Russian life in the era of Western sanctions
US, WASHINGTON (ORDO NEWS) — This was my first trip to Russia. They called me for a long time, but I could not accept invitations before. In college, I spent many hours studying Russian, but 45 years have passed since then, and then I became a lawyer and pursued a career. So the trip is long overdue.
There were many surprises and pleasant surprises. For starters, Moscow Sheremetyevo Airport. Very modern. Red Square turned out to be smaller than in the pictures. And Krasnodar turned out to be a very bright, sunny, southern city – they are building something on every corner. It looks like Florida, only near Crimea, Sochi and the Black Sea. Russia was not as gloomy as I expected. We even had a barbecue.
Much, it seemed to me, is similar to the USA. Even people are like Americans, although, of course, everyone speaks Russian. There are no dull, colorless scenes with gloomy, suspicious faces. Around are billboards, traffic jams and neon signs, as in any consumer society. The “gas station pretending to be a country,” as the late Senator John McCain put it, is unlikely.
Our trip was organized by the Center for Civil Initiatives, this organization is associated with Rotary International and arranges such trips every year. The group recruited 48 people from all walks of life, some of whom were already in Russia. In Moscow, we attended lectures on Russian politics, history and finance. This went on for five days. Then they looked at other cities. We broke into groups and divided twenty-one cities. Four went to Krasnodar. After Krasnodar, we flew to St. Petersburg and spent the last five days all together again.
Moscow is the gateway to Russia, a popular destination for tourists. Moscow has an amazingly beautiful metro where a ticket costs less than a five-cent. However, when we flew in and out, it seemed that Moscow was covered with a huge gray umbrella of smog. There are a lot of public transport in the city, but there are also a lot of cars, hence the huge traffic jams and very bad air.
Another thing is St. Petersburg. This is the most beautiful city in Russia, just dazzling and all historical. Here the main events of the Russian revolution unfolded, and here the Hermitage Museum, rightfully known throughout the world, is located here. The city is teeming with tourists, mainly Germans and Chinese. In St. Petersburg, it is easiest to understand and feel the great sufferings of Russians in the Great Patriotic War (as they commonly call the Second World War). On the other hand, some of the St. Petersburg taxi drivers left behind an unpleasant impression.
Krasnodar is not as historical as St. Petersburg, but it is not so crowded and very hospitable. The air is clean and a gentle breeze always blows. Near the Black Sea, and life is in full swing. There I talked with the Russians most of all.
The Russians welcomed us warmly. They communicate with Americans with curiosity and want to get to know us better. They are educated and cultured, they want to be understood, but no more hospitality can be imagined. We were given two guide-translators, and in the hotel and in the city center I talked with other Russians. Other members of the group lived in private homes. From our communication it became clear how little we know about life in Russia.
I found out that although there are a lot of luxury houses and expensive cars on the streets, many live in poverty. As in America, teachers are paid little, youth find it difficult to find work for their liking, and the elderly have a hard time because of small pensions. With income inequality, Russians have lost most of the achievements of socialism, its benefits and social protection, and corruption, as we have been told, is widespread. Therefore, many Russians are leaving, while others are nostalgic for the security and stability of the Soviet state.
Krasnodar is growing
Five days we rode around the city and met with business people, and all of them have their own business. They are real enthusiasts, and entrepreneurship in Russia is growing. Among other things, we visited one company and even a government agency, whose main goal is to help entrepreneurs and enterprises, including foreign ones, start work and develop. They help with licenses, refer to other specialists, organize financing and training. When we were visiting them, everything was packed with people there.
The result is obvious. As in America, a gradual outflow of population to the south is observed in Russia. Over the past ten years, the population of Krasnodar has doubled. Construction cranes rise above the whole city and new office buildings and residential buildings grow. The city is expanding, new enterprises and shopping centers are being built, traffic jams are on the streets, but in the suburbs there are still broken roads with a track. They did not seem to be inspired by the idea of downsizing. One of the companies we visited is engaged in mapping services, such as Google Maps, only they track sales. So, they said that 1,400 new enterprises are opening every month in their area, and 1,300 are closing down.
The benefits of sanctions
No one expected it, but at least part of this growth is due to European and American sanctions. We were told that when the sanctions were just introduced, Russia was heavily dependent on Europe in terms of food supplies, financing and industrial goods. In 2008, about 45% of Russian products were imported from Europe. Today, thanks to government intervention, Russia has become a net exporter of wheat and chicken, and in Krasnodar, with its mild climate and fertile land, is an agricultural boom. They are trying to diversify the economy through the information industry, but agriculture and tourism still serve as the basis for everything.
On approaching the city, endless fields are visible. Where there were once collective farms, now there are large farms. This is the breadbasket of Russia. The American food giant Cargill and other American and European manufacturers of agricultural equipment work here. And to complete the picture, the producer of genetically modified seeds, Monsanto, as well as Roundup, Philip Morris, and Bayer, are widely represented.
Along with the growth of large agricultural enterprises, the effect of Ukraine is also felt. This region adjoins the east of Ukraine, and thanks to the new 17-kilometer bridge to the Crimea, only a couple of hours drive. In December, rail links opened with Crimea. In Crimea, as we were informed, significant growth is also observed due to state investments. New airports, residential buildings and roads, as well as a new terminal for cruise ships cruising the Black Sea are being built. All resources and funds for Crimean growth flow through Krasnodar.
