War on Terror: The Imperialist Roots of the Russia-Chechen Conflict

Media likes to portray the “war on terror” such as the Boston bombing incident as either individual (psychological) aberrations or sectarian (religious) problems. They hardly consider the geopolitical or even internal political angles from which may have inspired on such heinous actions. 

Suspects of the unfortunate Boston incident have reportedly been of Chechen descent or from Chechnya

Understanding the Russia-Chechen conflict may give us a clue to the recent events.

From historian Eric Margolis at the lewrockwell.com in 2010

There is an old saying about the fierce Chechen tribes who inhabit southern Russia's Caucasus mountains: "Chechen cannot ever be defeated. They can only be killed."

Chechen are Russia's nemesis. Even the notoriously brutal Russian mafia fears the ferocious Chechen, and for good reason.

Last year, Prime Minister Vladimir Putin proudly proclaimed that resistance to Russian rule in the North Caucasus had been eliminated. The region was pacified.

Confounding Putin's claim, Chechen suicide bombers hit Moscow's subway last week, killing 39 and injuring over 70. Chechen suicide bombers in Dagestan killed twelve, mostly policemen. There were further attacks in neighboring Dagestan. The North Caucasus was again at a boil.

The attacks seriously rattled Russians and left the Kremlin deeply embarrassed and enraged.

Two "black widows" – wives or daughters of Chechen independence fighters killed or raped by the Russians (Russians call them "Islamic terrorists" and "bandits") – took their revenge last week, as so often in recent years.

The latest Chechen leader, Doku Umarov – all his predecessors were liquidated by Russia – claimed from his hideout in the Caucasus mountains that the subway attacks were reprisal for the recent killing of Chechen civilians by Russian security forces.

He warned Moscow, "we will make you feel what we feel."

In recent years, Chechen "black widows" have brought down two civilian airliners. Other Chechen hijacked an entire Moscow theater, and derailed the "Alexander Nevsky" Express that runs from Moscow to St. Petersburg.

Chechen are a tiny but fierce North Caucasian mountain people of Indo-European origin. They, and other Muslim Caucasian tribes, such as Dagestanis and Cherkass (Circasians), have battled Russian imperial rule for the past 300 years.

In 1877, Imperial Russia killed 40% of the Chechen population of about 220,000. Four hundred thousand Cherkass were expelled.

Stalin, from neighboring Georgia, hated Chechen. He divided Chechnya, creating the republic of Ingushetia. Then, in July 1937, his secret police, NKVD, shot 14,000 Chechen.

In 1944, Stalin ordered the entire Chechen people rounded up and shipped in cattle cars to his Siberian concentration camps or dumped to perish into icy fields. Other Muslims followed: Ingush, Tatars, Karachai, Balkars.

Neither bullets nor gas chambers were needed in Stalin's death camps. A third of the prisoners died each year from cold, starvation or disease in the concentration camps. In all, some 2.5 million Soviet Muslims were murdered by Stalin, "the Breaker of Nations," among them half of the Chechen people.

In my new book, American Raj, I entitle the section on the Chechen, "Genocide in the Caucasus."

Gulag survivors filtered back to Chechnya. When the Soviet Union collapsed in 1991, Chechen demanded independence like the Soviet republics.

Instead, Boris Yeltsin's government invaded Chechnya, killing some 100,000 Chechen civilians through massive carpet bombing and shelling. Chechen leader Dzhokar Dudayev was assassinated, reportedly thanks to telephone homing equipment supplied to Moscow by the US National Security Agency. President Bill Clinton actually lauded Boris Yeltsin as "Russia's Abraham Lincoln."

Incredibly, Chechen fighters managed to defeat Russia's army and won de facto independence.

Read the rest here

As one would note, imperialism typically engenders retributions via acts of “terror” or terrorism.

War on Cash and Informal Economy: Russia to ban Transactions over $10,000

Since the financial crisis of 2008, governments around the world have taken financial repression to a higher level. 

Russia’s government plans to restrict cash transactions supposedly to increase bank reserves, as well as, to curtail her informal economy which allegedly has grown to at 50%-65% of national output.

From Russia Beyond the Headlines (hat tip Zero Hedge) [bold mine]

Russia may ban cash payments for purchases of more than 300,000 rubles (around $10,000) starting in 2015. The move is expected to boost banks’ cash reserves and put a damper on Russia’s shadow economy. However, the middle class will most likely end up having to pay the price for the scheme.

