don’t look like they will rise again soon: “Over the coming few years,” writes Forbes commentator Bill Conerly, “look for oil prices to decline at least below $80 a barrel and quite possibly more” because of increased production. Gas prices are worse: The once-mighty Gazprom, which had dictated prices and terms to those it supplied, has been forced to discount and saw its profits fall last year by $6.5 billion, or 15 percent. The warnings, inside and out of the country, that it was dangerously dependent on fossil fuels for its newfound wealth and strength are coming home to roost. Russia may face recession.

This wasn’t supposed to happen. Modernization was the watchword of Dmitry Medvedev’s one-term presidency, but it remained largely rhetoric. During a public Q+A session with Putin, former Finance Minister Alexei Kudrin, who has “flirted with the opposition” recently, said that the government had adopted “half measures and half reforms” and that it “did not have a program” to wean the country off oil and gas dependency. The powerful Deputy Prime Minister Vladislav Surkov, in London last week, told an audience at the London School of Economics that “so far Russia hasn’t made any money on something new, on something that’s been invented. No one’s become a millionaire on an idea. We need at least one success.” But the incentives, support and clean courts that entrepreneurs need to “become a millionaire on an idea” don’t exist.

The political climate continues to darken. In that same phone-in, the editor of the radio station Ekho Moskvy, Alexei Venediktov, said he detected a “whiff of Stalinism” in the air. His concern, and that of many in the presently quiescent opposition, is the trial of lawyer and activist Alexei Navalny, the closest the opposition has to a leader. Charged last month in the city of Kirov with corporate embezzlement, Navalny pleaded not guilty. He has thrown down a gauntlet to Putin, saying he intends to stand for the presidency, and if elected, would strive to throw Putin and his associates into prison. If convicted, he will face up to 10 years in prison himself. At the same time, raids on Russian – and some foreign – NGOs continue, with documents seized by the tax police under last year’s law that classifies all Russian institutions that receive money from foreign sources as “foreign agents.”

Let’s begin with two glimpses of the workings of the Italian state.

First, it was announced last week that passengers would be required to mount a bus only at the door in the front, and pay the driver on entry. The present system, in which tickets are bought in cafes and other shops and stamped at machines on the bus after entry from any one of several doors, has resulted in such widespread evasion that it’s calculated that only a minority of riders buy tickets on publicly owned buses. In Naples, three out of 10 play by the rules. The wonder is that three bother to pay.

Second, the ruins of Pompeii, buried by lava from the volcano Vesuvius in 79 AD and thus preserved as a Roman town, is one of the world’s wonders. It is also among its worst-preserved wonders. The Italian authorities have taken such poor care of it that several buildings have collapsed, and much-needed European Union money has been withheld because of the bureaucratic chaos.

The Italian state is one of the most swollen in the democratic world. It has some 330,000 police officers in a dozen different agencies, more than any other country in the EU and twice the number in the UK, which is slightly bigger in population. The private sector in health, education and welfare is tiny. The administrations, at district, city, provincial, regional and national levels, have their own councils, bureaucracies and, in many cases, police forces.

Many men in Chechnya, the mountainous region in the Russian Caucasus that has been fought over for three centuries, define themselves as warriors. They see the title as both their birthright, and the source of their manly honor. Now, their example has gone global, like so much else.

Nearly 20 years ago, with Pilar Bonet of the Spanish daily El País, I persuaded two Chechens to drive us out of Grozny, Chechnya’s capital, to some high ground, so that we might catch a glimpse of the Russian army advancing on the city. It was the beginning of the first Chechen war, in 1994. Russian President Yeltsin had tired of the defiance of the self- appointed Chechen leader Dzhokar Dudayev, who had declared Checnya’s independence – one of Russia’s Caucasus republics. He sent in the army.

Our drivers, a father and son, sped their rattling Lada out of the city and headed west, in the direction of the advancing Russians. As we drove, the older of the two men reached under the seat and, grinning, produced a Kalashnikov submachine gun and a pistol. He announced the intention to strike a blow for freedom against the Russians. Not wanting to join them in a bloody ditch, we asked to be let out, to the evident scorn of the son. The older man, with a hint of apology, said you must understand: “Lyubim oruzhie”  – “we love guns.”

