Bolshevik Tendency

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Introduction
Our 24 October 2018 statement, “Why Things Fell Apart,” outlined the debate within the

International Bolshevik Tendency over whether contemporary Russia should be categorized

as an imperialist power—an issue with profound programmatic consequences. As we noted,

the difference arose a decade ago:

“When Georgian president Saakashvili moved troops into South Ossetia in August 2008 his

intent was to assert control over a territory that, while nominally part of Georgia, had a

population that not only identified much more closely with Russia, but, like their Abkhazian

counterparts, had enjoyed virtual autonomy after the destruction of the USSR. In response to

Saakashvili’s provocation, Vladimir Putin surprised the world with an overwhelming

military response that swiftly pushed Georgian troops out of Ossetian territory….

“This event signaled that the Yeltsin era of passive acquiescence to America had come to an

end, a development which had major implications for global politics. The Russians did not

formally annex South Ossetia, despite the pleas of the population, but neither did they permit

Georgian forces to reenter the region (or Abkhazia), and thereby effectively integrated both

into the Russian federation.

The leadership of the International Bolshevik Tendency had no difficulty agreeing to a

position on the conflict—opposing both Georgia’s intervention in South Ossetia and the entry

of any Russian forces into ethnically Georgian territory. But the conflict triggered a serious

division within the group, which has now lasted for a decade, that began when cde. Bill

Logan proposed that the Georgian conflict marked Russia’s emergence as an imperialist

power in its own right.”

The debate was conducted in a serious and comradely fashion. Both sides sought to win

over their opponents and avoid a destructive split. Through the course of the discussion

agreement was reached on several issues, notably the character of Russian imperialism circa

1914, as well as what Marxists mean by the term “imperialism.” The comrades who did not

consider Russia to be imperialist (the “Nimps”) drafted articles on both these questions that

were endorsed by their “Imp” opponents and then published in 1917 No. 39 as

“Imperialism, Tsarist Russia & WW I” and “Roots & Fruits of Imperialism.”

During the latter stages of the debate (which is the period from which all but one of the

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items in this bulletin are taken) one of the key controversies involved the interpretation of

available data on capital flows and patterns of Russian foreign investment. A Nimp

comrade (Roxie Baker) declared that "if a parallel [with Russia in 1914] could be proven

today – that Russia is pumping value out of neo colonies – I would be convinced to re-

evaluate my position. But so far, I don’t feel that the imps have provided this evidence. I

think there is a simple reason for this – it doesn’t match the reality today as far as I know."

Baker’s comment was cited by Barbara Dorn in a 20 March 2014 document in which she

sought to provide the proof Baker requested with data on Russian “foreign direct

investment” (FDI) from the United Nations Conference on Trade and Development

(UNCTAD).

The significance of the UNCTAD data became a focus for the discussion: the Nimps pointed

out that most of it was composed of subsidies to dependents, tax avoidance and money

laundering, while the Imps asserted that it should be treated as evidence of capital exports

by Russian oligarchs similar to those described in Lenin’s classic 1916 study, Imperialism, the

Highest Stage of Capitalism. A few weeks after Dorn’s contribution Comrade Josh Decker

followed up with “Russia’s Emergence as an Imperialist Power” (27 March 2014), in which

he featured “a series of graphs I’ve put together, taking inspiration from Barbara’s reply to

Roxie. They compile a large amount of FDI flow data from UNCTAD.” Decker indicated

what he saw as the significance of this data with the offhand comment that: “Despite the

serious problems with official FDI figures...we have been using these figures as a very crude

measure of capital export (and by implication surplus extraction).”

The presumption that raw data on FDI flows somehow necessarily “implies” the existence of

investments generating “surplus extraction” from less developed economies is central to the

Imps’ case, yet they were never able to present much evidence to validate this assumption.

As the Nimps repeatedly pointed out, the overwhelming bulk of the FDI tracked by

UNCTAD was in fact not being invested in neocolonies. Russian capitalists have not, over

the past several decades, been investing to any significant extent in railroads, canals, or ports

in less advanced countries, nor have they acquired (or built) much in the way of factories,

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mines, plantations, or other sorts of productive enterprises in them. Instead, as virtually all

serious analysts agree, the “FDI flows” which so impressed the Imps are chiefly made up of

“roundtripping” funds that almost immediately return to Russia, “investments” in

propping up friendly regimes (e.g., Belarus), expenditures for the purchase of assets

(typically real estate) in imperialist countries, or deposits in tax havens like Cyprus,

Luxemburg, etc., which are beyond the reach of Russian authorities. There is simply no

equivalence between this and the pre-1914 drive by Russia’s politically disenfranchised

bourgeoisie to invest in Persia, Mongolia and other more backward countries in their “near

abroad” in pursuit of markets, raw materials and cheap labor.

Far from pumping value out of its dependents in the Commonwealth of Independent States

(CIS—i.e., Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan,

Uzbekistan and Ukraine) Russia has been subsidizing them for years with discounted energy

pricing:

“Russian oil companies’ export earnings have grown nearly six fold in the last 10 years, but

over 90% of revenue is generated by deliveries to non-CIS countries. In 2010, 26.6 million tons

out of 250.7 million tons of the total crude oil exported went to CIS countries. This amounts to

10.6% of crude oil exported from the Russian Federation by volume. The average price per

barrel of crude was $20.04 less for countries of the former Soviet Union than the rest of the

world. This amounts to $1,090.9 million worth of oil sold at a discounted rate. To put it

another way, if Russia charged CIS countries the same price as the rest of the world in 2010

for crude, it would have made an additional $3.891 billion in revenue from exports.”

—Ariel Cohen, Politicized Oil Trade: Russia and Its Neighbors, p5

When we cited this study, Decker responded by reminding us that in Imperialism, “Lenin

discussed how imperialist monopolists engage in ‘systematic price cutting (to ruin

“outside”’ firms, i.e., those which refuse to submit to the monopolists. Millions are spent in

order to sell goods for a certain time below their cost price….’” We replied that this tactic

was employed to establish a monopoly—something that already existed for Russia within

the CIS where no significant “outside [oil] firms” operate.

Another dispute involved the question of Russian “finance capital.” The Nimp document “Is

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Russia Imperialist?” (2 June 2013) contained evidence that the Russian banking system is far

closer to that of “developing” Brazil than “developed” (i.e., imperialist) countries like the

U.S., Britain or France. The Imps were unable to seriously challenge this, because it is a fact.

At the IBT’s Seventh Conference in April 2014, a clear majority of the delegates endorsed the

Nimp position. The conference occurred around the time the Ukrainian crisis came to a

boiling point and the programmatic implications of the difference were starkly evident. The

Imps’ 5 March 2014 call for “the immediate expulsion of Russian forces from the territory of

Ukraine (including its naval base at Sebastopol)” would have effectively placed them on the

opposite side of the barricades from the Nimps, who asserted that if there was an attempt

“to forcibly seize the Russian base and assert Ukrainian nationalist/Nazi western imperialist

government control” Marxists would “side militarily with Crimean resistance and any

Russian troops to repel the invaders.” Russia’s role in Syria was another source of sharp

disagreement (see: “What is Russia doing in Syria?”, 25 February 2014). The substantial

articles published in 1917 on these two issues (“Ukraine, Russia & the Struggle for Eurasia”

[No. 37] and “Middle East Chaos” [No. 38]) represent the Nimp position.

Comrades from both sides made many, many contributions on this question during the past

decade. While there was no convergence on the core difference, there was also a

considerable evolution in the discussion over the years. In selecting documents for this

bulletin we have attempted to include the essential arguments advanced by both sides

during the final stages of the debate. This issue is obviously of enormous importance for the

left and workers’ movement internationally. While we regret, and are somewhat puzzled by,

our inability to win over our former Imp comrades we are firmly convinced that only

through this sort of open and principled political struggle will it be possible to develop the

political consciousness necessary to lay the basis for the future resurgence of a genuinely

revolutionary mass workers’ international, a development upon which the very survival of

humanity depends.

Bolshevik Tendency

November 2018

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1. ‘Worried about the Russia Question’

From: Bill
Sent: Sunday, October 05, 2008 7:43 AM
Subject: The Russian Question

Dear Tom

Of course I'm quite worried about the Russian Question, particularly because I think we
have to have a decision on it in time for the next issue of 1917, and I see no possibility of
any compromise which does leave the door open for some sort of Kautskyan theory of ultra-
imperialism.

I chatted a little to Josh today on IRC and had a brief telephone conversation with Christoph,
and so far as it is possible to be sure, the three of us are on the same wavelength on this
one.

Perhaps it can be accepted that there is a certain similarity between pre-1917 Russia and
Russia today.

It is very clear that Lenin saw Russia as imperialist. He saw it as having certain specific
features, but he saw it as fundamentally imperialist.

And so it is again today.

I gather that you are going to be driving up to St Catherine's with Josh later in the week, and
I hope you get a chance to discuss the issue carefully with him.

CGsB

Subject: RE: The Russian Question

Date: Sun, 5 Oct 2008 19:18:27 -0400
From: Tom R.
To: 'Bill'

I agree that the discussion is worrisome. I have some regrets that you and I did not have a
chance to discuss it before it went into the general hopper. I am not sure that I see why we
have to have it in the next issue of the paper.

I can tell you that the whole issue is diverting me from other important work, on top of my
already stretched personal situation. I have not been able to devote as much time and energy
as I would like. thought it very important to deal with Sam, and I am doing the talk on the
US election that Josh said he was unable to for the BroSocs and Jason failed to produce a
draft of. I am not feeling like I have the time or energy to get this done as well as it should be

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and would like to slow the tempo of developments re imperialist discussion.

I am not sure if you have noticed but I have been attempting not to introduce
characterizations that might polarize things into the discussion. I think that it is an objective
question and that everyone is motivated by a desire for us to come up with the correct
position.

Of course these things tend to have a life of their own. I have thus far resisted contacting
people to discuss things because I have wanted to slow things down rather than speed them
up and see if it is possible for us to work back to broaden the areas of agreement. I think that
it would be best for the organization if we have a longer, deeper discussion, rather than an
accelerated one. Of course if we are confronted with a major showdown we will have to
have something to say, but on the Georgia thing I think that the line we worked out was
sufficient.

I can talk to Josh of course but so far we have not engaged very successfully on the issue. We
had one round at the local last week and I said that I thought it was important that (as I
understood things) in the IEC we all agreed that in any forthcoming political/military
confrontation that we would have to look at the concretes very closely to determine our
position and not have an automatic default setting and that suggested to me that there was
still a lot of common ground. He said that he did not agree to that at all and that he would
have an automatic setting. That was troubling to me.

I tend to think that we have a genuinely difficult and unprecedented situation. I think that
we need to think it through as best we can. I want to avoid unflattering labels as long as
possible. I am not sure how to proceed exactly, but I tend to favor a lengthier rather than a
speedier process. I think that we want to try, if at all possible, to arrive at a situation where
as many comrades as possible come to an agreement on the basis of a higher understanding.
I also think that the discussion to date has been useful and that everyone knows more than
when we started.

I would of course like to see if it is possible to work together toward a common

understanding, or at least elements of that. It is a pretty important issue with a lot of
potential implications

2. Decker/Dorn Interpolated Comments on Riley’s ‘Is Russia

Imperialist?’
19 June 2013

Dear comrades,

We have not been convinced by Tom’s document to change our position on the imperialist
character of Russia. Aside from dismissing major sectors of the economy and failing to fully
consider the role that Russia plays in global imperialist rivalries over markets and spheres of

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influence, Tom’s document paints a misleading portrait of Russian finance capital and its status
in relation to capital export. While we have no doubt the distortions are unintentional (they likely
stem from a tendency to “read” the data on the basis of a pre-established view of Russia as a
sort of basket case, as well as from an inclination to use the United States as an ideal type), they
nonetheless contribute to a downgrading of Russia to something less than the imperialist power
it is today.

It is our view that the body of evidence of Russia’s imperialist status is substantial and growing.
And it is not limited to the economic questions addressed in Tom’s document, as important as
many of them are. Indeed, we do not believe that the debate can be settled (or the imperialist
character of Russia definitively established) simply by successfully countering the points made in
his document. We have elsewhere treated other aspects of the question, and doubtless much
more could be said. Nonetheless, Tom has put forward what he evidently views as the core of the
question, and insofar as what he has to say is misleading, it has been necessary – at least for
what we understand to be his central points, which we have bolded – to insert our own
comments. We have done so in red (in lettered/numbered entries), occasionally breaking the
original paragraphs. Our correction of misunderstanding/misleading analysis in Tom’s document
has mostly taken the form of placing the data in context and comparative perspective, and
supplementing with new data, revealing a very different picture.

It is undeniable that the Russian economy is underdeveloped in important respects. Yet

Russia does not fit the picture of a dependent, underdeveloped country that Tom attempts
to paint. In some ways, it resembles the economies of the most advanced imperialist powers.
According to the CIA Factbook, Russia’s GDP by composition in 2012 was as follows:
agriculture = 3.9% ; industry = 36% ; services = 60.1%. According to the European
Parliament:
“[Russia’s] service sector activity is, as a proportion of total value added, closing in on levels
observed in the EU. In 2010, services accounted for 68 per cent of total value added in
Russia, compared to the EU average ratio of 79.7 per cent, and ratios of 50 per cent for China
and 49.7 per cent for Indonesia.

“Thus, it is clear that over two decades of economic transformation in Russia has resulted in
an economy that is closer in structure to its rich EU neighbours than it is to some other large,
low- and middle income countries.”

- European Parliament, “The Economic Significance of Russia’s Accession to the WTO,”

June 2012
Of course, none of this is to deny that significant backwardness exists, and in some respects
Russian capitalism lags massively behind – Tom has pointed to much of this. But it is
important to get a sense of perspective, and not to accept on face value caricatures of
Russia.

If Russia circa 1914 was imperialist despite the significant relative backwardness of its
economy (far more backward than modern-day Russia), it is difficult to see why Russia circa
2013 is not imperialist: it has large finance-capital corporations that dominate its economy
(and have important connections with the state); these corporations have maintained and
developed economic linkages (via capital export) with non-imperialist countries that transfer
value back to Russia; the Russian bourgeoisie is able to maintain what is probably the

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second or third most powerful military on the planet; it has implicated itself in, or
maintained its position within, key institutions through which the great powers negotiate
and struggle against one another over matters of geopolitical concern (for instance the
recent G8 negotiations over Syria); and it is quite arguably – in terms of the confluence of its
economic position/power, military strength and geopolitical weight – the second most
powerful capitalist state on the planet.

Decker/Dorn, 19 June 2013

***

Is Russia Imperialist?
—Riley 3 June 2013

As Leon Trotsky observed in the Transitional Program: “Imperialism means the domination of
finance capital.” We are agreed that the imperialist world system operates to channel wealth
from relatively backward countries to the elites of the “developed” capitalist countries. Those
countries that are active participants in what Trotsky referred to as “the expansionist policy of
finance capital” (a policy at least partially mediated through a complex web of international
political and particularly economic institutions) can properly be considered imperialist.

A century ago, Tsarist imperialism was a hybrid of dynastic Romanoff 19th century
“imperialism” and the modern financial capitalist operations of Russia’s bourgeoisie in
neighboring more backward countries. At that time, Lenin observed, Russia’s military clout, like
that of its somewhat more advanced Japanese rival, supplemented and partially offset its relative
economic backwardness.

Russia today plays little or no role in key global institutions established after World War
II through which imperialist policy (e.g., the “Washington Consensus”) is developed and
implemented in the neocolonies.

[A1] It is not clear what this statement means, either empirically or analytically. First,
Russia does indeed play a role in key postwar institutions like the United Nations
Security Council, the G8, the World Trade Organization (to which it was admitted in
2012) and the IMF. In the IMF, Russia has about 2.5% of the quotas of Special
Drawing Rights, just a nudge below Canada and more than Belgium, Switzerland,
Australia and Spain. Nonetheless, it is true that, for the IMF at least, Russia is not a
core member (Brazil has 1.8% of SDRs). But then neither are most countries we call
imperialist, with the exception of the U.S., Japan, Germany, France and Britain.

[A2] Second, there is no unified “imperialist policy” agreed upon by all of the world’s
major powers. Lenin’s view of imperialism was distinguished in part by its insistence
that the imperialist countries have antagonistic relations that render a joint “policy”
toward the neocolonies unlikely, to say the least. The post-WWII period did indeed
see a considerable degree of cooperation for obvious reasons, but even then no
common policy was developed. The Washington Consensus institutions are not the
collective managing committee of imperialist domination of the neocolonies. It is to
be expected that hostile new-comers will tend to be under-represented.

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Russian banks and corporations have derived no benefit from the give-away privatizations
imposed by IMF “structural adjustment” policies. Nor does the Russian bourgeoisie
operate a separate, or parallel, state system, in which it dominates and oppresses weaker
countries.

[B1] Russia is the dominant member in the Commonwealth of Independent States,

the Eurasian Economic Community and, along with China, the Shanghai Cooperation
Organization, though the latter has a largely military purpose. It is not clear what we
are supposed to compare these institutions to – the IMF, the EU or what? Russia
cannot be disqualified as an emerging imperialist power because of the weakness of
the formal institutions through which it is attempting to reinforce its dominance over
dependent countries. The fact that it finds itself at the center of fledging institutions
which are intended, from the standpoint of Moscow, to play this role is itself
noteworthy.

There are no mechanisms, beyond the sale of oil and gas at world market prices, by which
Russia extracts wealth from less developed countries on any significant scale.

[C1] As demonstrated below, Russia has significant investments abroad that transfer
value back to the country.

It appears that the only time Trotsky explicitly discussed the criteria by which to determine
which countries were imperialist was in 1938 in the context of a discussion of the position
revolutionaries should take in the event of a military conflict between Czechoslovakia and
Nazi Germany. Trotsky stressed the importance of “finance capital” and pointed to
Czechoslovakia‘s highly developed industrial capacity, as well as its alliances with other
imperialist powers:

“I believe that Czechoslovakia is a small country and in the event of war her existence would
be directly threatened [my emphasis]. But the difference between Czechoslovakia and France
lies in the fact that France has colonies. It is an imperialist country. Czechoslovakia has no
colonies. But this difference is only apparent. Czechoslovakia is an imperialist country in
every respect. It is a highly developed country with finance capital in a leading position in a
very concentrated industry, the very important war industry. This is why Czechoslovakia is a
developed capitalist country, but not only that. In Czechoslovakia we now have a population
of about 15 million. It is not a big country. Under European conditions it is a medium-sized
country.”

. . .

“I forgot to add that Czechoslovakia is a partner of a world corporation of imperialist

countries. If it doesn't have colonies, it has loans from Britain. These loans are possible
because of Britain's colonies; likewise with military support from France. It is a link in the
imperialist chain.”
—Leon Trotsky Writings, 1937-38, p. 353, 356

Russia is certainly not a link in any imperialist chain. Nor can finance capital be said to be in
a leading position, for reasons outlined below. Nor is the Russian economy highly
developed, despite the fact that in a few specialized fields, particularly military, its

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inheritance from the Soviet degenerated workers’ state allows it to produce world class
goods.
[D1] The Russian economy continues to combine considerable backwardness with
important elements of the most advanced capitalism based on high technology. The
origins of the advanced sectors is irrelevant, and the military industry cannot simply
be dismissed with the wave of a hand. Most imperialist countries borrow technology
from others; Russia does this, and it has inherited substantial advances from the
Soviet degenerated workers’ state – advances which it has maintained and continued
to develop. Aggregate labor productivity in Russia is admittedly low compared to
other imperialist countries (just over 40% of “high-income” OECD countries), and the
significant progress that was made in the 2000s has slowed since the onset of the
global economic crisis. On the whole, Russian manufacturing is not particularly
competitive, but there are sectors that can compete globally – most notably,
chemicals and metals, though other key industries (e.g., transport vehicles) lag
behind (Ye.Yasin et al., “Russian Manufacturing Revisited: Industrial Enterprises at
the Start of the 2008 Financial Crisis,” Bank of Finland). UNCTAD confirms this
assessment, noting that Russia’s “Metallurgy and chemicals are already competitive
in world markets and operate without major subsidies” (World Investment Report
2012, p58).

For the most part, however, Russian products are not competitive on the world market.
Nouriel Roubini, an insightful analyst who was among a handful who predicted the 2008
financial crash years before it occurred, provided the following thumbnail sketch of Russia’s
economic situation in the aftermath of that event:

“The weakness of the Russian economy and its highly leveraged banks and corporations, in
particular, which was masked in recent years by the windfall brought by spiking oil and gas
prices, burst into full view as the global economy tumbled. Saddled with a rust-belt
infrastructure, Russia further disqualifies itself with dysfunctional and revanchist politics and
a demographic trend in near-terminal decline.”

—“Another BRIC in the Wall?,” 15 October 2009

Russia has the attributes of a large and (because of its Soviet inheritance) militarily
formidable power which is able to play a major role in global politics.
[E1] We need to ask how Russia maintains this “inheritance”? It has been a
generation since the fall of the Soviet Union, and yet capitalist Russia has become a
world power and continues to produce world class, advanced military technology.
Russia’s military industry, like the Russian economy as a whole, is marked by
combined (or at least differential) levels of development, and the military exhibits
both backwardness and advancement. Western media have often emphasized the
backwardness (and we heard echoes of this in our debate, when Russia’s military
apparatus was once compared to “spears” in the face of America’s “Gattling guns”).
It seems the only time that the advanced character of some of Russia’s war
technology is acknowledged in the U.S. media is when it threatens to interfere with
American plans, as demonstrated by the announced sale of advanced anti-aircraft S-
300 missiles to the Syrian government.

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 [E2] The fact that Russia plays “a major role in global politics” is both an
expression/reflection of its imperialist status and a means by which the Russian
bourgeoisie is attempting to leverage its military and geopolitical power into
economic advances. Russia’s ruling class is an independent and powerful player
within the global order.
It is also a country with enormously valuable natural resources. At the same time the
development of the Russian bourgeoisie (and its ability to reduce the gap separating it from
its more advanced capitalist rivals) is deformed by cultural backwardness and bureaucratic
corruption. In a 2010 report on “The state of Russia” the Economist wrote:
“By 2005 the bribes market, according to INDEM, a think-tank, had risen to $300 billion, or
20% of GDP. As Mr Khodorkovsky said in a recent interview, most of this was not the bribes
paid to traffic police or doctors, but contracts awarded by bureaucrats to their affiliated
companies.

“Unlike private businessmen, who started to invest in their core businesses (Yukos among
them) in the late 1990s, bureaucrat-entrepreneurs have little incentive to do so. Their wealth is
dependent on their administrative power, rather than newfangled property rights. The profits
are often stashed away in foreign bank accounts or quickly spent: on luxury property in
European capitals, or on their children's education in British private schools. All this is
inevitably accompanied by anti-Western rhetoric and claims of Russia's resurgence.

“Unsurprisingly, surveys now show that the young would rather have a job in the
government or a state firm than in a private business. Over the past ten years the number of
bureaucrats has gone up by 66%, from 527,000 to 878,000, and the cost of maintaining such a
state machine has risen from 15% to 20% of GDP. At the same time, Russia's standing in
indices of corruption, property rights and business freedom has deteriorated. “

—Economist, 9 December 2010

The Russian economy is both integrated into the world market and overwhelmingly
dependent on resource extraction, particularly hydrocarbons. Revenues from oil and gas
sales in the past dozen years have tended to mask the problems at the core of Russian
capitalism, particularly a failure to diversify economically and an inability to produce
commodities that are competitive internationally:

“Corruption was also excessive in the 2000s, but it was compensated for by strong
economic growth and fast-rising incomes. This, and soothing television pictures,
created a sense of stability. But the global financial crisis hit the Russian economy
harder than that of any other large industrial country, exposing its structural
weakness. As Vladislav Inozemtsev, an economist, argues in a recent article, the
improvement in living standards was achieved at the cost of massive under-
investment in the country's industry and infrastructure. In the late Soviet era capital
investment in Russia was 31% of GDP. In the past ten years Russia's capital
investment has been, on average, about 21.3% of GDP. (For comparison, the figure
over the same period in China was 41%.)

“Despite rising oil prices and a construction boom, Mr Inozemtsev says, in the post-

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 Soviet period Russia has built only one cement factory and not a single oil refinery.
The Soviet Union used to build 700km of railways a year. Last year, it built 60km.
‘We have lived by gobbling up our own future,’ he argues. Peter Aven, the head of
Alfa Bank, the largest private bank in the country, thinks today is like the late Soviet
period: ‘Once again the main source of wealth is oil and gas, which is being
exchanged for imported goods.’”

—Ibid.

While generating immense profits, Russia’s oil and gas sector is technologically
backward by world standards.

[F1] Although many imperialist countries are home to powerful corporations

specializing in fossil fuels (e.g., BP, ExxonMobil), the suggestion here is that oil and
gas capital in Russia don’t really count as finance capital due to the relative
technological backwardness of Russian natural resources industries. While it is true
that Gazprom and other Russian energy companies have partnered with other
companies to borrow their technology, this does not render the Russians dependent
on Britain, for example. Such partnerships are normal across imperialist countries.
Nor does Russia’s relative technological backwardness in these strategic sectors
mean that it is working with shovels. The fact that large Russian energy corporations
in many respects lag behind their U.S. competitors is hardly a reason to disqualify
them as examples of imperialist finance capital.

When Lukoil (a major Russian producer) won a contract to develop a portion of Iraq’s oil
fields it had to subcontract most of the work to a U.S. firm (see Appendix A “In Rebuilding
Iraq’s Oil Industry, U.S. Subcontractors Hold Sway”). American authorities claimed the fact
that Iraqi contracts mostly went to foreign oil corporations proved that the conquest of Iraq
had nothing to do with seizing oil assets. They were well aware that U.S. companies, with
their advanced technology, stood to reap most of the benefits: “While Baker and its
American peers are poised to make significant profits from such work in Iraq, wafer-thin
margins seem to await Lukoil….”

This phenomenon was described in the “Theses on the Eastern Question” adopted at the
Fourth Congress of the Comintern in December 1922:

“The progress of indigenous productive forces in the colonies thus comes into sharp
contradiction with the interests of world imperialism, since the essence of imperialism is its
exploitation of the different levels of development of the productive forces in the different
sectors of the world economy, in order to extract monopoly super-profits.”

—emphasis added

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Russia’s rulers enjoy relative independence both from imperialist economic penetration
and the political control that goes with it, but this is not sufficient to qualify as an
imperialist power. To a considerable extent this “independence“ is a product of social
dysfunction—investors steer clear of places where the judicial system cannot be relied
upon to enforce contracts and ensure payments.
[G1] The term “independence” is used in a confusing way here. Our position is not
that Russia is an “independent” player in the global economic order in the sense that
it receives less investment than neocolonies (after all, a significant proportion of
imperialist investment is directed toward other imperialist countries), but rather that
the Russian bourgeoisie is not subordinate to, or dependent on, other imperialist
powers.

Turkey, Venezuela, India and various other non-imperialist countries have also periodically
asserted considerable political independence from Washington and its allies in recent years.
In 1917 No. 29 we discussed the possibility of a U.S. defeat in Iraq resulting in Iran emerging
the primary “regional power” in the Persian Gulf.

I. Large Ogopolistic Corporations: Russia & Brazil Compared

In his 6 April 2011 preconference document arguing that Russia should be considered an
imperialist power (the most recent statement of that view that has been circulated) comrade
Decker pointed to an “economy dominated by large oligopolistic corporations (combining
banking and industrial capital)”:

“Russia has several massive corporations listed in the Forbes 500, including in the banking,
steel and telecommunications sectors. Most importantly, of course, are oil and natural gas:
Gazprom was the 16th largest corporation in the world in 2010, while Lukoil was 69th and
Rosneft was 77th.”

He added that “Sberbank (93rd) and VTB Bank (437th) are large Russian financial
institutions,” and rounded out the list with “Severstal, the largest steel company in Russia, is
313th” and Novolipetsk Steel (390th),” another steel producer.

The current Forbes 500 lists nine Russian companies—two thirds of them gas and oil
corporations, including five of the top six.

[H1] One must be careful with the Forbes list, as it sometimes masks the real ownership
structure of big companies. For instance, if one looks at the profile of the Netherlands (which
has ten entries, two of which are oil and natural gas companies), one finds VimpelCom, a
telecommunications company. Yet VimpelCom, while headquartered in Amsterdam, is
majority owned by Alfa Group, a large Russian investment company headquartered in
Moscow. VimpelCom is the “sixth largest mobile network operator in the world” (Wikipedia).

[H2] Some imperialist countries have roughly similar profiles on the list to that of Russia,
while others barely register. Norway has three entries in the Forbes 500, one of which is an
oil and natural gas company that dwarfs the other two combined. Austria has two entries,
one of which is an oil and gas company. New Zealand, to take an extreme case, does not
even have a single entry among the top 500 – one has to scroll down to #1820 to find a New
Zealand company.

14
 [H3] Inclusion of large corporations on the Forbes 500 is an important indicator of the weight
of an economy in the global order, but this fact must be studied in relation to the role which
this capital plays in relation to neocolonial countries, and weighed against other factors.

The other major BRIC capitalist economies hold a roughly similar position: six Brazilian and
ten Indian ten corporations are listed. The Brazilian and Indian companies are less heavily
weighted in resource extraction than their Russian equivalents. Brazil’s six entries,
coincidentally, have roughly the same market value as Russia’s nine.

[I1] Setting aside the important question of what these companies do and what relationship
they have to neocolonial countries and the global economic order, it is worth noting – in
order to gain some perspective on the above observation – that the profits of the Russian
entries totaled $96.6 billion, while those of the Brazilian entries was $35.4 billion.

In general the Indian firms are ranked somewhat lower (see Appendix B).

The BRIC countries are grouped rather closely in terms of entries on Forbes list ogopolies. It
is notable that Russian entries (7 of 9) are resource companies, whereas four of the six
corporations from Brazil are in the financial sector, including one “Major Bank.” All other
BRIC financial institutions are categorized as “Regional Banks.”

[J1] The suggestion is made here that since energy corporations play a relatively greater role
in the Russian economy than do banks, Russia is comparable to – or even at a disadvantage
when set against – semi-colonial countries like Brazil and India in terms of status in the
global imperialist order. This is a spurious argument, whose premise is that the energy sector
somehow doesn’t really “count” as finance capital. By this logic, we would have to exclude
ExxonMobil, Royal Dutch Shell, Chevron and BP.

[J2] It is unclear how Forbes determines what is a “major bank” versus a “regional bank” –
there is no mention in their methodology that we can find to explain this. We note that
Brazil’s Itaú Unibanco Holding is listed as a “major bank” with $453.6 billion in assets, $6.2
billion in profits and $82 billion in market value, whereas Russia’s Sberbank is downgraded to
a “regional bank” with $441.1 billion in assets, $10.8 billion in profits and $73.3 billion in
market value. By contrast, Austria’s Raiffeisen Bank International – with a mere $190.5
billion in assets, $1.3 billion in profits and $7.6 billion in market value – is considered a
“major bank.” Nor is it clear that sales are a factor: Austria’s “major bank” had only $13.9
billion in sales compared to $36.1 billion for Russia’s “regional bank.” Perhaps these
classifications reflect the particular network standpoint of Wall Street than they do any
objective measurement of financial capital.

The fourth “BRIC” state—China—has 39 entries on the list, more than the other three
combined and second only to the U.S. which has 160. Britain is in third place (30), followed
by France (27) with Germany and Canada tied for fifth (23 each).

II. Foreign Direct Investment: Russia & Brazil Compared

A second criterion posed by Decker’s 2011 document was: “Does Russia have an exploitative
‘finance capital’ relationship with neo-colonial countries?” There is no question that substantial
amounts of Russian money is sent abroad, but this is not necessarily evidence of imperialist
activity. The pattern of foreign investment by Russia closely parallels that of Brazil, and is
distinct from core imperialist countries like France, Canada, et al. Attachments 1 & 2 are

15
scans of several documents that provide important information about Russia’s foreign
holdings, particularly in comparison to Brazil’s. (The first of these, a 2008 Deutsche Bank
report, was extensively cited in Decker’s 2011 contribution.) Some of the texts have been
abbreviated to include only those portions that seemed most relevant. For ease of reference
the scanned pages have been numbered sequentially.

The documents are the following:

1. “Russia’s outward investment” by Deutsche Bank, 30 April 2008” <p1-6>

2. “Russian outward FDI [Foreign Direct Investment] and its policy context”, Columbia FDI
Profiles, 13 October 2009 <p 7-15>

3. “The growth of Brazil’s direct investment abroad….”, Columbia FDI Perspectives, 17

August 2009 <p16-19>

4. “Inward investment in Russia and its policy context,” Columbia FDI Profiles, 30
November 2010 <p20-32>

5. “Russia’s emerging multinational companies amidst the global economic crisis,” Dr. S.
Filippo, Delft University, 21 January 2011 <p33-38>

Passages that seem particularly significant are marked. The following comments related to
information in the scanned documents (with references to page numbers being those written
in the lower right corner.)

1.“Russia’s outward investment” by Deutsche Bank

P 2 Note that Russia has only 6 companies rated as “global challengers” compared to 20 for
India and 13 for Brazil (footnote #4).

[K1] Actually, the Deutsche Bank report was citing a Boston Consulting Group paper
with a measure of “global challengers” that was more restrictive than what DB itself
included in Chart 1 – DB said that the global reach of the Russian corporations was
“not clear-cut” from its own perspective. DB did note, however, that “Russia’s ODI
stock became the second largest among emerging markets in 2006” (Hong Kong
[China] was the largest).

[K2] Nonetheless, Brazil’s foreign investment has reached impressive levels – while
there are good reasons to view Brazil as playing a qualitatively different role in the
global economic system, there is no reason to deny that on certain important
measures it is quantitatively close to Russia.

P 3 Russia’s share in ODI (outward direct investment) by “emerging markets” is estimated at

9% for 2006, but as Table 5 on page 4 shows emerging market ODI was only 13% of the total,
so Russia’s share of total ODI was approximately 1.2% of the total—hardly what one would
expect from an “imperialist” country with the world’s 6th largest GDP (PPP adjusted). Even if
this was all money invested in attempts to realize higher rates of profit than available
domestically (which most of it is not, see below) it would still portray Russian “finance

16
 capital” as only a very minor factor in the world economy.

[L1] While the 2008 DB report is an important document, it is somewhat dated. The
most recent figures demonstrate that Russia has further entrenched itself as a
finance capital power. Russia’s share of global outward FDI stock has continued to
increase, as has its share of global outward FDI flow (aka ODI) – roughly speaking,
the “stock” is the accumulated “flow” adjusted for revaluations, so the stock variable
of an emergent imperialist power is expected to be relatively low for some period of
time. The following chart is compiled from UNCTAD data.

Russia’s Share of Global Outward FDI (%)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Outward 0.3 0.3 0.7 1.7 1.5 1.4 1.6 2.1 2.8 3.7 3.6 3.9
FDI Flow
(% of
world
total)

Outward 0.3 0.6 0.8 0.9 0.9 1.2 1.4 1.9 1.3 1.6 1.8 1.7
FDI Stock
(% of
world
total)
Source: http://unctadstat.unctad.org/TableViewer/tableView.aspx

[L2] According to UNCTAD, the so-called BRICS (Brazil, Russia, India, China and South
Africa) accounted for 9% of the total outward FDI flow in 2012 (“Global Investment
Trends Monitor,” special edition, 25 March 2013). Of that 9%, China and Russia
accounted for the vast majority – 54% and 40% respectively. In other words, Russia
accounted for 3.6% of world FDI outflow in 2012, which is slightly down from the
year before but double the figure from 2006.

[L3] Brazil’s profile is more erratic, and it does not appear to play the same role as
Russia. (Note: instead of Brazil, one could have subbed in India, which plays a
similarly small role.) Zeros are used for negative values.

