Bad but Stable

Russia's fiscal system was destabilized in 2015 because of the fall in national oil revenues. The budget crisis resulted in a sustained fall in personal income, which in turn led to a fall in consumption. This in turn resulted in a decline in trade and investment. These trends were present in the majority of Russia's regions. Russia's industrial slump, on the other hand, was relatively small and did not last long, in large part due to continued investment and growth in the defense industry. The sustained industrial production, combined with the buffer of a substantial pool of foreign migrant labor, allowed for stable employment figures. Overall, the Russian economy was better able to adapt to the deterioration in conditions than most expected.     

Post-Soviet Society and Russia’s Macroeconomic Statistics

This article investigates the causes of the distorted macroeconomic statistics in the Russian Federation. It introduces alternative methods for the estimation of gross domestic product (GDP) growth, and the growth and amount of fixed capital stock, and estimates them by drawing on alternative data. Our estimates for the period of 1992–2015 differ substantially from those reported by the Russian Federal State Statistics Service (Rosstat). According to our estimates, GDP declined by 10.2 percent, which is in sharp contrast with the official estimate reporting growth of 13.4 percent. The same is found with regard to labor productivity, for which we find a decline of 30.1 percent instead of a growth of 9.2 percent. Accordingly, the full book value of fixed capital stock shrunk by 29.2 percent instead of the officially reported 50.9 percent growth. The drop in the residual value of fixed capital is estimated at 52.6 percent. The ratio of replacement to book value of fixed capital fluctuated between 4:1 in the middle of the period and 7:1 toward the end of the period. Additionally, we estimate the amount of investment in human and physical capital necessary for producing 3 percent annual GDP growth. Financing such investment would require a decline in personal consumption by about a factor of 2, with a greater part of it falling on the better off population strata. Finally, we make suggestions regarding income redistribution.     

No Room

In 2015, Russia's judicial system saw a marked expansion in the repressive activity of the law enforcement bodies. For the first time in many years, there was a significant rise in the frequency of sentences involving imprisonment, while standards of proof in the Russian courts declined. The judiciary tried to compensate for its inability to resist pressure from the law enforcement bodies through the unprecedented application of amnesty in court verdicts. Sporadically declared amnesties have become almost the only thing protecting the Russian penal system from overcrowding.     

Inertia of the State Power Hierarchy

Russian regional policy in 2015 was focused on the continued dismantling of the modest political reforms introduced during the Medvedev presidency. These changes were implemented in order to minimize the possibility of the emergence and strengthening of new independent political players, and the resultant institutional imbalance toward centralization at the regional level was merely a side effect of this effort. The net effect has been a major strengthening of the power of governors at the expense of all other political actors at the regional level. The governors' power will now only be checked by federal oversight.     

Midterm Elections and Economic Fluctuations: The Response of Voters Over Time

Abstract: Recent empirical work (Alesina and Rosenthal 1995; Erikson 1990) has shown that economic conditions may not have influenced House midterm elections since 1915. I argue that economic conditions may have influenced House midterms in the late 19th and early 20th centuries, when Congress dominated economic policy‐making, parties offered starker positions on economic issues, and national issues dominated House elections. As the 20th century progressed, congressional power over the economy declined, the parties converged over certain economic policies, and district‐level forces grew more important in elections. I test the stability of the relationship between the economy and House midterms over time, using F‐tests to show how the impact of macroeconomic conditions has changed in House midterm elections from 1872 to 1994. The results indicate that the gross national product (GNP) influenced House races before 1913 but, as the 20th century continued, the importance of the economy on House midterms declined.     