Moscow is looking to kill two birds with one stone: Firstly, it wants to bring some of the population’s “grey” income out of the shadow; secondly, it wants to increase the volume of cash reserves in the banks. The government’s bill will introduce the new rule to the State Duma. The document was prepared by the Ministry of Finance and approved by the government.

The proposed transition, from the same article.

The restrictions on cash transactions will develop in two phases. In 2014, a ban on cash payments for purchases worth more than 600,000 rubles (about $19,500) will be introduced; the limit will then be halved to 300,000 rubles in 2015. Furthermore, the document introduces mandatory, cash-free, salary payments.

Smaller companies with fewer than 35 employees will be the only exception, and trade companies will be able to pay salaries in cash if they employ no more than 20 people on staff.

Informal economies are basically products of an anti-business regimes based on over-regulations and various forms of social and economic controls, bureaucratic morass, high taxes, rampant inflationism and high welfare economies or simply said a highly politicized economic environment. 

Informal economies are what I would call guerrilla capitalism. 

Yet the desire to simply restrict cash transactions will likely fail, and the produce outcomes opposite of the intentions. 

Such restrictions will likely provide a huge disincentive for Russian firms to expand beyond 35 employees (20 for trading firms) that would limit attaining competitiveness. 

Russian firms are also likely take advantage of such legal loopholes to maintain numerous small companies than to consolidate them. 

In short, more restrictions promote the incentives to remain in the informal or shadow economy.

More from the report:

Even now, cash withdrawals on payday account for around 85 percent of all ATM transactions. Moreover, in 2005–2011, cash flows more than quadrupled. According to Bank of Russia estimates, more than 90 percent of all commodity purchases in Russia are paid for in cash.

The government is now trying to bring the shadow economy into the light and increase money flows into the treasury, according to Investcafe analyst Yekaterina Kondrashova. In her words, as soon as the new rules come into effect, those using unofficial wage payment schemes will encounter certain difficulties, although there could be some ways to circumvent the law.

Governments are against informal economy simply because they defy political control and in so doing the private sectors retain their resources or savings, which the government desires to tap or to confiscate via taxation or various fees, so governments naturally come up with the usual excuses to justify their actions, such as money laundering…

The Ministry of Internal Affairs and the National Anticorruption Committee estimate the market for money laundering and cash conversions at somewhere between 3.5 and 7 trillion rubles ($113–230 billion) — about 60 percent of the Russian federal budget.

Rosstat reports that the volume of the shadow economy (“grey” money from tax evasion, compensations paid as “cash in envelopes” and violations of currency and foreign trade regulations) is at least 15 percent of the GDP, according to Ricom-Trust senior analyst Vladislav Zhukovsky.

Given the substantial criminal activity and illegal entrepreneurship, the grey and black economies account for 50–65 percent of GDP. Even former Central Bank Chief Sergey Ignatyev had to admit that about $50 billion was taken out of Russia illegally in 2012 alone.

Russia’s informal economy has been expanding during the post-USSR era, the informal economy grew from an estimated 23% in 1993 to 46.6% in 2006, and now 50-65% based on the above report.

Yuriy Timofeyev of the Frankfurt School in a a paper “The Effects of the Informal Sector on Income of the Poor in Russia” notes that Russia’s informal economy “played a significant role in stimulating the country’s  economic activities and in educating the new businessmen in many skills”. 

And that “In some sense, the shadow economy has been a place where many economic entities have gained initial experience and entrepreneurial skills and have accumulated the initial capital needed for a transfer into the official sector. The shadow economy, to some extent, has played a positive role, stimulated overall economic activities, and has generated employment and additional income, which is especially important for the poor part of the population”. 

In other words, restricting cash flows will prevent productive "informal" enterprises from flourishing and from transferring to the official sector. Such policies would only defeat its purpose.

So the Russian government will squeeze wealth from productive sector and transfer them to the politically privileged banking system via building up of cash reserves. Of course, the Russia's banking system serves as main intermediaries to the funding needs of the government (foreign ownership of Russian bonds are low), aside from direct financing.

I would also like to add that the informal economy is not necessarily "free". They principally include informal arrangements with many authorities via bribery or other forms of business easing concessions or popularly known as "corruption". 

If measured from Transparency International, Russia ranks as one of the most 'corrupt" countries in the world (133 out of 176 in 2006). Bribes accounted for 20% of GDP as of 2005. 

