Guest Post: Russia After Sochi

Tyler Durden's picture

Submitted by Stephen Sestanovich via The Diplomat,

By hosting the Winter Olympics in Sochi, Russia has brought a surge of international attention to the state of its economy, its interethnic relations, its domestic politics, and its foreign policy. Already much of the scrutiny has become unwelcome.

The staggering $50 billion price tag for the Games highlights official waste, fraud, and abuse. The threat of terrorist attacks reminds the world of the volatile state of Russia’s southern regions and the separatist movements that operate there. Legislation on so-called gay and lesbian “propaganda” calls attention to the illiberal elements of President Vladimir Putin’s governing ideology. The reluctance of many foreign leaders to come to Sochi provides a convenient scorecard by which to evaluate Russia’s global standing.

Corruption, terrorism, human rights protests, high-level no-shows—all these represent ways in which the Sochi Olympics have embarrassed Putin. Yet in each case, the problem goes well beyond any connection to the Games. Each reflects a major tension in the system that Putin has created. And even if all goes well at Sochi, they suggest continuing challenges for the Western effort to create a cooperative relationship with Russia.

A Slowing Economy

Rapid economic growth has, for many Russians, been the most important achievement of Putin’s tenure. Between 1999, when he became prime minister and then acting president, and 2008, on the eve of the global financial crisis, annual growth averaged 6.9 percent. The impact of the crisis was severe for Russia, but the recovery was also quick. Rebounding smartly, growth in the three years after 2009 averaged 4.1 percent.

Last year, however, the Russian economy slowed significantly. Growth was only 1.4 percent, and the World Bank forecasts only slightly higher growth (2.2 percent for 2014); other forecasts are lower still. If so, Russia will be the slowest growing of the BRICS economies in the year ahead. Inflation, meanwhile, remains relatively high—approximately 6~7 percent in 2013; it is likely to continue at that rate in 2014. And all this has occurred with the price of oil, a key Russian export, still high. In the event of a real drop, economic forecasts become much more negative.

When the slowdown began, Putin sought to deflect blame for it; he traced lower growth to economic difficulties in Europe as a whole. More recently, he has acknowledged that the causes are “internal, not external.” Russian economists, businessmen, and officials are now engaged in a debate about how to respond. Among Western-trained experts, the right course has seemed relatively clear-cut: Russia needs market-based solutions that allow more small- and medium-sized businesses to form, reduce the size and power of state corporations, lighten the burden of corruption, and encourage both foreign and domestic investment.

Putin has embraced some of these ideas, but has given few indications that he is ready to change course. Some of his pronouncements have, in fact, had a distinctly atavistic flavor (like his proposal to recreate Soviet-era mechanisms for evaluating national economic competitiveness).

Ethnic Friction

Chechen separatism and associated terrorist activity originating in the North Caucasus have gripped Russia’s attention for two decades. They are a headline-grabber for the Sochi Games too. But the challenge posed by violent extremism may not be the most severe ethnic policy problem Russia faces in the coming decade. That distinction should probably go instead to the growth of a large workforce of immigrants from Central Asia and the Caucasus in Russia’s biggest cities.

With its long-running economic boom, Moscow in particular has been a magnet for jobseekers from the south; estimates of the number of undocumented migrant laborers living in the capital range from one to several million. Although many of them are in fact citizens of the Russian Federation, they are widely seen to be taking jobs from ethnic Russians, engaging in criminal activity, and exploiting social services.

These tensions periodically express themselves in violence, most recently after the October 2013 killing of a young ethnic Russian, allegedly by an Azeri migrant, in the Moscow suburb of Biryulevo. Many Russian commentators called the fighting that followed a “pogrom.” More than a thousand migrants were arrested (even though Russians had launched the beatings), and the entire Moscow police force was put on high alert.

Ethnic issues had been a topic of lively debate before the Biryulevo incident, and even some liberal oppositionists have felt obliged to appease popular hostility to migrants. While disavowing the nationalist slogan “Russia for Russians,” Alexei Navalny, the best-known new leader of the opposition, said visas restrictions should be imposed on visitors from Central Asia and the Caucasus. Slower economic growth seems likely to increase the demand for such measures.

A Political Awakening?

The huge demonstrations that shook Russian politics are now two years in the past, and in most respects Putin has successfully blunted their impact. No significant new opposition groupings, much less a united opposition coalition, have formed. New laws have been passed to impede the activities of organizations that already exist, especially by trying to choke off foreign funding for civil society. The near-term electoral calendar offers few opportunities for breakthroughs by candidates who want to challenge the near-monopoly of Putin’s party, United Russia. Putin himself does not have to face the voters until 2018, at which point he will be eligible to run for another six-year term.

