Sunday, January 13, 2008

Who is the hedgehog?

This is not a "substantive" post.

Just made some minor changes to the blog. One of them is the new blog title image.

I was so thrilled to find this photoshopped picture totally by accident (again, thanks to the magic power of internet.) It is a panorama view of south part of Moscow taken from the main building of Moscow State University. One can see in the center of the picture the Lizhniki stadium, the main stadium for the Moscow Olympics.

What's amazing about the picture is of course the addition of the lovely hedgehog on the right. For those of you who don't know, this is the cartoon figure in one of the most famous Soviet (maybe even world) animations "Hedgehog in the fog". The presence of this lovely little animal, seemingly wandering in a foggy scene of Moscow, is truly amazing and that creates an effect that I was looking for when thinking about the blog title image. Very happy to find this picture.

BTW, Yuri Norstein, the director of "Hedgehog in the fog", made another masterpiece animation "Tale of tales". Highly recommend.

I will return to more "serious" topics next time.

Thursday, January 3, 2008

Sitting on the flow

Kommersant's Dmitry Butrin had another interesting piece on the recent trend to form state corporations in Russia (Russian version, English version). What caught my attention are the two sentences at the beginning.

... authorities have realized the age-old dream of Russian business: never mind property, just give us a cash flow.

... Russian business of the first wave (we hope there will be more waves) always agreed with the principle that Boris Berezovsky is said to have given voice to in the romantic past of the early days of privatization. For creating a medium for business in Russia, property is less important than control over the cash flow, he said. The Russian business term “sitting on the flow” dates from that era.

What surprises me is Berezovsky's conclusion that "property is less important than control over the cash flow." because this statement seems to run directly against another seemingly widely held statement that in current day Russia: control is much more important than cash flow.

For a very selfish reason, I do hope the latter is correct. In that case, my dissertation would make more sense or at least the questions I raise there would make more sense. For whatever reason, if control is extremely decisive, then one would make all efforts to control the assets, even through the very extreme (or primitive) way of "physical control". That then would account for all those various extreme forms of gaining physical control of the factory/facilities observed in many corporate property scandals in Russia. That can also (partially) explain why the market for assets does not clear easily. For example, those outsiders who try to buy into a firm can't offer a price satisfactory to the current insiders because for the latter control is way much "pricier" than the cash flow the outsiders are willing to offer, hence a source of conflict among different market players.

However, after reading Butrin's piece, I feel that these two seemingly contradictory conclusions might be two sides of the same coin. What Berezovsky meant in the "romantic past of the early days of privatization" is that given one's property (or ownership) is not secured anyway it is better to count on cash flow: at least you can get something. What the second observation argues is that when one's cash flow rights are not secured enough, it is better to try to hold on to what you have (even in a physical sense) as hard as possible. The gist is that both of the observations are the results of the lack of security of ownership/property by an external, neutral agency, be it state or mafia. Each of these two observations may well apply to a different set of market players or the same set of players at different time spots (e.g. Khodorkovsky's Youkos before and after 1998).

I am not totally sure whether my interpretation is correct. Your comments are particularly welcome.

As to why control is so important in the Russian context, I will leave it for another post.

Tuesday, January 1, 2008

Russia in 2007 and New Year speech

Here is Russia Today's pick of the most memorable events in Russia in 2007.

Russia's landmark events in 2007

It seems that I have covered all the events there in my column articles, except for the successful bid for 2014 Olympics. Not a bad job! (I mean for Russia Today.)

Here is
Putin's New Year Eve speech
(with English dubbing)

To watch/listen to the top leader's speech right before the New Year on TV has become a yearly ritual in Russia since the late Soviet time (Brezhnev made the first New Year televised address to the nation in 1970) . As far as I know, very few actually pay attention to what the leader is saying in the speech. When I searched for Putin's speech for this year on Youtube I actually incidentally clicked the link to his speech last New Year Eve and didn't find that out until he mentioned "2006": his facial features and his tone are almost the same in these two videos. One can say the same for the content of these speeches. I don't want to be too harsh on the speech-writer(s): it's not an easy job to figure out something totally original and exciting for such speeches.

Of course, there was something unexpected for at least one such speech: Yeltsin's last speech on the 1999-2000 New Year Eve. He not only surprised all by announcing his early resignation, but also unexpectedly (with some rare candidness for politicians) made an apology for the mistakes he made during his administration of the country.
"I want to beg forgiveness for your dreams that never came true. And also I would like to beg forgiveness not to have justified your hopes." (Source: BBC)
A touching moment. Unfortunately, I haven't located online a video of that speech yet.

Anyway, ritual is ritual.

Happy New Year!