So "corruption" is tightly linked with the informal economy.  In short, "corruption" represents as another offshoot to economic repression, aside from the informal economy.

Yet more politicization and cronyinsm from the same article:

There is another side to the move toward plastic, however. Cash-free payments will result in higher prices for some goods and services. The middle class will suffer the most, because the “risk group” includes property and automobile transactions. The luxury segment will also be affected, including customized tours.

The problem is that Russian banks charge commissions ranging from 2–4 percent of the total amount of cash-free transfers. Sberbank charges up to 2 percent, says Irina Tyurina, spokesperson for the Russian Union of Travel Agencies.

Well so much for the bullishness in emerging market economies who punishes productive activities.

Cyprus: The Mouse that Roared

Unfolding events in Cyprus may or may not be a factor for the Phisix or for the region over the coming days. 

This will actually depend on how the bailout package will take shape, and importantly, if these will get accepted by the “troika” (IMF, EU and the ECB), whose initial bid to force upon a bank deposit tax indiscriminately on bank depositors had been aborted due to the widespread public opposition.

So far, the Cyprus parliament has reportedly voted on several key measures[1] as nationalization of pensions, capital controls, bad bank and good bank. Reports say that the Cyprus government has repackaged the bank deposit levy to cover accounts with over 100,000 euros with a one-time charge of 20%[2]!

The troika demands that the Cyprus government raise some € 5.8 billion to secure a € 10 billion or US $12.9 billion lifeline.

If there may be no deal reached by the deadline on Monday, then Cyprus may be forced out of the Eurozone. Then here we may see uncertainty unravel across the global financial markets as a Cyprus exit, which will likely be exacerbated by bank runs and or social turmoil, may ripple through the banking system of other nations.

However, if Cyprus gets to be rescued at the nick of time, then problems in the EU will be pushed for another day.

Nonetheless unfolding events in a 1 million populated Cyprus, but whose banking system has been eight times her economy[3] has so far had far reaching effects.

The Cyprus “bail in” has already ruffled geopolitical feathers.

Germans are said to been reluctant to provide backstop to Cyprus due to nation’s heavy exposure to the Russians, where the latter comprises about a third of deposits of the Cyprus banking system. Much of illegal money from Russia has allegedly sought safehaven in Cyprus.

The Cyprus-Russia link goes more than deposits. They are linked via cross-investments too.

Some say that the Germans had intended to “stick it to the Russians”[4].

On the other hand, Russians have felt provoked by what they perceive as discrimination.

Meanwhile events in Cyprus have also opened up fresh wounds between Greeks and the Turkish over territorial claims[5].

The other more important fresh development is of the bank deposit taxes.

Where a tax is defined[6] as “a fee levied by a government on income, a product or an activity”, deposit taxes are really not taxes, but confiscation.

Some argue that this should herald a positive development where private sector involvement takes over the taxpayers. Others say that filing for bankruptcy would also translate to the same loss of depositor’s money.

Confiscation is confiscation no matter how it is dressed. It is immoral. Private sector involvement is forced participation.

Bankruptcy proceedings will determine how losses will partitioned across secured and unsecured creditors and equity holders. Not all banks will need to undergo the same bankruptcy process. Yet confiscation will be applied unilaterally to all. For whose benefit? The banksters and the politicians.

And one reason bondholders have been eluded from such discussion has been because Cyprus banks have already been pledged them as collateral for target2 programs at the ECB[7].

The more important part is that events in Cyprus have essentially paved way for politicians of other nations, such as Spain and New Zealand[8], to consider or reckon deposits as optional funding sources for future bailouts.

With declining deposits in the Eurozone[9], the assault on savers and depositors can only exacerbate their financial conditions and incite systemic bankruns.

So confidence and security of keeping one’s money in the banking system will likely ebb once the Cyprus’ deposits grab policies will become a precedent.

This is why panic over bank deposits have led to resurgent interest on gold and strikingly even on the virtual currency the bitcoin[10]. The growing public interest in bitcoin comes despite the US treasury’s recently issued regulations in the name of money laundering[11].

Such confiscatory policies will also redefine or put to question the governments’ deposit insurance guarantees. Not that guarantees are dependable, they are not; as they tend increase the moral hazard in the banking system as even alleged by the IMF[12]. 