Despite the seeming lull, however, Russian politics has hardly returned to the status quo prevailing before 2012. The NGO sector remains robust, buoyed by the amnesties of December 2013. Many organizations have worked around legal hurdles to sustain foreign funding. In a series of cases both administrative and civil, Russian courts have actually ruled that NGOs should not have to register as “foreign agents.” (The Constitutional Court will take up the issue soon.)

On the electoral front, elections to the Moscow city council offer an opening for opposition candidates to emerge as new leaders in 2014. Democratic activists continue to think that Moscow is fertile ground for them, and Navalny’s strong showing in the mayoral balloting of September 2013 bolsters their claim.

Another opposition victory in 2013 was the election of Yevgeny Roisman, a defector from United Russia, as governor of Sverdlovsk. In the coming year, there will be gubernatorial elections in fourteen other Russian regions. Many of these will not be genuinely competitive contests, but taken as a whole they may test the continued dominance of United Russia as the institutional expression of Putin’s rule.

As for the president’s own popularity, the picture is interestingly mixed. His own approval ratings have improved in the past year, and 68 percent of poll respondents say they would vote for him in a new election today. Only 22 percent, however, say they want him to run again in 2018, and 47 percent want someone else to run instead.

Russia’s Global Standing

The Sochi Olympics represent a genuine reputational risk for Putin. Damage could be done to Russia’s international prestige in any number of ways—by a terrorist attack, by some major shortfall in the preparation of the Games, by too-rough treatment of protestors, and so on.

Yet this picture of the situation is incomplete in two ways. An estrangement between Russia and leading Western countries has been underway for some time, for reasons that have nothing to do with the Olympics. Moreover, this estrangement has been to a large extent a matter of deliberate strategic choice by Putin. He has sought greater distance from the United States and Europe, and is likely to perpetuate it no matter what happens at Sochi.

That foreign leaders are holding Putin at arm’s length was clear from President Obama’s cancellation of a Moscow visit in September 2013. It was underscored by the cool reception the Russian leader received in Brussels for the EU-Russia summit in late January 2014. For Washington, Russia’s grant of asylum to Edward Snowden was the prime grievance; for European leaders, Russian efforts to block the EU’s relationship with Ukraine were central. How long this set-jaw style continues will be tested four months after the Olympics when Putin hosts the annual summit of the G8—once more in Sochi. (Even if the mood among the leaders improves, the event is certain to produce a new wave of anxiety about terrorist incidents.)

For Putin, social slights by foreign leaders may carry some sting, but he has defined Russia’s aims and identity in a way that downplays what others say and do, and puts a lower premium on international problem-solving. He argues that what makes Russia one of the few truly “sovereign” countries in the world is precisely its ability to pursue its own interests and rebuff outside interference in its affairs. Lately he has given this theme a still more ideological dimension, portraying Russia as a brave holdout against Western decadence.

This “exceptionalist” outlook has resonance in important sectors of Russian society, especially the Orthodox Church. Yet it worries those who want Russia to be a “normal” country, one with modern democratic institutions and social norms. Long after Sochi, Russians will be arguing about whether Putin has advanced this goal—or put it further out of reach.

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Leaf of Tree's picture

Russia was stupid to waste 50 billion USD on this.

Not because I think Sochi is a failure. I don't buy the Western MSM antiRussia propaganda.

Better to spend that money on S400 missile systems and radar and arm Iran, just to laugh in Israel's face.

Putin should have known better that western MSM will try to do a hit on Sochi.

john39's picture

The only people listening are the westerners still locked into the propaganda machine anyway. I wonder what this all looks like to the rest of the world, struggling to throw of the Zionist yoke?

Leaf of Tree's picture

It looks like a decent to high class winter olympics organized by some russians.

Oh regional Indian's picture

What a rag this diplomat is. It's clear that propaganda machine is in full force.

Dumb Russia, failed Russia, cannot organize an olympics Russia.

Drivel. My question is, are we seeing a shift in ZH?

Is ZH becoming a propaganda rag? Hmmm?

Too bad if it is.

Okay, I'm off to see if any travel girl will travel with me.


Son of Captain Nemo's picture

I concur this is pure BS. 