Brazil’s Share of Global Outward FDI (%)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Outward 0.2 0 0.5 0.1 1.1 0.3 2.0 0.3 1.0 0 0.8 0
FDI Flow
(% of world
total)

Outward 0.7 0.6 0.7 0.6 0.6 0.6 0.7 0.7 1.0 0.9 0.9 1.0
FDI Stock
(% of world
total)
Source: http://unctadstat.unctad.org/TableViewer/tableView.aspx

17
 [L4] As discussed below, there is some reason to discount a chunk of Russia’s
outward FDI stock (and flow). Such a procedure could, however, just as easily be
justified for Brazil as well, meaning that the difference between the two countries in
terms of outward FDI profile would likely remain roughly the same. More
importantly, in the case of Russia we are looking at a country that has, unlike Brazil,
jumped onto the outward FDI flow scene in a big way since 2000-2001, when the
two countries were fairly similar in profile. Here is a graph illustrating the dramatic
expansion of outward FDI flow from Russia (billions of dollars) over the last decade:

Source: UNCTAD

[L5] The dramatic expansion of Russian capital export was linked to the consolidation of
large Russian corporations:

“Russian outward investment is boosted by rising volumes of cross-border M&As.

While M&A purchases by Russian TNCs tripled between 1992–1996 and 1997–2000,
and between 1997–2000 and 2001–2004, they soared more than 10 times in the last
four years. This pattern confirms the evolution of Russian TNCs which started
consolidating their competitiveness through oligopolistic or monopolistic
advantages, first at home and later on abroad.”

- Kalman Kalotay and Astrit Sulstarova, “Modelling Russian outward FDI,”

http://gdex.dk/ofdi/49%20Kalotay%20Kalman.pdf
[L6] Many other imperialist countries are roughly comparable to Russia in terms of
outward FDI flow, and only slightly exceed Russia in terms of outward FDI stock (which is
not surprising, since they are more established finance capital powers that have had
more time to accumulate stock). For example in 2011, Spain’s share of global outward
FDI flow was 2.2% (its share of stock was 3.0%); Italy’s flow figure was 2.8% (and 2.4% of
outward stock); and the Netherlands’ flow figure was 1.8% (its stock figure was 4.5%).
And Russia is not too far behind the most advanced imperialist powers. In absolute terms
in 2011, Russia’s outward FDI flow was $67 billion, compared with $397 billion for the
U.S., $114 billion for Japan, $107 billion for the UK, and $90 billion for France. It was
ahead of Germany, which had $54 billion, though Germany’s figure is normally higher
(Nigel Driffield et al., “Outward FDI from the United Kingdom and its policy context,”
Columbia FDI Profiles, 25 November 2012
http://www.vcc.columbia.edu/files/vale/documents/UK_OFDI_-_25_Nov_2012_-

18
 _FINAL.pdf). In terms of outward FDI stock in 2012, Russia ranks 15 th in the world, behind
(in this order): U.S., UK, France, Germany, Hong Kong (China), Switzerland, Belgium,
Netherlands, Japan, Spain, Canada, Italy, China (mainland) and Australia. The size of
Russia’s outward FDI stock was $413 billion compared with $537 billion for Italy (source:
CIA Factbook).

[L7] What about the net effect of FDI flow in and out of Russia? Since 2009, Russia has
been a net exporter of FDI flow. In 2011, it took in $53 billion in FDI flow and exported
$67 billion – the only country in the CIS that was a net exporter. Which other countries in
the world are net exporters of FDI flow? In addition to Russia, they are (in alphabetical
order, according to the most recent figures found in UNCTAD’s World Investment Report
2012): Austria, Canada, Finland, France, Germany, Italy, the Netherlands, Norway, Spain,
Sweden, Switzerland, United Kingdom and the United States. (Some countries normally
considered imperialist are not on the list, e.g., Belgium and New Zealand, and there are
some non-imperialist countries that do appear – more on this below.) How does Russia’s
net FDI outflow rank in relation to other imperialist countries? In 2011, Russia’s net FDI
flow export was $14.4 billion, while it was $14 billion for Germany, $49.2 billion for
France, $53.2 billion for Britain and $172.5 billion for the U.S. Spain, which is considered
imperialist, had a net FDI outflow of $7.8 billion, i.e., about half that of Russia.

[L8] What about the presence of non-imperialist countries on the list of net FDI
exporters? Egypt was a net exporter only because foreign investment collapsed in 2011
(otherwise it is a consistent importer, and its exports do not even reach $1 billion). British
Virgin Islands is a net exporter, though this is due to its role in round tripping. Angola is
technically a net exporter, but only because its FDI flows have been negative (set against
very small positive FDI outflows). Portugal swings between being a net importer and net
exporter, as does Thailand, Bahrain, Qatar, Yemen and French Polynesia (and most of
these countries’ net exports are miniscule in value). There are a handful of other non-
imperialist net exporters whose inclusion might be explained for other reasons: South
Korea, Taiwan, Malaysia, Kuwait. It is worth noting that there appears to be no
consistent pattern for oil exporting countries (e.g., Saudi Arabia is a net importer).

[L9] What about other so-called developing or rising economies – are they on the list?
Notable countries which, unlike Russia (with +14.4 billion in 2011), are not net exporters
of FDI flow: China (-$170.5 billion), India (-$17.4 billion in 2011) and Brazil (-$67.7 billion
in 2011). In other words, Russia’s role in the pattern of global FDI – at least since 2009 –
is different from the other BRIC countries.

P 4 In fact very little of the 1.2% of global ODI that originated in Russia is invested. Most of it
has been sent to Cyprus (37.5%), Luxembourg (26.7%) and other financial centers only to
later be returned to Russia in a tax evasion maneuver known as “round-tripping” (see
footnote 16 on page 4 and Table 9 on page 5).

[M1] Russians use Cyprus as a tax haven and transit country, and it is true that a
non-negligible percentage of Russian capital export can be discounted in this way.
Not everyone agrees with what that percentage is. There are, for instance, wild
discrepancies between what the Russian and Cypriot banking authorities report in
terms of FDI stock and flows between Russia and Cyprus (see “The 2013 Cyprus
bailout and the Russian foreign direct investment platform,” Kalman Kalotay
[UNCTAD], 23 May 2013; http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=2269634). According to the Russian figures cited by Kalotay,
approximately 1/3 (33.6%) of Russian outward stock was in Cyprus in 2011.

19
According to the Cypriot figures cited by Kalotay, a negligible 0.5% of the Russian
outward stock officially recognized by the Bank of Russia was in Cyprus. (Similarly
unbelievable discrepancies were recorded for flow variables.)

[M2] Much of Russian “investment” in Cyprus is indeed round-tripping that ends up

back in Russia. But it is also true that Cyprus is a temporary home to some Russian
capital, which then gets invested elsewhere, including in Central Asia. This process is
known as “trans-shipping,” which is distinguished from “round-tripping”. Cyprus in
fact advertised itself as a good jumping off point for investors looking to branch out
in the world. It would seem, however, that a majority of Russian capital sent to
Cyprus was round-tripping, not trans-shipping – about 28% of Russia’s inward FDI
stock, according to the Russian source cited by Kalotay, is from Cyprus (most of that
presumably being Russian-origin).

[M3] But how different is Russia in terms of round-tripping? Certainly the rampant
corruption seen in Russia (which in itself is not an indicator for or against imperialist
status) is not seen to such an extreme in many other imperialist countries in the
modern era (though was fairly typical of these countries at the dawn of the
imperialist era). And this will presumably mean that the problem of round-tripping is
larger in Russia than it is in other imperialist countries. It would indeed seem that a
higher proportion of Russia’s outward FDI is accounted for by round-tripping. But
“round-tripping” is not a Russian word. Take the case of Britain. In 2011,
approximately 10% of the inward FDI stock in the UK was from “UK offshore islands”
and the tiny “grand duchy” of Luxembourg alone (Grahame Allen & Aliyah Dar,
“Foreign Direct Investment,” House of Commons Library, 14 March, 2013).
UNCTAD’s World Investment Report 2012 complains that tax-haven countries like
Luxembourg and Cyprus (which are also home to SPEs – “special purpose entities”
that disguise real ownership) obscure the true picture of world FDI flows. In 2011,
the British Virgin Islands received over $54 billion in FDI inflow – a figure that was
more than that for France and Germany (each with around $40 billion) and nearly
identical to that for the UK itself (i.e., around $54 billion)!

[M4] The recent G8 summit in Britain, aside from wrangling over Syria, was
significant in part because of the focus on clamping down on tax havens. According
to a leaked government report that was initially seen by the Guardian (9 May 2013),
there is a network of “complicated financial structures using companies and trusts
stretching from Singapore and the British Virgin Islands to the Cayman Islands and
the Cook Islands.” Britain’s wealthiest, alongside billionaires from other imperialist
countries (including Russia), have hidden, according to a recent report by the
International Consortium of Investigative Journalists, trillions of dollars in tax havens
– equivalent to a staggering 44% of global GDP. Summarizing the revelations, the
WSWS (30 May 2013) noted:

“The clients of these offshore tax havens include the super-rich from nearly
every country. The clientele ranges from American billionaires to Russian
oligarchs, Hong Kong property developers, corrupt government bureaucrats,
and gangsters. According to the leaked documents, about $10 trillion is the
property of a mere 100,000 individuals. On average, this tiny sliver of the
global population is hoarding $100 million each.

“Enormous banking institutions like Deutsche Bank, UBS, the Swiss private

20
 bank Clariden, ING, and ABN Amro have actively worked to set up tax
evasion schemes for their clients in offshore hiding places. JP Morgan, linked
inconclusively by leaked documents to a number of tax evasion schemes, has
50 subsidiaries in Bermuda, the Bahamas, and similar ‘treasure islands.’”

Russian companies have a major market share in the CIS “due to linkages already in place
in the Soviet Union as well as a lack of foreign investors from elsewhere” (the lack of other
investors presumably due to unstable domestic situations in many cases.) Telecom
companies as well as energy companies require “on site” capacity which is perhaps why
they are prominent among the holdings of Russian investors.

[N1] Russia certainly does invest heavily in Central Asia and Eastern Europe. It’s
unclear why this is supposed not to count as finance capital. Naturally, Russian
imperialism has built upon pre-existing “linkages” with its periphery.

But the percentage of Russian investment going to CIS declines sharply as total Russian ODI
grows—from 59% of the total in 1997-99 to 12% in 2004-06.

P 6 Table 12 shows that Russian investment abroad is overwhelmingly concentrated in

oil/gas and metallurgy sectors. The reasons for investing (outlined on p 3 of the Deutsche
Bank paper) include a desire to upgrade technological and managerial capacity, gain easier
access to foreign capital investment, and avoid the political uncertainty and “difficult
business and institutional environment” at home. Such considerations do not normally
shape investment decisions by imperialist corporations based in North America, the EU
and Japan.

[O1] The question of why Russian corporations invest abroad is a complex issue, and
there is no consensus. The DB report provides a summary on page 2: “The bulk of
Russia’s foreign investment is accounted for by private companies and it mainly
reflects economic considerations such as obtaining higher profit margins, increasing
companies’ growth potential and securing access to raw materials. Foreign
engagement also allows access to new technologies, thereby helping to modernise
the Russian economy. In addition, foreign activities, especially in developed markets,
force Russian companies to increase transparency and to improve their corporate
governance structures.”

[O2] A more recent study drew a very different (and indeed contradictory) conclusion
by noting “the changing strategies of outward investing Russian firms: in the early
1990s, they were mostly privately owned TNCs, seeking for ‘safety nests’ abroad to
protect themselves from domestic uncertainty; these days, State-owned or
-influenced TNCs dominate Russian capital exports, motivated by a desire to control
the value chain of their products.” (Kalman Kalotay and Astrit Sulstarova, “Modelling
Russian outward FDI,” http://gdex.dk/ofdi/49%20Kalotay%20Kalman.pdf).

[O3] The UNCTAD report echoes this analysis, adding that Russia’s profile differs
from that of the other so-called BRIC countries:

“Recently, Russian TNCs have found their way to the BRICS countries,
increasing their stock to US$1.1 billion. In contrast to TNCs from other BRICS
countries, the main aim of Russian TNCs is not simply to secure the supply of
raw materials to their home country, but also to expand their control over

21
 the value chains of their own natural resources, to build sustainable
competitive advantages vis-à-vis other firms, and to strengthen their market
positions in key developing countries. For example Rosneft formed joint-
venture with CNPC (China) to develop oil extraction projects in the Russian
Federation and downstream operations in China.”
(http://unctad.org/en/PublicationsLibrary/webdiaeia2013d6_en.pdf)

[O4] Another account adds to the overall picture, and sheds some light on the role of
telecom and financial services companies:

“There are several stimulants driving Russia’s outward investment flows.

First, through OFDI, Russian companies seek to establish additional control
over foreign natural resources in order to complement their domestic
reserves. The Russian natural resource-based multinationals generally seek
upstream investment targets that can be developed more readily and cost-
effectively than untapped domestic resources, which are often
geographically isolated and require vast investments and years to develop.
These resource-seeking investments make up a relatively modest share of
Russia’s total OFDI compared to those of China. Second, the Russian
multinationals increasingly seek downstream assets in order to build up their
value chains internationally and reach end customers. In particular, this
strategy is popular with the natural resource-based companies that are
responsible for the lion’s share of Russia’s OFDI. Third, Russia’s leading
telecommunication and financial service providers, among others,
increasingly are seeking targets for strategic acquisitions in order to
establish control over markets in the former Soviet republics. Among these
strategic acquisitions, one may also include purchases of assets granting
easier access to certain protected markets, such as the acquisitions by
Russian companies in the US steel and automotive industries. Finally,
Russia’s state-owned enterprises make purchases that seem to serve the
purposes of Russia’s foreign policy rather than commercial logic. While these
investments are often speculative, they generally attract considerable
attention.”

- Peeter Vahtra, “Russia’s Outward FDI Rise Amidst the Global Fall,”
http://www.css.ethz.ch/publications/pdfs/RAD-65-6-8.pdf
[O5] Rising oil prices are related to Russian capital export insofar as they contributed
to allowing Russian corporations to invest more capital abroad, securing strategic
positions in the world economy (including in other “BRIC” countries). But it has gone
well beyond these origins. According to UNCTAD:

“FDI outflows from the transition economies, mainly from the Russian
Federation, reached an all-time record level in 2011. Natural-resource-based
TNCs in transition economies, supported by high commodity prices and
higher stock market valuations, continued their expansion into emerging
markets rich in natural resources. For example, TNK-BP (Russian Federation)
entered the Brazilian oil industry with a $1 billion acquisition of a 45 per cent
stake in 21 oil blocks located in the Solimoes Basin. At the same time, the
company base of outward FDI continued widening as other firms from
various industries also invested. For example, Sberbank – the largest Russian
bank and the third largest European one in terms of market capitalization –
was pursuing major acquisitions abroad (e.g. in 2011 the bank completed

22
 the acquisition of Volksbank (Austria) affiliates in four transition economies
and four new EU member countries). As corporate customers of Russian
banks venture abroad, they demand that their banks have a local presence
in host countries to help finance their activities there. Russian technology-
based firms also acquired large assets, especially in developed markets (e.g.
Sky Technology acquired 10 per cent of Twitter (United States)).”

- World Investment Report 2012, p.57

[O6] Russia has begun to invest in Africa, though it is still a relatively minor player
(even compared to some non-imperialist countries, particularly China):

“The expansion of Russian TNCs in Africa is fairly recent but rapid, reaching
US$1 billion in 2011. The arrival of Russian TNCs has been motivated by a
desire to enhance raw-material supplies and to expand to new segments of
strategic commodities, as well as a desire to access local markets. For
example Rusal, the world’s largest aluminium producer, has operations in
Angola, Guinea, Nigeria and South Africa. Russian banks are also moving
into Africa. Vneshtorgbank for instance opened the first foreign majority-
owned bank in Angola, and then moved into Namibia and Côte d’Ivoire,
while the Russian Renaissance Capital owns 25% of the shares in Ecobank,
one of the largest Nigerian banks.”
(http://unctad.org/en/PublicationsLibrary/webdiaeia2013d6_en.pdf)

[O7] A report by the European Parliament’s Directorate-General for External Policies

of the Union notes:

“What is perhaps most striking is Russia’s unusually high ratio of OFDI [outward
FDI] to GDP. Russia’s ratio of OFDI is considerably higher than nearly all other
emerging economies as well as advanced economies like Japan and Italy. Large
Russian enterprises are active in the acquisition of foreign companies, usually as
Russian energy or metals firms acquire ‘downstream’ assets (‘market-seeking’
OFDI), or because of the desire to acquire foreign technologies or technological
capabilities and know-how (‘technologyseeking’ OFDI).”

- European Parliament, “The Economic Significance of Russia’s Accession to

the WTO,” June 2012

2. “Russian outward FDI and its policy context”, Columbia FDI Profiles

P 7 Russia’s economic resurgence since 1999 due to “consistently high prices in its main
export products” (particularly oil and gas) resulted in direct investment abroad.

P 8 Russian ODI was $208 billion in 2008; Brazil’s was $162 B; Russian investment in CIS grew
from $.13B in 2000 to $10B in 2008. (But the majority of this went to Belarus, see Table 4 page
14).

P 9. State companies play “an important role in Russian OFDI” [outward foreign direct
investment]; many Russian capitalists want to avoid domestic political instability by moving
capital abroad. (Not the usual motivation of imperialist investors, beyond tax avoidance).
Note that two-thirds of total ODI flowed to “international financial center such as Cyprus, the

23
 Netherlands, the British Virgin Islands and Gibraltar, which partly serve as tax havens for
Russian firms as well.” (See Table 5, page 14).

P 10 Some former Soviet bloc countries are antagonistic to Russian investment.

P 13 More than three quarters of Russian M&A (merger and acquisitions) involve firms in
“developed countries” rather than neo-colonies, CIS etc. This is similar to the usual
proportion for corporations from the U.S., etc.

P14 Russian investment in CIS countries in 2007 and 2008 was overwhelmingly concentrated
in Belarus, which at that time was a close ally. This implies that political, rather than
economic, calculations were dominant. See Appendix C “Belarus Bailout Hinges on Russia” in
which the author quotes an analyst’s observation that “Financially, Belarus is becoming
another South Ossetia.”

3.“The growth of Brazil’s direct investment abroad….” Columbia FDI Perspectives

P 17 There are close parallels between Brazilian and Russian FDI—in each country tax havens
account for roughly two-thirds of the total. The remaining investment also follows similar
pattern—predominantly going to “developed” capitalist countries, presumably for similar
reasons.

[P1] A large proportion of global FDI, often a majority, goes to developed countries,
including FDI originating in developed countries. In other words, it is common for
some imperialist countries to mainly invest in other imperialist countries. In 2011, of
the $90 billion in FDI outflow from France, about two-thirds went to other advanced
European economies (http://stats.oecd.org/Index.aspx?
DatasetCode=FDI_FLOW_PARTNER#).

[P2 ] It is true that there was a drop in FDI inflows into developed countries between
2011 and 2012. In this connection, UNCTAD’s report makes the following
observation, which is useful in judging the analytical significance of some of the
points made in the next section:

“FDI flows fell drastically in developed countries to values last seen almost
ten years ago. Of the global decline of US$300 billion in FDI inflows, from
UD$1.6 trillion in 2011 to an estimated US$1.3 trillion in 2012, almost 90%
was accounted for by developed countries. FDI declined sharply both in
Europe and in the United States. In Europe, Belgium and Germany saw large
declines in FDI inflows. In Belgium – which, with a drop of US$80 billion,
accounted for much of the fall – FDI flows are often volatile or inflated by
the transactions of the special purpose entities (SPE). Germany posted a
large decline from US$40 billion in 2011 to only US$1 billion in 2012, due in
part to large divestments. The decline of inflows to the United States is
largely explained by the fall in cross-border M&A sales; despite the fall the
country remained the largest recipient of FDI flows in the world. Elsewhere,
Japan saw a net divestment for the third successive year.”

4.“Inward investment in Russia and its policy context,” Columbia FDI Profiles

P 20 Corruption discourages FDI in Russia. What investment there is tends to be in big urban

24
 centers and oil and gas regions.

P 21-2 Much Russian FDI is simply “round-tripping” laundered money; CIS countries invest
in Russia because of preexisting Soviet networks etc.; foreign MNE (multinational
enterprises) help modernize Russian industry with technology transfers.

P23 Russia’s economy was heavily impacted by global financial crisis; “Many of the largest
Russian private companies demonstrated that they could not survive without state support.”
Russia is high on the corruption scale, which is not typical of imperialist countries, but
common among “emerging” economies with large “informal” sectors.

P 25 Russia is ranked 63rd in global competitiveness, 143rd in economic freedom: “both

Russian and foreign large investors usually solve their problems with the bureaucracy in
informal ways”, i.e., there is no reliable legal mechanisms for adjudicating property disputes.

P 27 There is a fairly close parallel between inward FDI stock in Russia and Brazil.

5.“Russia’s emerging multinational companies amidst the global economic crisis”

P 34 This list shows only two Russian companies among the top 50 in Europe and only four in
the top 100—all of them oil and gas firms. The next two largest companies on this list are also
oil and gas concerns. If Russia’s population of 140 m makes up roughly 28% of the total
population of Europe (including all of Russia) the fact that Russian companies make up such
a small percentage of the top firms (4% of the top 100, 5% of the top 200, and 6% of the top
500) is indicative of Russia’s relative economic backwardness. The proportions are doubtless
reversed for France, Germany et al (i.e., their share of firms in the European top 500 is a
multiple, rather than a fraction, of their percentage of the continent’s total population.)

The dominance of resource [particularly oil and gas] extraction for Russia is of course more
characteristic of “developing” rather than “developed” economies.

P 37 “While the economic crisis has halted the foreign expansion of Russian private capital,
state-owned capital strengthened its position as an investor.” Once again a phenomenon
more commonly associated with “developing” rather than “developed” capitalist economies.

III. Russia & Brazil: Marginal Players in Global ‘Finance Capital’

In terms of institutions of “finance capital” neither Russia nor Brazil play in the first
division, as indicated by the absence of both countries from a list provided by the authors of
a 2011 study of “The Network of Global Corporate Control” by Switzerland’s premier
institute for macroeconomic research, the Eidgenössische Technische Hochschule in Zürich
(ETHZ). This study (posted to DISC on 10 May) powerfully confirms Lenin’s contention
regarding the tendency of capitalism toward monopoly, expressed as the ever increasing
domination of the global economy by “a small tightly-knit core of financial institutions”
(p1). Using mathematical systems modeling to investigate “the architecture of the
international ownership network” the ETHA found a “super-entity” at the center of which
“only 737 top holders accumulate 80% of the control over the value of all TNCs”
(transnational corporations). A smaller group of 147 TNCs hold “nearly 4/10ths of the
control over the economic value of TNCs in the world” (p 6).

25
The study lists the top 50 “control holders,” 45 of which are financial institutions. No
Russian (or Brazilian) corporations are included.

[Q1] Also missing from the list: Australia, Austria, Belgium, New Zealand, Norway,
Spain, Switzerland and a few other countries we consider imperialist. The study is
interesting and useful, but the fact that it not only misses these countries but barely
includes Italy (and even Germany only gets 2/50!) is indicative that, for Marxists, it is
probably only telling part of the story. [END OF DECKER/DORN COMMENTS]

There are two entrants from the Chinese deformed workers’ state, but all the rest are from
“advanced capitalist” (i.e., imperialist) countries: 24 from the U.S., 8 from Britain, 5 are
French, 4 Japanese, 2 each are German, Canadian and Dutch and the remaining one is
Italian.

The Swiss study seems considerably more sophisticated than the standard rankings of global
financial institutions, but the pattern is similar. Appendix D, a list of the world’s 35 top banks
based on market capitalization (as of 23 August 2011), includes four Brazilian banks but only
one Russian one. Most of the banks on the list are from the “developed” capitalist world (as
well as six from China) (www.relbanks.com/worlds-top-banks/market-capitalization-
2011).The picture is essentially the same in ratings of banks by assets. Of the top 50 six are
Chinese and the rest are from “developed” capitalist countries, with the sole exception of
Banco do Brasil which stands in the 49th spot (see Appendix E— www.relbanks.com/worlds-
top-banks/market-assets-2012). No Russian bank appears on that list.

IV. Russia’s ‘Underdeveloped’ Pariah Capitalism

American authorities issued the following downbeat assessment of Russia’s financial

sector in 2011:
“Although still small by international standards, the Russian banking sector before the crisis
was growing fast and becoming a larger source of investment funds. To meet a growing
demand for loans, which they were unable to cover with domestic deposits, Russian banks
borrowed heavily abroad in 2007-2008, accounting for 57% of the private-sector capital
inflows in 2007. …

“Even with the banking sector’s recent growth, financial intermediation in the overall
economy remains underdeveloped. Contradictory regulations across the banking and
securities markets have hindered efforts to transfer resources from capital-rich sectors,
such as energy, to capital-poor sectors, such as agriculture and manufacturing. The sector is
dominated by large state banks, and concentrated geographically in Moscow and the Moscow
region. Thus financial service providers face little competition for resources and charge
relatively high interest rates for favored, large corporate borrowers.

“This state of affairs makes it difficult for entrepreneurs to raise capital, and banks generally
perceive small and medium commercial lending as risky. Most of the country’s financial
institutions are inexperienced with assessing credit risk, though the situation is improving.
The low level of trust, both between the general public and banks as well as among banks,
makes the system highly susceptible to crises. After an uncertain year in 2009, by spring 2010
Russian officials announced an end to anti-crisis bank support, and a World Bank report said

26
 that ‘a systemic banking crisis had been averted, the liquidity crunch eased and depositor
confidence reestablished.’ The report cautioned, however, that systemic weaknesses exposed
during the crisis—especially excessive dependence on foreign borrowing and non-
performing loans—still needed to be addressed.”
—U.S. State Department Country Survey on Russia, 16 March 2011, emphasis added

Heavy dependence on foreign borrowing is typical of countries with relatively

“underdeveloped” economies.

In Russia, like other BRIC countries, state-owned banks predominate (see: “Banking in BRIC
Countries,” 9 August 2010, Knowledge for Markets (www.ftkmc.com/newsletter/Vol1-21-
aug09-2010.pdf). The same report notes that among the BRIC banks “a study of key
performance ratios reveals that ROA (Return on Asset) is the highest for Brazil banks and
much lower for Russia.” According to the European Bank for Reconstruction and
Development Russia’s private sector’s share of GDP shrunk from 70 to 65 percent between
2004 and 2010:

“Despite large-scale privatizations, the seven existing state corporations still play a large role
in the Russian economy. (Note: State corporations are 100% owned by the Russian
government and operate under special legislation. The Russian economy also features
thousands of other companies owned in part or whole by the Russian government that
operate under different legal arrangements, such as unitary enterprises and joint stock
companies.) While private enterprises are technically allowed to compete with state
corporations on the same terms and conditions, in practice, the playing field is tilted. State
corporation holding structures and management arrangements (e.g., state representatives as
board members) make it difficult for private enterprises to compete. Furthermore, specific
legal constructions can result in preferential treatment of state corporations.”
—“2012 Investment Climate Statement – Russia,” U.S. Bureau of Economic and
Business Affairs

The level of corruption in Russia has been an enormous drag on economic development:

“Corruption, including bribery, raises the costs and risks of doing business. Corruption has a
corrosive impact on both market opportunities overseas for U.S. companies and the broader
business climate. It deters international investment, stifles economic growth and
development, distorts prices, and undermines the rule of law. Moreover, the NGO
Information Science for Democracy (INDEM) estimated in a 2009 report that bribes and
corruption annually cost Russia the equivalent of one-third of its GDP. In November 2010,
President Medvedev announced that Russia is losing up to a trillion rubles (approximately
$33 billion) annually due to corruption in its state procurement system.”

—Ibid.

This reality has inhibited both foreign and domestic investors:

“While Russia's peers in the BRIC group of leading emerging economies are coping with an
inflow of capital, $21 billion fled out of Russia in the first ten months of the year. Unlike
foreign firms such as Pepsi...Russia's private firms are too nervous to invest in their own
economy.”

27
 —Economist, 9 December 2010

In 2011, a government development bank, Vnesheconombank, launched a special new fund

designed to lure overseas investment. To reassure skittish capitalists this private equity fund
was headed by a former Goldman Sachs banker and personally backed by then prime
minister Vladimir Putin whose “personal involvement in the fund is intended to reassure
investors that they will not be abused by arbitrary or corrupt lower-ranking officials” (see
Appendix F “New Fund, With Ties to Kremlin, Seeks Foreign Investors”).

But even Putin’s personal guarantee was not enough and Russia’s ailing financial sector has
remained a major problem for the Kremlin. The 2012 U.S. State Department report cited
above stated that “most large Russian companies choose to list their stock in London and
elsewhere abroad in order to obtain higher valuations.”

A 20 February 2013 article, entitled “$500,000 Makeover Not Just Cosmetic,” report was
published in Russia Beyond the Headlines, a government-funded “Special Advertising
Supplement” that appears in more than a dozen major international papers, including the
Wall Street Journal, New York Times, and London Telegraph. The article, (see Attachment No.
3) begins: “In a new image campaign, the Russian government has hired investment bank
Goldman Sachs to persuade investors and ratings agencies of the country’s appeal.” It
continues:

“Sberbank Pesident German Gref has complained publicly that Russia is underestimated in
the international rankings. (In terms of financial sector development, Russia lies in 134 th place
in the World Economic Forum’s competitiveness ranking, below Albania, Armenia,
Botswana, and Peru.) “

The Goldman Sachs PR team faces a formidable challenge, particularly as Russian capitalists
themselves lack confidence in their future:

“growing numbers of the elite feel that the present political and economic model has been
exhausted and the country is fast approaching a dead end. ‘The problem is not that this
regime is authoritarian, the problem is that it is unfair, corrupt and ineffective,’ says one
leading businessman. ‘Corruption will erode and bring down this system.’ The paradox is
that few Russian government officials disagree with this.”

—Economist, 9 December 2010

This depressing assessment of the predicament of “actually existing” Russian capitalism is

confirmed by a recent report in the New York Times that things have become so grim that
Moscow’s stock exchange has recently been having difficulty competing with Warsaw’s for
regional financial center:
“The midsize companies in neighboring Ukraine or other former Soviet republics are
choosing to go public in Warsaw. They are hardly bothering to look at the carefully laid out
welcome mat in Russia.”

The report continues:

“Mr. Medvedev had named senior Western bank executives to an advisory council for

28
 transforming Moscow’s financial sector. They included Jamie Dimon, the chief executive of
JPMorgan Chase; Vikram S. Pandit, the former chief executive of Citigroup; and Lloyd C.
Blankfein, the chief executive of Goldman Sachs.

“But the Global Financial Center Index, published in March by Z/Yen, a consulting agency,
placed Moscow 65th out of 79 cities studied. London was first, followed by New York and
Hong Kong. The ranking placed Moscow between Bahrain and Mumbai.”
—“Moscow Tries to Reinvent Itself as Financial Hub,” New York Times, 3 April 2013
(reproduced as Appendix G)

The market capitalization of the Moscow’s MICEX/RTS stock market circa January 2012 was
$844 billion, compared to Warsaw’s $157 billion. Brazil’s Sao Palo’s MB&F—the eighth
largest exchange in the world—had a valuation of $1,188 billion (see: www.world-
exchanges.org).
. . .
On balance the evidence indicates that the “actually existing” Russian bourgeoisie is no
more imperialist—in the Leninist “modern [i.e., finance capitalist] sense”—than their
Brazilian counterparts.

Appendix A

In Rebuilding Iraq’s Oil Industry, U.S. Subcontractors Hold Sway

By ANDREW E. KRAMER June 16, 2011<published in Friday 17 June NYTimes, emphasis added>

MOSCOW — When Iraq auctioned rights to rebuild and expand its oil industry two years ago, the
Russian company Lukoil won a hefty portion — a field holding about 10 percent of Iraq’s known oil
reserves.

It seemed a geopolitical victory for Lukoil. And because only one of the 11 fields that the Iraqis
auctioned off went to an American oil company — Exxon Mobil — it also seemed as if few petroleum
benefits would flow to the country that took the lead role in the war, the United States.

The auction’s outcome helped defuse criticism in the Arab world that the United States had invaded
Iraq for its oil. “No one, even the United States, can steal the oil,” the Iraqi government spokesman,
Ali al-Dabbagh, said at the time.

But American companies can, apparently, drill for the oil.

In fact, American drilling companies stand to make tens of billions of dollars from the new
petroleum activity in Iraq long before any of the oil producers start seeing any returns on their
investments.

Lukoil and many of the other international oil companies that won fields in the auction are now
subcontracting mostly with the four largely American oil services companies that are global
leaders in their field: Halliburton, Baker Hughes, Weatherford International and Schlumberger.
Those four have won the largest portion of the subcontracts to drill for oil, build wells and refurbish

29
old equipment.

“Iraq is a huge opportunity for contractors,” Alex Munton, a Middle East analyst for Wood
Mackenzie, a research and consulting firm based in Edinburgh, said by telephone.

Mr. Munton estimated that about half of the $150 billion the international majors are expected to
invest at Iraqi oil fields over the next decade would go to drilling subcontractors — most of it to the
big four operators, which all have ties to the Texas oil industry.

Halliburton and Baker Hughes are based in Houston, as is the drilling unit of Schlumberger, which is
based in Paris. Weatherford, though now incorporated in Switzerland, was founded in Texas and still
has big operations there.

Michael Klare, professor of peace and world security studies at Hampshire College and an authority
on oil and conflict, said that American oil services companies were generally dominant both in the
Middle East and globally because of their advanced drilling technology. So it is no surprise, he said,
they came out on top in Iraq, too — whatever the initial diplomatic appearances.

United States officials have said that American experts who advised the Iraqi oil ministry about ways
to restore and increase petroleum production did so without seeking any preferences for American
companies.

And immediately after the 2009 auction round won by Lukoil, the United States Embassy spokesman
in Baghdad, Philip Frayne, told Reuters that “the results of the bid round should lay to rest the old
canard that the U.S. intervened in Iraq to secure Iraqi oil for American companies.”

But Professor Klare said that the American officials who had advised the Iraqi government on its
contracting decisions almost certainly expected American oil services companies to win a good
portion of the business there, regardless who won the primary contracts.

“There’s no question that they would assume as much,” he said.

The American oil services companies, which have been in Iraq for years on contract with the United
States occupation authorities and military, are expanding their presence even as the American
military prepares to pull out.

For example, Halliburton, once led by former Vice President Dick Cheney, has 600 employees in Iraq
today and said in a statement that it intended to hire several hundred more before the end of the
year. “We continue to win significant contracts in Iraq, and are investing heavily in our
infrastructure,” Halliburton said.

The 11 contracts Iraq signed with oil majors, including the six for the largest fields, are intended to
raise Iraqi output from about 2.5 million barrels of oil a day now to 12 million barrels daily in 2017.
Some of the oil services contracts are for repairing currently productive fields, others to tap mostly
unused sites.

Most outside experts, including those at the International Energy Agency in Paris, are skeptical of the
production targets. The I.E.A. predicts that Iraq will not surpass six million barrels a day until 2030.

But there is little question that production is ramping up. On average in 2002, the year before the
United States invasion, Iraq produced only 1.9 million barrels of oil a day.

Lukoil’s experience in Iraq shows how, while geopolitics steered the primary contracts largely away

30
from United States oil companies, the process left the subcontracting wide open for American
service providers.

Lukoil was originally granted rights by Saddam Hussein, in 1997, to develop a huge field called West
Qurna 2 — rights that Mr. Hussein rescinded just before the war began in 2003.

After the invasion, Lukoil sensed that its best chances lay in working with the Americans. It formed a
joint venture with the United States company ConocoPhillips, giving Conoco a small venture in the
Russian Arctic and ceding it part of West Qurna 2.

By the time Lukoil was eventually compelled to bid again for the field at the 2009 auction, sentiment
in both the United States and Iraqi governments seemed to have shifted to favoring non-American
companies in awarding the main contracts. But one of Lukoil’s first steps after securing the West
Qurna 2 deal was to subcontract the oil well refurbishment work to Baker Hughes.

While Baker and its American peers are poised to make significant profits from such work in Iraq,
wafer-thin margins seem to await Lukoil and the other international oil producers — which include
BP of Britain, CNPC of China, ENI of Italy and the Anglo-Dutch company Shell.

Lukoil’s contract, for example, is typical in paying a flat fee of $1.15 for each barrel produced,
regardless of oil’s price.