Impacts of realized volatility of oil price over foreign trade related activities in Turkey

Since 1973 oil crises, especially, small open economies have considered sudden and highly volatile movements in currencies and current account deficits. Oil prices have been breaking new historical price records since second quarter of 2014, especially from last quarter of 2015 to first quarter of 2016, which have gradually put pressure on political, geographical, and currencies risks in the Middle East and Eastern European countries. Similarly, because Turkish economy has been experienced serious current account deficit problems especially since 2002, the effect of decline in oil prices and increased volatility has been worth of investigating. For 2003M1–2015M7 period, export–import ratio, real exchange rate index, realized volatility in oil prices calculated based on monthly OPEC basket price, industrial production index, and consumer price index were collected to analyze these effects and causality relationship among these variables. Test results of unit root test with and without structural break, ARDL bound test and co-integration test were sorted out among variables. Initial result is that price volatility increases and total import decreases more sharply than total export after the decline in oil prices; thus, export–import ratio increases. Another is that there is a negative relationship between real exchange rate index and export–import ratio for real economy because of low oil substituents. As expected, inflation has an adverse effect on foreign trade ratio. Consequently, because of lower pressure of energy-induced inflation, economy policy makers will have some ability to change their priorities from inflation issue to other structural problems.     

Toward the privatization of the CIS weapons industry: The ‘collectivist’ option

The Russian military-industrial sector, like the economy generally is undergoing a turbulent transformation. Property rights, institutional arrangements, regulatory mechanisms and procurement demand are in rapid flux. In 1992 weapons production declined drastically, variously estimated between 20 and 67 percent, but arms contracts for 1993 are reported to be double last year's volume. This essay attempts to illuminate key elements of Russia's military-industrial transition by analyzing how property rights, tax and regulatory reforms of the sorts advocated by Alexsandr Isaev and Anatoly Chubais are apt to effect efficiency and military-industrial conversion. It is shown that while collectivist ownership could enhance economic efficiency, despite the usual Ward-Domar effects, Yeltsin's market reforms may not be sufficient to foster large scale military-industrial conversion.     

Could Innovations in Policing have Contributed to the New York City Crime Drop even in a Period of Declining Police Strength?: The Case of Stop,Question and Frisk as a Hot Spots Policing Strategy

Available data make it impossible to reach strong conclusions about the role of policing in the New York crime decline. Instead, we examine whether innovations implemented in New York fit with what is known about effective policing strategies. Our main analysis focuses on how the New York City Police Department (NYPD) could have continued to contribute to the crime drop over the last decade when the number of police declined significantly. We examine geographic data on crime and stop, question and frisks (SQFs) to show that SQFs are concentrated at crime hot spots. We also show that the NYPD increased these specific hot spots policing strategies despite declining numbers. In our discussion, we speculate on whether this “doing more with less” could be an explanation for the continued crime drop in New York, noting the limitations of drawing conclusions from existing data. We also raise concerns about possible backfire effects of SQF hot spots approaches.     

Editor's Introduction

The future of socialism and of the former Soviet Union is the unifying theme of this issue of Russian Politics and Law. Swedish sociologist Per Månson asks whether the historic events of 1989-91 toll the death knell of the entire era of socialism or whether they signify the end merely of the Soviet variant of an otherwise viable ideology. Any answer to this question largely depends on whether the observer regards the former Soviet Union as having been a deformation of "genuine" socialism rather than its very embodiment. Månson believes the USSR was a caricature of real socialism, which, he argues, requires democratic control of the economy, not state control. Although Månson provides an excellent summary of the contradictions of social democracy, he does not explore in depth the posited distinction between "democratic" and "state" control of the economy in a democratic state.     

Traces of Defeat

The state monopoly over television, turning it into a vehicle of total propaganda, has over the course of time changed the structure of public and information space in Russia. Although television undoubtedly continues to occupy the dominant place in the structure of information sources, trust in the quality of broadcasts has declined sharply in recent years. As a result of the regime's efforts, the public sphere has been thoroughly sterilized. Opportunities for the representation of group interests and exchange of information have grown increasingly limited. The Russian public is once again subject to an institutional fear that goes back to Soviet times, a condition that is likely to have severe and prolonged consequences.     

