Kamil Galeev

Kamil Galeev

14-03-2022

17:57

Crisis and Jubilee: What's happening in Russia? Russia's spiralling into a deep crisis. It was visible before the war but now it's rapidly accelerating. And every major crisis entails mass redistribution of power, property and status. Because crisis is essentially a Jubilee🧵

In Ancient Israel every 49th year was the year of Jubilee. Jubilee was a huge managed default. Debts forgiven, indentured servants released. The land cleared of debt and returned to previous owners. Jubilee annuls any obligations you took previously, you don't owe anything now

The most obvious element of Jubilee are huge queues before Russian ATMs standing day and night. Previously, you could delude yourself that your bank deposits are what you own. Nope. It's what you borrowed to the bank. This loan can be defaulted on. Especially during the Jubilee

It's more obvious with bank deposits, but honestly cash - is also a loan. It's something they they owe you, and what they absolutely can default on. For example, in form of hyperinflation. Normal inflation is a gradual default, a hyperinflation - a rapid one. The true Jubilee

This Jubilee happens on all levels. Oligarchs' assets frozen, Russian central bank assets frozen. It's the annulment of obligations to both Russian "state" and "private" actors. Arrest of mega yachts are just the most visible element of a general trend - seize what you can seize

It goes both ways though. Recently friends asked if they should take ruble loans with 30-45% interest rate. I said – YES, DO IT! Inflation will be *way* higher and Jubilee will cleanse your debt. Borrow rubles, convert them to usd, cash out and store. Jubilee is a time to borrow

During the Jubilee, the best strategy is to borrow. Take obligations in order to establish a direct grasp over *some* resources. Then convert them to sth robust. Resources will remain yours while obligations will be cleansed by the Jubilee. Like hyperinflation destroys your debt

Now let's think in higher orders. Financial capital is debt, it is the obligation. It can be defaulted on. The same however goes for other types of capital. Social, political, administrative. They all can be borrowed and all can be defaulted on. Especially during the Jubilee

Imagine a dictator has appointed a provincial governor. Thus governor has borrowed power. It's a debt the governor owes. He'll be closely checked and controlled by his creditor. And yet, the Jubilee allows the debtor to default. Keep what you borrowed, annul the loan. Break free

During the Soviet Jubilee of 1989-1991 this was happening on all levels. Whoever borrowed some direct control over resources, privatised them. They cashed out and defaulted on their loans. State-appointed CEOs became oligarchs. Governors became kings in their provinces. And so on

Jubilee is asymmetrical. Annulling the debt, it benefits a debtor and hurts a creditor. That's true both for financial and for political capital. One crucial concept to understand dynamics of centralised systems is the distinction between the barons and the courtiers

Courtiers are those who manage central power and give orders by its name. The chancellery of the king, the presidential administration, the company's hqs. These are central authorities and modern communications allow them to increase their power beyond any reasonable limits

Barons are in direct control over resources. They can be provincial governors, CEOs, generals. They borrowed power from the center but can't use their leverage fully, because they're closely controlled by the courtiers. The court must punish them often just to keep them at check

Now what's happening during the Jubilee? Barons borrowed their power from the courtiers. But debts as фтн obligations are annulled. Which means the power of the centre is diminishing rapidly. Courtiers used to be everything and will become nothing. Barons - the other way around

Consider the fall of the USSR. The Communist Party was the "leading force", the supreme power that checked other institutions. It was above everything and everyone. It was the sole creditor of power, everyone else borrowng their authority from the Party and being their instrument

For decades, the Party career was the best in any sense, giving the access to the source of the supreme power - influence at the court. But in late 1980s the Trumpets of Jubilee started blowing. And the more streetsmart of nomenklatura realised they need to cash out immediately

Consider Matvienko. She had been doing Party career for many years. But when the Trumpets of Jubilee were blown she cashed it out and transferred to the diplomatic service asap. Party was the creditor of power and credit is cleansed by the Jubilee. You need to cash out right now

Less than in a year USSR collapsed and Party lost any influence. Its debtors who borrowed their power from it defaulted. Dumber members of nomenklatura were fucked, while streetsmarter ones who established direct grasp over *some* resources before the Jubilee, were doing greatly

Now Russia is spiralling into the new Jubilee. Finance-wise, that's obvious. Sounds crazy, but since Russian invasion Ukrainian hryvna has been rapidly appreciating against ruble. In expectation of Jubilee people get rid of Russian currency asap. Monetary loans will be cleansed

The same is true for the loans of power. During the Jubilee it's better to be a power debtor, to have some direct control over valuable resources which give you leverage than to be a power creditor. So the crisis inverts the normal relations between the courtiers and the barons

That goes on every level. Typically politicians and bureaucrats in any country will at least try to cash out their administrative leverage for monetary benefits and it's delusionary to expect otherwise. And yet, can they do it and how effectively? It depends

Before Putin's rise, baronial power in Russia was very high. Local, municipal, regional authorities had vast autonomy in how they administered their territories. Even the lowest administrative apparatus - of towns and rural districts - could totally feed off the local economy