That means even if Lukoil ramps up West Qurna 2 production from almost nothing now to 1.8
million barrels a day by 2017, as specified in the contract, it will require more than a decade of
subsequent production just to recoup capital costs of about $13 billion. A good portion of those
costs, meanwhile, will have gone to its drilling contractors. Lukoil says it intends to drill more than
500 wells over six years.

Lukoil and other winners of the 2009 auction are now quietly seeking to renegotiate the deals by
slowing the upfront investment. On Wednesday, Lukoil executives met with Iraq’s oil minister in
Moscow, the company said in a statement. A spokesman declined to provide more details.

Andrei Kuzyaev, the president of Lukoil Overseas, the company’s subsidiary for foreign operations,
said in an interview that he was choosing oil services contractors in Iraq through open tenders, as
required by the contract. But in fact, Lukoil officials say privately, only American companies have bid.

“The strategic interest of the United States is in new oil supplies arriving on the world market, to
lower prices,” Mr. Kuzyaev said.

“It is not important that we did not take part in the coalition,” he said, referring to the military
operations in Iraq. “For America, the important thing is open access to reserves. And that is what is
happening in Iraq.”

Appendix B

FORBES 500 entries for capitalist BRIC economies: Russia, Brazil and India

RUSSIA

31
# 17 Gazprom

“Oil and Gas Operations” Sales $144 B Profits $40.6 B Assets $339.3 B Market Value $111.4 B

# 59 Rosneft

“Oil and Gas Operations” Sales $68.8 B Profits $11.2 B Assets $126.3 B Market Value $73.2 B

# 61 Sberbank

“Regional Banks” Sales $36.1 B Profits $10.8 B Assets $441.1 B Market Value $73.3 B

# 64 Lukoil

“Oil and Gas Operations” Sales $116.3 B Profits $11 B Assets $99 B Market Value $55.4 B

# 159 TNK-BP Holdings

“Oil and Gas Operations” Sales $43.3 B Profits $7.6 B Assets $43.3 B Market Value $33 B

# 187 Surgutneftegas

“Oil and Gas Operations” Sales $23.4 B Profits $7.2 B Assets $51.4 B Market Value $33.7 B

# 233 VTB Bank

“Regional Banks” Sales $16.1 B Profits $2.8 B Assets $210 B Market Value $18.9 B

# 385 Norilsk Nickel

“Diversified Metals and Mining” Sales $12.8 B Profits $3.3 B Assets $18.8 B Market Value $32.9 B

# 484 Tatneft

“Oil and Gas Operations” Sales $13 B Profits $2.1 B Assets $19.5 B Market Value $14.8 B

BRAZIL

# 20 Petrobras

“Oil and Gas Operations” Sales $144.1 B Profits $11 B Assets $331.6 B Market Value $120.7 B

# 42 Itau Unibanco Holding

“Major Banks” Sales $70.5 B Profits $6.2 B Assets $453.6 B Market Value $82 B

# 45 Banco Bradesco

“Regional Banks” Sales $78.3 B Profits $5.6 B Assets $417.5 B Market Value $71.6 B

# 67 Banco do Brazil

32
“Regional Banks” Sales $69 B Profits $6 B Assets $552.2 B Market Value $37.9 B

# 87 Vale

“Iron and Steel” Sales $45.7 B Profits $4.8 B Assets $130.4 B Market Value $92.7 B

# 173 Itausa

“Conglomerates”—“Holding company primarily involved in the financial sector”

Sales $27.8 B Profits $2.2 B Assets $172.4 B Market Value $25.4 B

INDIA

# 121 Reliance Industries

“Oil and Gas Operations” Sales $70.3 B Profits $3.9 B Assets $64.2 B Market Value $50.4 B

# 136 State Bank of India

“Regional Banks” Sales $35.1 B Profits $3 B Assets $359.1 B Market Value $28.1 B

# 155 ONGC - Oil & Natural Gas

“Oil and Gas Operations” Sales $28.9 B Profits $5.5 B Assets $52.1 B Market Value $50.5 B

# 309 Icici Bank

“Regional Banks” Sales $13.2 B Profits $1.5 B Assets $118 B Market Value $22.8 B

# 334 Tata Motors

“Auto and Truck Manufacturers” Sales $32.6 B Profits $2.7 B Assets $27.6 B Market Value $15.9 B

# 350 Indian Oil

“Oil and Gas Operations” Sales $70.8 B Profits $0.8 B Assets $43.2 B Market Value $14.2 B

# 377 Coal India

“Diversified Metals and Mining” Sales $12.3 B Profits $2.9 B Assets $20.8 B Market Value $37.4 B

# 384 NTPC

“Electric Utilities” Sales $12.8 B Profits $1.9 B Assets $30.5 B Market Value $22.3 B

# 456 Bharti Airtel

“Telecommunications Services” Sales $14 B Profits $0.8 B Assets $29.8 B Market Value $21.8 B

# 463 HDFC Bank

33
“Regional Banks” Sales $6.5 B Profits $1 B Assets $66.7 B Market Value $28.1 B

Appendix C

Belarus Bailout Hinges On Russia

22 April 2011
By Nikolaus von Twickel

<MOSCOW TIMES, emphasis added>

For the second time in two years, Belarus is facing bankruptcy. And for the first time, it seems that
Russia will be mainly alone in picking up the tab.

Belarus' currency reserves are running dangerously low, having slid from $6 billion to $3.7 billion
over the past six months, according to the web site of the country's central bank.

The situation is reminiscent of summer 2009, when a $2 billion loan from Russia and a $3.5 billion
credit from the International Monetary Fund helped Belarus survive the financial crisis.

But this time the political situation is much more volatile.

On Tuesday, the central bank announced that it would allow the Belarussian ruble to float freely,
heightening fears of devaluation and public unrest as people line up outside currency exchange
booths.

President Alexander Lukashenko, the country's authoritarian leader, has few alternatives to turning
eastward for assistance.

A tentative rapprochement with the West was shattered after the presidential election last
December, when police brutally cracked down on the opposition, which complained that the vote,
re-electing Lukashenko to a fourth term, was rigged.

In response, the European Union has frozen assets and restricted visas for the Belarussian
leadership.

"The EU is frustrated with Lukashenko, [though] they held out an olive branch before the election,"
said Fraser Cameron, director of the EU-Russia Center, a Brussels-based think tank. The poll "turned
out to be a complete fraud," he added.

The situation is likely to deteriorate further after Lukashenko implicitly accused the West of being
behind a mystery bombing that hit the Minsk metro on April 11, killing 13 and wounding more than
200.

In his state-of-the-nation address to parliament Thursday, Lukashenko suggested that the sanctions
and bombing were part of a foreign plot against Belarus. "These are all links of one chain," he said,
Interfax reported.

The president added that the blast was possible because the government had allowed too much
"unnecessary" democracy. "We had so much democracy that you and I got sick," he was quoted as
saying.

34
And while the 27-member European bloc is currently hit by its own financial worries — having
to avert a credit crunch in Greece, Ireland and Portugal — Russia, by contrast, is awash with cash as
rising oil prices promise more than $51 billion in extra budget revenues this year.

Finance Minister Alexei Kudrin said earlier this week that Moscow would finalize talks with Minsk
within a month on terms for a $2.7 billion loan, of which $1.7 billion would be released from the
Russian-led $10 billion anti-crisis Eurasian Cooperation Fund.

The prospect of the Kremlin bailing out Lukashenko with another billion-dollar loan spurned
concerns that Belarus is sliding into even deeper dependence.

"Financially, Belarus is becoming another South Ossetia," said Alexei Malashenko, an analyst with
the Carnegie Moscow Center, referring to the breakaway Georgian region that is largely
bankrolled from Moscow.

Malashenko said the money was largely wasted on Belarus' Soviet-style economy.

Analysts have said the present financial woes stem in large part from a state spending spree in the
run-up to the December presidential election.

But two influential pro-Kremlin State Duma deputies said it was right to support the country's
western neighbor.

"After all, we are not helping Lukashenko personally, but the people of Belarus," said Konstantin
Zatulin, a member of United Russia and long-standing expert on policy toward former Soviet states.

He added that Russia was morally and politically obliged to help, just as the EU was bailing out
Portugal and Greece. "After all, we have political and economic integration with Minsk," he said.

However, Zatulin admitted that the Belarussian leader had been a difficult partner in the past.

Last year, Lukashenko angered the Kremlin by courting the EU and boycotting institutions like
the Russia-led Collective Security Treaty Organization.

In return, he was mocked by state-controlled NTV television and President Dmitry Medvedev, who
openly accused him of sowing hostility between Moscow and Minsk.

"I cannot say that I like him very much, but show me one other [Belarussian] politician with whom
you can deal responsibly," Zatulin said in a reference to the split Belarussian opposition, which failed
to settle on a single candidate to run against Lukashenko in December and put forth a whopping
nine nominees.

Sergei Markov, another United Russia lawmaker and political pundit, went one step further
by saying Lukashenko's "demonization" in the Western press was unfounded.

"Maybe he is no stable ally, but he is a strong politician who has impressively survived the past 17
years," he told The Moscow Times.

Carnegie Moscow Center's Malashenko was also pessimistic about replacing Lukashenko. "Maybe
they do not like him, but they also fear to lose him," he said about the Russian government's support
for the incumbent Belarussian leader.

He added that, while the Belarussian opposition was too weak and divided, the economic aid should

35
at least be tied to political conditions to gradually facilitate change. "Sooner or later Lukashenko will
fall," he said.

Finance Minister Kudrin said earlier that the Russian loan would be issued on terms similar to those
of IMF programs.

Sergei Musiyenko, a Minsk-based analyst who works as an adviser to Lukashenko, said

the Belarussian government would meet all requirements for economic reform.

"We have been reforming for three years and we are known to be a sound borrower," he said
by telephone, adding that Belarus was a net donor to the budget during the Soviet Union. "There is
huge potential in our economy," he said.

Musiyenko pointed out that there were other potential creditors. As an example, he named China,
which has promised long-term aid worth some $16 billion.

Analysts have speculated that China could buy a stake in potash miner Belaruskali. They have said
that selling 25 percent of the firm could raise up to $7 billion.

Duma deputy Markov also said Lukashenko should also hope for help from Iran and Venezuela,
which have both established close ties with Belarus in the past years.

Appendix D

http://www.relbanks.com/worlds-top-banks/market-capitalization-2011

The following list shows the world's largest banks based on market capitalization, as of August 23, 2011.
China currently has Three of the Four largest banks in the world. In 2005, China did not have a single bank
among the world's top 50. Now it has four of the top ten.
Rank Bank Country Market cap ($b, 8/2011)
1 Industrial & Commercial Bank of China (ICBC) China 223.4
2 China Construction Bank China 167.1
3 HSBC Holdings UK 150.06
4 Agricultural Bank of China China 134.91
5 JPMorgan Chase & Co. US 130.27
6 Bank of China China 122.16
7 Wells Fargo US 120.86
8 Citigroup US 76.04
9 Commonwealth Bank of Australia Australia 75.24
10 Banco Santander Spain 74.81
11 Itau Unibanco Brazil 70.44
12 Royal Bank Canada Canada 70.38
13 Bank of America US 65.23
14 Mitsubishi UFJ Financial Japan 63.92
15 Toronto-Dominion Bank Canada 63.50
16 Westpac Banking Australia 61.69
17 Sberbank of Russia Russia 61.12
18 Bradesco Brazil 57.76
19 BNP Paribas France 57.06
20 Bank of Nova Scotia Canada 53.85
21 ANZ Banking Australia 52.76
22 Standard Chartered UK 52.16
23 UBS Switzerland 51.39
24 National Australia Bank Australia 50.83
25 Banco do Brasil Brazil 44.85
26 Bank of Communications China 43.91
27 BBVA Spain 41.84
28 Sumitomo Mitsui Financial Japan 40.20

36
 29 China Merchants Bank China 39.64
30 US Bancorp US 39.01
31 Bank of Montreal Canada 36.92
32 Deutsche Bank Germany 36.07
33 Santander Brasil Brazil 34.77
34 Nordea Bank Sweden 34.29
35 Lloyds Banking Group UK 31.92

Appendix E

Top Banks in the World 2012

The following is a list of the top 10 banks and top 50 banks in world ranked by total assets. Deutsche
Bank (DB) is currently the largest bank in the world with assets of EUR2.186 trillion (US$2.810 trillion).
In 2012, DB was awarded the title of Best Global Investment Bank by Euromoney magazine and won
six awards from Global Finance including Best Corporate Bank, Best Foreign Exchange Bank and Best
Credit Derivatives Provider, Europe. Mitsubishi UFJ Financial Group (MUFG) is the second largest
financial institution in the world with assets of ¥218.641 trillion (US$2.803 trillion). The Bank of Tokyo-
Mitsubishi UFJ is the main banking arm of MUFG. Industrial and Commercial Bank of China (ICBC) is
the third largest bank in the world. ICBC moved up to third place in the new world rankings in
September 2012. In December 2011, ICBC occupied only the sixth position. The ten largest banks hold
over $25.6 trillion in combined assets.
Rank Bank Country Total Assets, US$b *
1 Deutsche Bank Germany 2,809.89
2 Mitsubishi UFJ Financial Group Japan 2,803.42
3 Industrial & Commercial Bank of China China 2,763.59
4 HSBC Holdings UK 2,721.06
5 Barclays PLC UK 2,584.30
6 BNP Paribas France 2,562.99
7 Japan Post Bank Japan 2,513.21
8 JPMorgan Chase & Co. USA 2,321.28
9 Credit Agricole SA France 2,317.12
10 Royal Bank of Scotland Group UK 2,225.14
11 Bank of America USA 2,168.02
12 Mizuho Financial Group Japan 2,123.32
13 China Construction Bank Corporation China 2,115.35
14 Agricultural Bank of China China 2,078.03
15 Bank of China China 2,027.41
16 Citigroup Inc USA 1,931.35
17 Sumitomo Mitsui Financial Group Japan 1,788.23
18 Banco Santander Spain 1,672.11
19 Societe Generale France 1,647.51
20 ING Group Netherlands 1,604.57
21 Groupe BPCE France 1,531.08
22 Lloyds Banking Group UK 1,529.12
23 UBS Switzerland 1,456.45
24 Wells Fargo USA 1,374.72
25 UniCredit S.p.A. Italy 1,245.95
26 Credit Suisse Group Switzerland 1,088.60
27 China Development Bank China 994.685
28 Rabobank Group Netherlands 991.075
29 Norinchukin Bank Japan 949.667
30 Goldman Sachs USA 949.475
31 Nordea Bank Sweden 914.056
32 Commerzbank Germany 868.510
33 Intesa Sanpaolo Italy 859.643
34 Royal Bank of Canada Canada 838.216
35 BBVA (Banco Bilbao Vizcaya Argentaria) Spain 829.794
36 Bank of Communications China 823.033
37 Toronto-Dominion Bank Canada 819.802
38 National Australia Bank Australia 791.899
39 Morgan Stanley USA 764.985

37
 40 Commonwealth Bank of Australia Australia 745.345
41 Natixis France 721.933
42 Westpac Banking Corporation Australia 700.447
43 Bank of Nova Scotia (Scotiabank) Canada 681.203
44 Australia and New Zealand Banking Group Australia 666.370
45 KfW Bankengruppe Germany 665.818
46 Standard Chartered UK 624.431
47 Danske Bank Group Denmark 620.710
48 Bank of Montreal (BMO) Canada 551.340
49 Banco do Brasil S.A. Brazil 544.631
50 Dexia Belgium 528.595
51 DZ Bank Germany 523.025
52 Banque Federative du Credit Mutuel (BFCM Group) France 494.723
53 Landesbank Baden-Wurttemberg (LBBW) Germany 474.134
* The exchange rate on September 30, 2012
Last Modified: December 7, 2012

Appendix F

June 8, 2011, 5:14 am Private Equity <emphasis added>

New Fund, With Ties to Kremlin, Seeks Foreign Investors

By JACK EWING

4:52 p.m. | Updated

As part of its drive to show foreign investors that Russia is a safe and profitable place to put their
money, a government-owned bank has established a private equity fund with a former Goldman
Sachs banker in charge and Prime Minister Vladimir V. Putin as its promoter.

Last month, Mr. Putin met in Moscow with prominent international investors including Stephen A.
Schwarzman, chief executive of the Blackstone Group, and Lou Jiwei, chief executive of the China
Investment Corporation, to try to generate interest in Russia’s direct investment fund. President
Dmitri A. Medvedev plans to announce the fund formally later this month at the St. Petersburg
International Economic Forum.

Over dinner on Wednesday in Vienna with a small group of business people and investors, Kirill
Dmitriev, an alumnus of Goldman Sachs and McKinsey & Company who is chief executive of the
fund, gave details of how it would be structured.

The point of the fund, Mr. Dmitriev emphasized, will be to make money. That is not always obvious
in Russia, where foreign investors have been concerned about corruption, lack of an impartial court
system and the authoritarian tendencies of the government.

“We want to make some returns,” said Mr. Dmitriev, who graduated from Stanford University and
the Harvard Business School. Before Mr. Putin named him to run the fund, Mr. Dmitriev was
president of Icon Private Equity, a fund focused on Russia and the former Soviet Union.

Profitability, rather than government policy goals, will drive the investments, Mr. Dmitriev promised.
While the overall aim is to promote growth and create jobs, investments will be judged according to
the potential return over the typical private equity cycle of five to seven years, he said.

38
Russia plans to commit $10 billion to the fund, in installments of $2 billion a year for five years, via
the government development bank Vnesheconombank. But the bank’s stake in investments will
never exceed 50 percent, meaning that foreign investors will retain control, said Petr Fradkov,
deputy chairman of the bank.

At the same time, Mr. Putin’s personal involvement in the fund is intended to reassure investors
that they will not be abused by arbitrary or corrupt lower-ranking officials. “The investor has
implicit comfort,” Mr. Fradkov said.

Mr. Putin met for an hour and a half on May 18 with the foreign investors, a group of about 20
people that also included representatives of the Kuwait Investment Authority, the Abu Dhabi
Investment Authority and private equity fund Permira, Mr. Fradkov and Mr. Dmitriev said.

Investors are not being asked to write blank checks to the fund, but rather to invest in individual
deals, another effort to reassure them that they will have control over how their money is spent. Mr.
Fradkov said that there were projects in the works and that the first deals should be announced
within nine months.

Mr. Fradkov would not give specifics about potential deals, but Mr. Dmitriev said one goal of the
fund would be to invest in companies that could profit from Russia’s rapidly growing middle class.

Investors may still need to be convinced. The questions put to Mr. Dmitriev and Mr. Fradkov at the
dinner made it clear that many still regarded Russia as risky and unpredictable. When politicians are
involved — and not just in Russia — there is always a risk that money will be steered to pet projects.

As Mr. Dmitriev points out, the best way to deal with such concerns will be to generate some big
returns in the years to come.

Appendix G

Moscow Tries to Reinvent Itself as Financial Hub

By ANDREW E. KRAMER <New York Times, emphasis added>
Published: April 3, 2013

MOSCOW — Having tried and failed to become a major financial center, Moscow is trying yet again
— only this time it finds itself competing for business with Warsaw, not London, Tokyo and New
York.

Moscow wants companies to list on the Moscow stock exchange. It wants money center banks to
expand here, as well as insurance companies and law firms that deal with securities, to make
Moscow the hub for the former Soviet Union or Eastern Europe.

To do all that, city leaders are inviting business to glittering new skyscrapers, including the Mercury
City Tower, which at 75 stories is the tallest building in Europe.

“The idea is to upgrade the position of Moscow in ratings, to become closer to the leaders of
innovation and to the big boys of international financial centers,” Andrei V. Sharonov, the deputy
mayor for economic affairs, who led a roadshow tour promoting the city in Asia, said in an interview.

39
This spring, the city government sent deputy mayors to Tokyo, Singapore, Frankfurt, London, Boston
and New York to tell banks and other financial companies they should take a closer look at Moscow.
The trip was the first concerted effort by the city government to woo investors as tenants for the
new high-rise financial district called Moscow City.

Certainly Moscow has a lot of wooing to do. A city of traffic-clogged highways and sprawling
concrete apartment blocks, Moscow is widely known as a singularly difficult place to do business. It
did attract the big banking houses from New York and London after the fall of Communism. But
cronyism, the lack of transparency and shady accounting gave companies pause. Weak courts and
selective enforcement encouraged companies to conduct business outside Russia.

Political change in Russia further sapped enthusiasm. Vladimir V. Putin, a skeptic regarding greater
integration with the West, succeeded Dmitri A. Medvedev, who was seen as a modernizing figure, as
president in a switch known as “the castling” for its resemblance to the chess move.

Mr. Medvedev had named senior Western bank executives to an advisory council for transforming
Moscow’s financial sector. They included Jamie Dimon, the chief executive of JPMorgan Chase;
Vikram S. Pandit, the former chief executive of Citigroup; and Lloyd C. Blankfein, the chief executive
of Goldman Sachs.

But the Global Financial Center Index, published in March by Z/Yen, a consulting agency, placed
Moscow 65th out of 79 cities studied. London was first, followed by New York and Hong Kong. The
ranking placed Moscow between Bahrain and Mumbai. A survey by the World Bank and the
International Finance Corporation even ranked Moscow No. 30 out of 30 Russian cities for ease of
doing business.

“Moscow was never going to be an international financial center,” a Western banker working here,
who was not authorized to speak for his employer on the matter, said of the effort. “That was a
joke.”

So Moscow is setting its sights a little lower. Its biggest problem is to be taken seriously even as a
regional center.

The midsize companies in neighboring Ukraine or other former Soviet republics are choosing to go
public in Warsaw. They are hardly bothering to look at the carefully laid out welcome mat in
Russia. Kernel, a Ukrainian corporate farming enterprise, and Coal Energy, a Ukrainian producer of
steam coal, listed in Poland, where a policy of investing pensions in the stock market helps the local
exchange.

The Warsaw stock exchange, in fact, has so many Ukrainian company listings it has a Ukraine index.
Micex, the Russian stock exchange, has no such index because it has so few listings.

Moscow must compete, said Mr. Sharonov, the deputy mayor, because “there are a lot of other
opportunities and competitors all over the world.”

Moscow’s roadshow was intended to illustrate the city’s efforts to become more livable for foreign
executives and residents, Mr. Sharonov said. A new interchange links the financial district to nearby
roads, for example, easing congestion.

Also, under the federal program to promote banking here, Russian financial regulators tied up loose
ends in ways that pleased stock traders and other financial professionals, but have not been widely
noticed.

40
Russia created a central securities depository, introduced standard accounting rules for publicly
listed companies and is well on the way to consolidating nearly all financial regulatory authority in
the central bank by 2015. And, without much fanfare, the government now insists that all listed
Russian companies report financial results in accordance with international accounting standards.

“It’s a substantive change,” said Bruce Bower, the managing director of Verno Capital, a hedge fund
that focuses on Russia. “The government realized that by doing a little work, for the first time, it
could make a difference.”

3. For a ‘Concrete Analysis of the Concrete Situation’

Reply to Decker/Dorn on ‘Russian Imperialism’
—Riley, 15 July 2013

"…the concrete analysis of the concrete situation is not an opposite of 'pure' theory, but – on
the contrary – it is the culmination of genuine theory, its consummation – the point where it
breaks into practice."

—V.I. Lenin

Comrades Decker and Dorn’s 19 June response to my 3 June document takes up in some
detail to many of the arguments I set out for why Russia is not imperialist. I think that their
response is seriously flawed, as I will try to demonstrate below, but it is important that we
are at last seriously engaging on the programmatically significant issue of how Marxists
categorize contemporary Russia.

Some comrades may find it frustrating to read contributions from both sides of this dispute,
each of which seems plausible and apparently factually documented. But we cannot both be
right. So the only way to work through this problem is to really study the question and
carefully read and consider the arguments and expert testimony submitted by each side
(and perhaps do some further investigation).

When I reviewed the articles cited by Decker/Dorn in their critique I found that, on balance,
they did not project a very different picture of the political/economic reality of present day
Russia than the assessments by the U.S. State Department and the Economist quoted in my
document. This has put me in the fortunate position of being able to rebut the core
propositions put forward by my critics largely with citations from documents they
themselves introduced into the discussion. I think the implications are fairly obvious, and
hope that by reviewing this material together we may find ourselves moving closer to a
common understanding of the present character of Russia and its position in the
international world order.

A key sentence in the intro to the Decker and Dorn document sums up much of their
dissatisfaction with my contribution:

“Aside from dismissing major sectors of the economy and failing to fully consider the role
that Russia plays in global imperialist rivalries over markets and spheres of influence, Tom’s
document paints a misleading portrait of Russian finance capital and its status in relation to

41
 capital export.”

The comrades generously allow that I am not deliberately attempting to falsify things, but
that my views “likely stem from a tendency to 'read' the data on the basis of a pre-
established view of Russia.” I regard Decker, Dorn and their co-thinkers in exactly the same
light—as good comrades whose errors on this question stem from a tendency to attempt to
make reality fit their pre-established construct. While they characterize my view of Russia as
“a sort of basket case” I would simply say that while Russia is a significant player in global
politics and a formidable military factor, it is, in terms of economic development, not
qualitatively different than Brazil, which is to say not an imperialist country.

Before looking at the substantive economic questions there are a couple of open-ended, but
undeveloped, propositions in the Decker and Dorn piece that I want to address.

1) The first is a complaint that my document failed “to fully consider the role that Russia
plays in global imperialist rivalries over markets and spheres of influence.” It is unclear
exactly what this entails. On the basis of the IEC’s unanimous adoption of the text “On
Imperialism,” I had presumed:

“We are agreed that the imperialist world system operates to channel wealth from relatively
backward countries to the elites of the ‘developed’ capitalist countries. Those countries that
are active participants in what Trotsky referred to as ‘the expansionist policy of finance
capital’ (a policy at least partially mediated through a complex web of international political
and particularly economic institutions) can properly be considered imperialist.”

—“Is Russia Imperialist?”, 3 June

I presume we are still agreed that if a country does not meet the “finance capital” criterion, it
does not matter if it attempts to enlarge its sphere of influence. As we noted in 1917 No, 29,
Iran is contesting dominance in the strategically vital Persian Gulf region with the
US/NATO axis, but no one concluded that it had somehow become imperialist.

The recent rivalry between Qatar and the Saudis for influence in Egypt provides another
example:

“The aid package [of $8 billion from the Saudis and UAE to the new government]
underscored a continuing regional contest for influence between Saudi Arabia and Qatar, one
that has accelerated since the Arab uprising upended the status quo and brought Islamists to
power.

‘Qatar, in alliance with Turkey, has given strong financial and diplomatic support to the
Muslim Brotherhood, but also to other Islamists operating on the battlefields of Syria and,
before that, Libya. Saudi Arabia and the Emirates, by comparison, have sought to restore the
old, authoritarian order, fearful that Islamist movements and calls for democracy would
destabilize their own nations.”

. .

“The Saudis and Emiratis were nearly buoyant at the military’s move to oust Mr. Morsi. Both
are deeply hostile to the Brotherhood’s Islamist-cum-democratic agenda, which they see as a

42
 threat both to their own monarchical legitimacy and to regional stability. Qatar, by contrast,
provided about $8 billion in aid to Mr. Morsi’s government during his yearlong tenure, and
Turkey offered loans of $2 billion.”

—New York Times, 10 July

The scale of this aid has apparently been sufficient to (temporarily) free Egypt from
dependence on the IMF:

“The Qatari and Turkish financial aid to Mr. Morsi’s government last year helped him to
avert painful economic reforms being urged by the International Monetary Fund as the price
for its own $4.8 billion aid package.”

Of course Qatar, Saudi Arabia etc. are no more imperialist than Iran. So it is not clear exactly
what Decker/Dorn’s “sphere of influence” criticism entails. If it is only a suggestion that the
document would be improved by a few sentences indicating that the Russian bourgeoisie
pursues its own interests, e.g., seeks to resist NATO plans to dominate countries like Syria
with which it has a long term alliance, that of course is agreed. I hope that it does not
represent a gesture in the direction of a “multi-factoral” (rather than finance capital) model
of imperialism.

2) The second Decker/Dorn proposition is the assertion that if we agree that Czarist Russia
circa WWI was imperialist while also “far more backward than modern-day Russia” it “is
difficult to see why Russia circa 2013 is not imperialist.” We treated the question of Czarist
Russia as imperialist in a separate document in which we noted that Trotsky and Lenin
considered that the massive investment by Russia's bourgeoisie in adjacent backward
countries qualified Russia as imperialist despite the fact that it remained a predominantly
peasant-based society governed by a feudalist autocracy that posed a major obstacle to
domestic capitalist development. The question we must seek to answer is whether Russian
capitalists today have a similar relationship to the countries of the CIS etc or whether they
are more similar to countries like Brazil, India or Greece whose bourgeoisies have
investments in some more backward countries, but not on a scale that would qualify them as
imperialist. In today’s “globalized” capitalist economy many relatively backward countries
engage in foreign investments. For example the “World Investment Report 2012,” cited by
Decker and Dorn, reports that in 2011 in the CIS, “The takeover of Polyus Gold (Russian
Federation) for $6.3 billion by the KazakhGold Group (Kazakhstan) was the largest.”

* * *

It does not seem to me that the comrades were entirely successful in rebutting what they
describe as the “misunderstandings/misleading analysis” in my document, nor do I think
they succeeded in “placing the data in context and comparative perspective” as I will seek to
demonstrate. I think that in adding new information they seem to have been tempted to
“cherry pick” their sources and ignore aspects (often rather substantive ones) that did not
support their conclusion.

CIA & EU: Russia is Resource Dependent & Technologically Backward

Decker/Dorn first cite the CIA Factbook to demonstrate that the proportions between

43
agriculture, industry and services in the Russian economy “resembles the economies of the
most advanced imperialist powers.” True enough, but the CIA’s “Overview” also says:

“Russia's reliance on commodity exports makes it vulnerable to boom and bust cycles that
follow the volatile swings in global prices. The government since 2007 has embarked on an
ambitious program to reduce this dependency and build up the country's high technology
sectors, but with few visible results so far. The economy had averaged 7% growth in the
decade following the 1998 Russian financial crisis, resulting in a doubling of real disposable
incomes and the emergence of a middle class. The Russian economy, however, was one of the
hardest hit by the 2008-09 global economic crisis as oil prices plummeted and the foreign
credits that Russian banks and firms relied on dried up.... The economic decline bottomed
out in mid-2009 and the economy began to grow again in the third quarter of 2009..... Russia
has had difficulty attracting foreign direct investment and has experienced large capital
outflows in the past several years, leading to official programs to improve Russia's
international rankings for its investment climate.”
—emphasis added

This describes a country desperate to improve its status with the mavens of international
finance capital in order to attract the foreign investment necessary to raise its technological
capacity to world standards and break free of the traditionally non-imperialist role of
supplier of raw materials to more advanced economies. As such it is not exactly congruent
with what comrades Dorn and Decker’s snippet was supposed to demonstrate.

Their next source, a June 2012 EU study on “The Economic Significance of Russia's
Accession to the WTO,” is also cited for what it says about the composition of GDP. The
comrades admit that the country remains backward in many ways and “and in some
respects Russian capitalism lags massively behind” but caution that it is “important to get a
sense of perspective, and not to accept on face value caricatures of Russia.” Perspective is
good, and I would not dispute the EU study’s observation that the size of the service sector
in Russia is somewhat closer to the EU than China or Indonesia. (Of course neither of those
countries experienced the forcible liquidation of peasant smallholders carried out during
Stalin’s forced collectivization.) What is far more significant in gauging a country’s relative
position in the world economy than the size of its service sector is whether or not its
commodities are competitive internationally. By this measure Russia does not fare so well,
as the EU study observes:

“Russia's comparatively poor performance during the Great Recession led many in the ruling
elite to conclude that Russia's vulnerability was caused by its technologically backward and
natural resource oriented economic structure.” <p21>

The EU report contains an overall assessment that essentially tallies with what the comrades
colorfully referred to as a “basket case” when I cited similar comments:

“It is plausible that Putin’s new term may presage renewed efforts at economic reform in
Russia. However, even if this were to occur, there is still the important issue of whether or not
the Russian state possesses the administrative capacity to implement either new economic
reforms, or, at a more minimal level, the legal commitments made as part of the accession
agreement. Russia’s low ranking on indicators measuring corruption and the rule of law all
suggest that the low quality of public administration might prevent Russia from doing either.

44
 Indeed, the role of the state in the Russian economy is particularly pernicious, with
officials and those close to them using their positions to both extract kickbacks and
expropriate assets from Russian businesses on a frequent basis (see Table 1). The data
presented in Table 1 are further supported by a wide range of other international measures
that illustrate that the quality of public administration and legislation are comparatively poor
(including the World Bank’s Ease of Doing Business Index, the World Economic Forum’s
Global Competitiveness Report, and many more).

“Such corrupt practices as informal collusion between state officials and well-connected
businessmen permeate every level of Russian society, from the federal level to regional and
local levels. In all instances this collusion and the use of public office and laws to benefit
private interests is used to stack the economic rules of the game in favour of well-
connected incumbents.”
—“The Economic Significance of Russia’s Accession to the WTO,” p23, emphasis
added

The authors of the EU report anticipate that with integration into the WTO “foreign firms
[will] gain greater access to the Russian market,” competition will increase and prices for
consumer goods will fall:
“Product market competition is a driver of productivity growth by spurring innovation either
directly or indirectly, through what Joseph Schumpeter termed processes of ‘creative
destruction.’. In Russia, the empirical evidence suggests that openness to foreign competition
boosts domestic productivity growth (Aghion and Bessonova, 2006; OECD, 2009). The effect
is considered strongest in firms that are closer to the technological frontier. For less
productive firms, the threat of entry tends to reduce the incentive to innovate by reducing
their ‘life expectancy’ and thus shortening their time horizons. Sectors in which producers are
far from the technological frontier, and therefore less likely to adapt and more likely to suffer
from import competition, include light industry, mechanical engineering, machinery, food
processing, textiles and clothing, building materials, and agriculture (especially beef and pork
production). In business service sectors, such as telecommunications and financial services,
Russian firms that are not either part of joint ventures with foreign firms are likely to suffer
(e.g., Jensen et al., 2006).”
—Ibid., pp25-26

The “World Investment Report 2012,” (p57) also cited by Decker and Dorn makes a similar
projection that accession to the WTO will “boost foreign investors’ confidence and improve
the overall investment environment” although “in the manufacturing sector, domestic and
foreign investors will most likely consolidate as the landscape becomes more competitive.”
The term “consolidate” is of course a euphemism for what the EU report referred to as the
process of “creative destruction” of existing non-competitive Russian firms as integration
proceeds.

The sunny projection in the EU report that integration into the WTO will involve the
“creative destruction” of much of actually-existing Russian capitalism derives from the
authors’ view that, “on the whole, Russia is not competitive, in both industrial and services
exports” (p26). Comrades Decker and Dorn take a different view, without providing
supporting evidence: “[D1] The Russian economy continues to combine considerable
backwardness with important elements of the most advanced capitalism based on high
technology.” The authors of the EU document offer a somewhat bleaker assessment:

45
 “A number of recent studies show that Russia enjoys Revealed Comparative Advantage
(RCA) in only a few industrial activities (Cooper, 2006; Connolly, 2008, 2012b).17 Apart from
hydrocarbons and some other raw materials (such as precious metals and timber), Russia
only exhibits a comparative advantage in a few medium- and high-technology products, such
as military equipment, nuclear reactors and other power generating machinery. These are
traditional Soviet manufactured products, presently exported by Russia to the markets that
were developed in the Soviet era. The only industrial activity in which Russia has
managed to achieve RCA during the post-Soviet period is in microscopes. Here, NT-MDT,
a company that specialises in scanning probe microscopes, is ranked second in terms of sales
volumes on the world market (Connolly, 2011b). Russia’s low levels of competitiveness in
higher value-added industrial activities compares unfavourably with many other large
low- and middle-income economies, including Brazil, China, India, and Turkey. Moreover,
with the exception of Information Technology (IT) and some financial sector activity in the
former Soviet states, Russia is not competitive in international services trade, either (Figure
6).”
—“The Economic Significance of Russia’s Accession to the WTO,” p26, emphasis
added

It is hard to overstate the significance of this—the unfavorable comparison to Brazil, India

and Turkey is particularly striking. It raises the question of whether Decker and Dorn, who
introduced this document into our discussion, took the time to actually read it.

