Praskoveysky distillery

Russia has a long and proud drinking culture; according to the chronicle of its founding, the main reason it chose Christianity over Islam was the latter’s prohibition of booze. Vodka has been distilled there since at least the 12^th century. As of the time of writing, it is the world’s largest spirits market by volume – 2.4 billion liters in 2009, according to the Scotch Whisky Association (SWA), of which more than 80% accrues to domestic vodka brands. Whiskey’s share is only 0.5%; but it is growing at explosive rates, and whiskey now account for two thirds of all spirits imports. Indigenous distilleries are sprouting up and conditions appear favorable for this growth to continue.

In the Soviet period, the only spirits available to most citizens were vodka and cognac from the Caucasus – a point illustrated by Erkin Tuzmukhamedov, one of Russia’s leading sommeliers and author of whiskey books, who got his first taste of Scotch by taking sips on the sly from the bottles his diplomat father brought home from abroad. This changed with the opening up of markets in the early 1990’s. Whiskey consumption has seen tremendous growth; the SWA says exports to Russia have risen from £5m to £31m in the past decade.

Though starting from a low base in comparison with the biggest Scotch markets, such as the US’ £499m, growth is expected to remain double-digit well into the future for three main reasons. First, rising incomes means Russians can afford to develop more refined tastes. Second, the growing segment of female drinkers favors spirits that can be sipped. Third,  the government plans to quadruple the currently low excise duties on spirits by 2014, thus narrowing the cost differential between vodkas and whiskeys. All this implies growth for blends, which dominate the Russian whiskey market – for a time, Tuzmukhamedov was Dewar’s chief promoter in Russia – and very strong growth for single malts.

Reactions to inquiries about indigenous Russian producers was dismissive, their current presence being described as “fairly negligible.” There are some distilleries that have laid down their own malts, but are currently maturing and won’t be ready for years. One example is Viski Kizlyarskoe, a Daghestan-based brand that in 2008 laid down test run trials of all major types of whiskey – malt, grain, and blended – and is building a $7m distillery.

Another is the Praskoveysky distillery based in Stavropol, which has been producing wine and cognac since 1898. In 2008, it expanded into whiskey, starting up production in oak barrels on Irish technology. The factory manager, Boris Pakhunov, claims that it has a better nose than the Jameson that inspired his brand, and the honey tones are sharper.

The first samples from both are coming to market just now, and once in mass production prices are expected to range 300 to 400 rubles ($11-15) – an economy class alternative to vodka and the most popular imported brands in this category, such as White Horse or Famous Grouse.

Later, in May 2010, the Urzhum spirits distillery announced the launch of its own line, headed by “Officer’s Club.” Another increasingly popular approach is to just import whiskeys from abroad and bottle one’s own blends, as done by the Kaliningrad-based distiller Alliance 1892 in February of this year. It’s product, “Seven Yards”, went on sale this May, costing $18 per bottle.

So it’s a beginning of sorts, if not an overly impressive one thus far. Nonetheless, as whiskey’s following grows, this could change. According to Tuzmukhamedov, there are whiskey appreciation societies in the biggest cities like Moscow, St. Petersburg, and Yekaterinburg: “I’ve met ordinary guys who save their money to go on holiday to Islay – that’s not affectation, that’s appreciation of the drink.” He should know, as he runs Dewar’s new whiskey academy in Moscow, whose one month courses have become very popular with restaurateurs.

Whither now? Tuzmukhamedov is very skeptical that whiskey will ever displace vodka as Russia’s national drink, because vodka has the weight of tradition behind it and goes much better with the staples of the Russian diet. Though there is a lot of room for growth remaining, he expects it to eventually level off. Russian whiskeys are likely to become more prevalent on the Russian market, and some may even be exported. There is an antecedent for this in Baltika beer, which began brewing in 1990 on foreign techniques and can now be found in Western supermarkets.

That said, there is still a long way to go. According to Tamerlan Paragulgov, the director of an alcohol standards agency, many of the fledgling Russian whiskey makers still have fairly obsolete marketing standards; case in point, the Praskoveysky winery and cognac distillery is still run in a leisurely and paternalistic fashion as a Soviet-style enterprise. Another problem, according to Tuzmukhamedov, is that it is very hard for a small producer like Praskoveysky to establish itself in competition against the big names.

The experiments of today’s Russian whiskey producers may garner interest among whiskey circles in Russia, but they will have to get more serious about marketing and raising capital if their products are to break out into the wider market.

See more

• Whiskey gains a following in a Vodka world (Roland Oliphant). Thanks also to him for pointing to some useful articles and whiskey experts.
• Online interview with Erkin Tuzmukhamedov #1.
• Online interview with Erkin Tuzmukhamedov #2.
• From Russia with Laphroaig as vodka lovers turn to Scotch (Martyn McLaughlin).
• Prakoveya from Stavropol: Who needs Russian Whisky? (Maria Kopteva).

The above photo, part of a photo report by Ridus, shows the Anti-Orange protest at Poklonnaya Gora in Moscow on February 4th. Does that look like 35,000 people to you, let alone 20,000 or 15,000?Because those were the most commonly cited figures in the Western media, in those cases where they ignored them altogether (The Guardian) or even tried passing them off as a ANTI-Putin rallies (e.g. Le Parisien).

Let’s now try to get at the real figures. Attendance at Bolotnaya was respectable; not as high, probably, as the 75,000 or so at Prospekt Sakharova in December, but the photographer Ilya Varlamov’s estimate of 50,000-70,000 is eminently reasonable (reasonable estimates of turnout at the original December 10 rally there range from 30,000 to 60,000). Ridus estimates a lower 25,000-30,000. But regardless of whether the real numbers were closer to 25,000 or 70,000, it is certainly well short of the organizers’ figure of 120,000 that was typically uncritically quoted in the Western media. For it’s not quite dying away, but Navalny’s promise to get one million people onto the streets wasn’t fulfilled either.

Friendship of peoples at Poklonnaya.

RIA has an app that tries to measure rally attendance by calculating areas and crowd densities. They estimate 53,600 for Bolotnaya and 117,600 for Poklonnaya. Back in December, Novaya Gazeta estimated 102,000 for Prospekt Sakharova counting not maximum attendance but the total number of people who arrived and left; the range for max attendance is 60,000-80,000, i.e. 60%-80% of the total figure. The figures quoted by the police on this basis for Poklonnaya is 140,000; applying the same adjustment gives max attendance of 85,000-115,000.

The other two Meetings on February 4th were complete flops. Zhirinovsky got 1000-3000 people, while the liberals-only Meeting with Borovoy and Novodvorskaya and co. got 150-200 despite that they had permission for 30,000.

Anyone, no matter how you spin it, it’s undeniable that the pro-Putin Meeting enjoyed substantially higher attendance than the Bolotnaya one – at least half as much again, and probably double or even triple. So no wonder that the liberals, abetted by the Western and the Russian liberal media, are trying to discredit the former by saying they were all state workers bussed in on the threat of firing. There are anecdotal accounts of this and there’s little doubt some are valid. But do they account for the majority? Probably not. From the videos, they do not look like an unenthusiastic bunch; the speakers enjoy many cheers, and chants of “Glory to Russia” are eagerly taken up.