Deposit guarantees are merely symbolical, as they cannot guarantee all the depositors. Given the fractional reserve nature of the contemporary banking system, if the public awakens to simultaneously demand cash, there won’t be enough to handle them. And obliging them would mean hyperinflation. That’s the reason the dean of the Austrian economics, Murray Rothbard calls deposit insurance a “swindle”[13].

The banks would be instantly insolvent, since they could only muster 10 percent of the cash they owe their befuddled customers. Neither would the enormous tax increase needed to bail everyone out be at all palatable. No: the only thing the Fed could do — and this would be in their power — would be to print enough money to pay off all the bank depositors. Unfortunately, in the present state of the banking system, the result would be an immediate plunge into the horrors of hyperinflation.

So governments will not only resort to taxing people’s savings implicitly (by inflation), they seem now eager to consider a more direct route: confiscation of one’s savings or private property. Note there is a difference between the two: direct confiscation means outright loss. Inflation means you can buy less.

Finally, losses from deposit confiscation, and its sibling, capital controls will lead to deflation.

Confiscatory deflation, as defined by Austrian economist Joseph Salerno, is inflicted on the economy by the political authorities as a means of obstructing an ongoing bank credit deflation that threatens to liquidate an unsound financial system built on fractional reserve banking.  Its essence is an abrogation of bank depositors' property titles to their cash stored in immediately redeemable checking and savings deposits[14]. 

The result should be a contraction of money supply and bank credit deflation and its subsequent symptoms. This will be vented on the markets if other bigger nations deploy the same policies as Cyprus.

That’s why events in Cyprus bear watching.

---

[1] See Cyprus President Warned Friends of Crisis March 23, 2013

[2] New York Times Cyprus Makes Plan to Seize Portion of High-Level Deposits, March 23, 2013

[3] Constantinos Stephanou The Banking System in Cyprus: Time to Rethink the Business Model? 2011 World Bank

[4] Investopedia.com The Cyprus Crisis 101 March 19, 2013

[5] See Will Events in Cyprus Trigger a War? March 22, 2013

[6] Investorwords.com Tax

[7] Mark J Grant Why Cyprus Matters (And The ECB Knows It) Zero Hedge March 23, 2013

[8] John Aziz Guest Post: Whose Insured Deposits Will Be Plundered Next? Zero Hedge March 21, 2013

[9] The Economist Infographics March 23, 2013

[10] See Bitcoins: Safehaven from Cyprus Debacle and Officially Recognized by the US Treasury March 21, 2013

[11] International Business Times, US Treasury Department: Virtual Currencies (Read: Bitcoins) Need Real Rules To Curb Money Laundering March 22, 2013

[12] Buttonwood What does a guarantee mean? The Economist March 19, 2013

[13] Murray N. Rothbard Taking Money Back January 14, 2008 Mises.org

[14] Joseph Salerno Confiscatory Deflation: The Case of Argentina, February 12, 2002 Mises.org

Cyprus: From Deposit Taxes to Capital Controls; Russian Intervention Next?

After the botched attempt by scheming unelected Eurocrats to impose bank deposit levies in order to bail out the banking system, which had been foiled by the Cyprus Parliament, the EU now threatens to kick Cyprus out of the Union, followed by proposed measures to impose capital controls.

From Reuters

The European Union gave Cyprus till Monday to raise the billions of euros it needs to secure an international bailout or face a collapse of its financial system that could push it out of the euro currency zone.

In a sign it was at least preparing for the worst, the Cypriot government sought powers on Thursday to impose capital controls to stem a flood of funds leaving the island if there is no deal before banks reopen following this week's shutdown.

So same dog but with a different collar.

Principally, capital controls would represent the same assault on property rights.

Notes the Zero Hedge: (bold and italics original)

As Europe wakes up to what could be a tumultuous day, Handelsblatt reports that the ECB has decided that, due to the "great danger" of a bank run once they reopen next week, it will enforce capital controls independently of Cypriot (elected) officials. With perhaps a nod towards negotiating some ELA funding for Cypriot banks next week (if the government accepts this ECB-enforced 'program'), the rather stunning restrictions on people's private property include:

-Freezing Savings - no time-frame (it's not your money anymore)

-Make bank transfers dependent on Central Bank approval (a money tzar?)

-Lower ATM withdrawal limits (spend it how we say?)

The capital controls will be designed "so that citizens have access to sufficient cash to go about their lives." So, there it is, a European Union imposed decision on just how much money each Cypriot can spend per day. Wasn't it just last week, we were told Europe is fixed?