The authors of the EU report appear to agree that, “the inability to produce products that are
competitive internationally”(“Is Russia Imperialist?”) lies at the core of the difficulties of
Russian capitalism. They also seem to share the view that Moscow’s “ability to reduce the
gap separating it from its more advanced capitalist rivals” is blocked “by backwardness and
bureaucratic corruption”:

“Overall, the chances of Russia benefitting from increased market access abroad will be
determined by how successful the country is in effecting structural transformation over the
medium- to long-term.…Therefore, we come back to the issue of whether or not the Russian
elite is willing and able to commit to forging ahead with meaningful and relatively far-
reaching economic reform. It is this, along with sensibly designed industrial policies, which
will ultimately determine whether Russia will become a successful exporter of higher value-
added goods and services in the future.”
—Ibid., p27

If the Russian ruling class can manage to carry out such a transformation and raise its labor
productivity to world class levels it will indeed emerge as a genuine imperialist power in the
Marxist sense. But that is a big “if,” and one that seems increasingly improbable with the
passage of time. (The very fact that it is an ”if,” rather than an accomplished fact, of course
signifies that Russia is not yet a member of the imperialist club.) The EU report’s authors
caution that even after formally submitting to the WTO, “considerable informal
administrative tools remain available to Russian elites, both at the federal and local levels,
which may be used to restrict access to some Russian markets.” Yet they speculate that
ultimately Russia will have to go along to get along which will provide lucrative
opportunities for EU corporations:

46
 “Notwithstanding some of the important issues outlined above, as a result of Russia’s
accession EU strengths in business services (especially financial services, telecommunications,
and IT and software services, areas where EU countries possess RCA), light industry,
mechanical engineering, machinery, food processing, textiles and clothing, building
materials, and agriculture (especially beef and pork production), are all likely to see EU firms
in these sectors benefit from improved access to the Russian market.”
—Ibid., p36

None of the sources Decker/Dorn cite treat Russia as an “advanced capitalist” (i.e., the
bourgeois euphemism for imperialist) economy. Without exception Russia is referred to it as
an “emerging” or “developing” or “transitional” country precisely because of the gap which
exists—the same gap which the EU imperialists anticipate will set the stage for “creative
destruction” once they get into the tent.

To be fair, in their critique, the comrades do allow that Russia is far behind the “high
income” OECD countries (i.e., the imperialist countries) in terms of labor productivity, but
insist, without explanation, that it should be bracketed with economies 250 percent more
productive (“other imperialist countries”) rather than those which are at a comparable levels
of overall development (e.g., Brazil).
“Aggregate labor productivity in Russia is admittedly low compared to other imperialist
countries (just over 40% of ‘high-income’ OECD countries), and the significant progress that
was made in the 2000s has slowed since the onset of the global economic crisis. On the whole,
Russian manufacturing is not particularly competitive, but there are sectors that can compete
globally – most notably, chemicals and metals, though other key industries (e.g., transport
vehicles) lag behind (Ye.Yasin et al., “Russian Manufacturing Revisited: Industrial Enterprises
at the Start of the 2008 Financial Crisis,” Bank of Finland).”
—Decker /Dorn, 19 June

The Bank of Finland article is slightly more optimistic than the EU report, noting:

“True, Russian manufacturing generally lacks international competitiveness and still relies
extensively on obsolete technologies. But there is also strong evidence that some Russian
manufacturers have made significant advances in recent years.” [p4]

The most outstanding example of the latter was that “Russian manufacturing saw labor
productivity soar 50% on average during 2005-2008” (p4). Yet despite this, “As a whole,
Russian manufacturing firms failed to substantially improve their global competitiveness in
the period” (p5). The authors, like every other serious analyst, take for granted that the
appropriate comparators for Russia are its fellow “developing” BRICs. In discussing
“Government-business relations,” they write:
“We can suppose that local and regional authorities in more advanced regions in Russia
worked to attract investment and encouraged firms to restructure their businesses. This is
similar to the experience of China, Brazil and many other developing countries.” [p6]

The Bank of Finland report offers the familiar negative assessment of the dominant political
culture:
“An important obstacle to manufacturing competitiveness in this period was the lack of
progress in institutional development. As a result, respondent assessments of business
barriers in 2005 and 2009 are largely unchanged.” [p8]

47
One of the things in this report which may have come as a surprise to Decker and Dorn is
the information that Russia is falling behind other “transitional economies” (i.e., former
deformed workers states of the Soviet bloc):
“The absence of significant improvements in Russia’s business climate against a background
of positive developments in the institutional environment in other transition economies is
notable as Russian enterprises saw their competitiveness erode vis-à-vis their peers in these
economies. According to the BEEPS [Business Environment and Enterprise Performance
Survey] Russia in 2002 looked better on average than 26 other surveyed transition economies
in three-fourths of business climate parameters. By 2005, Russia led in only half of the
surveyed parameters. In 2009, it lagged the average in 16 of 18 parameters among the 29
surveyed countries.” [pp 9-10]

The authors describe Russian industry’s relative technological backwardness as a “vicious

circle”:
“Comparison of the 2005 and 2009 findings shows the sectors have not converged in the area
of technology absorption. The leaders have become stronger and the laggards have slipped
farther behind. Most manufacturing industries found themselves ensnared in a catch-22
situation. According to V. Polterovich (2009), this vicious circle of backwardness means
innovation cannot drive economic growth as backward production does not create demand
for innovation and suppresses supply, while absent supply in its way tends to be a drag on
demand.” [p12]

The authors also observe:

“Probably the most important trend here, however, was toward wider equity participation of
foreign owners (investors) in Russian manufacturing firms. In the early 2000s, empirical
studies found the share of foreign interest in manufacturing was only 1-2%. The above-
mentioned 2005 survey found that foreign investors accounted for up to 4% of equity in
manufacturing overall, and the foreign equity participation in joint-stock companies was just
under 10%.”

The Bank of Finland finds that in terms of competitiveness, there is “an explicit positive
correlation with foreign co-ownership, similar to what has been earlier observed in other
advanced and transition economies.” They report that:
“Half of the firms classified as most innovative in our study were firms with foreign
participation. (At this point, we offer a caveat: this may be due to a positive selection effect, i.e.
foreign investors tend to cherry-pick among the most efficient enterprises when targeting
participation.)” [p15]

Once again the pattern is far more typical of the relationship between imperialist portfolio
investors and the indigenous bourgeoisie of a “developing” or “emerging” economy than
between capitalists in two “developed” economies.

On Recent Fluctuations in FDI figures for Brazil & Russia

The EU study discussed above sums up the relationship between Russia and the EU as one
“characterized by asymmetries in size and production profiles, with the role of EU energy
imports central to the economic relationship” (p5). In a footnote (p21) the authors speculate
that:

48
 “it is likely that Russia's particularly poor performance [in the ‘Great Recession’ of 2008-09
can be explained by a combination of: exposure to the drop in commodity prices; poor
institutional characteristics; and an openness in its capital account that is unusual for a
country in its stage of development.”

This touches on the same weakness noted in the CIA overview—Russia needs massive
investment to bring its economy up to global standards but its “poor institutional
characteristics” (i.e., corruption and the arbitrary actions of state authorities) has resulted in
a low rating by international finance capital as an investment destination. This problem is
far more characteristic of neo-colonial or relatively backward capitalist countries than
imperialist ones. Several examples of (unsuccessful) attempts by the Kremlin to find quick
fixes for this problem were cited in “Is Russia Imperialist?” The relative ease with which
money can be pulled out and sent to various offshore tax havens doubtless has a lot to do
with the fact that “Russia has been a relative exporter of FDI [foreign direct investment]
flow” as comrades Decker and Dorn put it. But the significance of this phenomenon cannot
be presumed to be identical to investment flows from countries like the UK, Germany or
Sweden.

The comrades’ commentary (L1 – L8) puts considerable emphasis on discussing recent
developments in global FDI figures, without, in my view, paying sufficient attention to some
key underlying fundamentals. Claiming that “The most recent figures demonstrate that
Russia has further entrenched itself as a finance capital power” (L1), Decker/Dorn note that
“Russia accounted for 3.6% of world FDI outflow in 2012” (L2) As we agree the majority of
Russia’s FDI outflow has tended to go tax havens, from whence a substantial portion returns
to Russia, the actual figure is almost certainly substantially lower than 3.6 percent. In a
footnote the 2012 EU Parliamentary report (p11) observes:
“It should be noted, however, that Russian companies invest far more than is normal (by international
standards) in tax havens, such as the British Virgin Islands, Bermuda, Cyprus and Switzerland. Some
of this OFDI is then repatriated in the form of IFDI, thus inflating the ‘real’, non-Russian FDI flows,
both inward and outward.”

Decker and Dorn point out that similar practices are common among established imperialist
countries and cite recent information that “In 2011, approximately 10% of the inward FDI
stock in the UK was from ‘UK offshore islands’ and the tiny ‘grand duchy’ of Luxembourg
alone.” While the amount of money involved is substantial, the proportion relative to the
overall capital stock is substantially less—ten percent for Britain, compared to estimates in
recent years ranging as high as two-thirds for both Brazil and Russia.

Decker and Dorn cite figures since 2007 contrasting Brazil’s falling outward FDI (ODFI) flow
as a percentage of global totals, with rising figures for Russia. They conclude: “Brazil’s
profile is more erratic, and it does not appear to play the same role as Russia” in terms of
global finance capital. They do not comment on the fact that tables they reproduce for ODFI
stock—rather than “flow”—in L1 and L3 show the opposite trend over the same period;
Brazil’s climbed from 0.7 to 1.0 while Russia’s fell from 1.9 to 1.7. We should recall that as
recently as 2006, (the year that Vale, a Brazilian mining conglomerate, acquired Canadian
mining giant INCO) Brazilian FDI exceeded Russian. I would presume we all agree that
there has been no qualitative change in either country’s status since then.

49
The comrades comment that Russia “has, unlike Brazil, jumped onto the outward FDI flow
scene in a big way since 2000-2001, when the two countries were fairly similar in profile”
(L4). Russia’s “jump” of course corresponds to a steep rise in global oil prices, which
produced a bonanza for all oil-exporting countries. As might be expected there was a
corresponding upturn in outward directed investments from major Middle East oil
producers during the same period (see Appendix A). According to the Financial Times,
between 2003-07 and 2008-12:
“The second highest increase in FDI outflows was recorded by the United Arab Emirates. It
was the 14th largest outbound investor in 2008 to 2012, moving up nine places compared
with the 2003 to 2007 period. It now ranks above larger countries such as South Korea and
Australia.
“Elsewhere in the Middle East, investments from Kuwait, Bahrain and Qatar have also
increased significantly between the two five-year periods, although they are still far behind
UAE levels. Comparing the two periods, the number of outward FDI projects from Kuwait
doubled, the number from Qatar increased threefold and the number from Bahrain increased
fivefold.”
—FDI Intelligence, 10 April 2013

When a similar upturn took place during the early 1970s OPEC oil crisis no one interpreted
the massive flow of petrodollars from OPEC countries back to imperialist financial centers as
evidence of the emergence of Kuwaiti or Saudi Arabian “finance capital.”

The steep decline in Brazilian ODFI flow (into negative territory) has attracted attention
from academics as well as financiers. A recent study from Columbia University sheds some
light on what appears to be a rather complicated phenomenon:
“Between 2000 and 2010, Russia and China had higher rates of growth of their OFDI stocks
than that of Brazil’s. On average, the growth rate in 2000-2010 of Brazil’s OFDI was 14%
below the average of the BRICs. In 2009, most likely in response to the world-wide economic
and financial crisis, OFDI outflows from Brazil were negative, with Brazilian companies
repatriating US $10 billion from their foreign affiliates through intra-company loans. Annex
table 2 shows a peak outflow in 2006 of US $28 billion from Brazil.”
—“Outward FDI from Brazil and its policy context, 2012,” Milton de Abreau
Campanario et al, Vale Columbia Center, 10 May 2012, p2

The authors suggest that Brazilian OFDI fluctuations may, at least in part, have reflected a
deliberate strategic calculation:
“Outward M&As [mergers and acquisitions] by Brazilian firms plummeted sharply in 2009,
although the effects of the crisis in Brazil were relatively limited. In 2010, Brazil’s GDP
growth was 7.5%. Equity investments made by Brazilian MNEs [multinational enterprises] in
foreign affiliates reached US $11.5 billion in 2010, 3.9% of world of world outward equity
investment flow, reaching the 5th position in the world, behind the United States, China,
Hong Kong (China), and Belgium.”
—Ibid., p6

If it had been Russia, rather than Brazil, that had risen so rapidly in global equity investment
tables the comrades might have been tempted to interpret it as evidence that “Russia has
further entrenched itself as a finance capital power.” I think it would a mistake to do so (for

50
Brazil or Russia) even if figures on equity investments (acquisition of actual corporate assets)
presumably need not be as steeply discounted as gross ODFI figures must be.

The Vale Center report also suggests:

“FDI can be indirectly financed through trans-shipment investment by using foreign affiliates
in third countries or institutions such as SPEs [‘special purpose entities’ that conceal
ownership], which are constructed in hubs, such as Luxembourg, Austria and Hungary, in
that order. In 2009 and 2010, the stock of Brazilian ODFI in the Cayman Islands and other tax
havens was considerably lower than in any year during 2000-2008. Also in 2009 and 2010, the
stock of Brazilian ODFI in Europe rose considerably….
“At the same time, FDI from Brazil in the primary and secondary sectors increased, while that
in the tertiary sector, and in financial services in particular, decreased. Further research could
throw light on the relationship, if any, between these sector and geographic changes and their
possible links to MNEs’ risk-mitigating strategies during and immediately following the
financial crisis of 2008-2009”
—Ibid., p6

The FDI Intelligence item cited above (and attached as Appendix A) reported little change in
the relative position of Brazil and Russia in terms of outward investment. I would presume
that this is because the figures are discounted for round-tripping, tax avoidance, money
laundering, etc.:
“A comparative analysis of investment outflows before the financial crisis—between 2003 and
2007—and during the crisis—between 2008 and 2012—reveals that, while China performed
very strongly, the rate of outward investment from Brazil, Russia and India did not increase
significantly between the two five-year periods. ....
“According to greenfield investment monitor fDi Markets, China increased its outward
investment by 152% between the two five-year periods, the biggest increase of any country in
the world. This made it the 12th largest outward investor in the world between 2008 and
2012, moving up from its ranking as the 17th largest investor in the 2003 to 2007 period.”
. . .
“India moved only two spots up the ranking, from the 13th largest outward investor to the
11th, while Russia and Brazil remained in the same positions at 20th and 31st, respectively.
"Outward greenfield FDI from the BRICs was impacted by the debt crisis in Europe, and by
stuttering growth in Brazil and much slower growth in China,” says Dr Henry Loewendahl, a
senior adviser for fDiIntelligence, the FDI analytics unit of the Financial Times to which fDi
Magazine also belongs.”
—FDI Intelligence, 10 April 2013, emphasis added

As regards investment in Africa, the comrades acknowledge (O6) that Russia “is still a
relatively minor player (even compared to some non-imperialist countries, particularly
China).” They cite a 25 March 2013 UNCTAD report that states “The expansion of Russian
TNCs in Africa is fairly recent but rapid, reaching US$1 billion in 2011.” The report includes
a table (p7) listing the top 20 investors in Africa for 2011 which does not include Russia for
“FDI flows” (while China is listed in 4th place and India in fifth). Russia is listed in 15th place
for “FDI stock” for 2011 with South Africa, China and India occupying the 5th to 7th slots.

Brazil & Russia — Shifting From Regional to Global FDI

51
A feature of Brazilian ODFI which parallels that of Russia is that, as it has grown in scope,
the proportion going to its own hinterland (the rest of Latin America and the CIS
respectively) has fallen as investment is increasingly directed at more “developed”
economies. The pithy and informative 2008 Deutsche Bank report that comrade Decker
originally introduced into the discussion in 2011 noted that “the percentage of Russian
investment going to CIS declines sharply as total Russian ODI grows—from 59% of the total
in 1997-99 to 12% in 2004-06.” In the case of Brazil:
“The distribution of Brazil’s ODFI and its concentration in the Americas has changed
somewhat over time. Data from BACEN suggest that, between 2001 and 2010, there has been
a systematic decrease in the participation of Latin America and the Caribbean, coupled with
an expansion in Europe and the United States….”
—“Outward FDI from Brazil and its policy context, 2012,” Milton de Abreau
Campanario et al, Vale Columbia Center, 10 May 2012, p3

The comrades have not commented on what would seem to be a critical factor in evaluating
the significance of investment in the CIS. According to the Columbia FDI Profiles’ “Russian
outward FDI and its policy context” (attached to “Is Russia Imperialist?”): “Russian
investment in CIS grew from $.13B in 2000 to $10B in 2008. (But the majority of this went to
Belarus, see Table 4 page 14).” I observed:

“Russian investment in CIS countries in 2007 and 2008 was overwhelmingly concentrated in
Belarus, which at that time was a close ally. This implies that political, rather than economic,
calculations were dominant. See Appendix C ‘Belarus Bailout Hinges on Russia’ in which the
author quotes an analyst’s observation that ‘Financially, Belarus is becoming another South
Ossetia.’”

Not only does most Russian ODFI flow to the “developed” countries, but what goes to the
CIS was, for a lengthy period, “overwhelmingly concentrated” in one small country for
political reasons—i.e., “another South Ossetia.” This is not finance capital pursuing
superprofits, but a state subsidy to a dependent regime for geopolitical reasons. I suspect
that comrades who view Russia as imperialist may wish to ignore this because of the
importance of the “exploitation” of CIS counties by Russian capitalists in their scenario. But
Marxists have a responsibility to attempt to account for facts that do not fit a pre-conceived
model, and sometimes, if the gap between the model and reality becomes too great, be
prepared to rethink the position.

Brazil’s Oil Sector Compared to Russia’s

Brazil’s oil industry is apparently fairly technologically advanced:

“Petrobas, the largest Brazilian company, ranks fifth in the list by foreign assets in annex table
5 [Brazil: major MNEs headquartered in the country, ranked by foreign assets in 2009 and 2010]; it is
a leading technology player in the sector, including in bio-fuels. The Government controls
56% of the voting shares in Petrobas. The company has drilled the world’s deepest
exploration well: the Tupi offshore oil field (7,000 meters below sea level). It has the
potential to turn Brazil into a global oil producer. Today, Brazil has reserves of 26.9 billion
barrels of oil.”

—“Outward FDI from Brazil and its policy context, 2012,” Milton de Abreau

52
 Campanario et al, Vale Columbia Center, 10 May 2012, p5, emphasis added

This technological capacity contrasts with Russia’s oil magnates who had to rely on U.S.
firms when they won the right to access Iraqi oilfields, (see “In Rebuilding Iraq’s Oil
Industry, U.S. Subcontractors Hold Sway,” Appendix A of “Is Russia Imperialist?”) Decker
and Dorn only address this obliquely, acknowledging that Russian energy firms are
relatively backward, while arguing that the “partnerships” they form based on technological
dependence are more analogous to alliances between imperialist corporations, rather than
the exploitation of more backward countries by more advanced ones:

“[F1] Although many imperialist countries are home to powerful corporations specializing in fossil
fuels (e.g., BP, ExxonMobil), the suggestion here is that oil and gas capital in Russia don’t really count
as finance capital due to the relative technological backwardness of Russian natural resources
industries. While it is true that Gazprom and other Russian energy companies have partnered with
other companies to borrow their technology, this does not render the Russians dependent on Britain,
for example. Such partnerships are normal across imperialist countries. Nor does Russia’s relative
technological backwardness in these strategic sectors mean that it is working with shovels. The fact
that large Russian energy corporations in many respects lag behind their U.S. competitors is hardly a
reason to disqualify them as examples of imperialist finance capital.”

Do the comrades consider the sizeable, but relatively technologically backward, national oil
companies of Saudi Arabia, Kuwait, Venezuela, etc. (all of which form similar
“partnerships” with the oil majors) to be similarly qualified as “examples of imperialist
finance capital”? If not, why not?

We explained why Russia’s energy oligarchs were more successful on the world market than
most of their contemporaries during the early Yeltsin years:

“The privatization drive was supposed to create a new generation of dynamic entrepreneurs
who, by shrewdly forging strategic partnerships with foreign investors, would obtain the
investment and technical inputs necessary to make Russian industry competitive
internationally. But the chaotic looting of the planned economy produced an entirely different
result:

“‘Before long most Russian businessmen, including the oligarchs, would realise that
the surest way to build fortunes was not to waste time and energy on the back-
breakingly difficult job of changing the way factories were run. The real money-
spinner was to grab a piece of Russia's vast mineral wealth....’

—Freeland, op cit

“The biggest winners in the privatization sweepstakes were the oil and gas executives of the
Soviet era (the neftyankiki and gazoviki). Unlike the industrial managers, who had to worry not
only about production but also marketing, shipping and raw materials, the former
bureaucrats who grabbed chunks of the Soviet oil and natural gas industry had ready-made
markets and established transportation networks. Their control of Russia's fuel supplies, and
the profits they made in export markets, gave them substantial domestic political clout.”

—“Russia: A Capitalist Dystopia,” 1917 No24

As long as 1970s Soviet infrastructure continues to pump oil and gas out of the ground there
will be money to be made, but with very little investment, Russia’s hydrocarbon industry

53
has been gradually losing ground to its competitors:

“Gustafson observes that the Russian oil industry relies, to a degree that is unusual in
international terms, on its ‘brownfields’ – fields that entered production decades ago. The
boom of the 2000s had less to do with the energies of new entrepreneurs than with the
accumulated inheritance of the Soviet era: fields, pipelines, geological knowledge and drilling
techniques remain largely the same. The surge in production since the late 1990s seems
impressive only because of the slump that immediately preceded it; Russian oil output has
not matched its 1987 peak even today. In Gustafson’s view, ‘the Soviet legacy assets have
acted as an anaesthetic, delaying the adaptation of the Russian oil industry to modern
management and technology, allowing it to remain relatively isolated and poorly equipped to
compete globally.’ Post-Soviet oil companies have done relatively little exploration of their
own: most of the fields brought online since 1991 were found by Soviet geologists, and only
one major new field discovered since 1988 has entered production – Vankor, in the far north
of the Krasnoyarsk region, operated by Rosneft since 2009.

“The combination of high oil prices and a massive expansion of production that proved so
beneficial to Putin is ‘not simply unlikely to happen again – it is impossible.’ Russia’s
geological luck is running out: West Siberia’s fields, which today account for almost two-
thirds of total production, began to decline in 2007, and new sources of petroleum have yet to
be found in sufficient quantities to make up the shortfall…. The hopes of the Russian oil
industry are increasingly focused on the offshore ‘bluefields’ of the Arctic and Sakhalin, but
these require huge levels of capital investment as well as forms of expertise the Russian
companies generally lack. Hence the series of partnerships Rosneft has recently formed with
international oil companies: with ExxonMobil and Eni last April, with Norway’s Statoil in
August and with BP in October, all of them geared to joint explorations of the Arctic shelf in
the Barents and Kara Seas.”

—London Review of Books, 6 June

Russian companies’ “partnerships” with imperialist oil corporations are analogous to those
formed in other countries where the national oil corporations lack the technology to exploit
their own resources. The fact that “Such partnerships are normal across imperialist
countries” is irrelevant—joint ventures between imperialist oil majors with world class
technology (BP, Exxon and Shell etc,) are hardly equivalent to arrangements they may work
out with Kuwait, Saudi Arabia, Venezuela or other countries which cannot access their own
resources without paying a surcharge for foreign assistance. These sorts of relationships
were described in 1922 in a document adopted by the Fourth Congress of the Comintern:

“The progress of indigenous productive forces in the colonies thus comes into sharp
contradiction with the interests of world imperialism, since the essence of imperialism is its
exploitation of the different levels of development of the productive forces in the different
sectors of the world economy, in order to extract monopoly super-profits.”

—“Theses on the Eastern Question,” emphasis added

Brazilian Tech Successes & Putin’s Aspirations

Brazil’s energy industry is apparently not the only area in which Rio de Janeiro is at least
quantitatively ahead of Moscow. Brazilian aerospace companies have been able to compete
successfully with imperialist ones in some sectors:

54
 “Embraer is the largest Brazilian MNE in the high-technology aerospace industry. Founded in
1969 as a state-owned enterprise, this firm became the world’s third largest manufacturer of
commercial aircraft and a leading producer of regional jets with up to 120 seats….In 2002, it
opened a factory in China (Harbin Embraer Aircraft Industry—HEAI), in association with
China’s state-owned company AVIC in which its holds a 51% stake, for assembly, sale and
post-sale support.”

—“Outward FDI from Brazil and its policy context, 2012,” Milton de Abreau
Campanario et al, Vale Columbia Center, 10 May 2012, p6

The authors also discuss how the Brazilian government’s policy “indirectly encouraged
FDI”:
“First, a steady reduction in tax barriers to imports, mainly in the capital goods and final
consumer goods industries, has opened the country to higher levels of international trade,
particularly imports of capital goods. This process has directly increased industrial
productivity and strengthened the competitiveness of Brazilian enterprises. Second, the
privatization of industries such as steel, energy, mining, chemical products, and
telecommunications in other economies has stimulated FDI from Brazil in those industries.
Incentives for mergers of domestic firms offered by BNDES [government supported
development bank] have also indirectly helped to promote the internationalization of
Brazilian firms by facilitating the creation of large MNEs, most notably in the past five years.”

This is roughly what Putin et al aspire to but as yet have made little progress toward
achieving:

“Diversifying the economy away from oil and gas remains an obligatory rhetorical goal for
the Russian elite as a whole. In September 2009, Medvedev – he was then president –
described the country’s dependence on hydrocarbons as ‘humiliating’; in his most recent state
of the nation address to the Duma, Putin insisted that ‘we cannot put up with the Russian
budget and social sector being kept hostage by financial and resource markets.’”

—London Review of Books, 6 June

Reviewing the evidence, it does not seem reasonable to conclude that Russian capitalism is
more advanced than Brazilian. Of course this is a bit of an awkward fact for those who
believe that Russia is imperialist and Brazil is not.

‘Global Challengers’ — Brazil Compared to Russia

I found the comrades’ response to the Deutsche Bank footnote on “global challengers” to be
unsatisfactory:

“P 2 Note that Russia has only 6 companies rated as “global challengers” compared to 20
for India and 13 for Brazil (footnote #4). [”Is Russia Imperialist?”]

“[K1] Actually, the Deutsche Bank report was citing a Boston Consulting Group paper with a measure
of “global challengers” that was more restrictive than what DB itself included in Chart 1 – DB said that
the global reach of the Russian corporations was “not clear-cut” from its own perspective. DB did
note, however, that “Russia’s ODI stock became the second largest among emerging markets in 2006”
(Hong Kong [China] was the largest).

“[K2] Nonetheless, Brazil’s foreign investment has reached impressive levels – while there are good

55
 reasons to view Brazil as playing a qualitatively different role in the global economic system, there is
no reason to deny that on certain important measures it is quantitatively close to Russia.”

As noted above, it was comrade Decker who originally introduced the Deutsch Bank survey
in his 2011 document in which he sought to prove that Russia was imperialist. In response to
why it reports that there are far fewer Russian companies on a list of “global challengers”
than Brazilian (which would undercut the notion that Russia is in fact in a higher—i.e.,
imperialist—league) the comrades take a two-pronged approach: 1) raising the irrelevant
issue that Deutsch Bank was using some other company’s research—they obviously
considered it legitimate or would not have cited it); and 2) shifting the topic from global
challengers to relative size of ODFI. In an implicit acknowledgement that perhaps they had
failed to prove their point, they conclude with an assurance that while Brazil and Russia
may have much in common there are (unspecified) “good reasons” to see Russia as
qualitatively different than Brazil. This is of course the nub of our difference, and it is
necessary to spell out what these “good reasons” might be, and particularly to provide
evidence to substantiate them.

If we are to have a serious discussion it necessary for both sides to address the substantial
arguments put forward by the other, not to ignore or sidestep them. For example, it is clear
that neither Russia nor Brazil is currently a globally significant center of finance capital. In
this case of Russia this is highlighted by a recent NYTimes report that Warsaw, not Moscow,
is emerging as the regional stock exchange for the countries of the former Soviet Bloc (see
Appendix “G” of “Is Russia Imperialist?”). Fitting this within the framework of “Russian
Finance Capital” would seem to present a formidable challenge. Perhaps this is why
comrades Decker and Dorn offered no comment. In the absence of any evidence to the
contrary this simple fact would seem, on its face, to be a “good reason” to think that Russia
is not imperialist in the finance capital sense.

4. Twenty points on the imperialism discussion

—Logan, 18 September 2013, with Riley’s 26 October 2013 interpolations

1. In the very weak state the IBT now finds itself in, our failure to either resolve the argument about
Russian imperialism or to set it aside for the time being threatens to be a critical blow to the
organisation. The silence of many comrades is probably reflective of a sense that the stakes are very
high here.

In the run-up to our 2011 conference where we had agreed not to attempt to resolve the issue
but to air differences there was very little discussion of the question—the three documents
arguing the “non-imperialist [nimp]” position did not get a single comment from the “imps.”
The one document arguing that Russia is imperialist was replied to immediately—but again
no response was forthcoming.

Since 2011 the conference the IEC has conducted an intermittent but substantive discussion.
The results of this were codified in two documents unanimously approved by the IEC earlier
this year—“On Imperialism” (regarding the nature and historical development of

56
 imperialism) as well as “Combined and Uneven Development & Russian Imperialism Circa
WWI.” This represented substantial progress and an apparent narrowing of outstanding
differences to the question of Russia today.

The fact that thus far there have been few comments from non-IEC comrades on these
documents, may be because they are waiting to see how the discussion develops.

2. The debate so far may have clarified the issues in the minds of some of the participants, but I
don't think it has clarified the issues for many.

It is a complicated issue so comrades who recognize its importance for the future of the IBT
may wish to carefully study the documentation, and perhaps do some investigation of their
own, before expressing an opinion. As the discussion proceeds and issues come into clearer
focus, comrades who begin to feel “up to speed” will presumably begin to participate.
Reviewing the IEC- approved documents and subsequent exchanges should help clarify the
issues that remain in dispute.

3. Either a sense of extreme urgency or a sense of the need for great forbearance are quite
understandable. Though I take the position of forbearance, I respect the contrary view of it.

We have been having a discussion of sorts for something over five years now and the range of
differences expressed during the discussion at the 2011 conference has been considerably
narrowed by the adoption of two documents by the IEC. I do not think that a sense of urgency
is necessary to undertake a careful and substantial discussion over the six the months leading
up to the next conference. That should be plenty of time to thoroughly air the pros and cons
on both sides and for comrades to come to an informed decision.

On Tsarist Russia
4. An earlier stage of this discussion involved focussing on whether Russia in the period prior to 1917
was imperialist, with those who argued that Russia now is not imperialist seeking to show that
Russia then was not imperialist. It was clear to us all, I think, that Russia in that period was rather
similar in its place in the world to Russia today. We seem now to have come to agreement that
Russia was then imperialist, but apparently some of us have simultaneously come to the view that
the role of Russia in the world then, and the role of Russia in the world today are very different. In
fact Russia today is in very much the same international role, though actually more of an
independent imperialist factor than it was before the 1917 Revolution.

Those of us who do not consider Russia today to be imperialist were indeed forced to
reevalutate our view of Tsarist Russia—largely because of comrade Decker’s challenge to
account for what Trotsky wrote on the question. We agree that:

“Russia was an imperialist country in 1914—the predatory role played by Russian finance
capital in China, Persia, Manchuria, Mongolia et al was essentially identical to that of the
more developed imperialists.”

—"Combined and Uneven Development & Russian Imperialism Circa WWI,”

adopted by the IEC on 19 April 2013

In their 19 June 2013 response to “Is Russia Imperialist?” Decker and Dorn suggested that if
Tsarist Russia in 1914 was imperialist despite being “far more backward than modern-day
Russia” it “is difficult to see why Russia circa 2013 is not imperialist.” On 15 July 2013 I

57
 responded:

“Trotsky and Lenin considered that the massive investment by Russia's bourgeoisie in
adjacent backward countries qualified Russia as imperialist despite the fact that it remained a
predominantly peasant-based society governed by a feudalist autocracy that posed a major
obstacle to domestic capitalist development. The question we must seek to answer is whether
Russian capitalists today have a similar relationship to the countries of the CIS etc or whether
they are more similar to countries like Brazil, India or Greece whose bourgeoisies have
investments in some more backward countries, but not on a scale that would qualify them as
imperialist.”

Comrade Logan does not address the question of whether or not Russian capitalists have
significant investments in less developed countries through which they extract value. Yet this
is the decisive criterion—it is why backward Tsarist Russia qualified as imperialist. This
criterion, originally introduced into our discussion by Murray Smith, was codified as follows
in “On Imperialism”:

“The fact that, over the long term, semi-colonies suffer a net outflow of value to more
‘developed’ imperialist countries lies at the core of what Marxists designate as ‘imperialism.’ ”

Russia circa 1914 was an imperialist power, in the modern Marxist sense, because its
bourgeoisie was exploiting semi-colonies on a significant scale, not because the Tsarist
Empire, like Turkey’s Ottoman Empire, pursued an independent foreign policy and was a
significant factor in global power politics. The fact that Russia pursues a relatively
independent foreign policy does not constitute proof that it is imperialist—Iran today plays
an independent role in global affairs as do Turkey, India, Brazil and China. To qualify as
imperialist the Russian bourgeoisie must be shown to be involved, in a significant way, in the
economic exploitation of less developed countries.

5. The observation that the conditions for Russia's imperialist-like role today were created while it
was a degenerated workers state (ie before it was imperialist this time around) do not seem to
advance the discussion. It is always the case that most of the conditions of imperialism are created in
the pre-imperialist history of a given country.

Agreed. The fact that Russia still poses a formidable military counterweight to the dominant
imperialist powers also results from its Soviet inheritance and so does not constitute evidence
that it has become an imperialist power.

On the Leninist theory of imperialism

6. We began our debate on the status of contemporary Russia by discussing a range of factors:
economic development, the presence of finance capital, the independence of the Russian
bourgeoisie, geo-political weight and so on. The comrades who argue against Russia’s imperialist
status (most particularly Tom) tended to push on the question of economic development, reduced
even to matter of organic composition of capital (which itself was used to frame what remained of
the other subjects, e.g. finance capital). So the discussion became a bit narrow, as other comrades
(most particularly Josh) responded by attacking the points on which the other side believed they
were strongest. This was normal and understandable, and in fact quite useful, but the recent
trajectory of the debate has taken us away from other factors that dialectically contribute to the
whole picture.

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This may be an allusion to the difficulties encountered by Decker and Dorn (19 June 2013) in
attempting to prove that Russia’s position in the world economy is qualitatively different
than non-imperialist Brazil—an issue which is conspicuously absent in these twenty points.
The studies they cited to back up their contentions tended to refute them—as demonstrated in
my 15 July reply. This is perhaps why after three months there is still no response from the
comrades. This may also account for why comrade Logan takes a different (less concrete aka
“empirical”) approach. But proving that Russia is imperialist means demonstrating that
“over the long term, semi-colonies suffer a net outflow of value” to it, i.e., that their
relationship to Putin’s Russia today is essentially similar to that of Persia and Mongolia’s to
Tsarist Russia a century ago.

Over the course of our debate has travelled some distance from its beginning and in the
process we have gained some clarity on the inter-relationship of “economic development, the
presence of finance capital, the independence of the Russian bourgeoisie, geo-political weight
and so on.” Finance capital is the product of the accumulation of dead labor through a
historical process of economic and technological development. Dismissing the “question of
economic development” and the “organic composition of capital” (i.e., relative levels of
technological development and labor productivity) as “narrowing” the discussion does little
to advance things. At its core of imperialist predation is and always has been about economic
exploitation of the weak and more backward sectors of the world economy by more advanced
ones, as the Fourth Congress of the Comintern observed:

“The progress of indigenous productive forces in the colonies thus comes

into sharp contradiction with the interests of world imperialism, since the
essence of imperialism is its exploitation of the different levels of
development of the productive forces in the different sectors of the world
economy, in order to extract monopoly super-profits.”