Ignoring, misrepresenting, and trying to discredit the massive rallies in support for Putin, and in Moscow of all places – the bastion of liberalism in Russia – isn’t going to make it all go away. But it is going to make his supporters angry and all the more determined to vote for him one month hence.

Others odds and ends.

• Ad for the Anti-Orange Meeting
• Dystopian scenario of what will happen to Russia if Putin vanishes. EDIT: New link because the democratic heroes at Google decided to censor the old one.
• Kurginyan, main organizer of Anti-Orange meeting, speaking at Poklonnaya.
• Aleksandr Dugin.
• A man at the Poklonnaya protest explains his reasons for going. And another one.
• Now on to patriotic music instead of all that political nonsense.
• There IS occasional impartial piece in the Western media that covers both sides, such as this and this, but they are the exceptions that prove the rule.
• Doku Umarov, the leader of the terrorist Caucasus Emirate, comes out in support of the liberal malcontents. With friends like this…
• LGBT activist allowed to speak at the St.-Petersburg, roundly booed by intensely homophobic liberal audience. Maybe they they and the Islamic radicals deserve each other?
• Navalny goes over to the dark side. (Look at the hand)))
• True Russian patriots.
• Prokhorov: “I came to the Meeting as a citizen, not as a Presidential candidate.” (pay attention to the photo)
• So it’s true. Latte-sipping liberalsactually do dislike Putin! Almost half of them would vote for Prokhorov.
• List of political prisoners opposition demands pardon: Khodorkovsky and Lebedev (who’s surprised?), Arakcheev (waiting for ECHR ruling under chargers of murdering Chechen civilians), and Osipova (political activist whose 10 year sentence for drugs actually is suspicious).
• Non-related: Did Berezovsky poison Badri, the Georgian tycoon? And rendition a US lawyer for torture in Belarus?

Update: Channel 1 has a balanced report on the Poklonnaya meeting. Look at 1:10 and on for confirmation of the 100,000-scale of the meeting.

(h/t Alexandre Latsa)

Many people claim that China’s educational success is superficial, arguing that although it has achieved good literacy figures, standards – especially in the poor rural areas that have been neglected by the state during the reform period – are very low. This is not a minority view. The problem is that for proof they cite figures such as the average number of years of schooling or secondary enrollment ratios - which are still substantially inferior to those of developed nations – and assume that they directly correlate to the human capital generated among Chinese youth. This is a flawed approach because it doesn’t take into account the quality of schooling. Though not without its problems, by far the most objective method of assessing that is to look at international standardized tests in literacy, numeracy, and science. The most comprehensive such study is PISA, and it tells a radically different story.

The big problem, until recently, was that there was no internationalized student testing data for either China or India. (There was data for cities like Hong Kong and Shanghai, but it was not very useful because they are hardly representative of China). An alternative approach was to compare national IQ’s, in which China usually scored 100-105 and India scored in the low 80′s. But this method has methodological flaws because the IQ tests aren’t consistent across countries. (This, incidentally, also makes this approach a punching bag for PC enforcers who can’t bear to entertain the possibility of differing IQ’s across national and ethnic groups).

In contrast, the PISA tests are standardized, and – barring a few quibbles – largely free of the consistency and sampling problems that tend to plague international IQ comparisons. And they confirm what the IQ data has long hinted at: At least among schoolchildren close to graduation, the Chinese are simply far, far smarter than their Indian counterparts (necessary caveat: As measured by these tests).

I already covered China, so I will simply quote in extenso from an older post. I emphasize the most important part in bold.

“As regular blog readers know, I think that educational capital and more broadly average IQ levels are one of the key – and frequently under-appreciated due to political correctness – determinants of economic development and whether or not convergence to developed country levels is even possible. Its much higher educational capital is one of the key reasons why I think China will continue doing much better than India in development, regardless of its “democratic deficit.” However, many people argue that China’s human capital must actually be quite low, because it doesn’t spend much on education, resources are bare in the provinces, statistical fudging under unaccountable governors, etc.

The recent results from the international standardized PISA tests in math, reading and science will make this an increasingly untenable position. Shanghai got by far the best results out of all the OECD countries (never mind the developing ones). Now while you might (rightly) argue Shanghai draws much of the elite of the Yangtze river delta, the Financial Times has more: “Citing further, as-yet unpublished OECD research, Mr Schleicher said: “We have actually done Pisa in 12 of the provinces in China. Even in some of the very poor areas you get performance close to the OECD average.””

Since countries like the US and France get scores “close to the OECD average”, this means that the workforces soon to be entering China’s economy, even from its poorest regions, will be no less skilled than those of leading Western economies (note too that the numbers of Chinese university graduates are soaring). And with China’s massive population, four times bigger than America’s, its road to superpowerdom must be all but guaranteed. [AK adds: I.e., because under market economies, development - as proxied by GDP per capita - tends to converge to a level commensurate with the human capital level of the country in question].”

Also in December 2011, but unnoticed by myself until now, PISA released additional information on nine countries*. Critically, this included two Indian provinces, Tamil Nadu and Himachal Pradesh. How did they do relative to China?

On math proficiency, Tamil Nadu scored 351 and Himachal Pradesh scored 338. On science, they scored 348 and 325, respectively. In both cases, they were at ROCK BOTTOM of the league table of the 74 sampled countries together with Kyrgyzstan. Literally no other country did worse.

In comparison, even the poorest Chinese regions performed close to the OECD average of about 500, putting them in the same rank as the bottom half of the industrialized countries such as Russia, Italy, or the United States (high 400′s); but well above other prominent developing states such as Brazil, Mexico, and Malaysia (high 300′s-low 400′s). The better off Chinese regions will have presumably done better, perhaps similar to Australia or Japan, while the most developed Chinese region, Shanghai, blew every other country out of the water with a mean score of 600 in math and 575 in science.

Note that Tamil Nadu is fairly developed by Indian standards, while Himachal Pradesh is about average. One simply shudders to imagine what the results would be in a poor state such as Bihar or Uttar Pradesh. China and India are both truly exceptional in educational attainment for dynamically developing emerging markets, but only the former is exceptional in a good way.

Many Indians like to see themselves as equal competitors to China, and are encouraged in their endeavour by gushing Western editorials and Tom Friedman drones who praise their few islands of programming prowess – in reality, much of which is actually pretty low-level stuff – and widespread knowledge of the English language (which makes India a good destination for call centers but not much else), while ignoring the various aspects of Indian life – the caste system, malnutrition, stupendously bad schools – that are holding them back. The low quality of Indians human capital reveals the “demographic dividend” that India is supposed to enjoy in the coming decades as the wild fantasies of what Sailer rightly calls ”Davos Man craziness at its craziest.” A large cohort of young people is worse than useless when most of them are functionally illiterate and innumerate; instead of fostering well-compensated jobs that drive productivity forwards, they will form reservoirs of poverty and potential instability.

Instead of buying into their own rhetoric of a “India shining”, Indians would be better served by focusing on the nitty gritty of bringing childhood malnutrition DOWN to Sub-Saharan African levels, achieving the life expectancy of late Maoist China, and moving up at least to the level of a Mexico or Moldova in numeracy and science skills. Because as long as India’s human capital remains at the bottom of the global league tables so will the prosperity of its citizens.