Another interesting aspect the geopolitical consequence from the unfolding events in Cyprus.

While I have earlier noted that unresolved ethnic rivalries, conflicting territorial claims that covers energy resources with neighbors, and the realignment of alliances and rivalries within east Mediterranean region may trigger a regional military conflict, Russia’s heavy stake in Cyprus could also spark a military conflagration.

Nearly a third or $19 billion of the 70 billion euros in deposits in Cyprus banks are reportedly held by Russians (supposedly from oligarchs to alleged mafias to political money). 

According to CNBC

One Russian bank, Alfa Bank, estimates that $70 billion of illegal capital flight from Russia in the past two decades may have found its way to Cyprus.

Moody's rating agency said last week Russian banks had about $12 billion placed with Cypriot banks at the end of 2012 and has estimated that Russian corporate deposits at Cypriot banks could be around $19 billion.

"We think that the $19 billion exposure is mostly wholesale - ie corporate," Eugene Tarzimanov, Senior Credit Officer at Moody's in Russia, told Reuters.

Some of Russia's largest banks have some credit exposure to Cyprus. VTB, Russia's second-largest bank by assets, had $13.8 billion in assets and $374 million through its Cypriot subsidiary, Russian Commercial Bank, at the end of 2011.

Political pressure has allegedly been building up for the Russian government to intervene

From Investmentwatch.com

From latest reports, the Cypriot banks might open on March 26th at the earliest. That’s two weeks after being shut down. That’s two weeks of unmet financial obligations, ie government employee salaries, public works financing, unpaid pensions etc etc…Expect unrest on the streets of Moscow

The EU/Germany are certainly aware that 95% of all Russian money goes through the Cypriot banks. Certainly they were well aware of the consequences this would lead to. Is this the first salvo in the new world war??

Dennis Gartman of the eponymous The Gartman Letters made a recent germane comment at the CNBC “Don’t Mess with the Russian Mafia”.

Next week will be very interesting.

Laffer Curve Russian Edition: 300K Entrepreneurs Quit over Taxes

Politicians hardly ever consider the economic effects of their actions. They almost see things as operating in a stasis.

Well here is another instance of the Laffer curve (elasticity of taxable income) in action, this time in Russia

From Rianovesti or en.ria.ru

Almost 300,000 self-employed Russians have quit business in Russia in the past three months due to social tax hikes, an Economics Ministry official said on Monday.

From January 1, 2013, the Russian government doubled the annual fixed-sum social security tax for individual entrepreneurs to 36,000 rubles ($1,200), in a move that directly affected babysitters, housemaids, tutors, handymen and other self-employed Russian workers earning 50,000-100,000 rubles a year.

“The new tariffs that came into force from January 1, 2013 and doubled the taxation base for fixed-rate payments reduced the number of individual entrepreneurs by 293,421 people between December 2012 and February 2013,” said Natalia Larionova, director of the ministry’s department for small-medium enterprise business and competition.

That represents 7 percent of the total number of individual entrepreneurs registered in Russia, she said.

Bottom line: When you tax something you get less of it. On the other hand when you subsidize something, you get more of it.

Russia’s Entry to World Trade Organization will have Political Repercussions

Two major positive developments emanating from Russia.

One, Russians may have come to realize that state or crony capitalism has been doing them more than enough harm.

Signs of these have become evident with the latest election results (where Putin’s Party has lost the majority) and the unfolding street protests (over the election results) which could be portentous of a ‘Russian Spring’.

While displeasure over Vladimir Putin’s autocracy has led to a surge in communist followers, I’d say that this represents a default position for many, when seen from the perspective of Russia’s history, whom has traipsed from autocracy to communism and back to autocracy.

The Western concept of classical liberalism has hardly any influence to the Russians. Thus, free markets and economic freedom may seem as an alien concept.

But this is about to change dramatically, in my opinion.

As compliment to education, one way to introduce classical liberalism is to get people to feel the benefits from its exposure. Put differently, once people come to realize the benefits of freer domestic and external trade, then more will be demanded. And this will be manifested via political actions or policies.

And changes happens on the margins.

chart from tradingeconomics.com

The deepening of globalization trends in the 1990s accompanied by the collapse of the USSR (1991) has already been boosting Russian exports and imports.

Russia’s external trade consists of exports mostly dependent on natural resources and defense equipment (80% of total) while imports have been machinery, transport equipment, plastics, medicines, iron and steel, consumer goods, meat.

