MOSCOW BLOG: Harding and Kraus go head-to-head in print

By bne IntelliNews October 25, 2011

bne -

Why does Russia evoke such strong emotions in writers? There seem to be only two lines ever taken when reporting on the country in print. Former Guardian Moscow correspondent Luke Harding's recently released book "Mafia state" is an archetype of one, and doyen of the investment scene Eric Kraus's charter on Russia's transformation in an upcoming book being put together by a local financial institution is a classic of the other.

So we have...

Russia is a vast cold expanse of nothingness under which lies buried one of the greatest treasures of natural resources in the world. The country is run by a cabal of KGB spies that jail their political opponents, nick private companies for personal gain and poison their enemies with radioactive sushi.


Russia is one of the richest consumer markets of any emerging economy in the world that has decupled in size over the last 10 years, returned four times as much as any other equity market, and will soon be the dominant power in Europe. And the girls are all hot.

The trouble is, both these lines are true to some extent. But the international press seems to focus almost exclusively on the former, while the "ra ra Russia" crowd (as the long-term residents in Moscow were dubbed by infamous Economist correspondent Ed Lucas) are almost universally upbeat (and rich, thanks to those spectacular returns).

There should be an engaging and difficult debate over how these contradictory lines can live simultaneously, which could help Russia take its positives, like the mineral wealth, and use them to deal with the negatives, like the rampant corruption.

However, the two camps are not even on the same page and spend their time scoring points off at each other. The better international journalists tend to simply ignore the positive stuff (the Economist has yet to do a piece about Russian President Dmitry Medvedev's anti-corruption drive despite the fact that it complains about corruption in almost every article on Russia), whereas, the Russian "lifers" (amongst which I count myself) tend to talk about the material progress and accept the problems as part and parcel of living here.

Prime Minister Vladimir Putin's decision to return as president next year is a good illustration. A friend of mine summed up the reaction well: "The Russia optimists will be very disappointed, but for the Russia pessimists nothing has changed."

We at bne try to take a pragmatic path between these two extremes, accepting that things are far from perfect but focusing what could be done in this context - and a lot can be. I think one of the reasons that the "pooh-pooh" crowd fail to notice the progress is that Russia always confuses its progress with gaffes and downright thuggery.

Brazil had Lula, who "transformed" Brazil. The Chinese have also "transformed" China in the sense that if you walk about Shanghai, you cannot fail to be impressed by how new it all looks. But that's Russia's problem: personal incomes have gone up 14-fold in the last decade - far more than in any other major country in the world - but if you walk about Moscow, it looks almost exactly the same as it did in 1993 when I first arrived, except there are more billboards. Typically, incoming foreign correspondents are extremely negative in first months after they arrive; but after they have been here a year or two - long enough to see the incredible pace of change under the patina of communism left over from the old days - they start to become more positive. And then they leave for the next country.

For the most part then, the coverage is almost exclusively, and more importantly, selectively negative. For example, the oligarchs blatantly stole most of Russia's richest natural resource companies, as Boris Berezovsky is happily admitting in a case in London at the moment. But when the state got round to taking one of them back, it botched it so badly that Mikhail Khodorkovsky's fate has become a cause célèbre, making the former Yukos owner out to be some sort of hydrocarbon copy of Nobel Peace Laureate Andrei Sakharov. Anyone who spends half an hour of research on Khodorkovsky's career will soon unearth the horrendous corporate governance abuses inflicted on the minority investor Kenneth Dart in the 1990s, yet the whole Dart affair is never mentioned in the current reporting on the case.

Khodorkovsky remains a convicted criminal and, indeed, in October the Germans opened a money-laundering investigation into Yukos after the tax authorities stumbled across some undeclared Yukos accounts in Germany - a titbit that has been widely ignored in the western press, as it inconveniently clashes with their image of the martyred victim. You would have thought they'd learnt their lesson after backing Viktor Yushchenko and Ukraine's Orange Revolution with such vim.