—“Theses on the Eastern Question,” emphasis added

We have cited this several times but as yet comrades have neither chosen to agree or disagree.
But the “exploitation of the different levels of development of the productive forces” is why,
for example, Britain, with a population only a tenth the size of India’s, was able to acquire it
as an imperial colony. The recognition of this fundamental truth is central to the capacity to
judge whether a given country is an imperialist power in the modern, Marxist sense.

On 14 June 2011, at the outset of the IEC discussion, I responded to an inquiry by an “imp”
comrade [Dorn] who had posed seven possible factors to consider when evaluating the status
of a given country:

“its imperial past”

I do not think that the imperial past is an active factor—Portugal is not imperialist today
because it had colonies in the 17th century.

“its membership of an imperialist bloc, the EU”

Membership in the EU or NATO etc is also not an important indicator per se—as Estonia,
Poland, etc etc are included

“its actual economic strength”

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 Actual economic strength—this is the major consideration in my view. This is clearly what is
suggested by the statement that “imperialism means the domination of finance capital” etc.

“the extent and nature of foreign investment”

This is a derivative of economic strength as a rule. Britain, for example, had a declining mass of
foreign investment through the 20th century, as its economic primacy declined (and it was
forced to liquidate foreign assets to pay for two world wars.

“the existence of a ‘sphere of influence’ secured for the long-term extraction of surplus value
(though perhaps at temporary economic cost)”

This too is a derivative of economic power –and of course military power in extremis. But it is
also not a constant in the history of imperialism and seems a lot less important today than at
points in the past (eg prior to 1945 and the end of colonial empires). In the contemporary world
the US has not been rigidly attempting to enforce the Monroe Doctrine and Latin America (a
classic sphere of influence) is open to investment from elsewhere. The US and France, for
example, are however contending for influence in central African former French colonies, and
the US has (unsuccessfully) invested a trillion or two in an attempt to seize Iraqi oil.

“the military role played in the world (again to secure long-term advantage)”

From actual economic strength flows military capacity—as for example Germany demonstrated
in the early part of the 20th century, or China today. Conversely declining economic powers (like
post war Britain or the US today) have declining military capacity.

“and competition with other imperialist powers for resources, markets and labour.”

Again this is essentially an expression of economic competition. For most of the post war period
this competition has been managed by the mediation of the American superpower. Today we are
beginning to see more direct forms of competition—as for example French and German
opposition to US seizure of Iraq, but direct competition is still primarily a matter of commercial
activity.

A week later the comrade thanked me for my explanation and agreed that these factors did
indeed derive from relative economic power. This suggested that we were making substantial
progress in our discussion, as did the unanimous adoption of both “On Imperialism” (which
treats the level of technological/economic development as central) and the document on
Tsarist imperialism (which poses the extraction of value as the key factor).

7. There has been some discussion of whether a multi-factoral or a uni-factoral analysis should be
applied in this discussion. I suspect that our predecessors would be amused; they were not much
into factors, or empiricism, or reductionism. To gain some perspective and mental peace I've been
reading a little Labriola, Plekhanov, and Lenin's philosophical notebooks. What impresses me is the
centrality for them of the totality of a phenomenon.

Our predecessors might well find some of our discussion amusing—but we are what we are
and they are unfortunately unavailable for consultation. (Terms like “multi-factoral/uni-
factoral analysis” are indeed so inelegant that should probably be left to groups like the LRP
that specialize in homemade categories.) I incline to the view that in assessing the reality of
Russia today Lenin’s materialist stress on “concrete analysis” is most likely to move us
closest to a correct appreciation of the totality of the phenomenon.

8. It is notable that conversations rooted in quantitative data about whether a given country was or

60
was not imperialist do not seem to have occurred among Leninists in Lenin's lifetime. The data in
Lenin’s Imperialism is focussed on how imperialism works, not on proving certain countries to be
imperialist – that is taken for granted. This is doubtless because our predecessors were aware that
establishing the imperialist nature of a country is a matter of qualitative as well as quantitative
analysis. Despite the difficulties with quantitative analysis, it is nevertheless usually fairly clear which
countries are imperialist. It would be difficult to find accounting indicators showing New Zealand, as
one extreme example, to be imperialist, yet it is uncontroversially clear that New Zealand is the little
finger in the Anglophone imperialist fist, and as a result enjoys imperialist conditions of life.

I would not pretend to know much about the political economy of New Zealand. It has always
been characterized as imperialist in our political tradition. Certainly it has acted as a junior
partner of U. S. imperialism for many years, and does appear to have a level of economic
development roughly comparable to North America north (rather than south) of the Rio
Grande. I would presume that NZ capitalists have taken advantage of regional investment
(i.e., exploitation) opportunities in Fiji, Indonesia or Micronesia, etc., but have not
investigated.

It would seem unlikely that no conversations occurred in the Comintern involving economic
data as a means of assessing whether or not a particular country was imperialist. While it
was of course taken for granted that France, Britain, etc. were imperialist it seems likely that
for more borderline cases (like Canada for example) questions may well have been discussed.
The first manifesto published by the Canadian CP (calling itself the Workers Party) in
December 1921 discussed Canada’s shifting status in relation to British and American
imperialism:

“The future of Britain’s vast emporium which she fondly calls her empire, is increasingly
more uncertain….Canada’s possible development as an industrialist capitalist power makes
her more and more dependent upon the United States.”

(This was likely written by Maurice Spector, the party’s leading intellectual, who was
eventually elected to the ECCI and shortly thereafter expelled as a Trotskyist.)

In 1926 Trotsky was likely perusing quantitative data in preparing “Europe and America”
when he stumbled upon a reference to Canada as the “northern prolongation” of the U.S.:

“Canada, without offense to the British crown, is an integral part of the United States. If you
consult the Annual Report of the US Department of Commerce, you will discover trade with
Canada is entered under internal trade; and that Canada is politely and somewhat evasively
referred to as the northern prolongation of the United States without the blessing of the
League of Nations.”

In 1899 Lenin published a book full of quantitative economic data to refute the Narodnik
claim that Russia was not on a capitalist path. Perhaps the comrades will accept that as a
suitable precedent.

There is also Lenin’s Imperialism: The Highest Stage of Capitalism which is packed with
economic statistics and tables of data showing foreign investments by different imperialists,
colonial possessions, trade statistics, investments by banks and as well as profits obtained. It
is true that he used this information to illustrate “how imperialism works, not [for] proving
certain countries to be imperialist” because most of the countries he mentions were clearly
imperialist, but that is neither here nor there. If the “imp” comrades would follow Lenin’s

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 lead and provide us with some “quantitative data” to show “how [contemporary Russian]
imperialism works” I think our discussion would take a big step forward. Lenin’s
characteristic use of concrete evidence to prove his assertions made his arguments far more
convincing, and is an example well worth emulating.

Finally there is Trotsky’s assessment of Czechoslovakia in 1938, when the question of

whether or not it was imperialist was of great importance to Marxists:

“I believe that Czechoslovakia is a small country and in the event of war her existence would
be directly threatened [my emphasis]. But the difference between Czechoslovakia and France
lies in the fact that France has colonies. It is an imperialist country. Czechoslovakia has no
colonies. But this difference is only apparent. Czechoslovakia is an imperialist country in
every respect. It is a highly developed country with finance capital in a leading position in a
very concentrated industry, the very important war industry. This is why Czechoslovakia is a
developed capitalist country, but not only that. In Czechoslovakia we now have a population
of about 15 million. It is not a big country. Under European conditions it is a medium-sized
country.”

. . .

“I forgot to add that Czechoslovakia is a partner of a world corporation of imperialist

countries. If it doesn't have colonies, it has loans from Britain. These loans are possible
because of Britain's colonies; likewise with military support from France. It is a link in the
imperialist chain.”
—LTWritings, 1937-38, p. 353, 356, quoted in “Is Russia Imperialist,” 3 June 2013

We can surely agree that this qualifies as an assessment “rooted in quantitative data about
whether a given country was or was not imperialist.” We have pointed to this example on a
number of occasions as an example of a Marxist approach to making such an assessment, yet
the “imp” comrades have thus far withheld comment.

Perhaps the reason the Czech example has been persistently ignored is because Trotsky’s
approach applied to contemporary Russia would produce a “non-imperialist” conclusion.
Comrades who do not want to reach that conclusion, but are not comfortable criticizing
Trotsky’s methodology, might feel it is best to say nothing. But that approach, which at least
implicitly concedes the essential political point, does little to move the discussion forward.

9. We may all agree that a state is imperialist if it benefits in the long run from superprofits
transferred from other countries, but the modes of transfer of superprofits are so varied, sometimes
so complex, and often so indirect, that it is extremely difficult to establish or quantify superprofits.
Foreign Direct Investment flows may be a better indicator (though insufficient and problematic) —
they would seem to rate Russia among the lesser of the clearly imperialist countries.

I think the formulation cited above is more precise: “over the long term, semi-colonies suffer a
net outflow of value to more ‘developed’ imperialist countries,” but the idea is essentially the
same. There are also of course value flows from semi-colonies (and imperialist ones) to
countries which are not themselves imperialist, as noted in “On Imperialism” draft:

“In some cases client states, like Saudi Arabia or Qatar which sit atop valuable petroleum

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 assets, are able to obtain a slice of the monopoly prices charged on the world market. These
earnings are very substantial and provide the indigenous rulers with a substantial degree of
political autonomy, yet even these privileged regimes ultimately remain dependent on
imperialist patrons for their survival.”

Tracing value flows is not straightforward, but there are useful indicators as to where
particular countries stand in the global hierarchy. One is whether or not they produce
commodities that are competitive on the world market. Another is the structure of their
foreign investments—in the case of Russia, as documented in the 15 July 2013 response to
Decker/Dorn’s critique, an inordinate amount of nominal foreign direct investment is not
really investment, but merely money being moved around for purposes of tax avoidance and
the like.

The presumption of “imp” comrades that Russia is exploiting weaker countries of the CIS is
not supported by the facts, as was pointed out in the same document:

“Not only does most Russian ODFI flow to the ‘developed countries, but what goes to the CIS
was, for a lengthy period, ‘overwhelmingly concentrated’ in one small country [Belarus] for
political reasons—i.e., ‘another South Ossetia.’ This is not finance capital pursuing
superprofits, but a state subsidy to a dependent regime for geopolitical reasons. I suspect that
comrades who view Russia as imperialist may wish to ignore this because of the importance of
the ‘exploitation’ of CIS counties by Russian capitalists in their scenario. But Marxists have a
responsibility to attempt to account for facts that do not fit a pre-conceived model, and
sometimes, if the gap between the model and reality becomes too great, be prepared to rethink
the position.”

Given that there is no evidence that Russian capitalists are exploiting CIS countries to any
significant degree, where does comrade Logan imagine that the value inflows (varied,
indirect, complex or otherwise) originate? How are they generated? What evidence is there
that they even exist? What is well established, according to virtually all Russian and foreign
analysts, is that the vast majority of revenue flowing into Russia from abroad comes from the
sale of primary products—chiefly oil and natural gas. Do the “imp” comrades know of
additional sources of revenue?

10. The argument that Russia is not imperialist because its economy is overwhelmingly dominated
by extractive industry is another form of the argument that imperialism equates to a high level of
industrial technique, or a high organic composition of capital. Now at a certain level of abstraction,
there is a truth in that. Imperialism as an historical world system is in fact associated with a high
organic composition of capital, but at the level of individual countries combined and uneven
development can render some imperialist countries with a relatively low overall organic composition
of capital.

It is not clear what this is meant to suggest. It is well established that apart from raw
materials Russian commodities generally are not competitive on the world market and that
Russia’s foreign revenues chiefly derive from its oil and gas exports. We have yet to see any
evidence that Russian investment in neo-colonial countries is a source of significant revenue.
Why then should Russia be seen as qualitatively different than other countries with
equivalent “relatively low overall organic composition of capital” which also derive most of
their income from the sale of natural resources?

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 The “imp” comrades prefer to ignore evidence (e.g., in the reply to Decker/Dorn) that
Russia’s position in the global economy is roughly equivalent to that of Brazil. Nor have they
ventured any opinion on the significance of a Bank of Finland study (originally introduced
into the discussion by Decker/Dorn) showing that Russia has been losing ground over the
past decade to other “transition economies” (i.e., the former deformed workers’ states of the
Soviet bloc):

“The absence of significant improvements in Russia’s business climate against a background

of positive developments in the institutional environment in other transition economies is
notable as Russian enterprises saw their competitiveness erode vis-à-vis their peers in these
economies. According to the BEEPS [Business Environment and Enterprise Performance
Survey] Russia in 2002 looked better on average than 26 other surveyed transition
economies in three-fourths of business climate parameters. By 2005, Russia led in
only half of the surveyed parameters. In 2009, it lagged the average in 16 of 18
parameters among the 29 surveyed countries.” [pp 9-10]
—emphasis added

11. The argument that Russia’s protectionist policies disqualify it as imperialist holds no weight. The
USA has considerable protectionist barriers, particularly in the agricultural sector .

Perhaps the fact that it holds no weight is why it has not been raised thus far in the
discussion by anyone. Imperialist countries and neo-colonial ones have both pursued
protectionist (aka import-substitutionist) policies in the past. As a rule protectionism is
designed to protect relatively backward producers from foreign competition.

12. Likewise the argument that an open banking system is the sine qua non of imperialism is
dubious. Until 1994 not only was branch banking by foreign banks impossible or very difficult in the
USA, even interstate branch banking was illegal. And even currently US citizens and residents may
make deposits only of amounts over $100,000 in a foreign bank branch in the USA.
http://www.ny.frb.org/aboutthefed/fedpoint/fed26.html

The openness of the banking system has also not been a major point of contention to my
knowledge. In “Is Russia Imperialist?” I responded to comrade Decker’s suggestion that the
fact that two Russian banks appeared on the Forbes 500 list indicated “finance capital”
imperialism by pointing out that four Brazilian banks appeared on the same list. Does
comrade Logan have evidence that would indicate that Russia’s banks are in a different league
than Brazil’s? If so please share it with us.

13. One criterion for imperialism—the key criterion—is the rule of finance capital. We are agreed on
this, but whether or not finance capital rules cannot be established by any accounting methods, but
only by qualitative analysis.

14. The argument that there is no finance capital in Russia, or that it is uninfluential is plainly
spurious. While much finance capital in Russia is an aspect of the self-financing extractive
conglomerates, banking finance is also highly significant. In the period of privatising the economy
which followed the Russian counter-revolution there was a burgeoning of banks, with every major
player having their own bank for some time (for the purpose of consolidating smaller parcels of
capital under their own control). Since then there has been a radical reduction of the number of
banks and an increase in their size and power, and a more complete fusion between banking,
industrial and extractive capital. Finance capital in Russia (like most things in Russia) is largely
unsophisticated, but it is extremely powerful. Putin is its preeminent representative. He is leader of

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the Russian state for the purpose of making decisions serving the interests of the topmost layer of
Russian finance capital.

During our IEC discussion I made the following comments (14 June 2012) on Russian
“finance capital”:

“The whole point of the definition of imperialism in the TP which we all agreed to endorse is
that it is ‘the domination of finance capital.’ To have Russia as an imperialist with such a
definition Russian finance capital will have to be shown to be a real (rather than notional)
phenomenon. I think that may prove very difficult to demonstrate.”

. . .

“The state exercises a great deal of control and provides most of the funding (as is true in
most of the economy it seems). As a rule I think that it would not be accurate to suggest that
Russian banks pool the excess capital generated by domestic enterprises and direct it from the
saturated home market to more profitable opportunities abroad. There seem, by all accounts, to
be no shortage of investment opportunities at home--even if the corruption and nepotism etc.
make investments unwise in many cases. Russia is chronically short of investment by most
accounts and has been trying to attract finance capital from abroad.

“So I think that we need to look more closely at whether or not the Russian economy can be
described as dominated by ‘finance capital’ or if it is something a bit more akin to ‘late
industrializing’ countries where the state has to substitute for the role played by the
indigenous bourgeoisie in the more classic model.”

I remind comrades of a challenge presented in my 3 June document and repeated in the 15

July 2013 reply to Decker/Dorn:

“…it is clear that neither Russia nor Brazil is currently a globally significant center of
finance capital. In this case of Russia this is highlighted by a recent NYTimes report that
Warsaw, not Moscow, is emerging as the regional stock exchange for the countries of the
former Soviet Bloc (see Appendix “G” of “Is Russia Imperialist?”). Fitting this within the
framework of “Russian Finance Capital” would seem to present a formidable challenge.”

This challenge cannot be met by simply asserting that finance capital exists in Russia—we
must all back up our positions with real world evidence. It does not advance the discussion to
presume as fact what needs to be proven. If indeed they have significant evidence of Russian
finance capital the “imp” comrades should share it with us. So far we have seen none.
Meanwhile the ascendance of Warsaw over Moscow as the regional financial center in the
former Soviet bloc speaks volumes:

“In the absence of any evidence to the contrary this simple fact would seem, on its face, to be a
‘good reason’ to think that Russia is not imperialist in the finance capital sense.”

On Russia’s role in the world

15. Our understanding of imperialism leads us to expect a world characterised by disputes between
imperialists, with disputes between imperial powers and non-imperial powers being local, and
generally relatively short-lived.

I am not sure that the evidence supports such an expectation. Disputes between imperialists
in the American Century have tended to be muted and often relatively short lived. American

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 resentment at Franco-German refusal to participate in the 2003 Iraq adventure (which led the
U.S. Congress to rebrand French fries “Freedom fries”) had largely evaporated by 2011 when
France took a leading role in the assault on Libya. U.S. antipathy for Iran’s Islamic Republic
on the other hand has lasted more than three decades. The CIA organized its first coup in
Syria in 1949 but never succeeded in establishing a viable client regime there and has
remained relatively hostile to the Baathist dictatorship for decades. While tactics vary, there
has for many decades clearly been an ongoing strategic project to reverse the Cuban and
Chinese revolutions with particular animosity directed at the North Korean regime.

16. We understand the subordination of those disputes in the period of the deformed workers
states, but that period is now twenty years past, and the United States maintains a strong hegemony
among most imperialist players. It is almost as if some kind of super-imperialism has, after all, come
to pass. But that hegemony does not extend to Russia.

American hegemony is declining in much of the world, as we noted in “U.S. Empire In

Decline,” 1917 No. 31. The tensions between the U.S. and the remaining deformed workers
states remain a major axis of global geopolitics—witness the recent talk of an Asian “pivot”
by the Obama administration which is clearly aimed chiefly at China, as well as North Korea.
The survival of the Cuban Revolution remains a sore point for the U.S., which has recently
been aggravated by the shift of previously politically reliable neo-colonial clients in the
direction of a friendlier posture toward Cuba. Cuba’s role in stabilizing the Chavez regime in
Venezuela, which helped encourage the growth of similar left populist currents in Bolivia and
elsewhere, was also not welcomed by Washington.

17. The polarity between the USA and Russia is the central feature of international politics today,
and promises to be so for some time. The truth of it is that Russia competes with US imperialism as
no other country does. The role that Russia played recently in brokering a deal over Syrian chemical
weapons indicates that very clearly. The attempt to relegate Russia in world affairs to the status of
Brazil or India flies in the face of reality.

Russia does have special status globally due to its nuclear inheritance from the Soviet Union.
But I think we can agree that this is not sufficient to qualify it as an imperialist power in the
Marxist sense. Russia’s role in Syria is also derived from the Soviet period. While Brazil does
not wield comparable influence internationally, it is a major political factor in Latin America.
Brazil’s aspirations to play a larger global role were evident in May 2010 when, with Turkey,
it announced a tentative deal over Iran‘s uranium stockpiles designed to block a new round of
UN sanctions. While the U.S. immediately spiked the proposal, the fact that it occurred
indicates the appetites of the BRIC countries and their equivalents to play a larger role in
global events than non-imperialist countries ever have in the past.

It does not seem accurate to characterize the polarity between the U.S. and Russia as
“central“ to global politics today, although it is certainly one important axis. The struggle for
U.S. hegemony in the Middle East is not centrally a struggle with Russia but rather Iran. So
too the U.S. “Asian pivot“ which is clearly aimed at China. The main “competition“ between
the U.S. and Russia involves American attempts to carry out “color revolutions“ against
pro-Moscow governments in the former Soviet “near abroad“ and setting up “anti-missile“
(i.e., preemptive-strike enabling) sites on Russia’s frontiers.

The struggle between Russia and the U.S. over supplying energy to the EU goes back to the

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 Soviet period when America unsuccessfully attempted to block the construction of pipelines
to ship Soviet oil to Germany. German imperialism retains an interest in accessing gas and
oil directly from Russia and its allies without having to pay off American oil corporations.
The Berlin-Moscow relationship is a factor in the current Syrian conflict, the outcome of
which is likely to determine whether natural gas from the Persian gulf is routed to the EU via
a Gazprom-supported Iran-Iraq-Syria route or from Qatar through Saudi Arabia, Jordan and
Syria with the participation of U.S. firms.

18. A very high proportion of United States imperialist war efforts since the Second World War, and
certainly since the fall of the Soviet Union, has been about acquiring and manipulating for its own
benefit the largest possible share of world energy supplies. Besides a generalised fight for world
domination, the fight for energy is the accepted central objective of US imperialism—and also
Russian imperialism. (Neither, incidentally, has a substantial influence on the world price of
hydrocarbon fuels.)

The fight for control of energy resources is certainly a critical element of global politics. But
while the major imperialist powers have long been involved in this struggle, the fact that a
country is a participant is not sufficient to qualify it as imperialist. Hugo Chavez’s
willingness to supply the Cuban deformed workers’ state with oil played a role in the latter’s
survival. The “fight for energy” was also the central motivation for Saddam Hussein’s
invasion of Kuwait in 1990, but, contrary to various liberals and anarchists, Marxists did
not view the seizure of Kuwait’s oilfields as evidence of “Iraqi imperialism.”

19. If in fact Russia is not imperialist, then our anti-imperialism is fated to mostly be anti-
Americanism. If that is the case, so be it. But it would be a reality in which we would find difficulty
transcending a rather crude programme.

The Marxist program for social liberation can be presented crudely (“Peace! Land! Bread!”)
or with great subtlety. The critical question is to correctly analyze reality and provide the
working class and oppressed with the path forward. Whether or not Russia one day becomes
an imperialist power in its own right (or Poland or Brazil do) the Marxist duty to tell the
truth to the working class will not change. There is no more reason to expect that those who
oppose U.S. imperialist predations around the world are fated to “mostly” engage in anti-
Americanism in future than we have in the past.

Our political current’s opposition to U.S. imperialist aggression from Vietnam in the 1960s
to Libya in 2011 has been consistent in its revolutionary internationalism and never shaded
into anti-Americanism. Anti-Americanism is the anti-imperialism of fools, and a fetter for
the oppressed. It is a tool for demagogues to destroy class consciousness and manipulate the
workers’ movement. It would be profoundly pessimistic to accept that Marxists are fated to
embrace it, regardless of Russia’s status.

20. The Syrian conflict had the makings of a US-Russia proxy war, though it never rose to that level,
and the organisation as a whole was able to accept a common position: defeatist on both sides of
the civil war, and Assad regime defencist in the event of a US-led attack. Comrades must consider
the programmatic meaning of our characterisation of Russia. In the event of a war between the US
and Russia (abstracting from the question of each power’s alliances), do comrades suppose it would
be in the interest of the international working class to raise the call “Defend Russia Against US
Imperialism”, given everything we know about the role Russia plays in the global capitalist system?

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CGsB

A serious military conflict between Russia and the U.S. would, presumably, be likely to go
nuclear rather quickly. The likelihood of “Mutual Assured Destruction” has prevented it
since the end of the Cold War, as it did for its duration. At some future point this could
change if the gap created by the relative backwardness of Russian technology becomes large
enough. Russia’s involvement in the Middle East is largely an inheritance from the USSR, as
is its nuclear capacity. At this point the integration of Russia as part of the hinterland of
European (and perhaps American and Japanese) imperialism seems more likely than a full
scale military conflict.

Russian integration into the world market seems likely to have similar consequences to those
experienced by Poland, Ukraine, Yugoslavia and other deformed workers’ states whose
industrial, political and social infrastructure were roughly equivalent. This prospect is
sketched in some of the materials cited by cdes. Decker/Dorn, as noted in my 15 July 2013
reply:

“The ‘World Investment Report 2012,’ (p57) also cited by Decker and Dorn makes a similar
projection that accession to the WTO will ‘boost foreign investors’ confidence and improve the
overall investment environment’ although ‘in the manufacturing sector, domestic and foreign
investors will most likely consolidate as the landscape becomes more competitive.’ The term
‘consolidate’ is of course a euphemism for what the EU report referred to as the process of
‘creative destruction’ of existing non-competitive Russian firms as integration proceeds.

“The sunny projection in the EU report that integration into the WTO will involve the
‘creative destruction’ of much of actually-existing Russian capitalism derives from the
authors’ view that, ‘on the whole, Russia is not competitive, in both industrial and services
exports’” (p26).

During the IEC discussion I responded to a 12 June 2012 query from an “imp” comrade
[Dorn] on the programmatic implications of a possible military conflict arising from events in
Syria:

“It did occur to me that we might be in a position of having to comment on Russian

participation. If Putin puts in Russian troops the world takes a big step toward the brink
(particularly as Obama cannot afford to appear weak in election year.) Putin may do so as he
is mightily aggrieved at the insistence of the US in treating him as an enemy to be encircled
with anti ‘Iranian’ missile installations that are clearly aimed at neutralizing Russia’s
nuclear deterrent. This makes it clear that Russia has no effective ‘diplomatic’ means of
getting the US to recognize its sphere of influence etc.

“I think that the agreement on ‘What Is Imperialism’ [subsequently published in 1917 No. 39
as ‘Roots & Fruits of Imperialism’) reached last year should represent an important step
forward for us in relation to this whole puzzle--one which may not be fully appreciated or
realized as yet. I was already thinking that it would be good to write up as a ‘canned copy’
article for 1917, to accompany a piece on why it is important to defend Syria in the event of
imperialist attack.

“This agreement should give us a yardstick, for example, to determine whether we consider
Portugal or Greece to be imperialist, as I pointed out when I recirculated it in response to this
question a few weeks ago. It should also allow us to assess the relationship between Syria and

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 Russia--is it like the relationship between the U.S. and Iraq or Russia and Ossetia. In the one
case we have one position in the other another.”

The comrade requested that I spell out my analogy more clearly, which I did in an email dated
14 June 2012:

“The Ossetians (Southern division) are friendly to Russia (like the Albanians were friendly
first to Stalin and then Mao as a counterweight to Tito). Russia is not there as an exploiting
finance capitalist power seeking to gain superprofits but as a patron/protector. As they would
have sort have liked to have been when their Serb ally/client was being attacked by NATO but
did not dare (Russia under Yeltsin being both much weaker and more US linked.) The fact
that Ossetia is on Russia’s border and Syria and Serbia are not is also of course neither here
nor there.

The comrade responded by asking what position I would advocate in the event that
U.S./British/French troops supporting rebels in Syria came into conflict with Assad forces
supported by Russia military units. I replied:

“Well I think that both Iran (a non imperialist) and British imperialist SAS forces are already
on the ground. If their numbers were to increase substantially (say x1000) our attitude would
not change—i.e., we would be for defense of Assad regime v imperialism. If the Russians were
to send a significant number of troops (highly unlikely) to prevent a US client state being
established which, if it came to pass, would immediately dominate Lebanon, checkmate
Hezbollah and tighten the noose around Iran that would not necessarily be a bad thing. IF
they were to do so, instead of trying to secure their own interests as a semi-ally, semi-
opponent of the US-led bloc, capable of arranging an inside coup or some such I do not think
that the world would be a worse place (i.e., Syria would not fall under the economic control of
Russia which would seek to plunder it as the US planned for Iraq. Nor would it be a platform
for a renewed attempt to conquer the Mid East oil wells via ‘regime change’ in Iran. It would
be an attempt to preserve the status quo (including a port on the Mediterranean for the
Russian navy) and block a move by the US in the Great Game for domination of the
EuroAsian heartland (which Russia sees as including a lot of its own turf as well of course as
Iran).

“I think that Assad would be ANXIOUS to have Russian paratroopers land in Damascus at
this point as it would solidify his regime. This would contrast with, for example, the way that
Saddam Hussein or the Taliban viewed the arrival of NATO forces. The difference is in what
they would be there to do. I do not think that the motivation of the Russians would be
equivalent to that of the US and its proxies, so I do not see why we would have the same
attitude to them.

“A hypothetical Russian intervention would be essentially defensive in character--an attempt

to preserve the Assad regime. So we should not look at Syria as becoming a ‘spoil of war,’ in
such an event. The status quo would be maintained and the Zionist/US Syria-Iran project
would have a set back. If Assad wins he would redouble his repression presumably and kill a
lot of dissident civilians etc, which we would of course oppose.”

In a subsequent (17 June 2012) communication I added:

“Russia is attempting bloc the imperialist take-down of its Syrian ally, it is not attempting to
take over Syria nor impose a regime more to its liking nor secure transit lines for oil nor
anything else except to maintain the status quo in the region which is an important security
concern for Russia (including preventing Iran becoming a US protectorate as it was under

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 the Shah). Russia is not particularly fond of Assad and has signaled that he can go, but what
it does not want is a NATO-led color revolution that ends up putting in a regime that will be
more or less a US puppet (as was attempted but has essentially failed in both Iraq and
Afghanistan.) If Russian troops go into Syria in the next week or so to reinforce the regime
(which is what is actually posed and is an unlikely situation but possible) I do not see why we
should oppose that. They will not be going in for the same reason as French or US troops,
which of course we would oppose, but rather for the same reason as the Iranians. It would
certainly not be evidence of Russian ‘imperialism’ in my view. It seems clear to me that if
there is no significant finance capital there is no imperialism in the Marxist sense of the term,
and that is pretty clearly what our ‘What Is Imperialism’ statement says as I read it.”

Four days later (21 June 2012) I responded to a follow-up inquiry on our attitude to a
possible Russian-U.S. conflict growing out of the Syrian civil war:
“I think we can agree that the question of why a country engages in a military conflict is
important. Russia is clearly still a Great Power but only militarily. It is seeking to present an
obstacle to US steamrolling first Syria and then Iran (because it fears it could be next). But it
is not attempting to seize the material wealth of the Middle East, which is at bottom what
motivates the policy of the US and its allies. It is of course interested in controlling pipelines
and winning influence in the region and if successful it would certainly be interested in
attempting to wring any economic advantage it could--but it is too weak economically to do so
on a significant scale (as I understand the situation).

“If there were a hypothetical direct military conflict with Russia v US, in my view, we should
not automatically have a position--it depends on what it is over. In the case of semi-colonial
Argentina v imperialist Britain we did not have a side. Usually we would of course, but it is
not quite automatic. In any case, in my view, there is almost certainly not going to be a
military conflict because a) the Russians do not want one because they know they cannot win
(whereas they can make trouble at one remove and are ultimately protected as long as the
Soviet era nukes are viable or potentially so which is likely to be for some time) and b) the
Americans fear that it could spin out of control and it might go nuclear and a victory in that
at this point would leave the world, including the US, in such a devastated condition that it
would not be worth it. Instead the US pursues its own more aggressive policy at one remove
via ‘color revolutions’ and ‘humanitarian’ rescues to remove regimes that are too
independent.

“The central project seems aimed to increasingly tighten the encirclement of Russia, which
along with Iran and China, is one of a handful of disobedient ‘rogue’ states (all of whom could
potentially turn on each other but none of whom have any reason to trust the US) The
establishment of the SCO (a hypothetical counterweight to NATO in the abstract but in
reality a negligible strategic factor) is an expression of a desire to remain independent players.

“The ‘missile shield’ on Russian borders and the refusal to accept Russia as a subordinate
ally/partner (which is the status Putin and Yeltsin have both been seeking) suggests a long
term project of domination. But there is no prospect of that being operational militarily in the
foreseeable future I do not think. In the meantime I am inclined to view Russian support to
Assad as not equivalent to CIA support to the SNA et al. chiefly because I think that the
objectives are different.

“IF on investigation we find that there evidence of serious intervention by Russian capital in
the direction of subordinating Syria for the purpose of pumping value out of it and/or the rest
of the region (which is the case we can agree with the US and its allies) I would have to

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 change my view. Of course in a surrogate battle between SNA and Assad we have no side, but
NATO intervention/no-fly would give us one (as in Libya). Any conceivable level of Russian
support to the regime would not change that I would not think.

“‘What is Imperialism’ is an accurate description of the standard Marxist analysis in my

view. It is the domination of finance capital--a characteristic of ‘advanced’ capitalist
development. Whether and to what extent this characterizes Russia is how we can determine
how to categorize Russia. I am completely open to discovering the structure of Russian
capitalism is something other than what I currently understand and that the foreign
investment in Syria and elsewhere are in line with a Marxist understanding of the operation
of finance capital. It is, in my view, entirely an empirical question.”

There was no response and no further questions.

5. What is Russia doing in Syria?

—Dorn, 25 February 2014 (with interpolated comments by Riley, 2 March 2014)
The conflict in Syria allows us to look very concretely at the role Russia plays in the world and
whether Marxists should describe it as imperialist.
In her email of 24 February, Rox paraphrases Tom from a previous discussion ("A Response to
Comrade Logan's 'Twenty Points'", 26 October 2013), saying that if there was evidence of “serious
intervention by Russian capital in the direction of subordinating Syria for the purpose of pumping
value out of it and/or the rest of the region” or evidence of “foreign investment in Syria and
elsewhere are in line with a Marxist understanding of finance capital” (RB emphasis), he would
have to change his view. Earlier in his reply to Bill, Tom asserts that Russia "is not attempting to
seize the material wealth of the Middle East, which is at bottom what motivates the policy of the US
and its allies".
This is a fair statement of the problem. The issue re Syria is what exactly is Russia up to. I
think that if we look closely at the whole picture we will see that is geopolitical rather than
economic calculations that determine Moscow’s policy (as is also the case in Ukraine and
most other places). Russia’s motivations are essentially the same as Iran’s which also has
important strategic reasons to back the Assad regime.

Russia has significant economic interests in Syria, with several Russian financial institutions still
operating despite the civil war. "Recent Russian arms sales to Syria are worth $4 billion, including
fighter jets and advanced missiles. Russian business investments in Syria encompassing
infrastructure, energy and tourism amount to nearly $20 billion. A natural gas processing plant about
200 kilometers east of Homs is being constructed by a Russian engineering company, Stroytransgaz."
(http://www.nytimes.com/2012/01/31/opinion/russias-syrian-power-play.html?_r=0) . " Tatarstan-
based oil producer Tatneft is the most significant Russian energy firm in Syria. The company began
pumping Syrian oil in April 2010 through a joint venture with Syria's national oil company and said in
January that it would spend $12.8 million drilling exploratory wells near the Iraqi border. "
(http://www.themoscowtimes.com/business/article/billions-of-dollars-of-russian-business-suffers-
along-with-syria/443078.html).
The passage immediately preceding the above reads:
“Nikolai Grishenko, director of Sovintervod, a water engineering company, said he was
in daily contact with his 20-man team in Aleppo, which has experienced no disruption.