There’s no time more apt for murmuring the ending of Brutus’s speech in Julius Caesar than the week of Margaret Thatcher’s funeral: “The evil men do lives after them/the good is oft interred with their bones.” No time better, either, to add that the “evil” that, in this case one woman, did is little examined by her detractors, who prefer to stick to a diabolical version of her 12-year rule.

Margaret Thatcher (narrowly) won the 1979 election because the Labour government of the 1970s, under Prime Ministers Harold Wilson and James Callaghan, had unsuccessfully tried to make a contract with the trade unions. In such a contract, pay would have been calibrated to productivity, and increases would be low in order to bring down high rates of inflation and to keep up investment in the socialized education, health and welfare institutions that disproportionately benefited the lower classes. It was the kind of social deal that the Germans and the Scandinavians had and still – in part – have: one that produces economies that, not by chance, have escaped the worst of the economic buffeting of the past five years.

But the attempt failed. The turn of 1978-79 was called the “Winter of Discontent” – another Shakespearean tag, this time from Richard III. Power failed; transport was constantly disrupted; hospitals and ambulance services closed. Most memorably, some gravediggers in Liverpool struck, and bodies piled up in a factory. All that Labour had held out as its usefulness to the nation – the ability to bring organized workers into a lasting, productive and stable agreement – was shattered. The party lost, but so did working men and women.

As Donald Rumsfeld used to say, there are known unknowns. Two of them are confronting the world today, and both stem from the Korean peninsula. 

One: What will North Korean leader Kim Jong-un do now? He’s ordered missiles to be ramped up, fired a gun on TV, watched missiles shoot down dummy planes and told his military they were cleared for an attack on South Korea and the United States. He said “a sea of fire” would engulf his enemies if they dared to provoke him. Earlier this week, South Korea’s Unification Minister, Ryoo Kihi-Jae, said “there are signs” that a fourth nuclear test is being prepared at the Punggye-ri test site. What is the next move? 

The other quandary: What will the newly installed Chinese President Xi Jinping, whose state has protected North Korea for decades, do now?

Jim O’Neill, head of Goldman Sachs Asset Management, thinks Beppe Grillo and his Five Star Movement is a greater threat to Europe and the euro than the trials of little Cyprus. That’s because Grillo received more than a quarter of the votes in February’s election in Italy and has since gridlocked the political system by refusing any dealings with the established parties. A government can’t be formed.

O’Neill warned that if growth does not come soon to the euro zone’s third-largest economy, stalled for longer than any other in Europe, even more people will start to support Grillo’s movement and its call for a referendum on membership of the euro zone. What, he asked, does Grillo think? His response: “Does anyone really know?”

I do, Jim.

Grillo and his collaborator, the slightly mystic Gianroberto Casaleggio, believe that the Web is the new form of democracy, infinitely superior to the representative parliamentary kind in which, they say, leaders frame the politics and politics fail the people. The Five Star Movement, said Casaleggio in a recent book, believes the word leader “is a word from the past, a dirty word that leads you astray. Leader of what? It means that you attribute intelligence and the power of decision making to others, so you aren’t even a slave, you’re an object.”

Among the initial wave of Russian oligarchs, Boris Berezovsky was the first among equals, and among the last.

By the mid- to late 1990s, he had become the most powerful figure, after the ailing President Boris Yeltsin, in the Kremlin. A mathematician and engineer of ability, Berezovsky leveraged an early success as a car salesman at a time of rampant inflation into huge wealth and control of media, auto, aviation and oil assets.

He strongly backed Vladimir Putin for president after Yeltsin’s resignation; indeed, he was his main promoter. In Putin, the apparently modest and amiable former KGB officer, Berezovsky saw somebody with self-discipline. He also saw somebody with the need for financial and intellectual support from somebody who had much of both – somebody like Berezovksy.