The roots of Russian organized crime: from old-fashioned professionals to the organized criminal groups of today

This study focuses on the development of persons and organizations in the successor states of the Soviet Union, with an emphasis on Russia. It examines the development of criminal professionalism in Russia between the seventeenth and nineteenth centuries and argues that exiling peasants to Siberia contributed to the development of a criminal underworld and the creation of a professional criminal underclass. In the early to late Soviet periods, vory v zakone, or “thieves-in-law,” evolved together with criminal groups as a means to survive in the GULAG, these criminal groups operating within the Soviet prisons and penal colonies. Inadequacies of the Soviet system of central planning led to the criminalization of the Soviet economy and the emergence of the thieves-in-law as critical players. Activities such as racketeering, robbery, and other crimes were dangerous but predominantly secondary. The roots of the Russian mafia lie in the innermost depths of the Russian shadow economy. Some of the key aspects of the post-Soviet privatization process are analyzed together with the interaction between various levels of the Russian government and organized crime groups. It is argued that the state was not corrupted by organized crime groups, but rather the organized crime groups became the state. In the new Russia, organized crime groups and corrupt government executives work together to generatea new criminal state.     

俄罗斯民法中单一制企业的主体地位及其过渡性——转型社会中“商业公营造物”的实证分析

当代俄罗斯民法中的单一制企业拥有＂商业公营造物＂的主体地位。这一具有＂过渡＂特色的主体形式是在批判继承苏联法律传统中国家企业法人制度与功能的基础上,在反思与整饬俄罗斯内部私有化时代法人制度弊端的过程中形成的,是对公营造物法人民法调整的结果。其主要价值在于既保障待私有化国家企业（一般单一制企业）资产的价值安全以及日后私有化利益公平分享,又促使不得私有化国家企业（国库企业）公共性目的优先实现,还预设了未来俄罗斯企业经济在公私领域间过渡体制。这些都使被归为向市场经济过渡性法人类型的单一制企业,因与法制化的社会经济转轨进程,乃至与后转轨时代的社会体制紧密联系,而无法被跨越与替代。这对国有企业改制进入攻坚阶段的当代中国应有参考与借鉴意义。     

Land,labor, and love: Household arrangements in nineteenth century eastern Finland—cultural heritage or socio-economic structure?

The article examines the relationship between household arrangements, marriage, and the economy in Virolahti in eastern Finland, where household forms superficially resemble the large and complex households found in Russian serf populations to the east. In Virolahti, however, the age at marriage was higher than in the Russian populations, and the choice of partner was made by the young couple, not by the parents. The absence of serfdom and corvée labor linked household size and economic needs more directly with ecology and resources than was the case within a system where the wishes of a landlord had to be taken into account. During the nineteenth century, joint-family households were replaced by stem families as the need for a large work-force diminished with the replacement of slash-and-burn agriculture with set field agriculture. Cultural influences on household forms were less important than economic factors.     

确定对俄经贸合作的主要领域,开拓俄罗斯市场

本文通过对俄罗斯市场的研究和分析,认为吉林省在开拓俄罗斯市场方面应增强紧迫感,确定经贸合作的主要领域,应在森林资源、矿产资源、农业资源、渔业资源、旅游业的开发和利用方面采取有利措施,有的放矢地开展与俄罗斯的经贸合作,提高吉林省的对外开放水平,带动国民经济增长。     

The Year 2015

Russian politics in 2015 was characterized by a continuation and strengthening of the lines of development first announced in the previous year. The chief trends in political development included a growing personalism and progressive deinstitutionalization of the Russian political system, the degradation of elections and of the judicial system, and the de facto dismantling of local self-government. The political elite underwent a radical shift in power, changing its overall configuration and enhancing the role of heads of the security forces. This coincided with the activation and strengthening of the apparatus of repression and an increase in pressure on regional elites, with continuing replacement of governors and of managers of state corporations.     

Chechnya's Right of Secession under Russian Constitutional Law

This article was written in a period of time when the escalationof the armed conflict in Northern Caucasus and particularlyin Chechnya reached the zenith of violence and unpardonablehuman slaughter.¹ Although contemporary international law doesnot accept the separatist movement's claims to create its ownstatehood, we have to look at the constitutional proceduresfor the modifications of the Fundamental Law of the RussianFederation: At the same time, the political situation afterthe dissolution of the former Soviet Union, the strong presidentialpowers in the constitutional hierarchy of executive organs,and the evident tensions between them and the Russian constitutionaltraditions have to be taken into account. The ambiguous and complicated character of the Chechen conflictis due to the fact that the Russian Federation has tried tokeep this conflict from the attention of the international communityby claiming that the Russian-Chechen conflict is an entirelyinternal matter. It is doubtful in this case if the Russianleadership, who have continued their tough policy, will finda peaceful solution to the almost ten-year armed conflict inthe region. Footnotes ^*LLM, Sofia University "Saint Kliment Ohridski", Faculty ofLaw.     