Tinker, writer, journo, spy

Harding's book is a classic of the genre. Before I go on, I have to say that I believe he suffered more FSB intimidation than any foreign correspondent I have met working in Russia, but still his book hams up his problems to an excessive degree and the "mafia state" title is not justified.

To underline the point Private Eye, the British satirical journal for the press, ripped his book to pieces in a very funny review (which unfortunately they have not put online). "Dozens of journalists have been killed in Russia since 1991, among them most famously Anna Politkovskaya. Yet Harding and the Guardian would have us believe that he was 'the reporter Russia hated'." The review sarcastically points out that amongst the most aggressive tortures Harding had to suffer was, "the FSB intelligence broke into his flat and, er, moved stuff around." It belittles the Berezovsky interview that caused the problems in the first place, pointing out that Harding didn't even take or write it, and lampoons Harding for suspecting, without proof, that men talking to him in Russian accents were actually KGB agents sent to hassle him. "Russians speaking with Russian accents - whatever next?"

This is not entirely fair, as all this was scary and oppressive for the family, whom I know well. But Harding's claim that he was the "first correspondent to be deported since the Cold War," is risible. Firstly, he wasn't deported, but refused entry on a technicality. Secondly, his visa was reinstated and the foreign ministry offered to allow him to stay another six months so his kids could finish the school year. The family chose to leave voluntarily (and Phoebe, his wife, actually voted to stay).

Kraus's contribution ("The Missing Chapter") to an upcoming book is entirely the opposite. Kraus has long savaged the international press for their blatant misreporting of the Russian story and in his piece he goes to town with some anecdotes that highlight just how mercenary some hugely influential correspondents have been.

Kraus relates a lunch meeting with the Economist's Lucas during his first week on the job in the spring of 1998, just before the first big crisis, when the correspondent predicted: "Russian ruble would collapse to 10,000/$, the economy would contract by at least 25%, the Communist hordes would sweep through Moscow taking the Kremlin, as the Russian Federation - held together with string and sticky-tape - broke up into four nuclear-armed, mutually antagonistic sovereign mini-states".

Of course none of that happened, and Putin was swept into power 18 months later and Russia boomed. Kraus met Lucas in 2000 when the economy had just turned in 10% growth - a record to this day - having contracted for the entire 1990s. Krause relates the conversation as him saying, "'Ed, the last time we met, you told me that Russia was dead in the water' - before reeling off his list of imagined catastrophes. "To Lucas' credit," Krause says, "he denied not one word of it, instead acknowledging that he had said it all - and had been proved wrong. "'But now'," Ed intoned, "'you are going to see the real disaster'," reeling off yet another doom-and-gloom scenario, even blacker than his previous one... and of course, no less self-assured!"

Russia then embarked on an eight-year boom that "transformed" the quality of life in the country, but Lucas returned to London to be made up to the Economist's Eastern Europe editor despite the fact all his predictions were wrong. It had got so bad that Moscow's leading investment banks sent a delegation to London to see his editor Xan Smiley to complain: Lucas was obviously wrong in tone and it was costing the banks a lot of money, as the Economist is so influential, bne's banking sources say. Smiley ordered Lucas to write an upbeat story on the economy, but to Lucas' credit he never wrote anything that he didn't believe to be true. The problem was he chose exclusively to concentrate on negative things and ignored the positive. "Choose your story line and then find the facts to fit it," he once told a bne correspondent.

The epilogue to this tale is that when Kraus submitted his chapter to the London publisher, the editor took this tale out of the book as well as most of the other names, including those of Prime Minister Mikhail Kasyanov, Berezovsky and most of the dirt that Kraus dishes out on Khodorkovsky. One wonders why? The publisher could be afraid of libel, but most of the information that Kraus relates is in the public domain. It seems the western mud-covered glasses are so thick and pervasive that even innocents who are not connected to the Russian story are now incredulous when someone attempts to tell the "real" story of Russia over the last decade.

You can read Kraus's chapter in toto here

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