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From the 6th Russian Investment Symposium | Статьи на английском
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From the 6th Russian Investment Symposium

24.11.2002 10:36

Johnson’s Russia List #6568, 24 November 2002

Russians studying English often ask a question, “Why write ’sought’ when you could have just spell it ’sot’?” Indeed, ’sot’ is a shorter and more logical spelling that conveys the same sequence of sounds. And the answer is that English spelling does not seek to be the easiest and most logical, but aims to preserve the history of the language, showing English the way it developed through centuries of its existence. Wel, Ai khav dzhast attended a 6th Russian Investment Symposium, wich sot tu prezent Russia in a bit tu “lodzhical” a lait.

Let’s start with the short talk given by the Governor of Evenkiya. Evenkiya’s territory is huge and chock full of natural resources. Evenkiya has a population of just 90, 000 - and yet, it has no investment projects going. Now, if I were to tell you that Fort Knox is protected by just two midgets, would you not be amazed? How could so few people be able to keep everyone away from so much treasure? Just as I was getting ready for the Governor to discuss what kind of an extra powerful Investor Repellant does Evenkiya use to keep its industrial virginity, the Governor ended his talk: “Come, be the first ever western investor in Evenkiya!” Thanks, but I’d rather not.

This talk is very representative of what happened at this Symposium. There are real issues, but they are never discussed, and then there are issues that appear very relevant but absolutely do not get us closer to the solution. When I was 17, I was once able to get beautiful Masha to come to my place while my parents were out. I wanted you-know-what, but Masha wanted me to help her with algebra homework. After that, we discussed the chemistry teacher, a few movies, and then drank some juice. I rated the evening as highly unsatisfactory, and at the Symposium I felt the same way.

How could you not love the talk delivered by the Russian Labor Minister, Alexander Pochinok! The entire talk was based on a formula “You want that? Okay!” that he repeated at least ten times in a short speech. You want more laws? Okay! You want more figures? Okay! You want to see economic growth? Okay! Pochinok ended his talk actually laughing with joy: he felt that he had delivered. Even a quick-and-dirty examination of his figures would reveal that they are phony and irrelevant - but this is not the issue. The issue is: if everything in Russia is “Okay” why is it such a disaster? Why is there no investment, no civil society, and probably no future for the country as we see it today?

Let me answer these questions to show what the real issues are. In a course of their long history, SOME human societies developed a concept of an INDIVIDUAL. To exist, individuals need PRIVATE PROPERTY, which would enable them to shape their INDIVIDUAL DESTINY. That made private property valuable, and to protect it, societies made LAWS. Please feel free to make definitions as we go along. PRIVATE PROPERTY is what an INDIVIDUAL unconditionally possesses so that he could shape his individual destiny. A law is a rule that offers comprehensive protection of this private property. Now, if you wear handcuffs, are they your private property? No, they are not, because they do not help YOU to shape YOUR individual destiny. Please note that from that it follows that not everything that is “yours” is your private property. Next. Suppose there is a regulation stating that should you jump fifty feet in the air, you will be able to hold a piece of bread in your left hand for seven seconds. Is this a law? No, it is not, even if it passed the State Duma and “signed into law” by Putin himself. It is not a law because it turns a piece of bread into an impossible-to-possess virtual entity. Since Russia has no concept of an individual, it has no private property, and thus, BY DEFINITION, does not have ANY laws. A statement, “Let me do that since my uncle can kick your butt” is not a law, and yet in Russia it is the only way to compose a valid “legal” statement.

Thus, the true topic of the Symposium should have been: “Does Russia recognize an Individual, so that he can creatively use Private Property, which therefore needs to be protected by Laws, in such a way that Individuals possessing Private Property protected by Laws would form a Civil Society?” But that topic was not discussed. Instead, we heard that Russian society, which is characterized by an exceptionally low creative potential, was somehow able to sell its oil (which is an asset that was not really “produced”) at such a price as to exhibit a 4% growth of a set of figures vaguely and indirectly related to some aspects of Russia’s economic condition. Okay??

The reality of the Russian legal system was actually discussed at the Symposium, but only indirectly. Bill Browder of Hermitage Capital Management revealed that out of 32 times he has been to Russian courts he lost 31 times. Mr. Browder’s claims are very reasonable, but they are formulated with a western legal logic (Mr. Browder pointedly added that he won four out of four of the western cases he has been a party to). Well, Mr. Browder’s legal record in Russia is a conclusive proof that he is not a personal friend of Mr. Putin’s judo trainer. Befriend the trainer, Mr. Browder, and you will see your legal briefs acquire undisputed legal merit, under the Russian “law”.

Here is how Symposium’s logic went: “Private property is good, laws are good, cooperation on a win/win basis is good - therefore Russia should have them, and if you name something “property” or “law” that is exactly what they would be, even if they demonstrably lack some major defining characteristics”. Let me give you another example of this logic. The larger is the brain of an animal, the smarter it is, and the more it can do. Elephant’s brain in a thousand times larger than that of a pigeon. Muscles make an animal stronger, and an elephant has a thousand times more body mass than a pigeon. Since a pigeon could fly, it follows that an elephant, with all its brain and muscle strength, can surely fly like a rocket. Now, a close examination of an elephant reveals large floppy ears, which, as we gleefully point out, a pigeon, being too underdeveloped, does not have. We therefore rename these ears as “elephant’s wings” and have Pochinok tell us the ear floppability has increased 4 percent, wholly unrelated to observable insect activity, and state that elephant is “resting before takeoff”.

Russia has catastrophic problems stemming from the fact that property there is conditionally controlled by those whose hands can grab but cannot plant a seed. In Russia, breakdown of an old system gave rise to several uncontrolled, highly dangerous processes, such as creation of a criminal state, demographic and religious tensions, and an epidemic of infectious diseases that will soon threaten the world. These issues were not discussed at all; instead, there was yet another discussion of how can the disintegration be used to gain temporary profit. Well, as the Titanic was sinking there indeed was much to grab. If you could grab the earrings and still make it to the lifeboat, Russia is indeed a place for you.

There also was a discussion of some genuinely successful Russian businesses, such as IT businesses. These businesses are successful in part because they find it easier to pretend that they do nothing and do not earn anything. Russians exist, Russians adapt, and some Russians do succeed, but they still cannot openly show that they are independent and genuinely free creators of their own destiny.

Sooner rather than later there will be a real discussion of Russia. Russia’s problem is that it does not have individuals and thus does not have citizens. 150 million people inhabit this huge area of Earth’s surface, but do not possess it; and so the conditional possession gravitates towards Khodorkovsky, Berezovsky, and the like, giving an appearance of a “business success” to an untrained or a very biased observer.

Just as the English language, Russia has its own, historically influenced, illogical, and yet clearly understandable, “spelling”. We cannot hope to reform Russia if we refuse to see Russia for what it really is.

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