12:44 GMT +324 October 2017

    Russian Press - Behind the Headlines, October 15

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    Mortal Kombat in Khimki: October’s Hottest Election Campaign / Reasons Behind Capital Flight From Russia and How It Affects the Economy / Russia’s Economic and Political Goals for Kyoto-2 Differ


    Mortal Kombat in Khimki: October’s Hottest Election Campaign

    On a bright October morning, the suburban town of Khimki, just north of the MKAD Ring Road, opened its polling stations for its most high-profile mayoral election ever following a heated and controversial campaign.

    Although analysts expected a record voter turnout, given the intensity of pre-election passions, by 10 a.m. less than 2 percent had voted and by 3 p.m. it was about 16 percent. The Khimki campaign captured the public imagination, even of those who usually take little interest in Khimki politics: it was here that the local opposition was supposed to take on “the androids in grey suits.”

    However, the battle was lost before it had even begun.

    “Android” Oleg Shakhov (who won with 47 percent) printed lots of campaign materials, met with residents and rallied the support of public associations. Anti-corruption activist Yevgenia Chirikova focused more on Twitter, enlisted the support of opposition blogger Alexei Navalny and showed burning protest both in her eyes and rousing speeches. Oleg Mitvol tried to combine the image of an opposition politician with that of a good executive, which was no mean feat.

    Shakhov was probably the only candidate to make any concrete proposals, ignoring what the other candidates said or did: “I am not a politician. I will build four health centers and lots of kindergartens.” In a less charged environment this modest positive agenda might not have worked, but his rivals actually helped his cause.

    When it became clear that there was to be no miraculous triumph of democracy, the campaign turned dirty. A handout said “Tajiks for Shakhov: He will raise the quota for migrant workers.” Khimki residents were harassed by late-night phone calls with recorded voices saying “Election day is October 14. You have to come and vote for Shakhov.” On election day, the voice said “Have you voted for Shakhov yet?”

    These four nights of phone calls did not help the opposition. In fact they had the opposite effect: the extremely low turnout can be put down to people getting sick and tired of politics altogether.

    This suggests conventional campaign techniques, such as dull meetings in courtyards and long policy pamphlets work well in Russia. The content is also important: Chirikova’s deficient but substantive rhetoric won her more votes than Mitvol, which was somehow fair.

    The dirty tricks continued throughout election day, the unexpectedly increased voter numbers and observers banned from polling stations being among the more minor. Optical scan voting systems and webcams made it more difficult to add votes, but there were cases of people long since deceased being included in the lists.

    The last resort of losers is citing fraud to try to discredit the elections. Someone wrote on Twitter: “Chirikova won’t become mayor, not because she’s a fool, but because democracy was abused.” However, the opposition activists do not agree. They understand that their campaigns failed. Effective managers have again thwarted creativity and the promotion of civil rights.

    Overblown expectations also resulted in a sharp fall in public interest.


    Reasons Behind Capital Flight From Russia and How It Affects the Economy

    The world has changed, and lack of progress in boosting Russia’s attractiveness for domestic and foreign investors is beginning to undermine its economy.

    In the first three quarters of 2012, Russia lost almost $58 billion in capital outflow, a quarter more than in the same period last year. In 2011, over $80 billion flowed out of Russia. This year, however, capital outflow is expected to slow to $65 billion.

    Since the crisis began in the middle of 2008, the outflow has totaled almost $380 billion and, with the exception of three quarters (in 2009 and 2010), has never ceased.

    In fall 2010, Central Bank Chairman Sergei Ignatyev, when asked about the outflow, said he did not have the full information. Later, he cited a variety of reasons: seasonable adjustments, expectations of a weaker ruble, or eurozone problems. Lastly, in the middle of 2011, he put the outflow down to a poor investment climate and negative expectations of investors. Many experts cite this argument as well.

    Over the past 10 years the institutional environment has only deteriorated. But net outflow from Russia has been continuous for at least the last 18 years. It could be said this situation is characteristic and common for Russia.