Since the transition away from USSR model and the desire to tap world markets, Russia has applied for WTO in 1993.

Timeline below of Russia’s WTO application from the BBC.

Also it is important to note that benefits accrued from Russia’s gradual opening of trade with the world has led them to pursue the WTO membership.

Thus, the approval of Russia’s membership to the World Trade Organization functions as the second and most important positive change.

Writes the China Daily,

Russia finally joined the World Trade Organization (WTO) on Friday, after 18 years of effort.

The world's 11th biggest economy is the last of the G20 countries to join the WTO and became its 154th member. Russia's entry means the BRICS countries (Brazil, Russia, India, China and South Africa) are now fully represented in the WTO.

Nigerian Trade Minister Olusegun Olutoyin Aganga struck a gavel to announce that the 8thWTO ministerial meeting here had agreed to accept the bid. Russia had to first reach bilateral agreements with 57 of its current 153 members to secure their support.

Like China, there will be mounting pressures from the collision of political forces from the escalating bottom-up forces vis-à-vis those currently benefiting from top-down political institutions.

Again like in China, an inevitable decisive choice would have to be made to tailorfit the politics with the economy: Either a return to communism to reinforce current political institutional arrangements along with the closing of their economies, or an evolution to a more representative form of government that would flow along with greater economic freedom.

And technology will play a crucial role in ascertaining the path to the resolution of these transitional conflicts.

Also, if the evolving trends will flow to the latter, then the important geopolitical implications would mean lesser risk of military confrontations, as political priorities will shift towards enforcing trade activities than to engage in brinkmanship politics which are premised on the politics of plunder that has encouraged conflicts.

When goods don’t cross the border, warned the great Frédéric Bastiat, armies will.

Apparently, the world seems to exhibit more signs in the acknowledgment of Bastiat’s wisdom, thus should be applauded and welcomed.

Overtime, if political economic trends persist on the path of economic freedom then Russia should be a prospective buy.

Russia’s Putin Loses Majority, Resurgence of Communists

Russia’s Vladmir Putin’s leadership appears on the edges.

From Reuters,

Russian voters have dealt Vladimir Putin's ruling party a heavy blow by cutting its parliamentary majority in an election that showed growing unease with his domination of the country as he prepares to reclaim the presidency.

Incomplete results showed Putin's United Russia was struggling even to win 50 percent of the votes in Sunday's election, compared with more than 64 percent four years ago. Opposition parties said even that outcome was inflated by fraud.

Although Putin is still likely to win a presidential election in March, Sunday's result could dent the authority of the man who has ruled for almost 12 years with a mixture of hardline security policies, political acumen and showmanship but was booed and jeered after a martial arts bout last month.

United Russia had 49.94 percent of the votes after results were counted in 70 percent of voting districts for the election to the State Duma, the lower house of parliament. Exit polls had also put United Russia below 50 percent.

And desperation against Putin’s autocratic crony capitalism has fueled the resurgence of communists.

From another Reuters article,

The Communist Party (CPRF) for most Russians evokes images of bemedaled war veterans and the elderly poor deprived of pensions and left behind in a "New Russia" of glitzy indulgence. Large swathes of society have appeared beyond the reach of the red flag and hammer and sickle.

Not that the Communist Party's doubling of its vote to about 20 percent presages any imminent assault on power. The memories of repression in the old communist Soviet Union, the labor camps and the "Red Terror" are still too fresh for many. But vote they did, if perhaps with gritted teeth.

"With sadness I remember how I passionately vowed to my grandfather I would never vote for the Communists," Yulia Serpikova, 27, a freelance location manager in the film industry, told Reuters. "It's sad that with the ballot in hand I had to tick the box for them to vote against it all."

For many Russians disillusioned by rampant corruption and a widening gap between rich and poor, the communists represented the only credible opposition to Putin's United Russia.

For some, desperation means jumping from the frying pan to the fire. The communist resurgence, who seem to base their preference by nostalgia, never seem to realize that Putin has been a product communism who used his position to snare power and to shape the current system.

They should rather realize that economic freedom and free trade will give them more chances of attaining prosperity than to depend on politicians, who will use all sorts of power grabs to enhance their status and privileges at the people’s expense.

Tradeoffs are a fact of life. The choice of politics over markets means greater risks of gaming of the system, corruption, wealth and power inequality, cronyism and poverty. It's a lesson that most people have yet to learn and digest.