The Western media wants the Sochi Olympics to fail miserably because the Russians under Putin didn't cooperate on Syria, so now they pivot on Ukraine while Russia brings in it's first Olympics in more than 30 years.

What is more shameful is the U.S. warships being sent to the Black Sea "in case of evacuations" of U.S. citizens are required!....

Wonder how the U.S. would have felt if Russia had parked a missile cruiser near Long Beach CA during the 1984 games?  The whole attitude of the West is like watching a petulant child that unfortunately is deeply psychotic and dangerous willing to take enormous risks because it isn't getting it's way! What is amazing is the way the U.S. media is propogandizing it and "the sheep" are too clueless to inquire, do there own research and understand what is actually taking place.  Case in point.  I had dinner with family yesterday evening when I brought up the Department of State Nuland scandal and the cooincidence and timing of this to Russia's Olympic Games to which I received blank stares. And to make matters even worse this is "Wa-Po" Country I'm living in!  Go figure?

In answer to your comment about ZH in seeing a "shift"  Nope.

It's deliberate and he wants to see the words written under comment(s) as the "sounding board".  If you don't read the comments section(s) on ZH, then you're probably not reading "ZH"!

silvermail's picture

In Russia there is no patriotic opposition. All opposition in Russia, payable from Washington and fulfills orders from Washington. If tomorrow, this so-called opposition in Russia to obtain an order from Washington, to kissing Putin ass, all of them will kiss Putin's ass.

strannick's picture

Russia is shunned because it won't bend over for Washington. All these criticisms apply 10 fold to the US.

superflex's picture

I read the headline and knew this was a Vischy DC propaganda piece or the author is weak minded.


SWRichmond's picture

...not to mention (so I'll mention it) that the Fed prints up more each month than Putin spent on the Sochi facilities in about 6 years.

So guess who's the bigger lying, cheating, human-rights-abusing fascist dickhead?

Printing money destroys the value of human labor.  Who is destroying more lives?

aerojet's picture

No, it is shunned because communism and then oligarchy has led to massive problems for Russian society.  Russia remains locked in its bitter old ways while other former Soviet Bloc countries have learned their lesson and moved on because they didn't put up with the massive corruption.

aerojet's picture

They weren't rounding up stray dogs in LA in '84 and the plumbing all worked.

Abbie Normal's picture

And if it wasn't for the illegal mexican workers, the Salt Lake games would have been even more of a disaster.

Skateboarder's picture

Pieces like this hint so. This shit was written with scorn from the very first line. James Bond theater in London with UK army filling in for security? Superb. Russian show with some technical difficulties? Baaad.

ori, ask her if she has friends. ;)

Take up the gypsy life... watch young Jimmy Rosenberg rip:

SovietCong's picture

I quite agree. I've been reading ZH since before they actually became an independent site. I come here for markets/econ news and analysis, not for some bizzare political musings. If anyone is interested in yet another piece on why we should keep bashing Russia, there is plenty of MSM propaganda available left and right. I kind of start to suspect that Tyler cashed out, leaving ZH to some teenage interns whose monthly checks come from Murdoch, or maybe Yahoo.

Superdude's picture

Yep, I was a long time reader, just signed up though. I miss robot trader, his mom, travel, Francis and cog dis only posts so much. Before, the riles of fight club were respected and known, now pussies are allowed to walk and talk. O INdian has good posts too and Norris is good for laughs. I also enjoy Fonestar's love of crypto. I figured signing up this late set my anonymity to zero, meaning I'll be the first one in the camps. Meaning I will get one of those plastic beds while the other pleebs that come in after me will sleep on the dirt. 

matrix2012's picture

@ ORI,

Yes, The DIPLOMAT is on full throttle to spread out its propaganda shits.

Put it into simple words, The DIPLOMAT is just UNREADABLE... UNBEARABLE.


One of the sad realities of the new ZH... ZH ver 2.0



ThirdWorldDude's picture

Have you noticed that Stratfor haven't contributed with their pre-ordered analyses since last autumn? Shit in, shit out...

I wonder how much these "experts" from The Diplomat, Sovereign Man etc. pay to ABC Media LTD. for publishing their vomit on ZH.


pot_and_kettle's picture



it would be a crying shame if this site became DRUDGEREPORTLITE


Then again, ZH does tax my ( pretty well stacked ) computer's resources with its multpile scripts; it wouldn't be a particularly difficult transition and my system wouldn't sound like a weezing cyborg...