Previously there were collectable local taxes. Many towns, districts, regions filled their coffers through taxation and thus were independent from Moscow. Since 2000, Putin has been centralising all collectable taxes as the federal revenue. Regions (blue) were turned to beggars

That was facilitated by the corporate centralisation. Previously there were many smaller companies registered and paying taxes in regions. Over time they were destroyed or consumed by huge federal corporations registered and paying taxes in Moscow. All money flowed to Moscow now

Before corporate centralisation local authorities could easily feed off local businesses. Smaller officials could impose tribute on shops, street markets, gas stations, larger ones - on regional banks. They also did a lot of street magic with logistics feeding off the trade flows

In Putin's era these feeding opportunities (кормления) were taken from barons and given to courtiers. Especially to Putin's friends. Consider the history of "Platon" system. For decades truckers operated through shady schemes and their businesses were not transparent to Kremlin

This lack of transparency was unacceptable. So, in 2015 government introduced the Platon electronic toll system (Платон). It was administered by Igor Rotenberg - the son of Putin's close friend. Basically, every trucker had to pay a toll per every mile to this private enterprise

Here you see a Platon control car that checks the road so that not a single trucker can pass without paying cash to the Putin's pal. Everything should be transparent, so that courtiers would feed off the goods flows directly, bypassing barons

Of course truckers protested, of course there were huge strikes and of course it was all suppressed. Some went out of the business, considering it unprofitable now while other submitted and paid the toll to Rotenberg per every mile

Platon story shows how courtiers centralise money flows and rent seeking opportunities, which in Russia are called much more directly - as "feeding" opportunities, in their own hands, at the pretext of increasing financial transparency. There's not much rent left for the barons

The last significant rent seeking opportunity for barons was residential construction. It needs so many permits, so difficult to proceed, that even town mayors could profit lavishly. Buy agricultural land, reclassify it as the land for housing, sell to developers at huge profit

Nowadays however, funding of up to 80% of residential development projects in Russia is centralised at Moscow banks, which are directly controlled by the courtiers. They pressure businesses to direct money flows through their banks, so that rent goes to them and not to the barons

For his entire career, Putin has been centralising power and money flows in Moscow. Being a baron was less and less lucrative, both regarding formal and informal incomes. Paradoxically, Kremlin imposed on regions as many social and welfare obligations as possible

There were two simultaneous trends. On the one hand, Kremlin was reducing their income flows with every year, taking everything to the federal budget. On the other hand, expenses on education, medicine, much of welfare were being delegated from Kremlin to the regional budgets

Regions became heavily indebted and about 20 of them were put on the brink of default. That created anger. Consider the Russian media headlines: "Russia forgave loans to Africa/Kyrgyzstan, Mozambique/Venezuela" "Ministry of Finance designed sanctions for indebted regions"

This wasn't stupidity or altruism towards foreign countries. It was a deliberate policy. Forgiving the loans to Mozambique is ok, because Mozambique elite is not a political threat to Kremlin. Meanwhile Novgorod elite absolutely can be a political threat and needs to be weakened

Kremlin launched the war on regions not because it hated them but because courtiers iaimed to keep the regional barons weak. In their crusade against barons courtiers inflicted huge socio-economic damage on regions. It wasn't a goal but rather a collateral damage in the elite war

Being a baron is quite dangerous. Governor of Khabarovsk Furgal pretended he doesn't understand he needs to do electoral fraud and allowed Putin to get a low vote count in his regions. Overall, 10 governors were arrested since 2014 when confrontation with the West escalated

The case of Furgal is especially interesting because he was unusually popular and political motivation of his imprisonment too obvious. Mass protests in Khabarovsk region continued through 2020-2021, but in vain. Of course nobody would release him

Much of Russian politics of recent twenty years becomes more understandable if we consider this constant tension between courtiers and barons. The former fear the latter and consider them as potential threat. They'll wage on them even if it damages on a country as a whole

The bill of Klishas-Krasheninnikov recently confirmed by the Russian Parliament was the apotheosis of the courtiers' crusade. Called as the 'Law on Public Power' it effectively eliminated the last remnants of federalism imposing direct rule by the federal centre

To start with, all state employees in Russia, including elected politicians from the regional and city legislative assemblies now will become federal civil servants. They'll get privileges but also obligations and will be directly subordinate to the unelected staffers in Moscow

Furthermore, since 2000 Putin has been increasing the number of regional cabinet positions that had to be confirmed by Moscow. This new bill suggests of them need to be confirmed. So even if the governor is elected, all of his cabinet will be comprised by the appointees of Moscow

The bill is huge and has many vague propositions which I'm not sure how to even interpret. For example, it might abolish the richest oil producing regions at all. But the message is clear - building a unified vertical of power, stripping regions and municipalities of any autonomy

Of course the bill was confirmed by the Russian parliament. And yet, very unusually many voiced their opposition to it. Many regions tried to introduce amendments: especially richer northern ones, like Yakutia. They have resources and thus naturally value their autonomy more.