* One other thing I noted in amusement is Georgia’s horrendous performance on the PISA: 379 in math, 373 in science. From being one of the most literate and urbane nationalities in the USSR to hanging out with Indonesia and Panama near the bottom of the international numeracy league tables, Georgians have sure come a long way under Saakashvili.

Now this is just one example, and the market for one consumer durable good isn’t going to be perfectly reflective of the overall situation. The crises in the PIGS may be temporarily dissuading nervous consumers from making large purchases; another factor to consider is that their overall car fleets are bigger and newer than Russia’s, so there is not as much of an incentive to get new cars. And taking into account a much larger basket of goods, the World Bank estimates Russia’s GDP per capita (at PPP) to be $20,000, which is still considerably behind $25,000 in Portugal and the Czech Republic, and $32,000 in Spain.

What’s all the better is that the current improvements in Russia’s relative position are happening against the background of extremely benign debt dynamics; aggregate debt is only 74% of Russian GDP, compared to 184% in China, 280% in the US, and more than 300% in most of Europe. This leaves it with a great deal of fiscal and monetary wiggle room in the event of a renewed global crisis that is no longer available to the developed world or lauded emerging markets such as Brazil, India, Poland, Turkey, and Poland. While the affluence gap between Russia and the most developed nations remains large it is nonetheless being steadily and sustainably closed.

I have decided to strip out these elements and focus only on indicators that can be objectively measured, i.e. the numbers of killed and imprisoned journalists set against the size of the national journalistic pool. Using figures from the Committee to Protect Journalists, I tally the numbers of journalist murders from the past three years – to reflect the fact that journalist killings can have a chilling effect years into the future – and the numbers of imprisoned journalists imprisoned now multiplied by six, so that their aggregate weighting is twice that of journalist killings. The reason I do that is because truly authoritarian regimes typically have a tight clampdown on monopoly violence, including on the various independent criminal elements (e.g. drug cartels, rogue intelligence officers); as such, direct killings of journalists tends to be rare. On the other hand, due to the threat of imprisonment and other harassment, independent journalism is severely circumscribed if at all existent. But instead of just going with this figure, I further adjust it to the size of the national journalist pool, because – for obvious reasons – a few journalist killings in a country the size of India is tragic, but nonetheless qualitatively different from the same number of killings in a country with a far smaller population like Honduras where there is a far bigger chance those journalists would know each other. The resulting figure is the Journalism Security Index; a narrower (but far more objective) measure than the Press Freedom Index, which – by necessity – relies on fallible expert judgments on unquantifiable measures such as self-censorship and journalistic independence.

Scroll down to the bottom to see the full results of the Journalism Security Index 2012.

Some of the rankings will come as a surprise to many people, so let me address those. First, we see a few countries where press freedoms are certainly heavily circumscribed, such as Saudi Arabia, Cuba, and Vietnam, get perfect scores. This reveals the major weakness of the index – it measures not so much press freedom as journalistic security (hence its name). Second, and tied in with this, it only measures the most severe things that can happen to a journalism, i.e. killing or imprisonment. It has no way of accounting for things such as Hungary’s new media laws, the rumored weekly meetings of Russia’s federal TV channel heads with Kremlin officials, or the 42 journalists and counting arrested at Occupy events in the US. Suffice to say that a score of zero on the JSI most certainly does not mean said country is an oasis of press freedom.

This is also not to mention that the CPJ has a fairly rigorous methodology for listing a journalist as imprisoned – it has to be political. For instance, while Turkey “only” has 7 journalists listed as imprisoned, other estimates put the number at more than 70. However, according to Yavuz Baydar, a similar methodology may give a figure of 17 imprisoned journalists in the UK for their part in the News of the World phone hacking scandal. Obviously, a line has to be drawn somewhere.

Third, there may be surprise that Russia is ranked somewhere in the middle, whereas it is near the bottom on most other indices of press freedom. The explanation is fairly simple. Russia does not currently have any imprisoned journalists by the CPJ’s reckoning, and whereas a total of four journalist deaths are recorded for the years 2009-2011, this is both a significant decrease on earlier years and not a catastrophic situation when set against its 143 million strong population (see Gordon Hahn’s Repression of Journalism in Russia in Comparative Perspective from December 2009) or – to be even fairer – the vast size of its journalistic pool, which at 102,300 newspaper journalists is the largest in the world.

On the converse, countries such as Bahrain, Syria, and Afghanistan do really badly because even a small number of journalist killings and imprisonments translate into very high scores because of the hugely circumscribed size of the journalistic pools in those countries. Some may dispute that Israel’s ranking is absurdly low. If so, please take it up with the CPJ. It lists 7 imprisoned journalists; now of them, 3 are under Hamas arrest, so I subtracted them from the Israeli total and gave them to Palestine. Nonetheless, that still leaves 4 Palestinian journalists that are under Israeli imprisonment, all of them without charge.

(In contrast, the sole Russian journalist listed as imprisoned in recent years was one Boris Stomakhin for “inciting hatred” and “making public calls for extremist activity”, writing things such as, “Let tens of new Chechen snipers take their positions in the mountain ridges and the city ruins and let hundreds, thousands of aggressors fall under righteous bullets! No mercy! Death to the Russian occupiers! … The Chechens have the full moral right to bomb everything they want in Russia.” One may dispute the ethics of imprisoning someone for what is, in the end, still an opinion; but one has to note that prosecutions take place in the UK (Samina Malik) and the US (Jubair Ahmad) for essentially equivalent activities).

Whereas countries like Brazil and Mexico have essentially free media, they are – as are Russia and much of the rest of the former Soviet republics – terrorized by the generally high background violence of their societies. In the former, this issue is particularly problematic, as Brazil has a much lower aggregate press pool than Russia; therefore, its three murders in the past three years exert more of a relative effect than Russia’s four.

Please make sure to note the caveats and methodological clarifications that follow below the following table.

Journalism Security Index 2012

Methodological clarifications: Impr. figures taken from CPJ‘s 2011 Prison Census; Kill. figures taken from CPJ’s numbers of killed journalists from 2009 to 2011; #pop. taken from Wikipedia’s list of official statistics on national populations; #journ. taken from UN data on the numbers of journalists per country.

JSI(p) is the Journalism Security Index calculated only relative to the population; it is more accurate, in narrow terms, than the JSI calculated relative to numbers of journalists (see below why), but suffers from the fact that it underestimates the risks of working in very populous and poor countries where journalists are low as a share of the population and even a few killings can have a chilling effect on their general community.

JSI is the official Journalism Security Index, calculated by (1) tallying the numbers of journalist murders from 2009-2011 and the numbers of imprisoned journalists imprisoned in 2011 multiplied by six so that the aggregate weighting of every imprisoned journalist is twice that of a killed journalist, (2) dividing by the numbers of newspaper journalists in that country, and (3) multiplying that figure by 10,000 to get convenient numbers for the index.

There are two very important caveats to be made about the UN data on journalists. First, it only measures the numbers of newspaper journalists, not the total number of journalists and media workers. As such, it should be viewed as a rough proxy. In some regions, newspapers have a much higher profile relative to TV (e.g. East-Central Europe, Russia, Scandinavia); in others, it is the opposite (e.g. Latin America). Adjusting for this would, for example, narrow the gap between in the JSI between Russia and Brazil. Second, far from all countries have data; many of them are fairly important ones in terms of press freedom issues (e.g. Iran, Israel, Mexico, Bahrain). To fix this, I just extrapolated the per capita figures from other countries with similar literacy and socio-cultural profiles, e.g. I equalized Iran and Mexico with Turkey; Israel and Belarus with Russia; Bahrain with Qatar, and calculated their numbers of journalists by multiplying their population by their estimated journalists per capita figures. Needless to say, this is an extremely inexact method, and may be off by several factors. For that reason, countries with no concrete data from the UN source are marked in italics; note that for them, the JSI may be off by several factors (though most likely not by an order of magnitude).

