This was meant to happen


This is what Russia’s financial markets did in the aftermath of the announcement that the Government and Central Bank were moving to take over the country’s largest private lender, Otkrytie (see the news in English or Russian.) It is, of course, not what usually happens in such circumstances: stocks do not usually rise in the aftermath of such news, and currencies usually fall.

The fact that Russian financial markets are doing the opposite of what might have been expected is not a fluke. Russia has been cleaning up its banking sector in a major way for years, and that’s undoubtedly a good thing. But Russia also planted a bomb under the banking sector back in December 2014, when it jacked up interest rates in response to a massive currency collapse. Then, when rates began coming down, the Central Bank encouraged financial institutions to maintain above-market rates for savers in order to keep their balance-sheets stable. This was, most likely, the best stop-gap available at the time, but it was in truth a bailout delayed, not a bailout avoided.

If this were just question of allowing the Finance Ministry and Central Bank — both as professional as they come — to manage Russia’s banking sector in a calm and collected manner, that would be fine. But as I’ve written before, there is more to it than that. What we have been seeing in Russia ever since the economy began to deteriorate has been a shifting of financial power from modernized, independent and entrepreneurial sectors to the state-dominated resource sector. In that respect, the loss of Otkrytie is neither a new phenomenon nor even a turning point, but a further reminder of the kind of re-basing that has taken place across the Russian economy over the last few years.

As Russia returns to growth, then, it will do so on a foundation indistinguishable from the state.




Game On

If you thought Russia’s presidential election was going to be held in March 2018, you were wrong. The voting began today.

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Virtual Reality

Every couple of days, the Twitter account for the King’s Russia Institute gets a ping, thanks to this tweet sent by the Russian Embassy in London back in early January:

There are two puzzles here. First, why did @RussianEmbassy – which has become something of a legend in the world of diplomatic trolling – copy the @KingsRussia into their tweet? Second, why are people still retweeting and replying to it, almost two months later? I’m no closer to solving the first question, but I might have discovered the answer to the second. (I’m not even going to try to figure out the significance of that frog.)

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Not This Time


This has to stop now.

The thousands of Americans who have come out to say a resounding ‘no’ to the Trump regime’s attack on hundreds of thousands of Muslim travelers do not need me to tell them that. The shame instilled in me by my government is truly surpassed only by the pride I feel in my compatriots. They seem intuitively to understand the nature of what we’re dealing with.

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Fake News & Bad Research

Part of the problem with the whole debate around the role of ‘fake news’ in contemporary politics is that we sometimes have difficulty distinguishing between purposeful fakery and sloppy reporting: thus, Trump can claim Clinton got 3-5 million ‘illegal’ votes while lambasting reporters who mistakenly wrote that he had removed the bust of Martin Luther King Jr from the Oval Office.

Unfortunately, the problem is even worse in the world of academic research: while careful reading and a bit of thought can often uncover bad or disingenuous work, most non-academic readers – including a lot of the journalists who report on it – don’t go to those lengths.

A case in point is a Bloomberg article making the rounds, citing academic research purporting to prove that fake news had little or no effect on the US election.  I’ll leave the journalist out of it (though he should know better, about which more later) and focus instead on the study, by economists Hunt Allcott and Mathew Gentzkow. It’s timely, important and methodologically advanced. It’s also spectacularly bad social science.

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Step Away from Trump’s Head

Let’s get one thing straight: No one knows what Donald Trump is thinking. Not Tom Friedman. Not David Rothkopf. Not even me.

No one knows what Donald Trump is thinking because there is no way to know what he is thinking. There is no window into his head, no wire from his brain to the wonkosphere. His tweets, scrolling by like a rolling commentary under his wobbly little chins, are not necessarily the same as his thoughts. Which doesn’t stop the likes of Friedman and Rothkopf from trying to convince us all that they – and only they – know what Trump is really thinking, and because we don’t know what they know, we’ll never get this administration right.

Sound familiar? It should: I wrote exactly the same thing about Vladimir Putin two years ago. Word for word, save for the names and the chins and the Twitter. Paragraph three of that old post works pretty well, too:

Here’s the thing: Whenever the world (or some part of it) thinks it has a grip on what Trump is thinking, he’ll surprise us. Not because he’s so inscrutable, but because there’s profit in it. And that’s my point: we cannot possibly know what he’s thinking, but we do know what his incentives are. And if we stop deluding ourselves with ad hoc psychoanalysis, we might actually figure something out.

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Tomorrow, it happens.

Tomorrow, the reality towards which we have been building for so many weeks, so many months, so many years, is consummated. Tomorrow, that man takes office. Takes charge. Takes over.

And then tomorrow will end, and we’ll be one day closer to the time when he will, finally, be gone.

Between tomorrow and that other day – perhaps four years into the future, or eight, or less – something else will happen. Between tomorrow and that other day, we will have to make a decision about who we are. What we’re doing. Where we’re going.

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