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 “Sovintervod has been working in Syria for more than 50 years. Grishenko added that Assad
was a "decent man" and compared today's protests to the 1980s civil unrest in Syria, which
was successfully crushed by the government at the cost of up to 25,000 dead and wounded
civilians.”
A great deal of existing Russian business in Syria dates from the Soviet period. I think that
we can agree that whatever the capitalization of Sovintervod, and others like it, given their
historical origin they cannot be viewed as examples of imperialist finance capitalist
investment but rather as continuations of economic relationships essentially similar to those
between Russia and other former Soviet republics.
While these are only a tiny percentage of Russia's foreign investments, they are strategic insofar as
they are aimed at securing Russian interests and influence in an important focal point of inter-
imperialist rivalry.
I think that in this discussion we need to focus on the facts and avoid the temptation to
presume that which is supposed to be demonstrated. Workers Power sees Syria as a rivalry
which pits U.S. vs. Russian/Iranian “imperialism.” Presuming that we can all agree that we
do not consider Iran to be intervening as an imperialist we need to see if the axis of Russian
action is fundamentally different. If we look carefully at the record of Russian economic and
political support/activity in Syria we will find that it, like the earlier Soviet policy it
continues, is driven primarily by a desire to prop up an ally with the idea of profit-
maximization entirely subordinate.
The fact that countries see to secure their “interests and influence” in the lucrative field of
energy supply does not qualify them as imperialist in the Marxist sense. Saddam Hussein’s
attempt to take over Kuwaiti oil is a case in point. A more recent example is the mid-2013
deal Iran negotiated with Pakistan to build a pipeline to provide cheap fuel (and break
U.S./UN sanctions). Iran was seeking to secure its interests and expand its influence. Russia
is not acting qualitatively differently in relation to Syrian gas and oil. And the fact that all
Western imperialist corporations are staying clear of the area underlines the reality that
Russian TNCs operate rather differently those we can all agree are imperialist ones.
Russia has a military installation in the Syrian port of Tartus, providing its only access to the
Mediterranean, where several Russian navy vessels operate. In early 2012, CNN
(http://edition.cnn.com/2012/02/02/opinion/treisman-russia-syria) describes the port as being
refurbished and set up for much more extensive use, extended to accommodate an aircraft carrier
etc., although it seems that Tartus was temporarily evacuated, along with many Russian citizens in
Syria, in mid 2013 (http://www.theguardian.com/world/2013/jun/26/russia-withdraws-personnel-
syria). Reports on the evacuation are conflicting, but it seems unlikely that Moscow will easily give
up this toehold in the Middle East.
Agreed.
The following two articles, worth reading in their entirety, are overviews of Russia's strategic
interests in the eastern Mediterranean, highlighting a deal that was signed in December for Russia to
extract oil from newly discovered sources in Syrian territorial waters:
http://www.iss.europa.eu/publications/detail/article/russian-policy-in-the-eastern-mediterranean-
and-the-implications-for-eu-external-action/
http://blogs.ft.com/nick-butler/2013/12/30/russia-advances-into-the-mediterranean/
Nick Butler observes that because there is a civil war in Syria it is “No wonder that all the
major western companies have studiously avoided the area” (‘Russia advances into the

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 Mediterranean’, 30 December 2013). Western (i.e., imperialist) energy corporations tend to
avoid any areas with serious civil conflicts because that makes it too expensive to create and
maintain infrastructure and vastly raise expenses for any project—thus diminishing and
postponing any potential return on capital invested. But Russia’s state owned/dominated
corporations can override such calculations—because the Kremlin has a dog in the Syrian
fight. Of course Putin et al are not humanitarians disinterested in promoting Russia’s
economic interests. Syria is important to Russia because, among other things, its potential
role in future energy “pipeline politics” in the Eastern Mediterranean, some of which we
touch on in our forthcoming article.
The Financial Times (26 December 2013) had a few days earlier published the following
assessment of the deal:
“Ayham Kamel, senior Middle East analyst at the Eurasia Group, added: ‘This is once again a
message of support from Russia for the Syrian regime.’
“‘The implicit support from Moscow in this deal should be seen as bolstering the government
in Damascus and [could] produce in the medium-term a new source of revenue for the
regime’.”
. . .
“Azamat Kulmuhametov, Russia’s ambassador to Syria, said the contract signalled ‘proof of
the strong economic relations’ between Moscow and Damascus in the face of ‘arbitrary
sanctions’ imposed on the Syrian regime.”

A report posted on Naturalgaseurope.com, on New Year’s Day offered the following

assessment:
The Syrian-Russian deal comes as a confirmation of Moscow’s continued support to the
Assad regime. The agreement was also interpreted as a sign of gratitude from the regime to
Russia’s friendship. The deal will not have any immediate repercussion given that even if
natural gas and oil were to be discovered in Syrian waters, extracting and monetizing such
resources would take years to materialise.
Assad has reason to be grateful for his Russian connection, as well as his Iranian one. They
are why he is still in the Presidential palace.
This deal is in Russia's area of strength in natural resources but here it is not a matter of
making profits simply by selling commodities extracted from Russia itself but in using expertise
in domestic extraction to invest capital in order to extract value from other regions of the world.
It is my impression that Russian technology in the oil and gas sector, like most others, does
not generally qualify as “expertise” by current international standards, even though it is
undoubtedly superior to that possessed by Syria, Lebanon or Cyprus. This is the view of
Thane Gustafson, a world class expert on contemporary Russia who we have previously cited
in 1917. In summarizing the assessment advanced in his recently published Wheel of
Fortune: The Battle for Oil and Power in Russia a reviewer wrote
“Gustafson observes that the Russian oil industry relies, to a degree that is unusual
in international terms, on its ‘brownfields’-- fields that entered production decades
ago. The boom of the 2000s had less to do with the energies of new entrepreneurs
than with the accumulated inheritance of the Soviet era: fields, pipelines, geological
knowledge and drilling techniques remain largely the same. The surge in
production since the late 1990s seems impressive only because of the slump that
immediately preceded it; Russian oil output has not matched its 1987 peak even

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 today. In Gustafson’s view, the Soviet legacy assets have acted as an anaesthetic,
delaying the adaptation of the Russian oil industry to modern management and
technology, allowing it to remain relatively isolated and poorly equipped to compete
globally.”
—London Review of Books, July 2013
Russia’s state-dominated energy sector activity in Syria etc. is not aimed at short term
revenue generation but is part of a larger geopolitical agenda—preventing Syria being
“liberated” a la Libya. This is why Russian state companies are prepared to invest in a
situation where actually existing finance capitalists steer clear because of inordinately high
risks and low and/or delayed rewards. Russia’s rulers, like those of China, Iran and other
non-compliant states, are prepared to invest in blocking attempts to whack regimes that
operate independently of the IMF et al.
The first of these articles also discusses Russia's relationship with Cyprus in some detail. This
has mainly come up in our discussion around the question of roundtripping, but this
indicates that there is more to the economic relationship with Cyprus, the instability of Syria
giving it considerable strategic importance. There is suggestion that Cyprus could provide an
alternative port should Tartus become unavailable.
On the whole, and combined with what we know about Russia's standing in the global
capitalist system, it seems to me that Russia's actions in Syria and the surrounding region
add up quite clearly to the behaviour of an imperialist power - investing finance capital with
the objective of extracting net value from the region back to Russia (literally, as Tom puts it,
"pumping value out of it and/or the rest of the region"). This is backed up by military muscle
in the form of the navy and by political diplomacy (eg, the deal struck to prevent a US attack
on Syria). It should be noted that these interests are not in Russia's immediate backyard, but
in a key region of the world for imperialist value extraction.
I suggest that the fact that Russia is attempting to pursue its national interest (and safeguard
the only significant revenue stream it has from the global market) by blocking rival attempts
to provide the lucrative EU market with energy is not sufficient to qualify it as imperialist.
The investments made by Russia in Syrian gas, and the usually extremely generous terms
under which they are arranged, like the willingness to loan money to “bad risks” like Cyprus
and Greece when the IMF/international financial markets will not, show a willingness to
outbid US/EU energy corporations. The ability to do this is in part due to the fact that the
Russian state industry is not required to keep stock prices up, maximize investment
opportunities and avoid bad risks in the same way that regular TNCs are. They operate in a
somewhat different framework and are responsible to different overlords—Putin’s Kremlin vs
Wall Street hedge funds.
It should also be noted that US investment in Syria is currently far less than Russian
investment, due to sanctions. Both Russia and the US are playing for the prize of future
value extraction from Syria and the region, Russia by defending the relationship with a
current ally, the US by seeking to aid the overthrow of that Russian ally, and both by
extending their influence to other countries in the region.
I think that, in Syria and elsewhere, the US is also in this case pursuing larger geopolitical
objectives than access to Syrian resources—it is seeking to cut off revenue to Russia to
weaken its position and make it more susceptible to pressure of various sorts. This is also why
the US is willing to bid for the allegiance of Georgia and various rulers in the former Soviet

74
 “stans” even if there is little likelihood of significant return on investment in the nearish
future.
On the question of our attitude should these two great powers come to blows, Rox cites
Tom suggesting that a Russian military intervention into the Syrian conflict would not be
imperialist because it "would be essentially defensive in character" and aimed at retaining
the status quo.
She asks whether those who consider Russia to be imperialist would agree. Whether an
action is defensive or offensive has no bearing on whether the perpetrator is imperialist. In
furthering their global interests, imperialist powers will defend existing positions and
possessions as well as seeking out new ones. The British troops in the North of Ireland were
sent to defend existing interests - that does not make them any less imperialist.
Of course we are indifferent to which imperialist is the aggressor and who was trying to
merely defend what they had already stolen. Perhaps the phrase “essentially defensive in
character” is best understood with some context. It appeared toward the end of a fairly
involved discussion in the IEC on 14 June 2012 from which I have extracted what seems to
me to be the gist. The exchange commenced with an inquiry [from Dorn] as to my view of the
Syria situation:
“...we should probably talk through the programmatic implications of some possible scenarios
to do with Russian/US intervention in Syria, which seems to me to have characteristics of
inter-imperialist rivalry. What are your thoughts?”

I responded:
“....I was already thinking that it would be good to write up as a ‘canned copy’ article for
1917, to accompany a piece on why it is important to defend Syria in the event of imperialist
attack. [This eventually appeared in 1917 No. 39 as “Roots & Fruits of Imperialism.”]
“This agreement should give us a yardstick, for example, to determine whether we consider
Portugal or Greece to be imperialist, as I pointed out when I recirculated it in response to this
question a few weeks ago. It should also allow us to assess the relationship between Syria and
Russia--is it like the relationship between the U.S. and Iraq or Russia and Ossetia. In the one
case we have one position in the other another”

I received the following reply:

I’m not sure if I understand your analogy. I don’t think Syria could be compared to Ossetia,
which is a component part of Russia, and I don’t think it’s comparable to the US/Iraq
relationship either, but perhaps I’m misunderstanding. The way I see it is we have a civil war
in Syria with the US and European imperialists aligning themselves on one side and the
Russian imperialists on the other.
. . .
“And I think that applying ‘What is Imperialism?’ to Russia gives us a weaker imperialist
power that is trying to use financial and military muscle to gain influence (and profit) out in
the world. These latest moves make sense to me in that context.
“What do you think?”

To which I replied:
“On the Syria/Russia thing. The first thing is that Russia is a great power. But that does not
make it imperialist (I think we agree.)
“As regards my suggested analogy here is what I meant: South Ossetia is part of Georgia

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 nominally--North is in Russia but they are not Russian. According to Wiki “The Ossetians
(Ossetic: ирæттæ, irættæ) are an Iranic ethnic group of the Caucasus Mountains,
indigenous to the region known as Ossetia.[8][9][10] They speak Ossetic, an Iranian
language of the Eastern branch of the Indo-European languages family, with most also fluent
in Russian as a second language.”
“The Ossetians (Southern division) are friendly to Russia (like the Albanians were friendly
first to Stalin and then Mao as a counterweight to Tito). Russia is not there as an exploiting
finance capitalist power seeking to gain superprofits but as a patron/protector. As they would
have sort have liked to have been when their Serb ally/client was being attacked by NATO but
did not dare (Russia under Yeltsin being both much weaker and more US linked.) The fact
that Ossetia is on Russia’s border and Syria and Serbia are not is also of course neither here
nor there.”
Which drew the following response:
“my initial reponse is to wonder what your analysis below means for the potential scenario of
Russian and US (and/or French/British etc) troops actually fighting in/over Libya. Are you
saying that, if this happens, we should be on the side of Assad and the Russians against the
rebels and their imperialist backers? It seems to me that the issue of the defence of the
independence of a semi-colony against imperialist aggression (as in Libya, Iraq etc) is rather
negated by the semi-colony becoming merely the spoil of war, whatever the result (even if the
sides are rather uneven).”
I answered as follows:
“Well I think that both Iran (a non imperialist) and British imperialist SAS forces are already
on the ground. If their numbers were to increase substantially (say x1000) our attitude would
not change—i.e., we would be for defense of Assad regime v imperialism. If the Russians were
to send a significant number of troops (highly unlikely) to prevent a US client state being
established which, if it came to pass, would immediately dominate Lebanon, checkmate
Hezbollah and tighten the noose around Iran that would not necessarily be a bad thing. IF
they were to do so, instead of trying to secure their own interests as a semi-ally, semi-
opponent of the US-led bloc, capable of arranging an inside coup or some such I do not think
that the world would be a worse place (i.e., Syria would not fall under the economic control of
Russia which would seek to plunder it as the US planned for Iraq. Nor would it be a platform
for a renewed attempt to conquer the Mid East oil wells via ‘regime change’ in Iran. It would
be an attempt to preserve the status quo (including a port on the Mediterranean for the
Russian navy) and block a move by the US in the Great Game for domination of the
EuroAsian heartland (which Russia sees as including a lot of its own turf as well of course as
Iran).
“I think that Assad would be ANXIOUS to have Russian paratroopers land in Damascus at
this point as it would solidify his regime. This would contrast with, for example, the way that
Saddam Hussein or the Taliban viewed the arrival of NATO forces. The difference is in what
they would be there to do. I do not think that the motivation of the Russians would be
equivalent to that of the US and its proxies, so I do not see why we would have the same
attitude to them.
“A hypothetical Russian intervention would be essentially defensive in character--an
attempt to preserve the Assad regime. So we should not look at Syria as becoming a ‘spoil of
war,’ in such an event. The status quo would be maintained and the Zionist/US Syria-Iran
project would have a setback.” [emphasis added]

It is not clear in Tom's scenario why Russia is anxious to defend its ally, if not for financial
advantage.

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There are of course material motivations and a material basis for geopolitical actions. Some of
this is discussed above. Maintaining its status as EU’s chief supplier of energy is very
important to Russia’s rulers as by far their most profitable activity as well as giving them
leverage in future negotiations with the EU etc. This is something that the US has been
aware of back to the Brezhnev period when they unsuccessfully attempted to block a deal to
send Soviet oil to Germany. The Russians are not in Syria to gain control its gas deposits,
any more than the Iranians are. In fact the motivation of both is virtually identical (which of
course does not exclude the possibility of either of them turning on that other—or Assad—at
at any point if it seemed advantageous).
Russia is attempting bloc an imperialist-backed take-down of its Syrian ally, not to take over
Syria nor impose a regime more to its liking. Even the New York Times has recognized this:
“‘Syria is kind of it in the Middle East at this point for Russia,’ said Dmitry Gorenburg, a
Russia expert with the Center for Naval Analyses, a federally financed research group based
in Virginia. ‘That can go a long way toward explaining why Russia stuck with Assad for the
last year.’

“The Kremlin is also eager to send a stern message to the West about its distaste for
interference in any country’s internal affairs — a point it reiterated in voting against the
General Assembly resolution last week.
. . .
“But if the talk from Russia is heavy on respecting Syria’s autonomy, and avoiding the chaos
that has engulfed Afghanistan, Iraq, Libya and Egypt, arms exports have long anchored the
relationship between Moscow and Damascus, including sales over the years of MIG fighter
jets, attack helicopters and high-tech air defense systems.“

. . .

“Syria, however, has a checkered history when it comes to paying for its weapons.

“Mr. Assad arrived in Moscow for his first state visit in 2005, with his country owing Russia
about $13.5 billion. Mr. Putin welcomed him warmly at a ceremony in St. George Hall of the
Grand Kremlin Palace. Their wives met for tea.

“At the time, the two leaders signed a “joint declaration on friendship and cooperation,” and
Russia agreed to write off nearly 75 percent of Syria’s unpaid bills.”

Maintaining the status quo in the region is an important security objective of both Russia
and Iran. A CIA supported “color revolution” in Syria would represent a big step toward
something similar in Iran, which of course the ayatollahs are resistant to. And Russia does
not want to see Iran becoming a US protectorate as it was under the Shah. So they have a
shared interest in maintaining the status quo. This is why they are both so willing to make
sacrifices to defend their ally.

In fact beleaguered Iran has provided substantial financial support (given its circumstances)
to Assad. The Voice of Russia (2 August 2013) interviewed Mona Yacoubian, a Mid East
expert at the Stimson Center in Washington, DC in which she described Iran’s provision of
financial credits to the Assad regime as the latest instance of a long-term “strategic
partnership”:

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 “I think we can understand it in the broader context and that is that Iran is perhaps one of the
staunchest allies of the Syrian regime, it has been for quite some. This latest line of credit of
3.6. billion comes actually after an earlier line of credit for about a billion in January. So what
we're seeing is certainly ratcheting up of the system, but it comes in the broader context of
Iranian support for the Assad regime:”

When asked what Iran stood to gain from providing this financing she replied:

“I'm not so sure it will help them. In fact, I think one could almost ask the opposite question
which is how long can Iran provide favorable terms to Syria? Syrian economy is collapsing.
And I think Iran is doing whatever it can to help bolster the Syrian economy. But, as you
know, Iran itself is under fairly rigorous sanctions regime. So the question is how long can
Iran manage to provide assistance, favorable terms of trade and other things to the Syrian
regime when Iran itself is under significant economic pressure?”

Russia, not subject to the same pressure, has been able to do considerably more to support
Assad financially. But the support offered by either has nothing to do with finance capital
seeking opportunities for maximum return on investment. Putin’s willingness to pour
resources into Syria under very favorable terms (after a 75 percent write down of previous
investments in 2005) reflects the same geostrategic calculation as that of the ayatollahs:
neither wants to see another “humanitarian” intervention a la Libya.

He argues that "Russia's involvement in the Middle East is largely an inheritance from the
USSR, as is its nuclear capacity". The indisputably imperialist powers also inherited their
position from various accidents of history, natural resources, and geography, and use these
to full advantage. The evidence here is that Russia, increasingly, uses and attempts to
extend its position in the Middle East to back up the investment of finance capital for the
purpose of value extraction - exactly the criteria that should lead Tom and others to re-
evaluate their assessment of Russia.
While in my view the evidence points to the opposite conclusion, I agree that all comrades
should be willing to re-evaluate their views on the basis of careful consideration of the facts.

6. On the Ukrainian Crisis

—Draft for discussion, Barbara, Bill, Josh, 5 March 2014

The following draft was circulated and discussed prior to the 2014 Conference, but neither voted on
nor published. The Nimps considered that the following passage in the last paragraph exemplified
the profoundly reactionary programmatic implications of the Imps’ mistaken notions about Russian
imperialism: “We demand the immediate expulsion of Russian forces from the territory of Ukraine
(including its naval base at Sebastopol)….”

DATE – Revolutionaries were neutral in the conflict between the administration of Viktor
Yanukovych and the Euromaiden protest leaders now governing from Kiev, characterizing it as an
inter-communal bourgeois fight bereft of progressive content. In the very early days of the
demonstrations it was necessary to intervene to stake out an independent working-class position
and gain influence for revolutionary socialist and anti-imperialist ideas, as well as seeking to organize
self-defense against the fascists and the state. Quickly, however, the opportunity to build a
proletarian pole of attraction vanished, as the protests became hegemonized by the right and far

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right (spearheaded by the outright fascists in Svoboda and Right Sector).

Triggering the conflict, and determining its development almost immediately from its inception, was
geostrategic rivalry between Western interests and Russia. Moscow attempted to pull the
Yanukovych government back into its orbit by offering a $15 billion aid package intended to dissuade
Ukraine from going forward with planned free trade and association agreements with the EU. In late
February, right-wing forces, fully supported and assisted by the U.S. and Germany, toppled
Yanukovych in a putsch. Marxists condemn both the Western powers for interfering in domestic
Ukrainian affairs and Moscow for backing the unlamented and corrupt outgoing regime of
Yanukovych.

In the face of the Western-backed coup, Russian military forces moved to secure Moscow’s interests
in Crimea (with the possibility of intervening in the east of Ukraine as well). In their struggle over
which of them is going to “get” Ukraine (or keep as much of it as possible), the great powers have
laid the basis for a major military conflagration in Europe, though it appears at the moment that the
West is unwilling to risk nuclear war over Ukraine and that Russia may content itself with Crimea for
the time being. The barrage of lies and pious lectures on “international law,” “territorial sovereignty”
and “human rights” spewing out of the mouths of imperialist politicians and the corporate media is
revolting, and the hypocrisy would be comical but for the deadly serious potential of the situation.

As a general principle, revolutionaries recognize the legitimacy of Ukrainians (and the

interpenetrated peoples that comprise Ukraine) resisting domination and exercising their right to
self-determination and political independence by any means necessary. Russia is the historic
oppressor of Ukraine, and Western imperialists seek only to subordinate the country for their own
purposes. However, the issue of Ukrainian sovereignty, and that of the complex national questions
within Ukraine, is not operational in a situation where each side in the intra-Ukrainian squabble
looks to rival oppressors for salvation, and where the conflict as a whole is essentially reduced to a
great power tug-of-war. We note that the exercise of the right of self-determination for all national
components of Ukrainian society could only be implemented equitably in the framework of a
socialist federation.

The international working class has no interest in the victory of either side in the struggle between
the West (and their local puppets) and Russia over control of Ukraine. We demand the immediate
expulsion of Russian forces from the territory of Ukraine (including its naval base at Sebastopol), and
of any Western forces or “observers” that may intervene militarily. Only global socialist revolution
offers a way out of the nightmarish world dominated by imperialism.

7. Russia, Ukraine, Syria

—Lichtenberg, 12 March 2014

Nobody disputes that Russia has some investments in Ukraine. It is also clear that the trade
balance between Russia and Ukraine is in Russia’s favor. If Russia is really the nation with
the highest FDI into Ukraine, as Josh suggests by including Cypriot FDI flows into Ukraine
as Russian, is unclear. Which nations actually make up for FDI’s from Cyprus is unclear. The
same source that Josh cites also shows USD 6 billion FDI from Ukraine into Cyprus:
http://ukrstat.org/en/operativ/operativ2013/zd/izu/izu_e/izu0413_e.htm

In fact, the economy of Ukraine has suffered significantly since they turned away from
Russia and towards the west after the “Orange revolution”:

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 “From 2000 to the ‘Orange Revolution’ of 2004 Ukrainian per capita GDP actually rose
compared to the GDP of its then CIS neighbors, from 61% to 68%. From 2004 forward,
however, it declined precipitously, from the 68% to a low of 57% in 2013. In 2013 the Ukraine
economy was in recession. That recession is about to accelerate in 2014, with some reports
predicting the Ukrainian economy will experience a 5%-10% drop in GDP terms in the
coming year. That’s not a recession. That’s a ‘Greece-like’, bonafide depression.”

http://zcomm.org/znetarticle/the-ukraine-economic-crisis-past-present-future/

The above seems to suggest that Ukraine may have actually benefitted from its close links
with Russia. If so, this certainly is not the norm for dependent countries that come under the
influence of the rule of finance capital/imperialism.

Furthermore it is not possible that Russia can play the role of an imperialist country in the
Marxist sense (through the export of finance capital and gain of super profits) due to its
weak domestic economy. Barbara, Josh and Bill acknowledge that the Russian economy is
weak, often with the qualifier “in many respects”, but it does not seem to have any bearing
on their political conclusions. If we agree that large parts of the Russian economy are non-
competitive, that labor productivity is low and that technological innovation is lacking, and
if we agree that the high value sector in Russia has high percentages of foreign investment
while Russia’s GDP largely comes from energy export, how can we place it in the same
category as the US? We cannot unless we change the category of what an imperialist country
is.

Barbara made a case for Russia as a “late arrival”, one that was excluded from the
imperialist “club”:

“Can we agree that if Russia was an imperialist power or became an imperialist power at some time in
the future, it would not be immediately welcomed into the Western club? It is quite plausible that a
newly imperialist power would be isolated from ("stand alone against") the US and EU. Yes, it is clearly
the weaker side, and, no, I can't think of other examples - there is no other country that holds the
Soviet military legacy and such a large proportion of the world's land mass with rich natural resources;
Russia became an imperialist power in rather unusual circumstances, and is therefore something of an
unusual imperialist power.”

Here once more we have the recognition of reality in the statement that Russia is “clearly the
weaker side” (vs US and EU). I presume that the weakness referred to is of an economic
nature. This is, however, compensated for it seems by its “military legacy” and “rich natural
resources”. As Marxists we must maintain that a high number of stockpiled weapons is not
synonymous with imperialist status, although military capacity is of course useful for
imperialist countries. Likewise, the existence of “rich natural resources” is not a prerequisite
for an imperialist country, in fact, many imperialist countries obtain their raw materials
from dependent countries (under exploitative circumstances).

It might also help the debate if what Barbara hints at (“Russia became an imperialist power
in rather unusual circumstances”) could be given further detail. We know that the Soviet
Union collapsed, and with it, a good part of the economy, that asset stripping was rampant
etc. Russia certainly did not build up an imperialist status through military conquests of
various countries. By which process has Russian finance capital evolved to an imperialist
level and how can Russia be an imperialist country when its economic competitiveness is
ranked as 64th in the world?

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Josh points out that Ukraine is strategically important to Russia because of the pipelines that
run through it. This is not disputed. However, having a strategic interest does not render a
country “imperialist”. Turkey has a strategic interest in at least parts of Kurdistan but this
does not amount to an imperialist Turkey. Nor does its military occupation of parts of
Kurdistan, or Israel’s occupation of Palestine.

Inter-imperialist conflicts have traditionally been seen as those situations where imperialists
come into armed confrontations with each other, e.g. WWI, WWII (excluding the USSR). In
the past we did not define armed conflicts within a state, where the contestants where
backed by different imperialists, as inter-imperialist. The Spanish civil war, where Germany
backed one side, and France/Britain the other, was not seen as an inter-imperialist conflict
but as a civil war – one in which revolutionaries had a side.

Leaving aside for a moment the fact that Russia is not imperialist, it is simply a completely
new definition of inter-imperialist conflict if Syria and Ukraine are presented as examples of
these. There is no direct military confrontation between imperialist states, not even between
imperialism and Russia.

Russia has increased its presence in the Crimea, an area that allows for the presence of
Russian troops due to the ports it has at the Black Sea. It also seems clear that Russia is
supporting the local population who are likely to vote for re-joining Russia in the
referendum on March 16, and who elected a pro-Russian parliament in their autonomous
region. As Marxists we defend the right of the population of Crimea to choose affiliation
with Russia. It therefore seems legitimate on more than one level that Russia has a military
presence in the area. It certainly does not fit the category of imperialist conquest and
annexation.

If Crimea were to secede from Ukraine, and if Ukraine were to attempt to forcibly retain
Crimea under their rule, we would side with those forces (Crimean militia, Russian military)
that would support the democratic wishes of the population. If this situation came to pass
we would side with Russia/Crimea against Ukraine. This would be an application of the
rights of nations to self-determination.

8. Why Russia is not imperialist

—Breitman, 23 March 2014

It seems to me that the current discussion is at heart not simply one of different perceptions
of what Russia is and how she can be best categorised, given the vast empirical data
collected by all contributors. The debate is also one fundamentally about the method that is
applied in understanding social reality. The terms “basket case” and “while picture” or
“totality” are employed by those describing Russia today as an imperialist country the
second most powerful capitalist country on the globe.

The key questions of the debate in my view are:

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 ● How do Marxists analyse social phenomena including those of imperialism? How do
they determine whether or not a country qualifies as imperialist?

● Why did the Bolsheviks see Russia in 1914 as imperialist and what was that view
based on?

The Marxian notion of totality

As Marxists we strive to understand the world from a materialist perspective. Marx himself
discussed his own theoretical development as follows:

“The first work which I undertook to dispel the doubts assailing me was a critical re-examination of the
Hegelian philosophy of law; the introduction to this work being published in the Deutsch-Franzosische
Jahrbucher issued in Paris in 1844. My inquiry led me to the conclusion that neither legal relations nor
political forms could be comprehended whether by themselves or on the basis of a so-called general
development of the human mind, but that on the contrary they originate in the material conditions of
life, the totality of which Hegel, following the example of English and French thinkers of the eighteenth
century, embraces within the term “civil society”; that the anatomy of this civil society, however, has to
be sought in political economy. ”

When Riley and Lichtenberg discussed economic factors in detail and provided a lot of
quantitative material they did not limit their contributions to simply that as Logan seems to
suggest. The Marxian approach as – in my view perfectly well performed by Lichtenberg
and Riley – does not simply discuss the totality of Russian society in itself as well as in the
global context. No one amongst those arguing Russia is not an imperialist power has denied
other factors in their analysis. Both for Hegel and for Marx totality was composed, driven
and created by a variety of factors but both of them found one specific driving force behind
social totality. For Hegel it was the human will, for Marx it was the political economy which
we might also call the materialist foundation of humanity. Marx could only develop a
“Critique of Political Economy” of capitalism on the basis of onopoliz this epoch in human
development via its material foundations and the changes social reproduction had taken
place since feudal and absolutist societies. In order to arrive at the conclusions drawn in Das
Kapital Marx had in fact looked for over twenty years not only into already existing theories
of economics, he had also reviewed extensively figures and the changes in these figures. The
art which contributed to his analysis being a dialectical one was not to dismiss figures as
empiricist – an argument made by comrades of the London local who think Russia is
imperialist – but rather to see the historic tendencies underlying the figures he was dealing
with. Marxists can never simply dismiss figures but have to be capable to account for them.

Lenin surely saw himself in that theoretical tradition and, as we all know, he specified
imperialism as an epoch of capitalism. It only makes sense in this light to approach the
question of imperialism in the same way Lenin did when he applied what he had studied
and learned from Marx. Lenin did not stop at just declaring that capitalism had reached a
new epoch that was somehow equally binding for all nations on the globe. He went on to
specify which nations qualified as imperialist and stated “that a small number of financially
‘powerful’ states stand out among all the rest.” (V.I. Lenin, Imperialism – The Highest Stage of
Capitalism, Chapter 3)

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In his contributions Bill seems to believe that such an approach is too narrow:

“The comrades who argue against Russia’s imperialist status (most particularly Tom) tended to push on
the question of economic development, reduced even to matter of organic composition of capital (which
itself was used to frame what remained of the other subjects, e.g. finance capital). So the discussion
became a bit narrow, as other comrades (most particularly Josh) responded by attacking the points on
which the other side believed they were strongest. This was normal and understandable, and in fact
quite useful, but the recent trajectory of the debate has taken us away from other factors that
dialectically contribute to the whole picture.” [“Twenty points on the imperialism discussion”, 18
September 2013]

I think it would be worthwhile to confront such a view with a quote you might have seen in
Tom’s first contribution last year from the Fourth Congress of the Comintern in 1922:

“The progress of indigenous productive forces in the colonies thus comes into sharp contradiction with
the interests of world imperialism, since the essence of imperialism is its exploitation of the different
levels of development of the productive forces in the different sectors of the world economy, in order to
extract monopoly super-profits.”

It is also surprising to hear such arguments from comrades who raised no critique of the
recent article on Greece which argued about the reason for Greece’s status as a dependent
country:

“Labor productivity is relatively low compared to the imperialist core countries of the EU, not because
of the supposed laziness of Greek workers, as bourgeois demagogues contend, but rather because of a
lower organic composition of capital— that is, less advanced technology and a relatively
underdeveloped infrastructure. Greek workers have in fact been working more than most others in the
EU to enable their employers to realize a rate of profit comparable to that of their European
counterparts.”

—1917 No.35

The Greek bourgeoisie commands a comparatively large army as we commented in the

article and has investments in countries economically less developed than itself – primarily
Bulgaria and Romania. These investments may even allow for the extraction of super-
profits. In the bigger picture Greece remains a dependent country nonetheless, despite the
fact that its GDP per head in 2013 (US$ 26,934) exceeds that of Russia’s (US$ 19,833) by a
good US$7,000 and the massive economic decline Greece has been experiencing in the last
few years. That of Spain (US$ 32,501), a weak imperialist country, is yet another US$6,000
higher than that of Greece. (see http://www.oecd-ilibrary.org/economics/country-statistical-
profiles-key-tables-from-oecd_20752288)

If we understand that national wealth in international comparison under capitalism exists

under similar conditions of economic rivalry that we find between individual enterprises
within one national economy (if one ignores relatively but not fully mitigating factors such
as protectionist measures) then we can usefully discuss how wealth is actually distributed
and redistributed internationally. If we understand that then we can appreciate the position
a country takes in the international competition for market shares. Why do market shares
matter? They matter because they indicate how wealth is being continually distributed and
redistributed around the globe. If we want to discuss imperialism as a theory capable to

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explain why countries are at where they are at then we need to look into the specifics of
value transfers between various countries. Researching this will of course dig out and
produce a lot of statistics and figures. But this is not purely an abstract game. If we
understand in the concrete how global wealth is distributed on an ongoing basis we are
capable to explain where countries stand, why certain countries have certain living
standards and how they relate to each other on a whole range of matters. Such an approach
has nothing to do with empiricism. Dialectics is the logic that does not deny the importance
of figures and statistics but rather takes them one step further. It explains the underlying
quality that produces according quantitative results.

Semi-Colonies in the Global Imperialist System

First we need to take one step back though. If we tried to explain imperialism in very
general terms we could describe it as the international system of capitalism once it has
reached a certain degree of onopolization and onopolization. Within that system there is a
hierarchy between states created primarily by their economic exchange with each other. It is
precisely the generation of imperialist extra-profits that only a certain bracket of countries
can accrue internationally (and even amongst those there exists a certain hierarchy, partly
dependent on the respective economic sector concerned) when entering into trade relations
with a less developed national economy. Mobility between the categories of imperialist,
dependent, semi-colonial and neo-colonial countries certainly exists to some extent, even
though the extent is probably about as high as the social mobility between capitalists and
proletarians. There can be the strangest situations of states that might not fit our
assumptions. If we look at the example of Portugal this becomes clear: Portugal was a
colonial empire at Lenin’s times and maintained its colonies into the mid-1970s. Nonetheless
Lenin was less preoccupied with the amounts of countries Portugal might have oppressed
and exploited at the time but rather he analysed where Portugal stood in the bigger picture.
Unlike other colonial empires Lenin classified Portugal as trade colony of Britain and not as
an imperialist country. This example is instructive since it illustrates that despite Portugal’s
military superiority in relation to Angola and Mozambique it remained economically
exploited overall. Today we find similar examples to that of Portugal in 1914 like Greece in
2014. A Bloomberg report on the trade relations between Bulgaria and Greece observed:

““Greece is uncompetitive within the euro zone and it’s evident that Greek companies are moving into
Bulgaria to escape that overvalued currency and to seek lower costs,” said Stuart Thomson, a fund
manager at Glasgow-based Ignis Asset Management, which oversees $120 billion. (…)

“Bulgaria remains at risk because the euro region’s financial instability may scuttle its economic
recovery, analysts say. Almost a third of the country’s banks are owned by Greek parents such as
Piraeus Bank SA (TPEIR) and Alpha Bank SA.”

—http://www.bloomberg.com/news/2011-08-25/greek-refugees-feast-on-bulgarian-tax-
savings.html

A Bulgarian news service observed in addition:

“For the period 1996-2012, Geek investments in Bulgaria amounted to EUR 3.576 billion, which
represents about 8.59% of the total investment for the period (EUR 41.637 billion). Greece ranks third in
terms of the volume of investments in Bulgaria out of 182 countries for the 1996 – 2012 period after The

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 Netherlands (EUR 6.601 billion) and Austria (5.638 billion).”

—
http://www.standartnews.com/english/read/greece__bulgaria_report_good_neighbours_strong
_investments-2052.html

Despite Greece’s significant investments in economically weaker countries than itself we

classified it as a dependent country and observed in our article on Greece in 1917 No.35:

“While Greek capitalists have important investments in banks, shipyards and industrial plants in
Central and Eastern Europe— particularly in Bulgaria and Romania—on balance the Greek bourgeoisie
remains dependent on its more powerful “partners” in the EU. This is reflected in the ownership
structure of its financial sector. Deutsche Bank holds 10 percent of EFG Eurobank Ergasias, half of
Greece’s Geniki Bank is owned by France’s Société Générale, while 67 percent of the Emporiki Bank
belongs to another French institution, Crédit Agricole.”

—1917 No.35

Dependent countries and semi-colonies cover a very broad spectrum of the globe. While we
have countries with almost defunct capitalist economies like many sub-Saharan African
countries Greece and Portugal certainly exist on the higher end of the spectrum – as does
Russia.

