Crisis-hit Russians Tighten Their Belts
BBC: What would you do if your income was slashed by 80% because of the continuing downturn?

What choice would you make if your bosses asked you and your colleagues to agree either to a 50% salary cut or to reducing the firm's workforce by half?

Such a choice might seem unreal to a lot of professionals in the West, whose rights are protected by laws and unions, as well as by history itself, as these rights have been in place for decades or even centuries.

But these questions are now a reality for some people in crisis-hit Russia as it comes to the end of a decade-long boom, the first time in its existence that this has happened in a free-market economy.

The problem is that many Russians still get the bigger part of their salaries "in envelopes", even despite a flat 13% rate of income tax. Their official salaries may be no more than a couple of hundred dollars.

It all seemed fine to them when they did not have to worry about their jobs. But now it leaves them unprotected.

Their bosses do not need to fear the cost of making them redundant, as the severance money, calculated as the sum of several official monthly salaries, would be tiny in comparison even with an employee's real one-month salary.

That is why many professionals, who have had to agree to a 30% salary cut, consider themselves relatively lucky. >>> By Konstantin Rozhnov, Business reporter, BBC News | Tuesday, January 20, 2009

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Russia May Cut Off Oil Flow to the West
THE TELEGRAPH: Fears are mounting that Russia may restrict oil deliveries to Western Europe over coming days, in response to the threat of EU sanctions and Nato naval actions in the Black Sea. 



Any such move would be a dramatic escalation of the Georgia crisis and play havoc with the oil markets. 



Reports have begun to circulate in Moscow that Russian oil companies are under orders from the Kremlin to prepare for a supply cut to Germany and Poland through the Druzhba (Friendship) pipeline. It is believed that executives from lead-producer LUKoil have been put on weekend alert. 



"They have been told to be ready to cut off supplies as soon as Monday," claimed a high-level business source, speaking to The Daily Telegraph. Any move would be timed to coincide with an emergency EU summit in Brussels, where possible sanctions against Russia are on the agenda.

Any evidence that the Kremlin is planning to use the oil weapon to intimidate the West could inflame global energy markets. US crude prices jumped to $119 a barrel yesterday on reports of hurricane warnings in the Gulf of Mexico, before falling back slightly.

Global supplies remain tight despite the economic downturn engulfing North America, Europe and Japan. A supply cut at this delicate juncture could drive crude prices much higher, possibly to record levels of $150 or even $200 a barrel.

With US and European credit spreads already trading at levels of extreme stress, a fresh oil spike would rock financial markets. The Kremlin is undoubtedly aware that it exercises extraordinary leverage, if it strikes right now.

Such action would be seen as economic warfare but Russia has been infuriated by Nato meddling in its "backyard" and threats of punitive measures by the EU. Foreign minister Sergei Lavrov yesterday accused EU diplomats of a "sick imagination".

Armed with $580bn of foreign reserves (the world's third largest), Russia appears willing to risk its reputation as a reliable actor on the international stage in order to pursue geo-strategic ambitions.

"We are not afraid of anything, including the prospect of a Cold War," said President Dmitry Medvedev. Russia May Cut Off Oil Flow to the West >>> By Ambrose Evans-Pritchard | August 29, 2008

THE TELEGRAPH:
Analysis: Should We Fear a New Cold War?: With his liking for Pink Floyd and Led Zeppelin, President Dmitry Medvedev of Russia seems an unlikely heir to the Kremlin's dour collection of Cold War leaders >>> By David Blair, Diplomatic Editor | August 28, 2008

THE INDEPENDENT:
South Ossetia ‘Will Become Russian’ >>> | August 29, 2008

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Russian Economy Succumbs to the Oil Curse
THE TELEGRAPH: Moscow is the most expensive city in the world, like Tokyo before the Nikkei bubble burst. A taxi from Domodedovo airport to the Kremlin costs $170 (£86). Property in Ostozhenka trumps Chelsea. Space fetches $30,000 a square metre.

Nice Tsarist flats fetch $3m to $4m. Even Bolshevik boxes are booming. Moscow boasts 150,000 home millionaires in dollars, says Sergei Polonsky, the Mirax Group tycoon. In a good year, prices double.