The explanation: Reconciling democracy with liberalism is really hard: since people are illiberal by nature, there is usually a trade-off between the two. The more frequent result is Semi-Liberal Democracy (describes most “Western” countries), which in turn can degenerate into a full-blown Illiberal Democracy (as did Russia around 1993, or the US and Hungary around 2011). Oligarchy is meant in the sense of rule by a few. It should be noted that some legislation ostensibly enacted to protect the public interest, such as libel laws, surveillance laws and anti-terrorist laws – in practice serve more to undermine liberalism. When they go too far, there appear Semi-Authoritarian states of permanent emergency. In the lower rung, Authoritarianism consolidates all political power unto the state (Semi-Authoritarianism tries to, but isn’t as successful). Totalitarianism extends the political realm over all spheres of life, bringing us into the realm of (Viereck’s) Metapolitics.

Liberal Democracy

• Iceland – In the wake of its post-financial crisis constitutional reforms, this small country may claim to have the most direct democracy on Earth.
• Netherlands
• California (state government)
• Germany
• Finland
• Sweden – Not as high as it might have been due to the politically-motivated prosecution of Assange.
• Spain
• Czech Republic

Semi-Liberal Democracy (tends to be corrupted by moneyed interests and/or other influential interest groups)

• Canada – A good democracy, but a whiff of a downwards trend under Harper. ↓
• Belgium
• Italy – Not a personalistic regime once Berlusconi left, but not helped by the fact that an appointed technocrat now runs it.
• Portugal
• Australia
• Brazil - Arbitrary power structures; extra-judicial murders.
• France - Paternalistic; corporatist surveillance state; discrimination against minorities. ↓
• Chile
• Estonia – Has excellent Internet democracy ideas, but is hampered by discrimination against Russophone minorities.
• Japan - Paternalistic; ultra-high conviction rates; no gun rights; but ceased being an (effectively) one-party state with recent election of DJP. ↑
• Bulgaria
• Mexico – Drug cartels challenge to the state may lead to curtailment of freedom. ↓
• Switzerland – The last canton only gave women the right to vote in the early 1990′s, and the banning of minarets restricts religious freedom.
• UK - Corporatist surveillance state; repressive libel & PC laws, regulations; no gun rights; strongly trending to Illiberal Democracy. ↓↓
• India - Strong tradition of debate & power diffusion, marred by caste inequalities, privilege, political cliquishness, bottom-up free speech restrictions.
• South Korea - Paternalistic; surveillance state; restrictive regulations, freedom of speech restrictions.
• Poland
• Indonesia
• Latvia
• Colombia – Pursued illiberal policies vs. FARC, but transitioned to a Semi-Liberal Democracy with recent transfer of power. ↑
• Romania ↓
• Argentina – New sweeping media laws bring Argentina close to the bottom of the Semi-Liberal Democracy rankings. ↓
• Ukraine - In “anarchic stasis” since independence; arbitrary power structures; recently trending to Illiberal Democracy. ↓

Illiberal Democracy (tends to feature oligarchies and personalism)

• USA - Highest prison population; corporatist surveillance state; runs transnational Gulag; increasingly arbitrary power structures; despite strong freedom of speech protections and surviving separation of powers, it can no longer be considered a Semi-Liberal Democracy after its formal legalization of indefinite detention under the NDAA 2012. ↓
• Armenia
• Israel - Severe national security-related civil liberties restrictions; growing influence of settler & fundamentalist agendas over the traditional Zionist foundation; severe new NGO laws, and discrimination against Palestinians makes Israel a downwards-trending Illiberal Democracy. ↓
• Hungary – The recent Constitutional reforms in Hungary have effectively ended separation of powers, constrained the media, and established a basis for indefinite one-party dominance. It is now the only EU member to qualify as an Illiberal Democracy. ↓↓
• Russia - Super-presidentialism with no real separation of powers; arbitrary power structures; surveillance state; and as recently shown, elections are subject to moderate fraud. However, new reforms (e.g. opening up of the political space), technical measures (e.g. web cameras at polling stations) and permits for opposition protests at the end of 2011 portend an upwards trend.  ↑
• Venezuela – Increasingly illiberal, especially as regards media laws. ↓
• Thailand
• Georgia - Arbitrary power structures; opposition protests broken up; main opposition candidate to Saakashvili stripped of Georgian citizenship.
• Algeria
• Turkey – Maintains severe restrictions on free speech (a country that has the world’s largest number of imprisoned journalists, many under bizarre conspiracy charges, can’t really be any kind of liberal democracy); ethnic discrimination; arbitrary power structures; paradoxically, both authoritarian & liberal principles strengthening under influence of Gulenists & AKP. ↓

Semi-Authoritarianism (tends to feature permanent states of emergency)

• Egypt – Despite the revolutionary upheaval, the military retains wide influence and shoots at protesters in Cairo; this cannot be a democratic state of affairs. The future is uncertain. ?
• Libya
• Pakistan
• Singapore - Overt political repression; repressive laws (esp. on libel); surveillance state.
• Kazakhstan - Overt political repression; Nazarbayev is Caesar.
• Azerbaijan – Overt political repression; Aliyev is Caesar.
• Belarus - Elections completely falsified; overt political repression, and getting worse. ↓
• Iraq - ↓
• Iran - Overt political repression; though Velayat-e faqih has embedded democratic elements (under formal clerical “guardianship), in recent years, the system is strongly trending to Authoritarianism as the IRGC clan tries to wrestle the old clerics out of power. ↓

Authoritarianism

• Vietnam
• China – Overt political repression; no national elections (but exist at village level & in some municipalities); the Internet is restricted by the “Great Firewall”, but print & online getting freer to discuss issues unrelated to a few unacceptable topics (e.g. Communist Party hegemony, Tiananmen, etc); may implement new form of political model of “deliberative dictatorship”; trending towards Semi-Authoritarianism. ↑
• Cuba - Overt political repression; pervasive Internet & media censorship.
• Uzbekistan
• Syria
• Saudi Arabia - Overt political repression; pervasive censorship; very repressive laws; political Islam permeated everyday life, esp. in regard to women’s rights; one law for the Saud family, another for the rest.

Totalitarianism (the realm of metapolitics)

• North Korea – Not much to say here.

But at what point can a country be considered to have definitively retreated from liberal democracy? After all, though much of the above are common to authoritarian states, they are sometimes present in liberal democracies too; and besides, the US does have some mitigating features (e.g. strong freedom of speech provisions that are relatively free from PC and libel laws, unlike in the UK and much of Europe).

The argument can be made that the US ceased being a liberal democracy on December 31, 2011 – the day the NDAA 2012 was signed into law by Obama. This legalizes the indefinite detention of US citizens by the military on the mere suspicion that the suspect is “associated with” terrorism or committed “belligerent acts” against the US or its allies. Bearing in mind the incredibly broad and flexible definition of what “terrorism” actually means, this could potentially encompass any number of anti-elite groups: Anonymous, Wikileaks, Occupy Wall Street, the Tea Party, etc.