Journalism gyrates dizzily between the dolorous grind of falling revenue and the Internet’s vast opportunities of a limitless knowledge and creation engine. On the revenue front, no news is good. The just-published Pew Center’s “State of the US News Media” opens with the bleak statement that “a continued erosion of news reporting resources converged with growing opportunities for those in politics, government agencies, companies and others to take their messages directly to the public.” Not only, that is, is the trade shrinking, but those who once depended on its gatekeepers have found their own ways to visibility.

Journalists’ task, as large as any they have collectively faced in 400 years of their trade’s existence, is to find a way to continue the journalism that societies most need and citizens are least willing to pay for: detailed, skeptical, truthful, fair, investigatory writing and broadcasting. It’s a big ask. The British are in the process of not answering it. They are staging a sideshow: not an unimportant one, but in a minor key all the same.

Over the past two years, a series of alleged crimes – illegal interception of phone messages, bribery, blackmail, perverting the course of justice, theft – have been committed by journalists working for the British tabloids. The Leveson Inquiry, prompted by revelations of phone hacking, and subsequent police investigations have laid bare a shaming landscape of cruelty and criminality. Many politicians of all parties bowed before the perpetrators, adding to the shame.

Two movements, fundamentally opposed, are at work in the world: corruption and anti-corruption. The marketization of the economies of China, India and Russia in the past two decades has exacerbated the corruption in those countries. Businesspeople and politicians, often hardly distinguishable, become billionaires in tandem.

But corruption is falling out of favor in more and more countries as more and more governments realize that while it may get things done in the short term, it corrodes everything in the long term. As public anger rises everywhere against the grossest inequalities the modern world has seen, it provides the fuel for future fires. Bribes, the most common form of corruption, are a crime not just against the law but against the public. Those states now climbing the wealth ladder will risk worse than poverty if they do not grasp that truth.

What do they need? A good bureaucracy, that’s what.

For two centuries, disparaging bureaucracy has been a major component of our freedom myths. Charles Dickens, Franz Kafka, George Orwell rynd Alexander Solzhenitsyn all made the bureaucrats  villains in their work. In Dickens’ 1857 masterpiece, Little Dorrit, an inventor, Daniel Doyce, goes gray attempting to register his invention at the Circumlocution Office ‑ a tragicomic institution dedicated to squashing all private initiative. He gets a final judgment that:

Hugo Chavez’s popularity was not confined to Venezuela; it was a global phenomenon. He pulled together a coalition of forces into a kind of “Chavez International,” an alternative to Western hegemony. It was an amalgam of allies whose comradeship was historically weird – communists, Islamists, Soviet holdovers, Western idealists and far leftists – but politically potent. And in the end, irrelevant.

Chavez’s first, closest alliance was with Fidel Castro. It was unconditional devotion on the part of the younger man; on Fidel’s side, it was admiration coupled with a canny estimation of the benefits of Venezuela’s loyalty in a post-Soviet era. Cuba got billions of dollars’ worth of oil; Venezuela got thousands of Cuban medical staff, engineers and other experts. More than that, Fidel gave Chavez an ideology of sorts, or as Francisco Toro writes, “a kind of cosmic morality play pitting unalloyed socialist ‘good’ in an unending death struggle against the ravages of ‘evil’ American imperialism.”

The “American imperialism” was the glue that bound Chavez International together. It united him with a range of world figures eager to court him for his oil wealth, and happy to join with him against a West ‑ and an Amerika (with a “k:), in particular ‑ that was either their active or potential foe. Chavez visited, and loudly proclaimed the virtue, of Bashar al-Assad of Syria, the late Muammar Gaddafi, the even later Saddam Hussein, Iran’s Mahmoud Ahmadinejad, Belarus President Alexander Lukashenko, and Zimbabwe’s Robert Mugabe. Many of those were given the “Order of the Liberator,” Venezuela’s highest honor, though most of these figures were or are deeply abusive of human rights, and some – such as Saddam, Mugabe and presently and most brutally, Assad – waged war on sections of their own population.