As for the Crimea, we talked with Crimeans and Russians from eastern Ukraine. They consider themselves citizens of Russia, and without exception, all flatly declared that Crimea will never be Ukraine, unless after another world war. This is not even discussed. Therefore, if the meaning of Western sanctions is to force Russia to leave Crimea, then they are useless.
Most Russians regret sanctions, especially because of an atmosphere of hostility, but at the same time admit that they had a beneficial effect on the country. Russia has become self-sufficient, feeds itself and manages its own money. There is no government debt, and Russia itself is financing its development. Things do not stand still, and the government is working hard.
The main engine of economic development is the federal government. In 1991, the privatization of state-owned enterprises began, but the state retained many of them. The extractive industries, oil, gas and pipelines remained in state ownership. Metro, public transport and railways too. Aeroflot is 51% owned by the state. In the banking sector, state-owned banks dominate. In 1992, there were more than 1,200 independent banks. Now there are only 125 of them. The most important thing is that privatization has not affected military companies and security companies. 65% of Russian GDP falls on the state – this is mainly oil and gas revenues, the “gas station” part of Russia. All this intensifies with the obvious turn of Russia from Europe to China and the east.
There are many Chinese guests in Moscow and St. Petersburg — fewer in Krasnodar. They told us a lot about joint ventures and projects with China, and all of them will only continue. A gas pipeline 1.5 meters thick has already been built from Siberia to China. A large oil pipeline is under construction. A bridge is thrown across the Amur River, the first of its kind. China provides a 5G network throughout Russia and will soon arrange the supply of railway and metro construction equipment. There is one high-speed railway in Russia, and soon there will be more.
Thanks to these relations, the governments of both countries are taking steps to move away from the dollar and withdraw from the international banking and financial system. Sanctions seem to only accelerate this process. Because of them, the flow of Western investment in Russia has dried up, but thanks to the oil and gas pipelines and close ties with the enormous Chinese market and its resources, this is not a problem. It is not difficult to foresee how this will end. A good example is Krasnodar. The sun is shining over the city.
With the transition to a capitalist economy, great inequality came: oligarchs appeared. At a meeting in Moscow, I found out about their appearance. Like corruption, this is an important part of the Russian system. According to lecturers, when the CPSU decided to curtail communism and begin privatization, many of the state-owned enterprises and banks were simply dismantled, captured or bought by people close to the leadership – for a nominal fee, or even for nothing. Business workers and people were not even asked.
Like in Oz : yesterday, an official in the Communist Party becomes an oligarch and an industrial tycoon, acquires a home in London and bank accounts in Zurich and Cyprus. The Bolsheviks and Lenin must have rolled over in their grave. Banks, companies and factories of the oligarchs are not acquired by hard work, not by savvy and not enterprise. They took their cunning, greed and nepotism.
There are several oligarchs in Krasnodar. One of them owns an airport, which will not be damaged by major repairs. For such a vibrant, growing city like Krasnodar, it is some seedy. This oligarch also owns one of the city’s two professional football clubs and a new stadium, large and beautiful. In Krasnodar, there are as many as two large football stadiums of a professional level, but a minimum of public transport. One club would have been enough.
According to one person from the American hedge fund, the oligarchs keep most of their money abroad, own real estate there (maybe even in the Trump Tower ?) And can fly on a private plane on a call. Although it is alleged that oligarchs once seated Vladimir Putin in the presidency, their relations with the Russian government are strained. They are not respected. Our interlocutor said: “a phone call and six hours to get away.” This unpredictability, apparently, applies to foreign investors. The man from the American hedge fund, who worked here from the very beginning, said that he had lost all his investments, except for one, and now he was trying to sit quietly and not lean out.
Now everyone agrees that the oligarchs have no noticeable political power. In those areas where the rich usually rule – the media, banking, and finance – not oligarchs rule in Russia. So, they don’t even have their own political party, as we have in America. This may change over time, and with it the future of Russia.
Thoughts in conclusion
Dear Will Rogers , having visited the Soviet Union, upon returning, he said the aphorism that Russia is “a country about which, whatever they say, it’s all true.” That was 80 years ago, but true to this day. Most of what our press writes about Russia concerns either the president or the army, or some other topic where there are many negative opinions and few facts. In addition, Russian history — for example, its role in World War II and its contribution to the victory over fascism — is often distorted and downplayed. In politics, it is still customary to make a scarecrow from Russia.
Travels, however, open their eyes and open their minds. My trip to Russia left a lot of positive, vivid impressions. For example, I found out that Russia’s military budget is only one-fifteenth of the US, and last year, military spending even declined. I learned that Russia is the strongest in the world committed to the conservation of wildlife, both in terms of total area and the share of protected lands. And so it has been since 1917. Most importantly, we learned that the Russians seem to be well aware of the shortcomings of their country – corruption, oligarchs, poor roads, terribly cold winters – and talk about them without any hesitation. Nevertheless, on the streets and in public places, they are clean and there are no homeless people and beggars – unlike us, where they are outrageously many.
It seems that the Russians are convinced that the flaws are gradually being corrected, except, perhaps, for the cold winter, and they are looking to the future with optimism. It seems that they are sincerely proud of their country and are trying to improve its life. This is especially noticeable in Krasnodar, where life and business flourish in spite of all Western sanctions.
Contact us: [email protected]
The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.