Even if we are to (very generously) assume that this law will only be conscientiously wielded against genuine terrorists, there is room for doubt that indefinite detention is compatible with liberal democracy. After all, no other countries commonly considered to be liberal democracies – so far as I’m aware – have indefinite detention powers as sweeping as those contained in the NDAA. Even many countries considered to be illiberal democracies (or outright dictatorships), such as Russia, don’t have anything like it. And, of course, this assumption of good intentions is pollyannaish, given that the government has given no cause for trust whatsoever in this matter (what with the FBI setting up terrorist plots, the numerous cases of wrongful detention at Guantanamo, etc).

Of course, this is not to say that in a few years the US will come to resemble a tinpot dictatorship. Some historical perspective is necessary. Indefinite detention and imprisonment without trial aren’t unprecedented: See the 1950 McCarran Act, introduced at the height of the red scare, didn’t exactly lead to authoritarianism (though the US at the time was a great deal more illiberal that many care to admit). Furthermore, it’s also important to note that the NDAA legislation merely codifies powers that the executive has both claimed (through the AUMF) and exercised for the past decade, and besides it is only building on past efforts such as the flopped Enemy Belligerent Act of 2010; so one can argue that the change is not so abrupt as to constitute a crossing-the-Rubicon type of event.

Perhaps. Then again, there are caveats to that viewpoint too. The 1950′s-60′s were a period of fast growth and prosperity, so there was no real base for authoritarian regression. The prospects for the next decade don’t look anywhere near as good; in fact, they are downright dismal, and may well see some combination of high inflation and default. And democracy tends to wane in days of depression. Faced with challenges from the far left and the far right, the elites may find it necessary to consolidate a profoundly different social order, a post-constitutional Third Republic of sorts: One that is fiscally and socially conservative, and more authoritarian than the current one. To do this they will need to enlist the support of the billionaires; as far as this is concerned, the Wall Street bailouts, Citizens United and corporate citizenship, SOPA/PIPA, etc. may well be only harbingers of what is yet to come.

But this is all speculation. In the here and now, the fact of the matter is that the US now has national security laws on its books far more draconian than those of any other country considered to be a liberal democracy; indeed, I doubt you would find anything similar even in countries whose democracies are often criticized, such as Russia, Venezuela, or now Hungary. These laws apply to “terrorists”, a grouping every bit as ephemeral and ill-defined as “counter-revolutionaries” under Article 58 of the Stalinist lawcode. I have no choice but to lower the US from a “semi-liberal democracy” to an “illiberal democracy” in this year’s edition of the Karlin Freedom Index.

First, there is the distinct (but wrong) impression that the mass of the literary “intelligentsia” is behind the anti-Putin protests, because of the visibility of high-profile writers like Boris Akunin, who recently wrote a rather rambling op-ed for the NYT. Lukyanenko demonstrates that this is not the case.

Second, I personally agree with almost all of it, save for a few parts like citing Switzerland or the UK as a good democracies. But on the whole I can vouch for practically every word. And as a science fiction writer in whose worlds the lines between good and evil are frequently blurred – if they exist at all – he brings a much needed “middle ground” position to the rigidly pro-Kremlin/anti-Kremlin binary that dominates this discourse.

I Will Vote For Putin

I didn’t want to, but in the end I had to make a comment. For every so often agitated young people would run into my LJ blog, asking me the following types of question: “Where were you during the Meetings [for Free Elections]? At home? That means you voted for the swindlers and thieves! Are you not ashamed of yourself? Your friends Kaganov, Eksler, Bykov were out there, making rhetorical history and laughing and waving placards… How could you look them in the eyes now? If everything in your life is fine, you’d be for Putin, right? You consider this regime to be ideal? What, you mean to say, that we don’t have anyone else qualified to be President?”

So an explanation is warranted.

I voted for the Communists. I did it with a pinched nose, for today’s Communist Party has no relation to communists, to the people, and unfortunately, even to politics in general. In the past I voted for the Union of Right Forces, but with equal amounts of horror and aversion. But the defining weirdness of my thoroughly anti-democratic and anti-liberal conscience consists of my belief in everyone’s right to think differently. And I want the Parliament to have representatives of the right, and the left, and centrists, and swindlers and thieves too, as they too make up a considerable share of our society – why bother denying this? As our most ardent supporters of democracy insist on denying others the right to their own opinion, I will sing my own song and do everything I can to make “a thousand flowers bloom.” I am mostly satisfied with the result – yes, of course there were violations (yeah, as if they didn’t exist earlier… You remember how Yeltsin won? Nothing bothered you back then?), but the Duma did become more diverse. (And I, by the way, don’t call for my political opponents to be hanged in the squares, stripped of  their rights and exiled to Magadan. Unlike you, my dear liberals…)

And the fact that Leo, Alex, and Dima went to the Meetings does not in the slightest interfere with my appreciation of their books. More power to them. And I consider them sane people too.

I am always touched by the argument: “Well, life is good for you – so that’s why you support the current regime?” This is usually said in an outraged and pressured tone. I mean, how could this be – why are those people, who aren’t bothered by the government, why are they of all things not protesting against it? The binomial theory! The great mystery of the universe! The great Russian pastime – cutting off the nose to spite the face! Yes, I will actually vote for the current government, as long as I believe that it is right for me. And you will vote against it, as long as you believe that it is bad for you. And this is all right and proper. Is this not the very democracy that you want?

So moving on, does this mean I consider the current regime ideal?

What a profoundly intellectual conclusion! I do not consider the sausage that I buy in a supermarket to be ideal. I don’t consider my books to be ideal. I consider our entire world to be far from ideal. So what should I do then – refrain from eating, from writing books, and from living in general? If you are not the Dark Lord, you will always find mistakes in the universe. We have no shortage of fools both in power and under their power. We have many swindlers, thieves, idlers, and rascals. But here is one crucial elaboration – these people are everywhere, in all spheres of life. And their percentage shares among construction workers, medics, and politicians are all broadly similar. The world isn’t perfect, you know?  People too. Have you forgotten how thirty years ago, the entire country voted in unison for the Block of Communists and Non-Party Members. I remember. Have you forgotten, how twenty years ago schoolboys dreamed of becoming hitmen, and schoolgirls – whores? Better by far that they dream of becoming bureaucrats! Satellites are falling, the Bulava can’t take off? And did you know how many satellites burned up on their way to orbit under the USSR, and how many unsuccessful missile launches there were before things got righted? So the country is dying out? Look at the charts – at how life expectancy has changed in the past few years. Few births? Look at the figures for Europe. Problems with immigrants? Take a walk in London or Paris (which, by the way, is now possible, as was not the case under the USSR).

Do you want the level of democracy they have in Switzerland or the UK? Learn a bit of history, people. How many years did they spend building their modern democracies and modern relations of people to the state? How many people perished in the process? Yes, it would be wonderful to wave a magic wand and… but I don’t have one. I’m afraid Putin doesn’t have one either. There, in Tajikistan yesterday they killed… Father Frost! As a socially and religiously alien element. Do you assume we aren’t Tajikistan? In some respects, we completely are. At least with respect to our attitudes towards differing viewpoints. The entire LJ blogosphere continually demonstrates this.

