We’ve Moved!

January 25, 2010 Leave a comment

CREF is proud to announce that we have moved this site to our own new url, www.russianeconomicfreedom.org.  Please update your links and bookmarks – the site should redirect you there shortly.

Categories: Uncategorized

NEWS: Russia arrests YouTube police whistleblower

January 22, 2010 Leave a comment

Reuters reports that Former police major Alexei Dymovsky, who posted a video about police corruption on YouTube, was arrested today on charges of fraud and abuse of power. Go to the Videos tab to watch Dymovsky’s appeal to Prime Minister Putin.

Categories: News

Impediments to Russia’s Economic Growth

January 22, 2010 Leave a comment

At an international conference in Moscow, Deputy Prime Minister Igor Shuvalov, who also happens to be the head of Russia’s anti-crisis program, mentioned two impediments to Russia’s economic development: lack of private property rights and an over dependence on oil and other raw materials to drive economic growth.

US Ambassador to Russia John Beyrle included these challenges in his speech at University of Michigan’s Ford School of Public Policy last week. Ambassador Beyrle cited corruption and the lack of rule of law in Russia as impediments to both foreign investment and the development of a democratic society.

On corruption, Ambassador Beyrle said,

Russia is still a very tough place to do business. The combination of bureaucratic and administrative obstacles intertwined with pervasive corruption in Russia still constitutes a pretty significant risk premium for American investors and American businessmen who want to enter the Russian market or grow their businesses.

And on the rule of law in Russia, he said,

Corruption in the Russian government and especially in the judicial system…is still rampant in Russia. The road ahead for Russia is not completely clear.

What both Deputy Prime Minister Shuvalov and Ambassador Beyrle recognize is reflected in the Heritage Foundation’s Index of Economic Freedom out this week. Russia’s overall rating in this measurement of economic openness, regulatory efficiency, the rule of law and competitiveness, dropped 10.5 points to 50.3 this year. Ten different components make up the overall score and Russia’s three lowest scores are in the Investment Freedom, Property Rights and Freedom from Corruption categories.

‘The problems of systemic corruption, abuse of property rights and legal nihilism are well known and recently publicly discussed by top US and Russian officials. The question is what, if anything, are they going to do with these impediments to Russia’s economic growth? Besides talking about “reset” or “modernization,” do they have the political will to find solutions to these issues?

Categories: Analysis, Economic impact

John Beyrle, US Ambassador to Russia, on the Rule of Law

January 21, 2010 Leave a comment

Ambassador Beyrle said,

Corruption in the Russian government and especially in the judicial system…is still rampant in Russia.

Categories: Economic impact, Russia

Truthiness Abounds in Russia’s Ratification of Protocol 14

January 15, 2010 Leave a comment

After dragging its feet for four years, the Russian parliament ratified the European Court of Human Rights’ (ECHR) Protocol 14 earlier today. Russia had been the only country out of 47 participating states to refuse to ratify Protocol 14, which improves the efficiency of the Court. The current process has created a backlog of complaints, a third of which are filed against Russia.

Dmitri F. Vyatkin, Russian Parliamentary member mentioned that the impasse was overcome because the ECHR had addressed Russia’s concerns by providing written commitments that Russian judges would be included in reviews of potential cases against Russia, the Court would not begin investigating complaints before cases were formally accepted and the Court would not have new powers to enforce rulings.

Taken together this sounds like Russia wants to transform the ECHR into a Russian court: by hearing complaints against Russia that the Russian government approves of, not delving too much in to the details of complaints filed and if the complaint is accepted for the Court to have no ability to enforce its ruling.

However, Thomas Hammarberg, the human rights commissioner of the Leaders of the Council of Europe, presents a different view of Russia’s approval of Protocol 14, that Russia’s concerns where heard but ultimately Russia will be held to the same rules that apply to other members and that no changes to the protocol were made.

Leaving for now, what Russia’s ratification of Protocol 14 actually means for the ECHR, a central question remains, “What propelled Russia to ratify the protocol after all these years?”

“Smoothing over differences” appears to be the official reason media outlets are reporting, however there may be other reasons political and financial reasons why Russia is offering this carrot to the West.  

Earlier this week, the $100 billion lawsuit YUKOS v. Russia was postponed for the third time because two Russian representatives were unavailable. Perhaps the Russian authorities feel that ratification of Protocal 14 could pave the way for this case to be dismissed.

Additionally, the Financial Times reported earlier this week that Russian companies would be seeking $90 billion over the next two years to finance debt restructuring and capital improvements and perhaps to rebuild the coffers for politically connected Russian business owners who saw their fortunes collapse during the 2008 financial crisis. As demonstrated with the Rusal IPO, concerns over the management of Russian companies remain and ratifying Protocol 14 may be a signal to the investment community that Russia wants to play nice.

Russia may see ratifying Protocol 14 satifying many goals: to reduce the effectiveness complaints against Russia in the ECHR while reassuring investors that Russia abides by the rule of law. But as the trial against former YUKOS chief Mikhail Khodorkovsky and a Russian policeman’s open letter to end authorized corruption demonstrate, Russia remains a feudal state, where

in absence of functional legal or law enforcement systems, people’s only real protection lies in a network of personal and professional relationships with powerful individuals.

NEWS: European Court of Human Rights Delays YUKOS v. Russia

January 12, 2010 Leave a comment

Today, the European Court of Human Rights issued a press release announcing the postponement of the hearing until March 4, 2010. This is the third delay by Russian authorities.

YUKOS vs. Rusal

January 11, 2010 1 comment

It was the best of times. It was the worst of times.

On Thursday, January 14th the European Court of Human Rights (ECtHR) is hearing the case of YUKOS Oil Company v. Russian Federation, the first time in six years of litigation that both sides will meet face-to-face in a legal battle on the Russian authorities expropriation of YUKOS and its assets beginning in 2003.  Foreign policy and Russian officials have acknowledged that the imprisonment of YUKOS’s CEO Mikhail Khodorkovsky was due to political reasons stemming from his support of opposition parties.

Meanwhile, the Rusal continues on its IPO path, even as more doubts about the process have surfaced. Its controlling shareholder Oleg Deripaska continues to be linked to organized crime, was refused a visa to enter the United States on those grounds and has received millions in government money funnelled through Russian state-run Vnesheconombank (VEB), controlled by Prime Minister Vladimir Putin.

YUKOS’s Mikhail Khodorkovsky is being charged in a second round of trumped up charges while Rusal’s  Oleg Deripaska is being rewarded for his cooperation and collaboration with the Russian government, stating publicly that he would transfer Rusal back to the government at any time saying, “If the state says we need to give it up, we’ll give it up.”