Saturday, Apr 21, 2018
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Mike Sigov

Sharon's `help' may give Russia a chance to reform

The Kremlin has received an unexpected gift from the Middle East that could buy Russia time to pull off unpopular market reforms.

Western folklore holds that a fairy comes at the very last moment, when all hope is gone, and fulfills your wishes. The Arabs have their genie in the bottle. But for the Russians, it's a gold fish in the sea.

To Russian President Vladimir Putin, Likud leader Ariel Sharon, who had led the Israeli invasion of Lebanon in 1982, was all of the above when he visited the Haram Ash-Sharif/Temple Mount in East Jerusalem, surrounded by scores of armed security. Previously - since 1967, when Israel occupied Jerusalem - the Israeli leaders had refrained from visiting the site, which both Jews and Moslems consider holy. They did not want to trigger a war.

The self-promoting act by Mr. Sharon spurned the worst violence in years in the Middle East, burying the peace process and further boosting thealready high oil prices. Oil prices are not likely to get back to normal for quite a while.

Russia, a major crude oil exporter, stands to benefit. And the timing could not be better.

The Russian economy has been experiencing an economic recovery owing to the increased national production that was caused by inflation in the wake of the 1998 financial crisis and partly owing to high oil prices.

The positive effect of the inflation, however, was starting to wear out and Russian liberal economists, who are behind the Putin-supported pro-market reforms, were warning about the possibility of an even worse financial crisis hitting soon.

That's because of Mr. Putin's half-measures in reforming the taxation system and unwillingness to start reforming the notoriously corrupt and inadequate banking system have so far failed to attract major capital investment, foreign or domestic.

Russia still taxes entrepreneurs 75 cents for every $1 of wages paid, and, besides moreover, it can't guarantee give sufficient guarantees that its banking system won't collapse again, as it did two years ago its money is worth much on the world markets.

It's hard to imagine anyone rushing to put his money in a Russian bank account to hold it there for any considerable time.

A rigorous implementation of the needed reforms would quickly win Mr. Putin a lot of enemies among the bankers and corrupt entrepreneurs, as well as antagonize millions of common people, who would be impoverished once social programs get cut as a result of decreased taxation of the rich.

Moreover, now.just months after the Russian president threw the powerful regional governors out of parliament, he is clearlywary about the prospects ofmaking new enemies.

But now that Mr. Sharon bought Mr. Putin some time with Jewish and Arab blood, Mr. Putin has plenty of time to quell the opposition, getting rid of his enemies one by onewith the help of Russia's "independent" judiciary and ski-masked, Kalashnikov-toting tax police.

He may even have enough money in the budget to reform Russia's largely inadequate army by cutting it by one third to save money to feed, re-equip, and train the remaining part.

Furthermore, a little financial flexibility could finally help him crush the Chechen rebels, which he self-admittedlyviews as critical in order to discourage other potential separatists from trying to split.

Separatism is a real threat in Russia, where most people in the country's gargantuan provinces make less than $60 a month but still have to pay fed-

eral taxes on that money. To appease them, Moscow has allowed the provinces to spend the bulk of their federal taxes due in the new fiscal year on their own needs.

"Russia has enough problems at home, and we are not striving to be active everywhere," Mr. Putin said told reporters Oct. 12 in Astana,Kazkhstan, referring in referenceto the Middle East crisis. "But we ready for such work if the conflicting parties are interested in that."

No wonder Russia, a formal co-sponsor - along with the United States - of the Middle East peace talks, did not protest when it was not invited to the Middle East crisis summit in Egypt last week.

The second part of Mr. Putin's quote was nothing but lip service for the reporters. And it was a perfectly safe thing to say: Even if Russia did take part in negotiating a truce between the "conflicting parties" to support its claims to a superpower status, the chances of a positive outcome are negligible and high oil prices are secure.

Indeed, Russia has many internal problems to tackle. And now - thanks to its accidental ally Mr. Sharon - it may have a fair chance of success.

Mike Sigov, a Russian-born journalist, is a staff writer for The Blade. Email him at

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