Not long ago, I was still wondering who to vote for in the Presidential elections. And, you know what, you guys helped me make my choice – with your meetings, provocative placards and loud slogans. I will vote for Putin.

Because we really do NOT have another politician, capable of leading the country.

Because the slogans of everyone else are either naked populism, or facsimiles of Putin’s slogans, or unorganized set of contradictory promises.

Because the “opposition leaders” plaster each other with obscenities, and would tear each other apart if the current government were to fall apart. Do you expect Krylov to get along with Yavlinsky? That liberals will make friends with Communists and nationalists? My friends, this isn’t even funny… All the current protesting opposition marches under the banner of destruction and mutual hatred… Yes, and you they also hold cheap…

Because Zyuganov would flee to Switzerland in panic if you were to vote him in.
Because Mironov, though a good man, is not a national leader.
Because Nemtsov – well, that’s not even funny.
Because Zhirinovsky – ‘twould be fun, if the country had a “Save Game” button.
Because Prokhorov is a businessman, and a country can’t be managed like a mining company.
Because Navalny is a person, who works for another country. Not for ours.
Because there is no other. Hasn’t appeared yet.

So is Putin responsible for all that? That he hasn’t raised a successor?

But you didn’t like Medvedev either. “Too liberal”; “too scheming”; “iPhone President”; “innovation”, this and that…

Putin, by the way, was put forwards by Yeltsin. You don’t like the result? So what do you want, that Putin himself could put forward someone, whom you consider worthy? Well then it would be but a continuation of Putin’s policies.

The opposition, in your opinion, should be raised by the acting regime? Don’t take the mickey… Politics aren’t the Olympic Games. Politicians grow notwithstanding the current government. And let them grow, and good luck to them. Let Navalny and Chirikova organize a party, write a program and come to power.

What, they wouldn’t be allowed in? LOL. United Russia had its share of the vote inflated, but probably by not more than 5 percent. United Russia is the party off the majority, that is a fact. So what if they got a few percentage points less – they’d have joined a coalition with Fair Russia. And as if that’d have made a great difference to the political picture in Russia…

Here are transparent ballot boxes, web cams at the elections, parties of 500 people… the mass media are controlled? Again, LOL. There are opposition media everywhere. Do you want to have the first word on TV? Then work for it, fight for it. If you get the majority – you’ll have this all. And if not – well, my apologies…

You have the right to vote. And to monitor the vote. And it’s entirely possible, that on that day – I too will go have a look. So that you, my passionate and fiery friends, don’t flood the streets will your bulletins. Because whenever one side says, that it’s all pure and white, that side I don’t trust in advance.

… And about what is happening now in the world, how one country after another is ruined in the name of democracy and maintaining the status quo, I won’t even talk about that. Either you see it and understand it, or you are naive beyond all measure. And over the next several years, while the world is undergoing this HUGE crisis, I want to see a leader in power who is capable of bold moves. And ready to defend our country.

So I will go and vote for Putin. For the next six years he has my trust on credit. And you go and vote for your candidates. This is what is called democracy.

But magic wands and a free lunch don’t exist in this world.

In previous years, my tradition was to review the previous year before launching into new predictions. I find this boring and will now forego the exercise, though in passing I will note that many of the defining traits in 2010 - the secular rise of China and of “The Rest” more generally; political dysfunction in the US; growing fissures in Europe, in contrast to Eurasian (re)integration; the rising prominence of the Arctic - have remained dominant into this year. The major new development that neither I nor practically anyone else foresaw was the so-called “Arab Spring”, as part of a pattern of increasing political stress in many other states: Occupy Wall Street and its local branches in the West; the Meetings for Fair Elections in Russia; Wukan in China and anti-corruption protests in India. I don’t disagree with TIME’s decision to nominate The Protester as its person of the year. However, as I will argue below, the nature of protest and instability is radically different in all these regions. I will finish up by reviewing the accuracy of my 2011 predictions from last year.

1. There is little doubt that Putin will comfortably win the Presidential elections in the first round. The last December VCIOM poll implies he will get about 60%. So assuming there is no major movement in political tectonics in the last three months – and there’s no evidence for thinking that may be the case, as there are tentative signs that Putin’s popularity has began to recover in the last few weeks from its post-elections nadir. Due to the energized political situation, turnout will probably be higher than than in the 2008 elections – which will benefit Putin because of his greater support among passive voters. I do think efforts will be made to crack down on fraud so as to avoid a PR and legitimacy crisis, so that its extent will fall from perhaps 5%-7% in the 2011 Duma elections to maybe 2%-3% (fraud in places like the ethnic republics are more endemic than in, say, Moscow, and will be difficult to expunge); this will counterbalance the advantage Putin will get from a higher turnout. So that’s my prediction for March: Putin wins in the first round with 60%, followed by perennially second-place Zyuganov at 15%-20%, Zhirinovsky with 10%, and Sergey Mironov, Mikhail Prokhorov and Grigory Yavlinsky with a combined 10% or so. If Prokhorov and Yavlinsky aren’t registered to participate, then Putin’s first round victory will probably be more like 65%.

2. I will also go ahead and say that I do not expect the Meetings For Fair Elections to make headway. Despite the much bigger publicity surrounding the second protest at Prospekt Sakharova, attendance there was only marginally higher than at Bolotnaya (for calculations see here). So the revolutionary momentum was barely maintained in Moscow, but flopped everywhere else in the country – as the Medvedev administration responded with what is, in retrospect, a well balanced set of concessions and subtle ridicule. Navalny, the key person holding together the disparate ideological currents swirling about in these Meetings, is not gaining ground; his potential voters are at most 1% of the Russian electorate. And there is no other person in the “non-systemic opposition” with anywhere near his political appeal. There will be further Meetings, the biggest of which – with perhaps as many as 150,000 people – will be the one immediately after Putin’s first round victory; there will be the usual (implausibly large) claims of 15-20% fraud from the usual suspects in the liberal opposition and Western media. But if the authorities do their homework – i.e. refrain from violence against peaceful protesters, and successfully reduce fraud levels (e.g. with the help of web cameras) – the movement should die away. As I pointed out in my article BRIC’s of Stability, the economic situation in Russia – featuring 4.8% GDP growth in Q3 2011 – is at the moment simply not conductive to an Occupy Wall Street movement, let alone the more violent and desperate revolts wracking parts of the Arab world.

3. Many commentators are beginning to voice the unspeakable: The possible (or inevitable) disintegration of the Eurozone. I disagree. I am almost certain that the Euro will survive as a currency this year and for that matter to 2020 too. But many other things will change. The crisis afflicting Europe is far more cultural-political than it is economic; in aggregate terms, the US, Britain and Japan are ALL fiscally worse off than the Eurozone. The main problem afflicting the latter is that it suffers from a geographic and cultural rift between the North and South that is politically unbridgeable.

The costs of debt service for Greece, Portugal, Italy, and Spain are all quickly becoming unsustainable. They cannot devalue, like they would have done before the Euro; nor is Germany prepared to countenance massive fiscal transfers. The result is the prospect of austerity and recession as far as the eye can see (note that all these countries also have rapidly aging populations that will exert increasing pressure on their finances into the indefinite future). Meanwhile, “core Europe” – above all, Germany – benefits as its superior competitiveness allows it to dominate European markets for manufactured goods and the coffers of its shaky banking system are replenished by Southern payments on their sovereign debt.