This is the curse of commodity wealth, the "Dutch Disease" that eats at the competitive foundations of an economy and incubates a parasite culture. No doubt Russia's scientists, engineers, and cyber talent, will enrich the country, but first it must overcome the toxic effects of oil at $90 a barrel.

"We can no longer afford to buy Russian equipment," said Yevgeny Ivanov, head of Polyus Gold.

"The prices here are one and a half times higher than abroad so we're having to break our rigid rule and turn to foreign-made machinery. It is bad news for Russian firms. The commodity super-cycle is catching up with us through higher prices. It is a disheartening picture," he said.

"There's no infrastructure, no power, no roads. Electricity costs twice what they pay in Alaska and Canada. We face a Soviet bureaucracy passing decrees that make you weep," he said.

The government has declared an infrastructure emergency. Russia has hit the limits of durable growth on today's rickety foundations.China has built 25,000 miles of highways since 1988, Russia a few hundred. Russian economy succumbs to the oil curse >>> By Ambrose Evans-Pritchard International Business Editor

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Interview with Russian Orthodox Metropolitan Kyrill
I post this excellent interview from SpiegelOnline International on this website because the possible successor to Patriarch Alexy II, Metropolitan Kyrill, raises many interesting and important economic issues. I think you will agree.

Photo of Metropolitan Kyrill, possible successor of Patriarch Alexy II, courtesy of SpiegelOnline International
SPIEGELONLINE INTERNATIONAL: Metropolitan Kyrill, foreign minister of the Russian Orthodox Church, discusses Christian values in the post-communist era, his relationship with the pope in Rome, Vladimir Putin the churchgoer -- and wrangles with SPIEGEL about homosexuality.

SPIEGEL: Your Eminence, after the collapse of the Soviet Union, the Russian Orthodox Church seemed to have prevailed over the godless communists. But has it been able to fill the spiritual vacuum that followed?

Kyrill: I wouldn't call it a vacuum. In communism, the church had no direct way of influencing society, but it did influence Russian culture and people's awareness. I remember a tour guide in a monastery in Vologda in the early 1970s. She talked about architecture and painting as if she were giving a sermon. There was no talk of Christianity, but her speech depended on a Christian system of values. This woman was not alone. Writers and artists spoke the same way. Or, someone would see a destroyed church and discover another world beyond the gloomy prefabricated high-rises where people lived. Christian values were always kept alive among the people. They ultimately brought about the fall of communism.

SPIEGEL: Crime and corruption were rampant after the collapse of the Soviet Union. Murder, robbery and fraud became mass phenomena. Wasn't this a defeat for the church?

Kyrill: Reviving morality is a long process. We also see high crime rates in other countries. Besides, Russia faced massive social changes. Our economy was in ruins, foreign influence was growing and so was the consumption mentality, the focus on performance, all of these postmodern ideas which treat everything as relative and no longer require us to distinguish between truth and lies.

SPIEGEL: It sounds as if the present is no better than the past, in your opinion.

Kyrill: The church should have taken time to regenerate. We were weakened by atheism, and then we were faced with a double burden. We were like a boxer who walks around for months with his arm in a cast and is then abruptly shoved into the ring, accompanied by shouts of encouragement. But there we encountered a well-trained opponent, in the form of a wide variety of missionaries from America and South Korea who tried to convert the Russian people to other faiths. Religion was also marginalized by a secular way of thinking.

SPIEGEL: Is capitalism ultimately worse than communism?

Kyrill: The free market economy has certainly proved to be more effective than the planned economy. Unlike corporate executives, however, the church also believes in justice. As far as that's concerned, we have no fewer problems today, perhaps even more, than in the Soviet era. The gap between rich and poor in Russia is scandalous. That's an issue we are addressing.

SPIEGEL: You must find it obscene, the way the Russian oligarchs, with their palaces and yachts, show off their wealth.

Kyrill: It isn't the church's place to point to someone and say: He owns yachts and airplanes, so let's take away his riches and redistribute them. That happened in the 1917 revolution. At the time, they were saying that paradise was the next step after expropriation. But what we got instead was hell. May God protect Russia from repeating the same mistake. However, the government must ensure that the gap doesn't become too wide. Russia's future depends on it. ’The Bible Calls it a Sin’ >>>

Part 2:
’Men Can Control Their Drives’

Mark Alexander (Paperback)
Mark Alexander (Hardback)