The “Virtual Mafia State” Strikes Back.
Posted by democratist on February 7, 2011
7th February 2010,
When the Russian chapter of the Wikileaks “cablegate” story broke in early December last year, Democratist suggested that one of its key impacts was to highlight the claims made by Transparency International (TI) and others about the truly outrageous extent of corruption throughout the country (at all levels) in the Western press, and that this would have a significant subsequent negative impact on the flow of the much hoped-for western FDI into Russia over the coming months. We concluded that, “Russia surely now has the worst PR of any major country on earth.”
Well, looks like the “virtual mafia state” tag has really struck home. Why else would the FSB (directed from the top, no doubt) have chosen to expel Luke Harding, the Guardian journalist who authored the story (and many others) under his own name, when he finally attempted to return to Russia earlier today, other than because the subsequent bad press has not only had a negative impact on Russia’s image (which wasn’t in great shape anyway), but also significantly contributed to a fall in investment into Russia?
It appears that we were correct in our suggestion that Russia’s superficially dynamic image of a few years back has become so toxic that many major western companies are seeking to avoid the country like the plague, fearing an unending nightmare of kickbacks and extortion, and that Harding’s role in publicizing Russia’s failings was an important element in his final expulsion.
It remains to be seen what effect the economic trends implied by these most recent moves will have on the long-term health of Medvedev’s “liberalization” project; they could either spur it on, or encourage a return to the “petrostate” model of development Russia followed prior to 2008 if the oil price continues to rise.
It will be interesting to see what the next batch of official FDI figures reveal (and whether they match up with independent estimates).