The only way to resolve this contradiction is through a full-fledged fiscal union, with big longterm transfers from the North to the South. However, the best the Eurocrats have been able to come up with is a stricter version of Maastricht mandating limited budget deficits and debt reduction that, in practice, translates into unenforceable demands for permanent austerity.  This is not a sustainable arrangement. In Greece, the Far Left is leading the socialists in the run-up to the April elections; should they win, it is hard to see the country continuing on its present course. On the other side of the spectrum, the Fidesz Party under Viktor Orbán in Hungary appears to be mimicking United Russia in building a “managed democracy” that will ensure its dominance for at least the next decade; in the wake of its public divorce with the ECB and the IMF, it is hard to imagine how it will be able to maintain deep integration with Europe for much longer. (In general, I think the events in Hungary are very interesting and probably a harbinger of what is to come in many more European countries in the 2010′s; I am planning to make a post on this soon).

Maybe not in 2012, but in the longer term it is becoming likely that the future Europe will be multi-tier (not multi-speed). The common economic space will probably continue growing, eventually merging with the Eurasian Union now coalescing in the east. However, many countries will drop out of the Eurozone and/or deeper integration for the foreseeable future – the UK is obvious (or at least England, should Scotland separate in the next few years); so too will Italy (again, if it remains united), Greece, the Iberian peninsula, and Hungary. The “core”, that is German industrial muscle married to Benelux and France (with its far healthier demography), may in the long-term start acquiring a truly federal character with a Euro and a single fiscal policy. But specifically for 2012, I expect Greece to drop out of the Eurozone (either voluntarily, or kicked out if it starts printing Euros independently, as the former Soviet republics did with rubles as Moscow’s central control dissipated). The other PIGS may straggle through the year, but they too will follow Greece eventually.

I expect a deep recession at the European level, possibly touching on depression (more than 10% GDP decline) in some countries.

4. How will Russia’s economy fare? A lot will depend on European and global events, but arguably it is better placed than it was in 2008. That said, this time I am far more cautious about my own predictions; back then, I swallowed the rhetoric about it being an “island of stability” and got burned for it (in terms of pride, not money, thankfully). So feel free to adjust this to the downside.

• The major cause of the steep Russian recession of 2008-2009 wasn’t so much the oil price collapse but the sharp withdrawal of cheap Western credit from the Russian market. Russian banks and industrial groups had gotten used to taking out short-term loans to rollover their debts and were paralyzed by their sudden withdrawal. These practices have declined since. Now, short-term debts held by those institutions have halved relative to their peak levels in 2008; and Russia is now a net capital exporter.
• I assume this makes Russia far less dependent on global financial flows. Though some analysts use the loaded term “capital flight” to describe Russia’s capital export, I don’t think it’s fair because the vast bulk of this “flight” actually consists of Russian daughters of Western banking groups recapitalizing their mothers in Western Europe, and Russians banks and industrial groups buying up assets and infrastructure in East-Central Europe.
• The 2008 crisis was a global financial crisis; at least *for now*, it looks like a European sovereign debt crisis (though I don’t deny that it may well translate into a global financial crisis further down the line). There are few safe harbors. Russia may not be one of them but it’s difficult to say what is nowadays. US Treasuries, despite the huge fiscal problems there? Gold?
• Political risks? The Presidential elections are in March, so if a second crisis does come to Russia, it will be too late to really affect the political situation.
• Despite the “imminent” euro-apocalypse, I notice that the oil price has barely budged. This is almost certainly because of severe upwards pressure on the oil price from depletion (i.e. “peak oil”) and long-term commodity investors. I think these factors will prevent oil prices from ever plumbing the depths they briefly reached in early 2009. So despite the increases in social and military spending, I don’t see Russia’s budget going massively into the red.
• What is a problem (as the last crisis showed) is that the collapse in imports following a ruble depreciation can, despite its directly positive effect on GDP, be overwhelmed by knock-on effects on the retail sector. On the other hand, it’s still worth noting that the dollar-ruble ratio is now 32, a far cry from what it reached at the peak of the Russia bubble in 2008 when it was at 23. Will the drop now be anywhere near as steep? Probably not, as there’s less room for it fall.
• A great deal depends on what happens on China. I happen to think that its debt problems are overstated and that it still has the fiscal firepower to power through a second global crisis, which should also help keep Russia and the other commodity BRIC’s like Brazil afloat. But if this impression is wrong, then the consequences will be more serious.

So I think that, despite my bad call last time, Russia’s position really is quite a lot more stable this time round. If the Eurozone starts fraying at the margins and falls into deep recession, as I expect, then Russia will probably go down with them, but this time any collapse is unlikely to be as deep or prolonged as in 2008-2009.

5. Largely unnoticed, as of the beginning of this year, Russia, Belarus, and Kazakhstan became a common economic space with free movement of capital, goods, and labor. Putin has also made Eurasian (re)integration one of the cornerstones of his Presidential campaign. I expect 2012 will be the year in which Ukraine joins the Eurasian common economic space. EU membership is beginning to lose its shine; despite that, Yanukovych was still rebuffed this December on the Association Agreement due to his government’s prosecution of Yulia Tymoshenko. Ukraine can only afford to pay Russia’s steep prices for gas for one year at most without IMF help, and I doubt it will be forthcoming. Russia itself is willing to sit back and play hardball. It is in this atmosphere that Ukraine will hold its parliamentary elections in October. If the Party of Regions does well, by fair means or foul, it is not impossible to imagine a scenario in which accusations of vote rigging and protests force Yanukovych to turn to Eurasia (as did Lukashenko after the 2010 elections).

6. Russia’s demography. I expect births to remain steady or fall slightly (regardless of the secular trend towards an increasing TFR, the aging of the big 1980′s female cohort is finally starting to make itself felt). Deaths will continue to fall quite rapidly, as excise taxes on vodka – the main contributor to Russia’s high mortality rates – are slated to rise sharply after the Presidential elections.

7. Obama will probably lose to the Republican candidate, who will probably be Mitt Romney. (Much as I would prefer Ron Paul over Obama, and Obama over Romney). I have an entire post and real money devoted to this, read here.

The US may well slip back towards recession if Europe tips over in a big way. I stand by my assertion that its fiscal condition is in no way sustainable, but given that the bond vigilantes are preoccupied with Europe it should be able to ride out 2012.

8. There is a 50% (!) chance of a US military confrontation with Iran. If it’s going to be any year, 2012 will be it. And I don’t say this because of the recent headlines about Iranian war games, the downing of the US drone, or the bizarre bomb plot against the Saudi ambassador in the US, but because of structural factors that I have been harping on about for several years (read the “Geopolitical Shocks” section of my Decade Forecast for more details); factors that will make 2012 a “window of opportunity” that will only be fleetingly open.