Boris Alatovkrap's picture

Boris is still curious why is allow Bi-athlon take place in anti-gayist Russia.

silvermail's picture

The so-called West wants from Russia only one thing - that Russia did not exist.

old naughty's picture

Or, that Russia is "normal" and not "exceptional" by tptb standard.

silvermail's picture

"Normal Russia", it is certainly a Russia that is controlled by Washington, is not it? LOL

NoDebt's picture

The Olympics are "awarded" to countries by the IOC and their decisions have no more bearing on reality than who gets the Nobel Peace Prize.  Just a bunch of deluded wannabe MOTUs who think their decisions mean something other than who influences who and gets the games dropped in their back yard.

If the Olymics have any more real world effect than Dot Com companies quoting how many "eyeballs" they have looking that their pages, it isn't by much.

Enjoy them for what they are.  Don't read too much into them.


daedon's picture

Some Russians believe it is a matter of time before the USD loses it's reserve currency status and most of its value, so that spending the 50B USD before it becomes Azwapé paper might be a wise decision.

dark pools of soros's picture

The 50Bil went to transform Sochi's nearby mountains into a resort so russians dont have to smell the french anymore.. and you'll probably see a major tennis tourny in Sochi going forward..  I wouldnt doubt Sharapova goes into politics at some point

Ratscam's picture

They are working since quite some time on the S500.
Russia has amazing missile technology, the fastest in the world.

Mister Kitty's picture

We're gonna know what we've always known.  Russia is a totalitarian state.  And Putin is a fuck-wad.  Bitches.

Flakmeister's picture

Lots of Putin apologists here....

Bunga Bunga's picture

Much better than wasting trillions in endless wars.

Meat Hammer's picture

I was the kid they used to pick on, now I have the balls you can lick on.

-Vladimir Putin

Leaf of Tree's picture

He does look like the midget chess playing type that was always bullied in highschool until he started to train in judo, got into the KGB, got himself elected as president of Russia and now he bullies the bullies.

Soul Glow's picture

Russia is just like any other fascist government - like the US, Japan, et al - they suck up tax payer money and distribute it from the top down.

And if we must discuss how UE and food stamps is killing America, let's note that everyone is currently funding $85B/mo worth of bond buying to keep the uber rich banks afloat.  Now that is what I call liberal.

TahoeBilly2012's picture

The story is Russian facism? I thought the story was US fascism...ah well,

kralizec's picture

Exactly.  What difference does it make, their tyrant or ours?  Intelligent people should want neither.

kaiserhoff's picture

Legislation on so-called gay and lesbian “propaganda” calls attention to the illiberal elements of President Vladimir Putin’s governing ideology.

The real reason why this boring, irrelevant shit shows up on ZH.

Leaf of Tree's picture

ZeroHedge has new owners. Hmmm....

suteibu's picture

The daily that you not only know what is important to TPTB, but what and how to think about it all.  Today, Russia bad.  Yesterday, China bad. 

I suppose it is difficult for them to write an article about how good the American government is without being forced to compare it to all of the bad governments out there.

silvermail's picture

Putin has not banned gays and lesbians fuck each other. Putin banned only propaganda of gay sex .
Because it is the will of the majority of the Russian population , which refuse to accept gays and lesbians sex as the norm .
Thus, Putin decided the most democratic manner .

In Western countries, the majority of the population is also against the promotion of gay sex .
But Western governments are ignoring the will of the majority.

Western governments are using the power of government to impose its will on the people. Thus, they go against the will of the people and show the classic signs of the military-police dictatorship.

BLOTTO's picture

'They' are destroying nations,

the financials, genders and FAMILY...

and are replacing it with a perversions, lies and the occult, i.e, the new order.


As above, so below.


tonyw's picture

Putin is very much in touch with what the people think, if the people change their opinion over the next few years then Putin will also change his stated view.

It's only a few years since homosexuality was illegal in many other western countries and is still illegal in many others today.  for example Qatar where the football world cup will be held in 2022.


silvermail's picture

@ tonyw

Who told you that homosexuality is illegal in Russia? It is delirium!


- You know how to read?

- You know how to read carefully?

- You know how to think? You know how to think for themselves?

- You can find the differences between the prohibition of homosexual relations and the prohibition of propaganda of homosexuality relations?

- You are able to understand the differences between the prohibition of homosexuality actions and ban open public propaganda of this homosexuality action?

Putin banned only one thing - public propaganda of homosexuality. He did it because it is required the vast majority of Russian citizens. Putin expressed in this law, will of the people and nothing more.