At the Turning Point to Repression

The murder of Boris Nemtsov in February 2015 means that Russian activists know that they may be killed because their public activity is not to the liking of some powerful actor. As the Kremlin has increasingly painted Russia as a country at war, it has created an attitude of emergency state legitimacy in which criticism of the authorities has become a crime. The labeling of some NGOs as foreign agents is part of a continuing trend toward increasing restrictions on civil society. Defense of traditional values and morality has been part of this trend toward increasing repression, which may result in the loss of all protections for activism and free expression.     

Secured Financing of Intellectual Property Assets and the Reform of English Personal Property Security Law

The past three decades have seen a decline in traditional industriesin the United Kingdom and there has been a relative declinein the value of physical assets to the UK economy. At the sametime, the value of intangible assets seen in intellectual propertyrights have increased considerably. As such, IP rights representimportant assets for companies and often comprise the foundationfor market dominance and continued profitability. There is astructural uncertainty in the law relating to the use of IPas collateral for the purpose of raising debt finance and thismay impact upon the survival of firms with high ratios of intangibleto tangible assets. This article considers the proper goalsfor an effective credit and security regime in IP. It examinesthe significance of the availability of collateral to the lendingdecision and also considers whether the reluctance to maximisethe use of IP as security reflects inherent difficulties whicharise out of the nature of IP as economic assets. This has implicationsfor the reform of English personal property security law andthe development of bright line priority rules associated withArticle 9 of the US Uniform Commercial Code which is often citedas a model for reform of English law.     

The Dutch Disease: evidences from Russia

The present study examines whether the Russian economy exhibits the symptoms of the Dutch Disease over the transition period begun in the early 1990s. Five warning signs have been detected, namely, a real exchange rate appreciation (1); a flourishing economic situation pushed by higher oil prices (2); a relative de-industrialisation (3); an export reduction in the non-booming-sector (4) and a real wage growth (5). The first three symptoms are estimated simultaneously in a VECM dimension. The results suggest the existence of three long-run cointegrating vectors, thus confirming the presence of the first three symptoms. Specifically, a 10% oil price shock leads to a real appreciation by 4%, a rise in GDP by 3% and a decline in domestic manufacturing production vis-à-vis service production by another 3%. Finally, a number of manufacturing exports have been crowded out and real wages have recorded important increases. To a certain extent, this corroborates the presence of symptom 4 and 5. The paper concludes that the risk of the Dutch Disease exists, and two preventive thrusts of action could be undertaken to reduce its threat: namely to diversify the economy and to hold back the appreciation of the exchange rate through targeted fiscal and monetary policies. These instruments would render Russia less vulnerable to exogenous shocks.     

Outward FDI from Central and Eastern European Countries

In Central and Eastern Europe, outward foreign direct investment (FDI) has not yet become as a prominent factor in the region’s reintegration into the world economy as trade liberalisation used to be in the early 1990s or inward foreign direct investment is currently. In the terminology of the investment–development path, with the notable exception of the Russian Federation, the region is in stage 2, whereby inward flows are still growing faster than outward flows. This article argues that a combination of the latecomer status of the region’s transnational corporations and the transition shock can explain most of that laggard situation. It hypothesises that the enlargement of the European Union (EU) would give a major push to the outward foreign direct investment flows of Central and Eastern Europe (CEE), on condition that adequate government policies to promote those investments are put in place. The impact on the investment–development path, however, is uncertain, because accession to the EU is often accompanied by a surge in foreign direct investment inflows, too. Finally, the article also looks at the options available to deal with the specific problems of the Russian Federation in relation to capital flight, including ways of regularisation and potential return to the home economy.