• Despite the rhetoric, the US does not want to get involved in a showdown with Iran due to the huge disruption to oil shipping routes that will result from even an unsuccessful attempt to block of the Strait of Hormuz. BUT…
• While a nuclear Iran is distasteful to the US, it is still preferable to oil prices spiking up into the high triple digits. But for Israel it is a more existential issue. Netanyahu, in particular, is a hardliner on this issue.
• The US has withdrawn its troops from Iraq. In 2010, there were rumors that the US had made it clear to Israel that if it flew planes over Iraq to bomb Iran they would be fired upon. This threat (if it existed) is no longer actual.
• The US finished the development of a next-generation bunker-busting MOP last year and started taking delivery in November 2011. But the Iranians are simultaneously in a race to harden and deepen their nuclear facilities, but this program will not culminate until next year or so. If there is a time to strike in order to maximize the chances of crippling Iran’s nuclear program, it is now. It is in 2012.
• Additionally, if Europe goes really haywire, oil prices may start dropping as demand is destroyed. In this case, there will be an extra cushion for containing fallout from any Iranian attempt to block off the Strait of Hormuz.
• Critically, the US does not have to want this fight. Israel can easily force its hand by striking first. The US will be forced into following up.

The chances of an Azeri-Armenian war rise to 15% from last year’s 10%. If there is any good time for Azerbaijan to strike, it will be in the chaotic aftermath following a US strike on Iran (though the same constraints will apply as before: Aliyev’s fears of Russian retaliation).

From "The Oil Drum"

9. Though I usually predict oil price trends (with great and sustained accuracy, I might add), I will not bother doing so this year. With the global situation as unstable as it is it would be a fool’s errand. Things to consider: (1) Whither Europe? (demand destruction); (2) What effect on China and the US?; (3) the genesis of sustained oil production decline (oil megaprojects are projected to sharply fall off from this year into the indefinite future); (4) The Iranian wildcard: If played, all bets are off. But I will more or less confidently predict that global oil production in 2012 will be a definite decrease on this year.

If investing, I would go into US Treasuries (short-term) and gold to hedge against the catastrophic developments; yuan exposure (longterm secular rise) and and US CDS (potential for astounding returns once SHTF). Property is looking good in Minsk, Bulgaria, and Murmansk. Any exposure to Arctic shipping or oil & gas is great; as the sea ice melts at truly prodigious rates, the returns will be amazing. I do think the Euro will survive and eventually strengthen as the weaker countries go out, but not to the extent that I would put money on it. Otherwise, I highly agree with Eric Kraus’ investment advice.

10. China will not see a hard landing. It has its debt problems, but its momentum is unparalleled. Economists have predicted about ten of its past zero collapses.

11. Solar irradiation was still near its cyclical minimum this year, but it can only rise in the next few years; together with the ever-increasing CO2 load, it will likely make for a very warm 2012. So, more broken records in 2012. Record low sea ice extent and volume. And perhaps 100 vessels will sail the Northern Sea Route this year.

12. Tunisia is the only country of the “Arab Spring” that I expect to form a more or less moderate and secular government. According to polls, 75% of Egyptians support death for apostasy and adultery; this is not an environment in which Western liberal ideas can realistically flourish. Ergo for Libya. I can’t say I have any clue as to how Syria will turn out. Things seem strange there: Russia and Israel are ostensibly unlikely, but actually logical, allies of Assad, while the US, France, the UK, and the Gulf monarchies are trying their best to topple him. These wars are waged in the shadows.

I've got some ways to go before I reach Navalny's demagogic stature.

13. As mentioned in the intro, 2011 has been a year of protest. As I argued in BRIC’s of Stability, in countries like China, Russia, or Brazil they will remain relatively small and ineffectual. Despite greater scales and tensions, likewise in Europe (though Greece may be an exception); these are old societies, and besides they are relatively rich. They won’t have street revolutions. I do not think Occupy Wall Street has good prospects in the US. By acting outside the mainstream (as part of a “non-systemic opposition”, to borrow from Russian political parlance) it remains irrelevant – the weed smoking and poor sartorial choices of its members works against its attaining respectability – and municipalities across the US are moving to break up their camps with only a few squeaks of protest. (This despite the arrests of 36 journalists, a number that had it been associated with Russia would have cries of Stalinism splashed across Western op-ed pages). I say this as someone who is broadly sympathetic with OWS aims and has attended associated events in Berkeley.

The nature of protest in the Arab world is fundamentally different, harkening back to earlier and more dramatic times: Bread riots, not hipsters with iPhones; against cynical and corrupt dictators, not cynical and corrupt pseudo-democrats; featuring fundamental debates about reconciling democracy, liberalism and religion, as opposed to weird slogans like “Occupy first. Demands come later.” Meh.

14. The world will, of course, end on December 21, 2012.

What about the 2011 Predictions?

1) My economic predictions were basically correct: “Today I’d repeat this, but add that the risks have heightened… The obvious loci of the next big crisis are the so-called “PIGS” (Portugal, Italy, Greece, Spain), and Ireland, Belgium and Hungary.”

2) Neither the Iranian war (chance: 40%) or an Azeri-Armenian war (chance: 10%) took place. If they don’t happen in 2012, their chances of happening will begin to rapidly decline.

3) Luzhkov still hasn’t been been hit with corruption charges, but merely called forth as a witness. Wrong.

Prediction of 3.5%-5.5% growth for Russia was exactly correct (estimates now converging to 4.0%-4.5%).

With headlines this December cropping up such as “End is nigh for Russia’s ‘reset’ with US“, my old intuition that US – Russia imperial rivalry couldn’t be set aside with a mere red plastic button may have been prescient: “In foreign policy, expect relations with the US to deteriorate.”

4) Pretty much correct about the US and the UK, though I didn’t predict anything drastic or unconventional for them.

5) “Oil prices should stay at around $80-120 in 2010 and production will remain roughly stable as increased demand (from China mostly) collides with geological depletion.” Totally correct, as usual.

6) China will grow about 9.4% this year, well in line with: “China will continue growing at 8-10% per year. Their housing bubble is a non-issue; with 50% of their population still rural, it isn’t even a proper bubble, since eventually all those new, deserted apartment blocs will be occupied anyway.”

7) 2011 was the warmest La Nina year on record, so in a sense thermometers did break records this year.

“Speaking of the Arctic, as its longterm ice volume continues to plummet and sea ice extent retreats, we can expect more circumpolar shipping. I wouldn’t be surprised to see up to 10 non-stop voyages along the Northern Sea Route from Europe to China, following just one by MV Nordic Barents in 2010.” If anything, I low-balled it. 34 ships made the passage this year! Sea ice cover was the second lowest on record, and sea ice volume was the lowest. So in the broad sense, absolutely correct.

“Likewise, expect the Arctic to become a major locus of investment.” This year, plans were announced to double the capacity of the Port of Murmansk by 2015.

Wrong on the Wikileaks prediction. The insurance file was released by The Guardian’s carelessness (whose journalists, David Leigh and Luke Harding, then proceeded to mendaciously lie about it), not by Assange. And the extradition proceedings are taking far longer than expected, though my suspicions that his case is politically motivated is reinforced by US prosecutors’ apparent pressure on Bradley Manning to implicate Assange in the theft of the State Department cables.

9) On Peter’s enthusiastic reminder, I did get my Russia Presidential predictions for 2012 wrong. Or 75% wrong, to be precise, and 20% right (those were the odds that I gave for Putin’s return back in May). I did however cover it separately on a different post, here. That said, I do not think the logic I used was fundamentally flawed; many other Kremlinologists ended up in the same boat (and most didn’t hedge like I did).