Russia’s global trade portfolio

Russia has been subject to value outflows since 1991. According to the OECD’s quarterly FDI
report for the last five years (we should keep in mind that Russia’s economy reached its
peak in 2008) Russia has always had a smaller amount of foreign direct investment (US
$387.2 billion) compared to US $497.8 whereas all major imperialist powers (there are a few
exceptions such as New Zealand and Belgium) clearly showed a trend in the opposite
direction. It is notable, however, that the outflows of FDI from Russia have been marginally
bigger than the inflows for the same period. It is worthwhile quoting a research paper by
Alexej V. Kuznetsov, Professor of Economics at the Russian Academy of Sciences in Moscow
who observed that Russia’s FDI was fairly insignificant amounting to no more than 1.3
percent of the global FDI stock:

“Illegal forms of capital flight was more common in the first decade of the difficult post-communist
transformation. At the end of 2000, the Russian outward foreign direct investment (FDI) stock was only
$20.1 billion and accounted for mere 0.3% of the global outward FDI stock (UNCTAD, 2010, pp. 172,
176). The real boom in Russian FDI began in 2003 and its peak was reached in 2007. During the current
global economic crisis, market capitalization of companies worldwide fell. This process led to a
significant reduction in the value of Russian foreign assets although instances of large divestments by
Russian TNCs were rare. As a result, the Russian FDI outward stock, which reached $370.2 billion at the
end of 2007, decreased to $205.6 billion at the end of 2008. Then it reached $318.7 billion at the end of
2009 (Bank of Russia, 2010a). Nevertheless, Russia now ranks 15th in terms of outward FDI stock and
accounts for 1.3% of the world total (UNCTAD, 2010, pp. 172–176).”

Russia's foreign investment is interesting because a mere 6.1% is invested in former Soviet
republics whereas 26.9% is invested in countries that are either economically on a par with
Russian technology or way more advanced (22.8% of those are invested in countries we are
agreed on being imperialist). Russia's dependency on oil and gas, two commodities at the

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lower end of the value chain, is expressed in its export portfolio. A paper called “Modelling
Russian outward FDI” for the United Nation Conference on Trade and Development named
the most important Russian Transnational Corporations (TNCs) as being active in the
following sectors:

“The largest, and probably most important, ones are in the oil and gas industry, with Gazprom, and
Lukoil as examples of full- fledged international players, while Novatek, Rosneft, Tatneft and TNK-BP
have more limited foreign activities. A second group is in metal processing, including Severstal, UC
Rusal, Norilsk Nickel and Evraz. The third group is in telecommunications, with Sistema (including its
affiliate Mobile TeleSystems) and VimpelCom being both important TNCs.”

Unlike TNCs from imperialist countries who invest in order to reap extra-profits investment
strategies of Russian TNCs focus on management techniques and familiarity with local
markets, inherited from Soviet times:

“However with the distinction that has been introduced between ‘Oa’ advantages, consisting of
property rights and intangible assets and advantages of common governance, learning experiences and
organizational competence (Ot), which can be gained also in relatively less advanced firms that do not
seemingly have technological advantages, or even have disadvantages in that area (Dunning and
Lundan, 2008). Large Russian TNCs base their international expansion on those newly described
ownership advantages, which are less technology and more organization and management based (Ot).
They possess remarkable Ot advantage in the iron and steel industry in turning around ailing facilities.
In addition, the fact that the outward investing firms are significantly more profitable than firms with
no foreign expansion (Table 4) can be taken as an additional indirect proof of organizational and
common governance-type ownership advantages being used for international expansion.”

—Ibid.

The article concludes that, unlike most imperialist TNCs who invest abroad in order to push
weaker local competitors out of the market – one might remember for example Western
European investment in the former deformed workers states of Eastern Europe dominating
up to 90 percent of the banking sector – Russian TNCs had other priorities:

“In terms of main variables explaining Russian OFDI, home-country market size has been found as a
particularly important factor, confirming the need for focusing future paradigms of emerging-market
TNCs on separate home-country related factors.

Market size of the host countries and equally importantly, host-country natural resources have also
been found to be important drivers of Russian OFDI, in contrast to a lack of asset-seeking investments.”

Other forms of investment include the political funding of friendly regimes such as that of
Assad (see Riley's reply to Dorn on the nature of Russian investment posted on 03/03/2014)
and the Ukraine (as laid out by Lichtenberg in his piece from 12/03/2014). The fundamental
issue behind Russia's overall economic weakness compared to imperialist countries lies in its
dependence on selling raw materials such as oil and gas. It is in this light that we need to
look at Russia's status when entering definite trade relationships with other countries. When
we look into the destinations of Russia's foreign investment we see that the investment was
largely directed at imperialist countries. The United Kingdom, Sweden, Canada and the US
are the countries that Russian foreign investment is primarily directed at. The only semi-
colonial countries that receive an amount worth mentioning outside Russia are the Ukraine
and Turkey. Almost 60 percent of this amount flows into petroleum, mining and quarrying.

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As for Russia's general position in global economic competition Tom quoted a document by
the EU on Russia's role in the WTO states:

“A number of recent studies show that Russia enjoys Revealed Comparative Advantage (RCA) in only a
few industrial activities (Cooper, 2006; Connolly, 2008, 2012b).17 Apart from hydrocarbons and some
other raw materials (such as precious metals and timber), Russia only exhibits a comparative advantage
in a few medium- and high-technology products, such as military equipment, nuclear reactors and other
power generating machinery. These are traditional Soviet manufactured products, presently exported
by Russia to the markets that were developed in the Soviet era. The only industrial activity in which
Russia has managed to achieve RCA during the post-Soviet period is in microscopes. Here, NT-MDT, a
company that specialises in scanning probe microscopes, is ranked second in terms of sales volumes on
the world market (Connolly, 2011b). Russia’s low levels of competitiveness in higher value-added
industrial activities compares unfavourably with many other large low- and middle-income economies,
including Brazil, China, India, and Turkey. Moreover, with the exception of Information Technology
(IT) and some financial sector activity in the former Soviet states, Russia is not competitive in
international services trade, either (Figure 6).”

—“The Economic Significance of Russia’s Accession to the WTO,” p26

In Russia's key export sector, the oil and gas industry, which makes up for 75 to 80 percent
of Russia's exports Russia is a key player albeit dependent on Western technology to
advance with the exploration and maintenance of energy infrastructure and drilling
equipment:

“The boom of the 2000s had less to do with the energies of new entrepreneurs than with the
accumulated inheritance of the Soviet era: fields, pipelines, geological knowledge and drilling
techniques remain largely the same. The surge in production since the late 1990s seems impressive only
because of the slump that immediately preceded it; Russian oil output has not matched its 1987 peak
even today. In Gustafson’s view, ‘the Soviet legacy assets have acted as an anaesthetic, delaying the
adaptation of the Russian oil industry to modern management and technology, allowing it to remain
relatively isolated and poorly equipped to compete globally.’ Post-Soviet oil companies have done
relatively little exploration of their own: most of the fields brought online since 1991 were found by
Soviet geologists, and only one major new field discovered since 1988 has entered production – Vankor,
in the far north of the Krasnoyarsk region, operated by Rosneft since 2009. (..) The hopes of the Russian
oil industry are increasingly focused on the offshore ‘bluefields’ of the Arctic and Sakhalin, but these
require huge levels of capital investment as well as forms of expertise the Russian companies generally
lack. Hence the series of partnerships Rosneft has recently formed with international oil companies:
with ExxonMobil and Eni last April, with Norway’s Statoil in August and with BP in October, all of
them geared to joint explorations of the Arctic shelf in the Barents and Kara Seas.”

—http://www.lrb.co.uk/v35/n11/tony-wood/who-owns-it

The waste dominating Russia's oil extraction which often is combined with gas extraction
can be exemplified when looking at a method called flaring was documented by Simon
Pirani who observed:

“Putin said in 2007 that Russia was flaring 20 billion cubic meters (bcm) a year, and had to stop. But
things could be even worse. A research group that measured flaring with satellite imaging reported that
Russia had probably overtaken Nigeria as the world's biggest flarer, and in 2004 may have flared up to
50 bcm of gas, more than France's consumption.”

—Simon Pirani, Change in Putin's Russia, 2010, p.58

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Russian manufacturing remains weak and is insignificant on a global level. Marshall
Goldman observed in Oilopoly in view of full WTO integration of Russia's economy:

“According to Izvestia, today Russia's share of the world's high market is only .5 percent and its
machinery exports total only .3 percent of world exports. Steep tariffs or import protection barriers
compete against foreign imports, but the strong ruble complicates whatever efforts are made to foster
domestic manufacturing. Because of tariff protection, a large number of foreign automobile
manufacturers have opened assembly plants in Russia to take advantage of the increase in Russian
consumers' disposable income. But if and when those tariff barriers are lowered as a condition for
Russia's entry into the World Trade Organization, that is bound to hurt such efforts.”

—Marshall Goldman, Oilopoly, p.202

Who is exploiting Russia?

In the cause of our discussion those who believe Russia is not imperialist have been
repeatedly asked who is actually exploiting Russia. In order to respond to that question we
need to take a look at the foreign investors in Russia and in which sectors they are investing.
According to the OECD FDI sheet from February 2014 the stock of foreign direct investment
held in the Russian economy stood at US $497.8 billion, compared to Russia's FDI stocks
abroad of US $387.2. The gulf between the numbers is not a recent development but one that
has sped up – both stocks have been on the rise but that of foreign investment in Russia
moderately faster than Russia's investments abroad.

It is worthwhile to eliminate a certain group of investors before looking into this issue in
order to not be perplexed by the numbers. The UNCTAD World Investment report noted
round-tripping as an important element which is at best investment within Russia's own
economy via a detour over various tax havens, not dissimilar in percentage to overall FDI of
roughly two Thirds of Brazil (see Tom's Is Russia Imperialist?):

“A large part of FDI in the Russian Federation is accounted for by “round-tripping”. In addition to the usual
sources of FDI, a distinctive feature of FDI patterns in the Russian Federation is the phenomenon of
“round-tripping”, implied by a very high correlation of inward and outward investment flows between
the country and financial hubs such as Cyprus and the British Virgin Islands. These two economies are
persistently among the major source countries for inward FDI and also the major destination of Russian
investments. A closer look at the FDI stock in and from the Russian Federation, for example, reveals that
the three largest investors – Cyprus, the Netherlands and the British Virgin Islands – are also the largest
recipients of FDI stock, with roughly the same amounts in both directions (figure II.7). Together, they
account for about 60 per cent of both inward and outward FDI stock.”

—UNCTAD, World Investment Report 2013, p.65 (compare also p.16 of the same document)

Having detracted the 60 percent of round-tripping that might account for direct investment,
but certainly not foreign direct investment, we are left with figures that are a lot closer to
those of other BRIC countries such India and South Korea.

But who are the investors in Russia if we leave out the tax havens? In terms of capital influx
into Russia it is the most developed countries, particularly Germany, Sweden and France,
that can easily compete with local businesses who are the main investors:

“Foreign investors continued to be motivated by the growing domestic market, as shown by relatively

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 high investments in the automotive and financial industries through reinvestment. The Russian
Federation’s accession to the World Trade Organization (WTO) also had an impact on investors’
decision-making for certain projects. Developed economies, mainly European Union members,
remained the largest sources of inward FDI for the Russian Federation.”

—http://unctad.org/en/pages/PressRelease.aspx?OriginalVersionID=142

The World Investment Report notes:

“Foreign investors were motivated by the growing domestic market, as reflected by high reinvestments
in the automotive and financial industries. The Russian Federation’s accession to the World Trade
Organization (WTO) has also had an impact on investors’ decision-making for certain projects, such as
the acquisition of Global Ports by the Dutch company APM Terminals. Developed economies, mainly
EU members, remained the largest sources of inward FDI in the country.”

—Ibid., p64

The Bank of Finland study from 2008, introduced into the debate by Decker and Dorn last
year observed in terms of foreign ownership that especially the larger companies are
becoming increasingly under foreign control:

“Foreign equity participation was reported by one in ten business companies in our 2009 sample. More
than half of these companies said the controlling foreign owner held a stake of over 50 %. Though the
total share of foreign investors in the sample is relatively low by international standards (averaging just
6 % of total equity), foreign owners in Russia tended to hold large stakes. In companies with multiple
foreign co-owners, this interest exceeded 60 %. Foreign investors tended to hold large stakes in
companies employing more than a thousand people.

Notably, the trend to increased foreign ownership of Russian companies was across-the-board. There
were no signs of concentration in individual sectors, although foreign ownership was more prominent
in the chemicals industry, manufacturing of transport vehicles and equipment, and the metals sector.
(…)

Firms with foreign interest by and large demonstrated more proactive innovation behavior. Over 60 %
offered new products, and over 50 % developed new technologies. Half of the firms classified as most
innovative in our study were firms with foreign participation. ”

—Bank of Finland Institute for Economies in Transition, Russian Manufacturing Revisited, 2008,
p.15

German businesses profited handsomely from their investment in Russia. The German
Auswärtiges Amt (Ministry for Foreign Affairs) notes on its website:

“With an 8.7 per cent share in Russia’s foreign trade, Germany is Russia’s third most important trading
partner worldwide. In the first ten months of 2013, however, bilateral trade shrank by 5 per cent, with
German imports from Russia falling by 6 per cent and German exports to Russia declining by 4 per cent.
Russia’s principal exports to Germany were raw materials, in particular oil and natural gas, as well as
metal goods and petrochemical products. Germany’s main exports to Russia were mechanical
engineering products (18 per cent), vehicles and vehicle parts (18 per cent) and chemical products (8 per
cent).

As of October 2013, investment by German companies in the Russian Federation amounted to an

aggregate USD 22 billion. There are currently some 6,100 companies with German capital participation
in Russia, operating in 81 out of 83 federal subjects (administrative units) and with a turnover of around

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 EUR 40 billion in 2012 and a total workforce of some 270,000.”

—http://www.auswaertiges-amt.de/EN/Aussenpolitik/Laender/Laenderinfos/01-
Laender/RussischeFoederation.html#doc388422bodyText2

German imperialism is fairly keen on opening Russia's market up to further investment

which would allow German capital to increase profits. According to a survey conducted
amongst 135 German capitalists in spring 2013 by the Ost-Ausschuss (a German economic
institution interested in furthering imperialist interests in Eastern Europe and Asia) 76
percent were enthusiastic about Russia's WTO ascension whereas only two percent expected
a negative impact on their business (http://www.ost-ausschuss.de/russland). Unlike
imperialist countries Russia's state plays a significant part in the economy.

Russia's economy is coming increasingly under foreign control, despite the still fairly
modest levels of foreign investment, hindered by uncertainties of ownership, taxes and
tariffs and high levels of corruption. Any further implementation of WTO trading standards
will allow for a rapid inflow of EU capital and continue to subordinate Russia's economy
more seriously to EU capital. This has sparked fears especially amongst state employees
who fear they might lose their jobs should state departments be sold off to private capital:

“The bureaucrats have little interest in fostering competition that might cost them their jobs.

This is particularly true of the security services and prosecutors who have been among the main
beneficiaries of Mr Putin’s rule. Alexander Bastrykin, a faithful chief investigator, recently told a
Russian state newspaper that “privatisation is a threat that could finish off the Russian economy.”

—http://www.economist.com/news/briefing/21595428-conspicuous-dazzle-games-masks-
country-and-president-deepening-trouble-sochi?
zid=295&ah=0bca374e65f2354d553956ea65f756e0

The economic dependence on raw materials and manufactured goods at the lower end of the
value chain such as steel rather than high-end manufactured goods has been referred to by
Putin in December 2013 as having a negative impact rather than representing strength. He
addressed the critical issue of economic stagnation along the lines that those comrades
believing Russia to be imperialist described as too narrow an approach:

“Putin called for action to improve the business climate and said that low labor productivity was a
major drag on Russia's economy, ranked by the World Bank as the fifth biggest in the world by
purchasing power parity.

"Russia is among the top-five global economies," Putin said. "However, we lag developed countries by
two-thirds to three- quarters on such a key indicator as labor productivity. We must act resolutely to
overcome this gap."

—http://www.reuters.com/article/2013/12/12/us-russia-putin-economy-
idUSBRE9BB08F20131212

A recent Reuters article described Russia's critical dependency on a rising world oil price as
the main stimulant for economic growth :

“With the ministry expecting global economic growth to average 3.4-3.5 percent, the outlook threatens

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 to make a mockery of Putin's oft-repeated pledge to lift Russia into the world's top-five economies by
the end of this decade.

And it is still based on an oil price forecast many analysts view as over-optimistic, showing just how
much Putin's Russia, the world's largest oil producer, relies on not only high, but rising, oil prices to
prosper.”

—http://www.reuters.com/article/2013/11/07/us-russia-economy-idUSBRE9A60BX20131107

The recent events around the Crimea and Ukraine show an interesting image of Russia, one
that does not quite live up to the seemingly boisterous occupation of the Crimea in military
terms. The German minister for foreign affairs, Ursula von der Leyen, stated in view of
sanctions as a serious weapon in its conflict with Russia's assertiveness about Sevastopol:

"The minister admitted: "sanctions hurt both sides, that is obvious. But if one has a look at the figures:
Russia has 15 per cent of its GDP that depend on trade with Europe. Europe only 1 per cent. That
means, Russia's dependency on a working business relationship with Europe is much higher."

—http://www.faz.net/aktuell/politik/krise-in-der-ukraine-merkel-fordert-putin-zu-gespraech-
und-verstaendigung-auf- 12839936.htmlhttp://www.faz.net/aktuell/politik/krise-in-der-
ukraine-merkel-fordert-putin-zu-gespraech-und-verstaendigung- auf-12839936.html

A Financial Times article from Friday addressed the impact of the EU and US sanctions
threatened on Russia since the beginning of March:

“Russia's respected former finance minister has delivered a stark warning that the country could soon
face capital outflows as high as $50 billion a quarter and no economic growth, should western countries
press forward with proposed sanctions against Moscow. (…) Russia's stock market has tumbled 13.6 per
cent since March 3, while Sberbank and VTB, its two biggest state banks have fallen23.4 per cent and
24.7 per cent respectively. The stocks are two of Russia's well-traded blue- chips and are seen as proxies
for the country's overall economy.”

—Financial Times Europe, 14/03/2014

Russia – the bigger picture

Now that we have discussed Russia's international connections and its role in power
relations based on value it is useful to consider Russia's role both in the world today vis-a-
vis other imperialist countries but also in the historical milieu in which the Bolsheviks
described Russia as imperialist. Russia's economy remains globally uncompetitive except for
its energy sector which creates income in ways comparable to those of Saudi Arabia and
other energy-exporting nations. Energy exports account for 80 per cent of Russia's overall
exports which is why it has been designated by many economists as a petro-state. While
Russia remains amongst the militarily most powerful countries on the globe its economy is
nowhere near where it was in 1914 compared to other countries. Despite crucial dependence
on French, British and German capital – the Bolsheviks occasionally went as far as
describing Russia as France's colony – Russia in 1914 was a very different player on the
global scene than in 2014. Paul Kennedy notes in The Rise and Fall of Great Powers:

"Its [Russia's] steel production on the eve of the First World War had overtaken France's and Austria-
Hungary's, and was well ahead of Italy's and Japan's. Its coal output was rising even faster, from 6

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 million tons in 1890 to 36 million tons in 1914. It was the world's second largest oil producer. (...)
Foreign trade stabilized Russia's going onto the gold standard in 1892, nearly tripled between 1890 and
1914, when Russia became the world's sixth largest trading nation. (...) By 1914, as many histories have
pointed out, Russia had become the fourth industrial power in the world."

—Paul Kennedy, The Rise and Fall of Great Powers, p.233

The author of the book observed that this trend continued somewhat during the First World
War:

“But the impressive rise in Russian arms output, and indeed in overall industrial and agricultural
production, during the first one-and-a-half years of the war greatly strained the transport system, which
in any case was finding it hard to cope with the shipment of troops, fodder for the cavalry and so on.”

—Ibid., p.263

Just like in 1914 Russia remains the second biggest oil exporter. In 1914 Russia's advanced
sectors of the economy could provide important leverage internationally. One also needs to
bear in mind that the production of steel was at a comparatively higher level in the value
chain than it is today. Let us briefly compare Portugal's standing in the world back then to
that of Russia. I think this is enlightening since Portugal was classified as Britain's trade
colony by Lenin and it has been asserted that Russia's global moves today are those of an
imperialist power. Malwyn Newitt remarked about Portugal and its colonial empire:

“In 1884 Portugal was the only European power with any settlements in the interior of central Africa
and it was the only country which had extensive commercial ties with the African states of the interior.
No other Europeans had a presence that came anywhere near to that of the Portuguese. Portuguese
claims to territory were, therefore, far stronger than those of other Europeans. (…) Portugal's
determination to compete in Africa at the level of the great powers had mixed consequences. In 1892
Portugal defaulted on its international debt and faced the prospect of losing its empire almost as soon as
it had been acquired. That it did not do so was in part the result of the flow of wealth from the empire –
the re-exports of colonial produce, the hard currency earned by the ports and railways and the
remittances of the migrant labourers who kept the Rand mines working.”

—Malwyn Newitt, Portugal in European and World History, p.195

It seems to me that the Bolsheviks were well aware of the fact that not every country
benefiting from its colonies was imperialist. Russia played a different role in 1914 than
Portugal did, even though Portugal's role is much more akin to that of Russia today – and
that despite the modest outflow of super-profits from Portugal's African colonies.

Russia shares some similarities with Portugal in 1914, even though it does not have colonies
as such and the main inflow of funds are certainly not imperialist extra-profits but oil and
gas sales to imperialist countries. Russia's industry is not modernising in a way that could
allow for stable economic growth as that a hundred years earlier, resting on more pillars
than just one economic sector:

“Diversification of the economy away from oil and gas is not happening. January 2013 saw a monthly
decline in industrial output for the first time since 2009. Capital flight amounted to $76 billion in 2011
and $46 billion in 2012. The business climate is still poor—the World Bank ranks Russia at 112 out of 185
in its ease of business rating for 2013,21 while the World Economic Forum Global Competitiveness

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 report places them at 67 out of 144 countries surveyed.”

—http://www.isn.ethz.ch/Digital-Library/Publications/Detail/?lng=en&id=167341

Nowadays even its most promising industries, oil and gas, rely on foreign investment in
order to carry out the job. The impressive growth between 2001 and 2008 was possible
because of growing global energy prices and still working but increasingly brittle Soviet
infrastructure. Modernisation of the economy is, as Putin himself admits, very unlikely.
While Brazil has three banks listed in the top 100 of the Forbes 500 list of important TNS (see
Tom's document Is Russia Imperialist? in the appendix) with one of them being listed as
major bank and the other two as “regional” Russia has only one, Sberbank, listed on rank 61
and as a regional bank. The New York Times wrote in regards to Russia's financial industry:

“But the Global Financial Center Index, published in March by Z/Yen, a consulting agency, placed
Moscow 65th out of 79 cities studied. London was first, followed by New York and Hong Kong. The
ranking placed Moscow between Bahrain and Mumbai. A survey by the World Bank and the
International Finance Corporation even ranked Moscow No. 30 out of 30 Russian cities for ease of doing
business.

“Moscow was never going to be an international financial center,” a Western banker working here, who
was not authorized to speak for his employer on the matter, said of the effort. “That was a joke.”

So Moscow is setting its sights a little lower. Its biggest problem is to be taken seriously even as a
regional center.”

—http://www.nytimes.com/2013/04/04/business/global/moscow-tries-to-remake-itself-as-
financial-center.html?_r=0

According to a study by the British government on global manufacturing Russia ranks 15th
behind semi-colonial countries such as South Korea, Brazil, India, Taiwan and Mexico
(www.parliament.uk/briefing-papers/SN05809.pdf ). Documents of other comrades who
have done research on Russian investments in the two countries often found in recent news
reports, Ukraine and Syria, have shown that there is hardly any profitable investment but a
lot of attempts to either stabilise regimes seen as strategic partners.

Russia is not imperialist

Overall Russia is not only a net importer of imperialist investment – it is also far behind
other imperialist powers in terms of the variety of competitive economic branches,
manufacturing or finance. We have not seen any evidence of the extraction of imperialist
extra-profits by Russian companies to an extent that would be substantially more significant
than that of Greece vis-a-vis Bulgaria or Portugal vis-a-vis Angola or Mozambique in 1914.
Its current global standing suggests that even compared to 1914 Russia is relatively weaker
in 2014 and much closer to the likes of Brazil. If we were to call Russia imperialist we would
have to do the same for Greece, Brazil, Iran and many others. The programmatic category of
imperialism which is aimed at understanding how the global power system works, based on
the extraction of imperialist super-profits, would become a useless shell which would not
allow for revolutionaries today to understand who is on top and why. Despite Russia's
military strength Russia cannot be described as an imperialist country. As Engels once

93
observed:

“Force, nowadays, is the army and navy, and both, as we all know to our cost, are “devilishly
expensive”. Force, however, cannot make any money; at most it can take away money that has already
been made—and this does not help much either— as we have seen, also to our cost, in the case of the
French milliards. In the last analysis, therefore, money must be provided through the medium of
economic production; and so once more force is conditioned by the economic situation, which furnishes
the means for the equipment and maintenance of the instruments of force. But even that is not all.
Nothing is more dependent on economic prerequisites than precisely army and navy. Armament,
composition, organisation, tactics and strategy depend above all on the stage reached at the time in
production and on communications.”

—Friedrich Engels, Anti-Dühring, III. The Theory of Force, 1877

9. Reply to Roxie on Russian Investment

Barbara, 20 March 2014

As promised, here is a link to the document which contains the tables I showed you at the last
London local meeting - the whole document is worth reading:
http://www.vcc.columbia.edu/files/vale/documents/EMGP-Russia-Report-2011a-
Final_for_publication-21_Jun_11.pdf

I found this while looking for data to respond to the challenge in your document 'Note on Skype and
Russia then and now':

"if a parallel could be proven today – that Russia is pumping value out of neo colonies – I would be
convinced to re-evaluate my position. But so far, I don’t feel that the imps have provided this
evidence. I think there is a simple reason for this – it doesn’t match the reality today as far as I know."

The document above, including the appendices, provides a lot of empirical data about Russia's
outward investments, based on the large transnational corporations (TNCs) (Lukoil and Gazprom
being the largest and best known) and shows that their investments are significant, widespread, and
not just about selling oil and gas but involvement in other areas of the energy sector
(combinationism, in Lenin's words, and in fact these big Russian TNCs bear a close resemblance to
the cartels and monopolies Lenin describes in Imperialism). Where the tables show value gained or
increases in the value of foreign asset holdings you can see that these investments are overall
profitable right now, not just investment for the realisation of future profit. (Of course, every
imperialist bourgeoisie makes long-term foreign investments with little immediate prospect of big
returns, and those should not be disqualified as examples of capital export - but you made a
particular challenge about seeing profits right now.)

As well as this information about individual companies, I also looked at the FDI figures for Russia
cited on the UNCTAD website (http://unctadstat.unctad.org, a standard source used by bourgeois
economists) and found some material that might be of interest. But first a few general points:

At the London local it was suggested that I was changing focus to look at statistics, which I disputed,
saying that economic statistics such as FDI were part of the totality we were looking at and should be
viewed alongside Russia's political and military role in the world. Statistics, of course, are only as
good as the way they are interpreted and both Josh and Dave have made some excellent points in
their latest documents about the difficulty in measuring FDI and that it only partially correlates with

94
the Marxist category of capital export to realise surplus value. But you wanted statistics, so here
they are. Quantitative measures of FDI are an important part, if only a part, of the whole picture.

You and other non-imp comrades have put some emphasis on net FDI, the difference between
inward and outward FDI from all sources. It has been argued that if total outward FDI is greater than
total inward FDI, then that is an indication that a country can be considered imperialist. In his recent
document Josh has pointed out that not all imperialist countries will or do experience this (though
an imperialist country will over the long-run extract surplus value from its neo-colonies). Lenin and
Trotsky did not require an imperialist country to have a total positive net FDI, and nor did we in the
IEC approved document on Tsarist Russia, which notes that Russia's outward investment was
"dwarfed" by inward investment from richer imperialists. The argument in that document for Tsarist
Russia's imperialist status was its significant investment in and exploitation of weaker countries,
regardless of the mathematical relationship between total inward and outward FDI.

Nevertheless, there have been assertions from non-imps that Russia falls into the category of a net
importer of FDI, and is therefore a subordinate country. In fact, Russia not only has significant and
increasing outward investment, but over the past few years its net FDI flow has changed from being
inward to being outward.
There are two measures of FDI - flow and stock. This is the UNCTAD definition:
http://unctad.org/en/Pages/DIAE/FDI%20Statistics/Sources-and-Definitions.aspx. As I understand it,
what this boils down to is that FDI flow records the amount of investment carried out in a particular
year, while FDI stock records the cumulative amount year on year, based on assets and the fruit of
past investments. In the case of Russia, which has only become imperialist during the past decade,
we would expect the stock figures to be low as they include the time when Russia was reeling from
counter-revolution and could not be described as imperialist. FDI flow is a better measure of the
recent trend, since it is not burdened by low accumulation rates from the past. The figures that you
and Breitman were citing at the previous local meeting were FDI stock figures, which showed net
inward investment (although it also showed substantial and increasing amounts of outward
investment, again fulfilling the criteria we established for Tsarist Russia).
FDI flow, the measure of investment in a particular year, records a different story: that there was a
substantial increase in investments in and out of Russia beginning about a decade ago, and since
2009 FDI flow has moved into the black.
Here is a graph of Russia FDI flow over the past 20 years (based on data from
http://unctadstat.unctad.org, in attached spreadsheet):

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And this for FDI stock over the same period:

Even the stock figures show a dramatic increase in Russian outward investment over the past
decade.
It has been suggested that this increase in outward investment is related to the rise in oil and natural
gas prices (since similar increases were seen in some other oil-exporting counties). This is
undoubtedly true, but I’m not sure I see the significance of that if Russia’s ruling class has leveraged
the massive profits from its natural resource oligopolies to extend and significantly deepen its
foreign investments, cementing its status as an independent exploiter of weaker countries.
By way of comparison, here are some graphs comparing Russia and Brazil, showing that despite
some (not unexpected) numeric similarities between a weak imperialist economy and arguably the
strongest non-imperialist, when it comes to foreign investment they are in different leagues.

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First, outward investment:

And net FDI:

This economic data is part of an overall picture that has seen Russia playing an increasing role on the
world stage as one of the powerful countries competing for resources, markets and influence, over
exactly the same period - the past decade and particularly since the war in Georgia when we began
our debate. If it wasn't clear then that Russia has become an imperialist power, it is now.

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10. Russia’s Emergence as an Imperialist Power
Examining Recent Trends in Foreign Investment
— Decker, 27 March 2014
Russia inherited much of its economic base from the Soviet Union, which by unplugging from global
capitalism and employing centralized planning was able to create a modern industrial economy.
Although crude in some respects, it was quite advanced in others (military technology,
space/aviation technology, chemicals, etc.). Capitalist counterrevolution dislocated the economy,
which went into a nosedive for about a decade.
In our 2002 article on Russia’s “Capitalist Dystopia” (which was based on evidence from the
country’s “basket case” days), we noted that “Russia today has attributes of both a great power and
a semi-colony, just as it did under the Czar.” While the inheritance from the Soviet Union in military,
economic and geopolitical terms was significant, the Russian bourgeoisie was unable to make use of
these “great power” capacities to consolidate an imperialist state roughly comparable in relative
stature even to Tsarist Russia. We predicted that the “semi-colonial” features of the country would
be strengthened:
“Despite immense natural wealth and a substantial cadre of skilled workers, scientists and engineers,
thus far the re-integration of the former Soviet republics into the capitalist world market has
produced mass impoverishment and the destruction of much of the pre-existing educational
infrastructure and industrial capacity. Nigeria provides a closer model for Russia’s future under
capitalism than Sweden or Germany.”
Yet even as we were writing these lines, the situation was changing due to a combination of rising
energy prices and the cohering of a strong regime based on an indigenous super-rich “oligarchy”
running a highly monopolized economy—a regime, independent from foreign imperialist
domination, committed to reversing Russia’s decline and transforming its “great power” attributes
into the basis of an imperialist state. In the course of the 2000s, revenues from oil and gas sales
were channeled into investment both at home and abroad, while some of the stronger industries
inherited from the Soviet Union (along with corporations in new sectors) maintained and expanded
markets and investments beyond Russia’s borders.
In his 2013 book, The BRICS and Outward Foreign Direct Investment (Oxford University Press), David
Collins observes that an oligopolistic financial-industrial structure allowed the Russian capitalist class
to leverage profits made through high energy prices into expanding foreign investments:
“During the early 2000s there was a strategic shift in the domestic business environment that led to
general improvements in [Russia’s] economy and saw the creation of SOEs [state-owned enterprises]
in key industries, either with the assistance of public finance or through more efficient administrative
measures. During the period since 2000, the Russian economy has become largely concentrated in the
hands of several large corporations. It is believed that the high concentration of income in the Russian
economy was one of the major motivators behind the globalization of Russian firms. In 2001 the
Russian investment bank Troika Dialog calculated that around 70 large financial and industrial groups
controlled 40 per cent of the Russian GDP.”
…
“Modern Russian MNEs [multinational enterprises] now display a high degree of horizontal and
vertical integration of production capacities which also include distribution networks and banking,
linking services to non-services outward FDI. Most Russian companies operating abroad retain strong
ties with domestic natural resources. Until recently, most Russian MNEs were in the oil and gas,
metallurgy, and electricity generation and distribution industries. Russian firms have exploited the ties
to their natural resources base as collateral to raise loans for FDI, particularly during periods where
the prices for these commodities were highest.” [pp.49-50]
While capital export from the highly monopolized energy sector predominates, Russian corporations
in other sectors have made significant investments abroad, securing important markets and
establishing an external revenue base:

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 “Russian firms in the telecommunications sector expanded abroad for market-seeking purposes,
strengthening their position in the neighbouring CIS region in particular. Accessing foreign expertise
is also believed to have underpinned the globalization strategies of Russian telecommunications firms,
although this was often achieved through strategic alliances with foreign technological leaders in the
West, rather than through mergers and acquisitions, which were focused on companies in the CIS. In
2004, Russia’s leading mobile operator MTS acquired a 74 per cent share in Uzbekistan’s leading
operator, Uzabunorbita. Russia’s second-largest mobile operator VimpelCom acquired a stake in
Kazakhstan’s second-largest operator, KaR-Tel in 2005. VimpelCom also has operations in Tajikistan
and the Ukraine, with plans to expand into Vietnam and Cambodia. Mobile TeleSystems (MTS) is a
market leader in wireless communication in various CIS countries, including the Ukraine, Uzbekistan,
Turkmenistan, Armenia, and Belarus. It is the largest company of Sistema Holdings, which itself has
acquired licences to operate in India with plans to enter China and Bangladesh. VimpelCom is the
most active globally expanding MNE among the Russian telecom firms.”
…
“MTS is the top non-natural resources-based company among Russian MNEs and Russia’s largest
mobile phone operator. Sistronics, which is also owned by Sistema Holdings, is a major
telecommunications provider as well as information technology specialist with operations in the CIS
as well as the Czech Republic and Greece. Russian telecommunications firms are rapidly catching up
with the natural resources-based and heavy manufacturing-based conglomerates on the global scene.
“In software and IT services, Russia is behind only the US in the number of companies that operate
internationally in this sector. There are also some globally active technology-based Russian MNEs,
particularly in information and communications technology. The anti-virus internet firm Kaspersky
was created in 1997 and had developed a global presence by the end of 2005, expanding into 10
foreign locations including in Asia, Europe, and the US. Another Russian high technology firm, NT-MDT
(Nanotechnology-Modular Devices and Tools) established an affiliate in Ireland in 2005 to carry out
assembly, testing, and after-sales services as well as research and development. The Russian holding
company GIS acquired French microelectronics manufacturer Altis Semiconductor in 2007….The
Russian IT sector is now perceived to be highly stable and is consequently able to attract capital from
private and institutional investors to fuel internationalization.” [pp.52-4]
Russia’s banking system (i.e., financial capital in the narrow sense of the term) is comparatively
weak, yet it is fused with massive industrial capitalist enterprises in the energy sector (and
presumably other sectors as well) and intertwined with a powerful state independent of all foreign
domination. Russian finance capital has extended the reach of its banking sector abroad through
overseas investments:
“Even in the poorly developed banking sector, the top five Russian financial institutions have
subsidiaries in many countries. Russia’s largest MNE in the banking sector is Sberbank, which is a
majority state-owned company that has two foreign affiliates in Kazakhstan and the Ukraine as well as
cooperation agreements with agencies in the US, Hungary, and Israel. The much smaller VTB Bank
specializes in foreign trade and has affiliates in several European countries including the UK, France,
Germany, and Switzerland, as well as operations in Singapore, the Ukraine, and Angola. As noted
above, there is a high degree of integration of production and distribution within Russia’s large
extractive sector MNEs, one component of which is banking. Alfa Bank, for example, is banker to the
Alfa Group, a conglomerate in the financial services and oil and gas industries. This reflects the strong
link that Russian services-oriented investors have to the country’s dominant extractive sector. Russian
banks are also now targeting consumers in Africa. Vneshtorgbank opened the first foreign majority-
owned bank in Angola, and then moved into Namibia and Cote d’Ivoire. Renaissance Capital owns 25
per cent of the shares in Ecobank, one the largest Nigerian banks, with branches in 11 other African
countries.” [p.54]
In the course of the 2000s, the Russian oligarchy transformed itself into the finance-capital
bourgeoisie of an imperialist power. The process was assisted by the country’s military and
geopolitical inheritance from the Soviet Union, which allowed an economically resurgent Russia,
under the control of a strong state dominated by the oligarchs, to begin to reverse the
encroachments on what it viewed as its spheres of influence, forcefully demonstrated in the 2008
war with Georgia that triggered the first round of our debate.