    And it is worrying politicians and experts. There are two sources for outflow. The first is payment of debts. Capital flows depend on many factors but most of them are connected with the servicing of foreign debts, believes Vladimir Tikhomirov, chief economist at Otkrytie. In 2011, the net outflow ($80.5 billion) was 56 percent of gross payments by residents on external debts.

    In the early 2000s, the main part was government debt: sovereign debt fell from 51 percent of GDP in 2000 to under 5 percent by 2006 and over the last few years has been about 3 percent.

    The private sector also began actively borrowing money: the external debt of banks and companies rose from 3 percent of GDP in 2000 to more than 30 percent of GDP by 2008.

    The 2005-2007 period was the time when the bulk of external corporate debts was created, leading to a five-fold increase, to $500 billion by the middle of 2008.

    Unless the global financial market becomes unfrozen, net outflow will continue, Tikhomirov believes. In the fourth quarter, the amount to be paid is $41 billion, which makes an official forecast for the outflow optimistic. Deputy Finance Minister Alexei Moiseyev believes the outflow will stop when oil prices drop.

    The second reason for the outflow is that there is nowhere to invest money. The economy cannot absorb the amount it can ingest, Moiseyev goes on. The conditions are simply not right for the efficient investment of incoming petro-dollars. Unless there are systemic changes the influx of capital is most likely to produce bubbles.

    He says: “What is important is not the fact of capital inflow, but channeling capital into economically sound projects, not as a source of speculation, but as investment in economic modernization.”


    Russia Not United Over Kyoto-2 Economic and Political Goals

    This week Sberbank, VTB, the Russian Union of Industrialists and Entrepreneurs and the Economic Development Ministry will appeal to the president’s economic adviser Elvira Nabiullina to back Russia’s involvement in the second Kyoto round of emissions targets. Their main opponent is presidential climate adviser Alexander Bedritsky.

    The ministries and businesses said in September 2012 that Russia’s refusal to sign up for the second commitment period of the Kyoto Protocol would harm the economy and increase risks. Russia should honor its commitment “in order to promote business development and technological modernization.”

    In December 2011, the signatories discussed extending the Kyoto Protocol and the Joint Implementation (JI) project for another five to eight years, by which time they will sign a comprehensive climate agreement. But the Russian delegation led by Bedritsky said that protocol extension is a false goal. The relevant Russian ministries and businesses want Russian companies to keep their place on the JI market on condition that they reinvest the Kyoto funds in eco-friendly Russian projects.

    Bedritsky, who has proposed creating a national emissions market to avoid Kyoto Protocol obligations, said the issue concerns the commercial interests of several companies, which hope that quotas will be sold and projects implemented in Europe during the second commitment period. “This is an illusion. The EU is not interested in doing this jointly with us,” Bedritsky said.

    No one in Russia believes a national emissions market can be established before the end of the second Kyoto period. Bedritsky said a domestic emission reduction units (ERU) market could be promoted by bilateral agreements signed outside the EU, for example with Japan.

    The main argument against Russia’s participation in the second commitment period is the price of ERUs. The EU has an excess of ERU offers from emerging (China, Brazil and India) and transition economies (Russia). According to Bedritsky, the EU needs Russia to participate in the second period, but even this possibility has not revived the market, where ERU prices have continued to fall.

    Market participants probably do not believe Russia has 6 billion tons of CO2 equivalent, a reserve fund created during the economic decline of the 1990s. The Russian Economic Development Ministry and business claim that its value will increase to 30 billion euros when ERU prices shoot up from 1.60 to 5 euros per ton in 2013. The European Commission plans to cut the supply of ERUs from China, Brazil and India, but the JI projects will continue.

    Russian Economic Development Ministry official Oleg Pluzhnikov, who attended the talks, said no one hinted that Russian ERU supply within the framework of JI projects could be rejected during the second commitment period. But if Russia refuses to assume quantitative commitments for the second period, the ERUs produced in 2013, including within JIs, will not be accepted in Europe.

    The next round of the climate talks in Doha, where Russia is to announce its decision, is scheduled for December 2012.

    RIA Novosti is not responsible for the content of outside sources.


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