While many cities and regions objected to the law, Tatarstan was the most active. It introduced about 30 of 100 amendments. Its legislative assembly voted against the law unanimously. Even more surprisingly, a bunch of Tatarstan MPs in Russian parliament voted against, too

That's highly surprising. In Russian parliament you are not supposed to vote against what've been introduced by the higher ups. You can only rubberstamp. You shouldn't even discuss the bills. As Gryzlov, the leader of United Russia told "Parliament is not a place for discussions"

There were two interesting aspects of this vote. First, six Tatarstan MPs from the United Russia party, voted against the law. And they were not punished. United Russia declared it will not be disciplining or excluding them. Government wanted to proceed lowkey minimising the fuzz

Interestingly, supposedly "liberal" and "oppositional" Moscow establishment supported the bill. Consider this headline by oppositional Meduza, criticising Tatarstan for resisting it. It's edited to be more politically correct. Original headline was "Don't they want too much?"

If you think about it, this article looks surrealistic. It's chastising the region for disobeying the "federal law". Meanwhile they had to include the following disclaimer labelling them as the "foreign agent" in accordance with the same Russian federal law. Isn't it beautiful?

So an oppositional media which is persecuted by the federal centre, deplatformed, labelled as foreign agents, still absolutely 100% supports this federal crusade against regions. They're enraged at the thought that barons dare to even object to the courtiers. Why?

Because they want to become courtiers themselves. Moscow liberal and oppositional establishment is glorified all over the West as heroes. They indeed are persecuted and deplatformed. But what they fight for is absolute, unlimited power. Power without any checks

Consider Navalny, the oppositional leader, who is almost deified as the political martyr. After he decided to start the contest for power, Navalny had to become much more hypocritical and politically correct. Otherwise, he would hardly find much support in the West

Previously however, Navalny attended "Russian marches" - ethnonationalist manifestations. They use different tricolour because they consider Russian official flag to be too inclusive. Russian marches were the main magnets for Neo-Nazis and militant right wings

Consider his blogposts from a few years ago "Belarussian language is something magic. It looks like their script was invented by хачи [ethnic slur against the browns from Central Asia and Caucasus] and падонки [an internet subculture, purposefully breaking Russian orthography]"

When Russian invaded Georgia in 2008 Navalny suggested full blockade of Georgia and deporting all Georgian citizens from Russia He called Georgians as "rodents" - in Russian it sounds similar, грызуны vs грузины and lamented Russians can't just launch a rocket on their army HQ

Navalny's debate skills are quite impressive: "Damn, you are a faggot. Faggot and also a Jew [he used slur жид instead of neutral еврей]. Faggots are being banned here. Not speaking about the Jews"

Now Navalny is in jail and suffers a lot. Do I think he is a political prisoner? Yes, absolutely. Would I support giving him total, unlimited power over a huge country without any checks? Not quite. Honestly I don't see how his ethnonationalist agenda is different from Putin's

You may ask, how can we know that Navalny didn't change? May be we should judge him by his recent actions (=when he made every effort to become respectable in the West). Idk. May be he did change. We'll truly know only if he gets unlimited power and will be free to do whatever

Navalny isn't an exception. He is the rule. Much of liberal oppositional establishment in Moscow fights against current courtiers. But they also fight to replace them and take their place with all of the power it brings. That's why idea of someone resisting Kremlin enrages them

Let's sum up. Much of current Russian political dynamics is understandable in the context of conflict between the courtiers and the barons. In the normal times courtiers will centralise all the power and all the cash flows in their hands

Courtiers naturally mistrusts and fear the barons. They'll use every tool they have to weaken them. The war they wage on barons inflicts huge socio economic damage and is a major reason of economic depression of much of Russia. That's collateral losses in the elite conflict

That's why Kremlin increases regional expenses and cuts their revenues. They must be always on the brink of collapse so barons couldn't challenge the courtiers. That's why Russia forgives loans to Mozambique but not to Novgorod. Novgorod barons are a threat, and must be weakened

In the peacetime, Russian geography, economy, institutions, favour the courtiers over barons. Putinism is simply the courtiers winning. However, the Jubilee entails a major redistribution of power, property and status. Anyone with some control over resources may try to default

These conflicts and negotiations regarding the power debit and credit are very visible now. Consider the following. Kadyrov sent a lot of his troops to Ukraine and was PRmaxing their engagement. He declared he went there personally and posted a video from a "basement near Kyiv"

And yet, Kremlin didn't confirm it. When asked about Kadyrov's visit to Ukraine, Putin's press-secretary Peskov told: "No, we don't have such information" It's unlikely that Kadyrov went there without Kremlin knowing anything. More probably, Peskov just accused Kadyrov of lying

Kadyrov not only sent his troops to Chechnya, but launched a massive PR campaign propagandising them. Chechen fighters are putting Chechen flags on Ukrainian military bases. They're cheering Kadyrov and his father. Kadyrov clearly strived for military glory and fame of conquest



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