Saturday, July 26, 2014

Skibinskiy: Russia - a 'failed, mafia state' - sees Ukraine's break as 'existential threat'

(HT: NK). Here are links to two blog posts (Part 1 and Part 2) by a Russian emigre Max Skibinskiy who works in Silicon Valley.  They're long so I'm going to highlight the best parts. Here's from Part 1, about Russia today [emphasis mine]:

Russia was and is a failed state. What is seen from the outside is just a facade imitating a functional country and government. High oil prices, residual infrastructure of USSR and internal mass propaganda machine maintained the illusion for more than a decade.

[...]   In simple terms, Russia is a mafia state. All the way from Moscow to regions and to small towns, everything is controlled by various mafia gangs. Police and judiciary are parts of most powerful gangs. They usually assist in extortion or theft of property earned by local small and medium size businessmen. Big business is subject to federal mafia clan wars.

The mafia-state formation is logical consequence of Russian economy: it is totally dominated by oil and gas revenues. Oil, gas and derivatives provide meaningful employment to about 1M people. Russian population is about 150M. How do they survive? The majority depends on various forms of government handouts.

With Russian-style oil production you don’t have to think, innovate or even hire smart people. All you have to do is to cash the check. Gazprom is ranked as one of the most grossly inefficient enterprises in the world. So what happens when a small, totally incompetent minority controls country-wide oil rent while the rest of 149 million people are a burden? The answer is obvious: that 1M would create a mafia state to keep the rest of 149M in check by means of police and judiciary abuse and mass propaganda.

Russian propaganda machine is vast, it now exceeds the one of Soviet Union. 

About the degradation of the Russian population:

The population at large is, statistically speaking, not very bright. Many are deranged from overuse of alcohol or drugs.  A big number are simply aging elderly rooted in USSR-centric mindset who never adjusted to the modern world.  Most of them do not “work” in the sense we understand full-time employment here: they occupy placeholder positions sponsored by the government. Being dependent their whole life on government help, they are psychologically unable even to think government can do something wrong.

About the Russian "brand":

I think we came to the end of the line with regards to Russia as a name, culture, a global brand. For the time being the country future is destroyed, police state is well-entrenched and the narrative for the brainwashed locals would be xenophobic tale of struggle with the “West”.

And here he finally gets to Ukraine:

The differences between “Ukrainian” and “Russian” people are cosmetic. [I certainly disagree, as did many of Max's readers, and he corrected himself in Part 2, basically saying Russians come from Kievan Rus', which is historically accurate and another reason Putin doesn't want to "lose" Ukraine. - J]  The distance between Kiev and Moscow is about same as Sacramento to San Diego. Even today, after all that happened, the most likely language you will hear on the streets of Kiev is Russian. So why Kremlin was so enraged about recent Ukrainian revolution? After all Ukraine has no natural gas or oil, there were no riches to divide, what was the fuss all about?

What happened is that first time in history, large group of ethnic “Russians” had overthrown a mafia clan in a popular uprising.  Until then, Ukraine was a satellite state, and exactly because it had no natural oil and gas, much larger portion of the population had to develop “creative class” skills rather than going to work for oil company or police enforcement. Then suddenly this social group had enough heft and popular power to overthrow local mafia don.

You can imagine the amount of terror it produced in the gang occupying Kremlin right now.  If was and still is an extensional threat to them, hence they pulled out all the stops to overthrow or destabilize a new government in Kiev, and at the same time whip out xenophobic mass-hysteria in a local population.

At this moment, Kremlin can not really stop. If Kiev government survives, it will fairly quickly unlock economic benefits of non-mafia, free economy. The large parasitic class living by bribes and extortion will be displaced: it will have the same effect as if base tax rate would suddenly drop by a double digit percentage. Next door, progressive Russians would quickly notice and spread information about growing prosperity and opportunity in a city next door. What was half million Euro-leaning progressives, would become a million, then few million: before long you can picture a Gaddafi-style demise for the Kremlin gang.

Kremlin is fighting for its own survival: supplying weapon system and military crew to a roaming criminal gangs [in Ukraine] is nothing for them in big scheme of things.

And here's what Silicon Valley can do to help Ukraine:
  • Help Ukraine. They have terrific outsourcing shops and consulting firms. Send them business if you can. Recent revolution would unlock even more creative force in this economically modest, yet energetic country. They are the first large group of ethnic “Russians” who become free on their own power and valor. To understand the scale of that achievement, here is the last group of Russians who were not ruled by khans, czars, communist chairmans or KGB generals: Free Novgorod Republic. That was over 1000 years go. Ukraine was a cradle of Russian civilization – they might become a source of its rebirth yet again.
  • Boycott anything and everything related to Russian government and associated banks and corporations. Any business you send to them only strengthen the regime. Your contract dollars will pay for next Buk missile.

Then in Part 2, here is what Max says about Ukrainians's and Russians' common heritage:

Ukrainian side, deservedly, had a lot of critique for calling Ukrainians “ethnic Russians”. It was interpreted as usual Russian chauvinism rejecting Ukrainian identity, language and rights as a sovereign nation. Ouch.

My apologies to Ukrainians. From a historical perspective I was referring to, the article would be unchanged if I were to say “Russia is populated by ethnic Ukrainians from Kievan-Rus“. did astute and very subtle translation as “Russich”, which precisely the meaning I was trying to convey. Keep in mind, there is no English word I know for “Russich”, and if one exists, I’m sure last person around here who knew it left after he locked gates at Fort Ross after himself.

In Part 2, here's his take on economic sanctions against Russia:

At the same time, make no mistake: current Russian’s regime is ruthless, efficient and fully in control. It not going to change soon, especially with 81% popularity rating. It has no obvious weaknesses besides potential economic collapse from sanctions (and still would take 10 to 20 months  and resulting political change that might not be for the better at all). The ruling elite is not considering Russia their homeland: it is occupied territory with captive native population to be exploited for monetary gain which is to be squirreled away overseas. If country and it’s people would be irrevocably ruined by the process so be it: the elite and their children will just permanently move their European residences.

That is the key problem that makes sanctions such a blunt and imprecise weapon: until they include all extended families of the corrupt Russian government-industrial complex officials they are toothless.  If they do include them (and assets registered in the name of *all* their relatives) it will have big negative impact on EU/UK economy, and it becomes equivalent of nuclear weapon against Russian ruling class: they will have absolutely nothing to loose [sic], the whole purpose of their life (Western wealth) would be wiped out in an instant. In general, it is not a smart move to put a nuclear-armed power in that position.

And on how Kiev's techies are smarter than Moscow's:

Kiev is a cosmopolitan European capital with good climate and great people. Unlike Moscow, it much less infected with toxic poison of oil and gas revenues – here you got to work to make your fortune. I observed many times that when it comes to cutting edge technologies Ukranian and Kiev teams are far ahead of Russia as whole – and Russia is a pretty big place! The reason is simple: Kiev teams already compete, learn and grown on the world level – they wouldn’t get any contracts otherwise. Russian teams always have a fallback to easy low-competency contracts driven by oil and gas: they have much less pressure to become exceptionally good. That how global technology competition works.

Posted by Max
July 20, 2014 | The Vault of the Future

July 25, 2014

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