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In November 2008, we sent a compilation of documents from both sides of the debate (then known
as “Duckites” [Imps] vs. “Plats” [Nimps]) to our widely respected friend Murray, who responded with
a short contribution in which he said he was unable to decide who was correct, suggesting that
Russia was either a “proto-imperialist” or a “pariah-imperialist.” In a passage cited on more than one
occasion by the Nimps, Murray wrote:
“In the last analysis what distinguishes a semi-colony from an imperialist country (of whatever rank) is
the fact that, over the long term, the former suffers a net outflow of ‘value’ while the latter
experiences a net inflow. These flows of value are mediated by several mechanisms – direct
investment, portfolio investment, unequal exchange in world markets – that systematically favor
more advanced capitalist countries, evincing high productivity, over more backward ones.”
It is worth recalling what Murray wrote immediately after this passage:
“But a set of further questions now suggest themselves: how ‘high’ does this ‘high productivity’ have
to be to guarantee a ‘net inflow’ of value? Is it possible for some countries to occupy an intermediate
position over the long term that involves neither significant net inflows nor net outflows (some sort of
‘semi-peripheral’ status, to use the language of ‘world-system theory’)? Are there not ‘natural factors’
that may, for a time at least, permit a net inflow of value (or at least block a net outflow) -- for
example, a conjunctural boom in primary commodity prices in resource-rich countries like Russia,
Saudi Arabia or Venezuela? How ‘independent’ would the national bourgeoisies or ruling elites of
such countries have to be to leverage such natural advantages in such a way as to escape a semi-
colonial status? What ‘weight’ do we give to these various factors in assessing the location of a
particular country within the imperialist-dominated world system?”
On the basis of the evidence then available (supplied in our discussion documents), Murray
observed:
“In general, the data suggest to me that Russia’s economic development is not being distorted or
‘disarticulated’ in ways that are typical of semi-colonial formations. Russia is burdened neither by pre-
capitalist social relations nor by a state beholden to foreign capital. The Russian bourgeoisie is as
‘independent’ as the bourgeoisies of the EU, indeed more so. Russia is currently a major holder of
foreign currency reserves, thanks largely to its role as an exporter of natural gas and oil during a
period in which energy prices skyrocketed. There is no meaningful sense in which we can say that
Russia, as a capitalist state, has become a victim of ‘world imperialism.’ Indeed, it’s very likely that
Russia has seen a net inflow of value in recent years (admittedly after many very difficult years in
which Russian industry was laid waste). In short, Russia has escaped the fate that seemed possible
after 1991: its relegation to a semi-colonial status.”
While also noting the role played by the decline of the established imperialist powers following
capitalist counterrevolution in the Soviet Union, Murray explained how Russia was able to avoid
subordination to the more advanced capitalist countries of the imperialist inner core:
“To understand how and why Russia escaped full subordination to world imperialism provides us with
some clues as to what Russia is now and where it is going. In my opinion, Russia’s recent trajectory of
‘economic modernization’ and its emergence as either a ‘proto-imperialist’ or imperialist power owes
much to the fact that it inherited from the Soviet workers state not only obsolescent industrial plant
but a comparatively modern infrastructure, not only relatively low productivity but also a well-
educated and highly skilled working class, and not only uncompetitive firms but an industrial rather
than a primarily agricultural economy. Putin’s achievement was to reassert the role of the Russian
state as the guardian and sponsor of a ‘responsible’ national bourgeoisie – one more concerned with
long-term development than with the short-term profiteering that characterized the ‘oligarchs’ of the
Yeltsin era.”
Murray wrote that he wished to see if Russia would be able to hold onto and deepen its strong
position in the coming period before he would conclude that it was not simply a “proto-imperialist”
state but a fully imperialist power (albeit a “pariah”):
“Does a decade of robust growth under an independent bourgeoisie allow us to declare that Russia is
now an imperialist power? I’m tempted to say yes, above all because the Russian state has
(somewhat realistic) aspirations to consolidate itself as a major player in the world imperialist system.

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 But two important questions give me pause. The first is: can Russia sustain its present trajectory in the
face of the strong headwinds of an intensifying global recession/depression? The second is: will the
current economic crisis lead in the medium term to fundamental geo-political realignments within the
world system and what effect could these have on Russia’s economic, political and military roles? I’m
not sure anyone can answer these questions with any degree of certainty at the moment.”
Over the past five years, the Imps have argued that events seemed to demonstrate Russia’s
continued and deepening “economic, political and military” role in the global imperialist order, e.g.,
Putin spiking a U.S.-led assault on Syria. The Nimps have responded mostly with assertions about
Russia’s “defensive” posture tied to a weak economic position, and with documentation on low
labor productivity/OCC and a dearth of competitive products in some industries.
While we have noted the problems with focusing exclusively on economic variables, and on one or
two sets of economic indicators at that, we have agreed that a country’s imperialist status will, over
time, manifest itself in a net transfer of surplus value (through various mechanisms) from the
neocolonial countries in which it invests. Despite the serious problems with official FDI figures—in
particular for Russia, whose outward foreign investment, as Dave’s recent contribution and my
earlier contribution noted, is under-represented in the UNCTAD statistics—we have been using
these figures as a very crude measure of capital export (and by implication surplus extraction). [See
attached document—“FDI Figures and a Grain of Salt”.]
So what has happened over the past five years since Murray wrote his assessment? In terms of
official FDI profile alone, has Russia become “more semi-colonial” or “more imperialist”? Below is a
series of graphs I’ve put together, taking inspiration from Barbara’s reply to Roxie. They compile a
large amount of FDI flow data from UNCTAD. There are four categories of country to which I
compare Russia: (1) BRICS and other strong neocolonies/regional powers; (2) “petro states”; (3) the
G7; and (4) smaller/weaker imperialist countries. For each of these categories, I look at (A) Outward
FDI (which is an indicator of the absolute size of new investments abroad); (B) Net Outward FDI
(which is an indirect indicator of the transfer of surplus value from abroad); and (C) Outward FDI as a
percentage of GDP (which is an indicator of the weight that new investment abroad has for a
country’s economy).

Just Another BRIC in the Wall?

Graphs 1A, 1B and 1C examine Russia in relation to the BRICS (excluding China because it is a DWS)
as well as Turkey, Greece and Portugal, i.e., the more powerful neocolonial countries to which Russia
has been likened in our debate. I have also included the G7 Average for comparison. The G7 is, of
course, the group of the most advanced imperialist countries.
Note: In all of the graphs that follow, I am taking the FDI figures at face value (i.e., neither inflating
them due to the problem of under-reporting Russian FDI, nor deflating them due to round-tripping,
which as I note in the attached document is both difficult to quantify with accuracy for any
imperialist country and a feature of all imperialist countries). If we’re using official FDI data for a
comparative analysis, then that’s what we’re doing: it would be a bit of a cheat to arbitrarily deflate
the figure for one of the countries (i.e., the country you wish to show is a weak performer) while
implying that a similar procedure for some or all of the others is not appropriate (particularly when
the evidence suggests that it would be appropriate, albeit extraordinarily complicated, to varying
degrees). In any event, since the Nimps claim that at least Brazil also suffers from a two-thirds
discount on FDI (and presumably many other neocolonial countries do as well), the relative gap
between Russia and Brazil would persist on average.
[BT Editorial Note: FDI charts have been deleted in the interests of space, (with the
exception of those for “Petro States,” i.e., 2A, 2B and 2C, because they featured in a
subsequent dispute). Decker’s “conclusions” for each set of charts provides a reasonably
accurate description of what was displayed.]

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 Conclusions
● From the mid-2000s onward, the absolute size of Russia’s outward FDI flow has been
somewhere between that of the capitalist BRICS/strong neocolonies and that of the
G7/first-tier imperialist powers.
● From the late 2000s onward, Russia’s net outward FDI has been positive (albeit much
smaller than the G7 average) except for 2012 (when it dipped slightly into negative
territory), while the net outward FDI of the capitalist BRICS/strong neocolonies has
been mostly negative (and Brazil’s was significantly in the red).
● From the mid-2000s onward, Russia’s outward FDI as a percentage of GDP has been
markedly higher (in relative terms) than that of the capitalist BRICS/strong
neocolonies (with the exception of Portugal in 2011), whereas it has been roughly
comparable to (and even exceeded) that of the G7 average.
‘Petro States’
Graphs 2A, 2B and 2C compare Russia with a selected group of so-called “petro states,” to which the
Nimps have also likened Russia due to the common heavy focus on the production of oil and natural
gas, despite Russia having highly oligopolized manufacturing and telecommunications industries that
export capital as well.
Conclusions
● From the mid-2000s onward, Russia’s outward FDI has significantly exceeded that of the
other “petro states” (with the exception of Saudi Arabia, which Russia began to outpace only
in the late 2000s).
● From the late 2000s onward, Russia’s outward FDI has moved closer to the G7 average as it
leaves the “petro states” behind.
● From the late 2000s onward, Russia’s net outward FDI was positive (though it dipped slightly
into the red in 2012), surpassing that of the “petro states,” which had a negative net
outward FDI (except for Venezuela in 2009). Saudi Arabia was the worst performer of the
bunch.
● From the mid-2000s onward, Russia’s outward FDI as a percentage of GDP has (in relative
terms) greatly exceeded that of the “petro states,” while it has converged with (and
sometimes surpassed) that of the G7.

2A: Outward FDI: Russia vs. Saudi Arabia, Iran, Iraq, Nigeria, Venezuela + G7 Average (2002-2012) [USD at
current prices and current exchange rates, millions]

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2B: Net Outward FDI: Russia vs. Saudi Arabia, Iran, Iraq, Nigeria, Venezuela + G7 Average (2002-2012) [USD
at current prices and current exchange rates, millions]

2C: Outward FDI as a percentage of GDP [multiply by 100]: Russia vs. Saudi Arabia, Iran, Iraq, Nigeria,
Venezuela + G7 Average (2002-2012)

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First-Tier Imperialists: G7
Graphs 3Ai, 3Bi and 3Ci compare Russia with the most advanced, first-tier imperialist countries
(while Graphs 3Aii, 3Bii and 3Cii compare Russia with the average of those countries taken as a
group, i.e., the G7).
Conclusions
● From the mid-2000s onward, the pattern of Russia’s outward FDI flow has roughly paralleled
that of the G7 average.
● By 2007, Russia’s outward FDI surpassed (and has since remained above) the lower
threshold of the G7 over the decade, though the country’s figure has been approximately
half that of the G7 average, which fluctuated between $45 billion and $140 billion.
● The G7 average outward FDI figure is heavily influenced by the size of the U.S. figure, which
in some cases was double or triple the G7 average. Since 2008, Russia’s outward FDI has
been roughly similar to G7 countries other than the U.S. (especially when Britain and Japan
are also excluded).
● By the end of the 2000s, Russia’s net outward FDI was positive (except for the small negative
figure in 2012), though still well below the G7 average.
● Over the entire decade Russia’s outward FDI as a percentage of GDP was comparable to that
of the G7 average, and since the end of the 2000s Russia has exceeded the G7 average.
● Over the entire decade Russia’s outward FDI as a percentage of GDP exceeded every
individual G7 country at some point.

Second-Tier & Third-Tier Imperialists

Graphs 4A, 4B and 4C compare Russia with a handful of non-G7 imperialist countries, i.e., those that
are commonly understood as second-tier or third-tier imperialist countries.
Conclusions
● Since the mid-2000s, Russia’s outward FDI has consistently exceeded that of Australia and
New Zealand, and since 2009 that of Spain and often that of Belgium.
● From the end of the 2000s onward, Russia’s net outward FDI, which was positive except for
2012, was greater than that of Australia, New Zealand and Spain in every year and greater
than that of Belgium in every year but one.
● Since 2009, Russia’s outward FDI as a percentage of GDP has exceeded the figure for
Australia, New Zealand and Spain.

***
Although I have cited Murray’s assessment of our 2008 debate, I must add that I have no idea what
he thinks of Russia today—for obvious reasons, I have not discussed the subject with him. I doubt he
has studied the matter nearly as closely as we have in the course of our subsequent discussion, and
naturally we were not appealing to him to arbitrate a dispute in our group. Nonetheless, I find it
interesting to reflect on how he—and the rest of us to varying degrees—seemed to be framing the
issue of Russia’s imperialist status back in 2008, i.e., rather tentatively. In that context, we had
expected the coming period to confirm or disprove the thesis that Russia had emerged (or re-
emerged) as an imperialist power.
If Russia was an independent “great power” within the global capitalist system in 2008 (at a
minimum a “proto-imperialist” as Murray described it), the subsequent period has witnessed, not its
regression into semi-colonial status, but further consolidation and deepening of its imperialist

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character. One of the economic measures of this character—capital export, reflected crudely in the
FDI flow data illustrated above—confirms that Russia does not resemble capitalist BRIC countries or
other strong neocolonial/regional powers, nor does it resemble the “petro states.” Instead, it most
closely resembles other economically weak/small imperialist countries (some of which it surpasses),
though in some instances Russia even resembles the first-tier imperialist countries of the G7 (with
the exception of the U.S.). Overall, its convergence with imperialist countries began in the mid-2000s
and became clear by the end of that decade. It was not halted by the global economic crisis.
Murray concluded his commentary with the following paragraph:
“Let me end with the following observation. The international working class has no interest in
promoting Russia as a capitalist counter-weight to US imperialism. Furthermore, whether Russia is
deemed proto-imperialist or pariah-imperialist, there is no clear basis for a defensist posture toward
it. Nevertheless, revolutionaries have a responsibility to expose the lies of the imperialists and to
distinguish between defensive actions and overt aggression. In the recent Georgia events, the bigger
liars were the Georgians and their US backers. Assigning greater responsibility for this senseless mass
murder to the Georgia-US axis than to Russia, however, should not be construed as ‘militarily
defending Russia against imperialism’.”
Likewise, it is necessary for revolutionaries to condemn Western imperialists for backing the
reactionary coup in Ukraine, and it is necessary for revolutionaries living in those imperialist
countries to focus their fire against their “own” governments. There is, however, nothing progressive
in Russia’s attempt to hold onto its spheres of influence. This fact should be even clearer given the
trajectory of Russian imperialist development over the past five years.

11. Reply to recent documents by cdes. Dorn (20 March) &

Decker (27 March)
—Riley, 8 April 2014

In her 20 March ”Reply to Roxie on Russian Investment” Barbara took up Roxie’s earlier
challenge that "if a parallel could be proven today – that Russia is pumping value out of neo
colonies – I would be convinced to re-evaluate my position.” In my opinion this represented
an important step forward in our discussion and brings us to the nub of the issue. Barbara
pointed to a 2011 document on Russian foreign investment published by the Vale Columbia
Center as a source of evidence of Russia’s role in the global economy today is that of an
imperialist power:

“The document above, including the appendices, provides a lot of empirical data about
Russia's outward investments, based on the large transnational corporations (TNCs) (Lukoil
and Gazprom being the largest and best known) and shows that their investments are
significant, widespread, and not just about selling oil and gas but involvement in other areas
of the energy sector.”

Unfortunately Barbara did not explain to what she found particularly significant in the
document (which I will refer to as “Vale 2011”). In reading through it I could not see much
evidence to support the notion of Russia operating as an imperialist in the modern Marxist
sense, although it did indeed show that Russian investments “are significant, widespread,
and not just about selling oil and gas.”

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It is worth noting that the authors of the Vale 2011 study, like all other financial analysts,
bracket Russia with other large “emerging markets,” rather than “industrialized” or
“advanced” (i.e., imperialist) countries. The report estimates that Russian MNEs have a total
of $107B invested abroad, more than all “emerging” non-imperialists except Mexico and
China :
“Despite the global crisis of the last few years, Russia has remained one of the leading
outward
investors in the world. The foreign assets of Russian MNEs have grown rapidly and only
China and Mexico are further ahead among emerging markets. As the results of our survey
show, several nonfinancial Russian MNEs are significant actors in the world economy.”
—http://www.vcc.columbia.edu/files/vale/documents/EMGP-Russia-Report-2011a-
Final_for_publication-21_Jun_11.pdf [Vale 2011] p1]

In describing “the motives of Russian investment abroad” (a category that presumably refers
to actual productive assets and excludes money laundering etc. ) the Vale 2011 authors cite a
desire to gain access to markets, resources and foreign capital markets as well as to avoid
protectionism abroad and political pressure at home. What seems particularly significant for
our discussion is the comment that Russian MNE investments are “rarely” aimed at
“efficiency seeking” (i.e., seeking superprofits through lower paid foreign labor).

“The motives of Russian FDI abroad are varied. The typical outward FDI motives of Russian
MNEs,especially in M&A deals, are the searches for markets and resources (see annex table
4). Their FDI can also be strategic-assets-seeking but it is rarely efficiency-seeking (this latter
motive is to be found in Russian FDI only in the CIS and a few other countries, where labor
costs are lower than in Russia). It can also be driven by image-building motives and by the
need to insure against political risk. Russian owners of the largest companies are still under
suspicion of developing new methods of ‘capital flight’. In some cases, through their FDI
abroad, Russian MNEs have received access to cheap financial resources from international
stock exchanges for the development of their business in Russia. The strengthening of
negotiating power is another specific FDI motive of Russian oligarchs. Such power is useful
both in dialogue with the Kremlin on anti-monopoly investigations and in the struggle
against protectionism abroad.”
—Vale 2011, p4 (emphasis added)

Apart from seeking access to broader markets and resources, the other priorities of Russian
capitalists are not shared by those from the “developed” countries who generally have little
difficulty exercising control over state policy and accessing global capital markets. Unlike
Russian MNEs, investments by G-7 imperialists are typically driven by “efficiency seeking,”
i.e., increasing profit margins by accessing cheaper labor power. This is an important
distinction.

Barbara asserts that the rising value of the foreign assets of Russian investors indicates that
profits are being made:

“Where the tables show value gained or increases in the value of foreign asset holdings you
can see that these investments are overall profitable right now, not just investment for the
realisation of future profit. “

I imagine that by “value gained” Barbara is referring to “Value realized by the end of 2009,”

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the title of the last column in Annex table 5,”outward greenfield investments” (Vale 2011, p
18). “Value realized” does not refer to profits extracted, but rather the actual (as opposed to
originally projected) value of the investment. This is clear from the footnotes. Footnote "b"
refers to a plan to invest as much as $10B in Indian telecommunications that was trimmed to
a "more realistic" $1B (the figure that appears in the “value realized” column). Footnote "d"
reports that only 10-15% of a $3B project in Libya was completed before it was abandoned
due to NATO bombing—so the estimated "value realized" is $200m.

Barbara suggests that the increase in the value of Russia’s foreign investments from one year
to the next indicates that they have been profitable. This is a reasonable presumption, unless
they have grown in value simply because new assets have been acquired. But profitable
investment does not necessarily mean extracting value from less developed economies. If,
for example, a Russian oligarch buys U.S. Treasury bills, real estate in London and a position
in a Wall Street hedge fund it does not any more qualify him as an “imperialist” than a
Ukrainian, or Nigerian billionaire with a similar portfolio. Conversely, any Russian (or
other) corporations seeking to open up operations in more backward countries—whether to
take advantage of cheaper labor or obtain a monopoly position in a given market—are
engaging in activities typical of imperialism. So that is what we need to pay attention to.

Josh opened his 30 March verbal presentation at our preconference meeting in TBT by
proposing that “capital export [FDI] by implication represents surplus extraction.” His 27
March contribution (“Russia’s Emergence as an Imperialist Power”) largely rests on this
premise. But the Vale 2011 report suggests that this formula does not accurately describe the
reality of contemporary Russia.

Most foreign investments by Russian capitalists are directed to more “developed” countries.
The 2011 Vale report notes that the reasons for this are to gain access to more advanced
technology and foreign capital markets, as well as a hedge against “political risks” closer to
home.

“The leading Russian investors are large exporters and their outward FDI supports their
sales. In some cases, it reduces transport costs for finished goods (hence the refineries of
LUKOIL in European countries) or secures their exports against the political instability of
transit countries (hence the participation of Gazprom in pipelines). Other motives are
connected with getting around trade protectionism in the United States or the EU, especially
in the metal industry. However, asset-seeking motives are more popular among Russian
MNEs in developed countries.” [p9]

Brazilian investment parallels the Russian pattern--most of it is also directed at more

“developed” countries (see Table 4 “Distribution of outward FDI stock 2001-2010” Vale
Columbia Center 2012 study on Brazil
(http://www.vcc.columbia.edu/files/vale/documents/Profile-_Brazil_OFDI_10_May_2012_-
_FINAL.pdf).

The 2011 Vale study describes recent difficulties experienced by Russian firms attempting to
set up new “greenfield” foreign operations—i.e., enterprises constructed from scratch.
Greenfield operations established by both Russian and Brazilian MNEs have tended to been
undertaken in more backward regions, whereas the acquisition of existing companies has
tended to characterize their investments in the EU and North America.

107
 “Several Russian companies lost their foreign subsidiaries during the recent crisis. There were
examples in machinery, construction, insurance and some other industries. The situation in
iron and steel was the worst. The largest non-ferrous metal companies survived but went
down in the top 20 ranking. The crisis was even more severe for Russian greenfield FDI.
Many projects were either abandoned or postponed. However, some companies (mainly oil
& gas MNEs) continued to make large new deals in 2009 (see annex table 4).”
—Vale 2011, p10, emphasis added

Annex Table 4 in the 2011 Vale report, “The top 10 M&A [merger and acquisition]
transactions [by Russian companies] 2007-2009,” shows roughly three quarters involving
companies based in imperialist countries. The figures in table 6 in the 2012 Brazilian study
(which I will refer to as “Vale 2012”) are roughly comparable.

Russian and Brazilian greenfield (neocolonial) investment in the recent past certainly does
not suggest that they are playing in different leagues. The Brazilian ventures have also
encountered some difficulties, but seem on the whole to be more robust. (Attachment No. 1
reproduces some of the key tables—including those on greenfield ventures--from both Vale
studies.)

Comparing the tables on greenfield operations reveals that investment in the top ten
Brazilian ventures is roughly six times larger than the top ten Russian ones (roughly$18B
compared to $3B). This ratio is the hardly what would be expected of a comparison of
investments in backward countries by a supposed imperialist country on the one hand and a
non-imperialist country on the other.

In her 20 March document Barbara wrote:

“It has been suggested that this increase in outward investment is related to the rise in oil and
natural gas prices (since similar increases were seen in some other oil-exporting counties).
This is undoubtedly true, but I’m not sure I see the significance of that if Russia’s ruling class
has leveraged the massive profits from its natural resource oligopolies to extend and
significantly deepen its foreign investments, cementing its status as an independent exploiter
of weaker countries.”

The growth in Russian FDI in recent years has been paralleled (and in some cases exceeded)
by other major oil producers, particularly from the Middle East, as I pointed out in my 15
July 2013 rejoinder to Decker-Dorn in which I cited data from the Financial Times, showing
that between 2003-07 and 2008-12:
“The second highest increase in FDI outflows [after China] was recorded by the United Arab
Emirates. It was the 14th largest outbound investor in 2008 to 2012, moving up nine places
compared with the 2003 to 2007 period. It now ranks above larger countries such as South
Korea and Australia.
“Elsewhere in the Middle East, investments from Kuwait, Bahrain and Qatar have also
increased significantly between the two five-year periods, although they are still far behind
UAE levels. Comparing the two periods, the number of outward FDI projects from Kuwait
doubled, the number from Qatar increased threefold and the number from Bahrain increased
fivefold.”
—FDI Intelligence, 10 April 2013 [see Appendix A below]

A sharp spike in oil prices in the early 1970s resulted in a similar dramatic upturn in

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“petrodollars,” but no one interpreted the massive outflow of FDI from OPEC countries
(most of which was recycled through imperialist financial centers) as signaling the
emergence of Kuwaiti or Saudi Arabian “finance capital.”

In his 27 March document “Russia’s Emergence as an Imperialist Power” Josh attempted to

deal with this argument with three graphs (which he labeled 2A, 2B and 2C) that showed
Russia “exceeding” or “greatly exceeding” a “selected group of so-called ‘petro states’” in
terms of outward FDI, net outward FDI and FDI as a percentage of GDP. The “petro states”
he selected did not, however, include any of the four I had cited last July as having doubled,
tripled or quintupled their FDI. In order to get the results he wanted Josh chose a different
quartet: Iraq and Nigeria (which were both undergoing major civil conflicts), Venezuela
(where the Bolivarian government was directing much of its oil revenues to various
redistributive projects, including supplying Cuba with oil in exchange for medical
personnel) and Iran (which has been under increasingly tight imperialist sanctions.) While
Josh’s graphs largely show what he wanted them to1 they failed to prove his point. As I
remarked in my 15 July 2013 response to he and Barbara: “If we are to have a serious
discussion it necessary for both sides to address the substantial arguments put forward by
the other, not to ignore or sidestep them.“

As comrades on both sides of this debate have observed, FDI stats can be misleading and in
any case are not a particularly useful measure of determining whether or not a given
country should be considered to be imperialist. Certainly no Marxist would conclude that
the Financial Times report that the UAE has passed imperialist Australia in the global FDI
table, signaled that the this Gulf sheikdom was “cementing its status as an independent
exploiter of weaker countries” to use Barbara’s phrase

Russia is by far the biggest country and the biggest investor among the nine members of the
CIS. It also has the largest gas and oil deposits. But Kazakhstan, which sits atop oil and gas
deposits of the Caspian basin, has in the last decade emerged as a major energy exporter,
and, like Russia, has also been generating considerable revenues, much of which has been
invested abroad. As I noted in my 15 July 2013 reply to Dorn-Decker in 2011, the “World
Investment Report 2012” states that, in 2011 in the CIS, “The takeover of Polyus Gold
(Russian Federation) for $6.3 billion by the KazakhGold Group (Kazakhstan) was the
largest.”

According to Wikipedia’s entry on “Energy Policy of Kazakhstan:

“In 2000s, the oil production has increased rapidly due to foreign investment and
improvements in production efficiencies. In 2006, Kazakhstan produced 54 million tons of
crude oil and 10.5 million tons of gas condensate 565,000,000 bbl (89,800,000 m3), which
makes Kazakhstan eighteenth-largest oil producer in the world.”

The oil revenues flowing to the Kazak ruling class need to be invested and there are not

1Two partial exceptions to this are: 1) graph 1B “Net Outward FDI” that shows Greece, Portugal and South
Africa with higher values than Russia between late 2005 and early 2009 (and all four countries essentially
converging in 2012);, and 2) graph 2B “Net Outward FDI” that shows Nigeria, Iran, Iraq and Venezuela
exceeding Russia between late 2005 and early 2009. In 2012 the five countries are shown as very close to
converging.

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enough profitable opportunities at home. So, like Russia, much of this money apparently
goes abroad. An article in Eurasian Development Bank’s “Eurasian Integration Yearbook
2011” pointed to parallels between Russian and Kazakh investment in the CIS:

“The emerging Russian transnational companies (TNCs) started a massive invasion into post-
Soviet [CIS] markets, and were joined by TNCs from Kazakhstan in the mid-2000s. The
preconditions for this boom were the high rates of economic growth in both TNCs’ home
countries which allowed the TNCs to gather momentum for entering regional markets….”

—“Trends in Investment Cooperation between CIS countries and the Global Economic
Crisis,” p 34

However large Kazakh FDI flows in and out may be, I am sure we can all agree that they
hardly qualify Kazakhstan as a center of imperialist “finance capital.” The same is true of
Russia. On page 10 of the 2011 Vale study there is a box on Russia’s financial sector which
notes:

“Our report does not cover financial services but an internationalization process can be seen
in the Russian financial sector as well. However, no Russian financial MNE can be
compared with the largest Russian non-financial MNEs in internationalization. The global
competitiveness of the Russian financial sector is low. After the collapse of the Soviet
Union, none of the banks or insurance companies took the opportunity to become real
multinationals. On the contrary, many foreign financial multinationals secured a footing in
the Russian market.”
—emphasis added

The significance of this seems fairly obvious. Perhaps we can agree that Russia capitalism
cannot be characterized as a powerful and vigorous “finance capital” player in the world
economy. The imp comrades have yet to comment on what they make of the fact that,
despite active attempts by the Kremlin to attract foreign and regional investment, it is
Warsaw, not Moscow, which has emerged as the financial center of Eastern Europe. This
signifies that Russia is far from being the dominant “finance capital” power even among the
countries of the former Soviet bloc.

The big players in Russia’s banking system (as indicated by Table 7 of the 2011 Vale study)
are either state owned or controlled. According to David Collins, whose 2013 book Josh cited
in his 27 March document, only one Russian financial institution, Sberbank, appears on the
Fortune 500 list [p 52]. On this score, and several others, Brazil seems somewhat more
advanced than Russia:

“Brazil has four financial services firms in the Fortune 500 list of the world’s largest
corporations: Itausa-Investimentos Itau, Banco Bradesco, Banco de Brasil, and Ultrapar
Holdings. However none is in the top 100. Companies related to construction, such as
Norberto Oderbrecht and Adrade Gutierrez maintain a large international portfolio. Several
high-tech firms, such as Datasul, Natura, and Lupatech are globally active. As a developing
country Brazil is ahead of France, Spain, and Canada in software and IT services. In 2010,
almost 20 per cent of Brazilian merger and acquisition based FDI was in the services sectors,
with finance being the most significant.”

—The BRIC States and Outward Foreign Direct Investment, p 30, emphasis added

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The following observation in the IEC approved document “On Imperialism” provides a
useful framework for determining which countries are imperialist:

“The fact that, over the long term, semi-colonies suffer a net outflow of value to more
‘developed’ imperialist countries lies at the core of what Marxists designate as ‘imperialism.’
The mechanisms for the extraction of value can take various forms—loans, direct investment,
portfolio investment, land rent, patent and licensing fees, transfer pricing—but they all
systematically tend to favor the interests of the capitalists of the advanced countries over
those of more backward ones.”

To assess Russia today we must seek to determine its relation to more backward countries,
particularly those in its “sphere of influence,” i.e., the CIS. The 2011 Vale study points to
other factors that help shape foreign investment decisions by Russian corporations:
“The second or Uppsala theory of the internationalization of the firm emphasizes the role of
close psychological distance and low language and cultural barriers. These factors are
important for Russian investment in Slavic countries, as are the strong economic and political
ties inherited from the Soviet period. Many Russian companies with outward FDI do not
have much experience in investing abroad and thus tend to prefer buying companies or
establishing affiliates in the familiar environment of post-communist countries, especially
those with a positive attitude towards Russians.
—emphasis added

A recent study by Ariel Cohen produced for a January 2012 workshop sponsored by the U.S.
Council on Foreign Relations notes that in 2010 roughly 10 percent of Russian crude oil
exports went to CIS countries:

“The average price of crude oil exported by Russia has consistently been considerably lower
for the former Soviet states than for the rest of the world. In 2010 CIS states bought the
Russian crude at a 35 percent discount, paying an average of $56.20 per barrel, while the rest
of the world paid $76.24. This figure does include the prices charged to Belarus and
Kazakhstan, members of the Customs Union. In the past, the discount was even deeper. The
largest discount – 44 percent – was extended in 2008. In the year when oil prices spiked to
over $100 a barrel for a time, CIS countries paid $66.11 per barrel of crude from Russia while
the rest of the world paid $95.27 on average. This is the cost of doing business, or more
accurately, of keeping the sphere of influence – excuse the pun – oiled."
—“Politicized Oil Trade: Russia and its Neighbors,” [p2 ]

This is not how the oil corporations of the advanced capitalist countries generally do
business:

"Russia is able to ignore the economics in its oil sales to CIS countries because it can make up
the difference elsewhere. However, its budget, dependent for the 86 percent of the revenue on
hydrocarbons, it precariously balanced at around $100/bl. If the world oil price were to drop,
Russia would no longer be able to override the economic illogic based on the geopolitical
rationale." [p5]

Cohen notes that Russia’s parvenu bourgeoisie is far more dependent on the state than its
opposite numbers in the imperialist West:

"Russian energy policy in the region is based on geopolitics rather than economic
considerations. Political clout created by energy dependence is supplemented by Moscow’s

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 involvement in support of leaders who otherwise may lose public legitimacy. The price at
which Russia sells oil to former Soviet republics is based on geopolitics rather than
production costs or market prices." [p4]

The discounts naturally come with a price and the Kremlin is quite capable of slapping
around its weaker CIS partners. Cohen gives the following example from a decade ago:

"Armenia is another country that sacrificed its sovereignty significantly through heavy
dependence on Russian energy and security blankets. In 2003 Armenia owed to Russia $93
million, and in 2003 Russia demanded repayment of this debt. Instead, the Amenian
government, under heavy pressure from the Kremlin, handed over five major Armenian
assets including key energy, research and development, and manufacturing facilities." [p5]

In other cases, for example Syria, Russia has written off vastly greater debts. The
"geopolitical interest of Russia" largely involve the Kremlin’s attempts to prevent further
expansion of NATO and the EU into the former Soviet bloc. To this end it supplies friendly
regimes with financial and political support (often in the form of discounted energy prices.)
And vice versa. When Ukraine went "orange” a decade ago, energy prices went up. This
happened again this year when Moscow’s preferred regime in Kiev was deposed. Russia can
be accused of acting as a regional bully, but that does not make it imperialist in the Marxist
sense.

Dorn concludes her document with a few tables comparing recent FDI trends in Russia and
Brazil:

“By way of comparison, here are some graphs comparing Russia and Brazil, showing that
despite some (not unexpected) numeric similarities between a weak imperialist economy and
arguably the strongest non-imperialist, when it comes to foreign investment they are in
different leagues.”

One area in which Russian and Brazilian FDI are similar is the prominence of tax havens as
destinations for outward FDI flow. This is evident by comparing Table 6 in the 2011 Vale
study (showing many of the top destinations for FDI are tax havens) to Table 4 in the 2012
study of Brazil which shows a similar tendency. On the other hand Table 3 of the Brazilian
study shows about a third of Brazilian FDI stock2 is in the financial sector. Comparable data
is not presented for Russia—perhaps because its financial sector is relatively less developed.

Collins provides the following sketch of Brazil’s economic development and global status:

“As of 2011, seven of the Fortune 500 lists of the world’s largest corporations are Brazilian.
Only one was in the top 100: the oil company Petrobras (occupying 34th spot). Brazil has 13
companies on the highly influential Boston Consulting Group’s (‘BCG’) list of Global
Challengers for 2011, a phrase used to describe firms that are globally expansive and

2: David Collins provides the following succinct definitions of FDI “flow” and “stock”:
“The stock of inward FDI is the cumulative US dollar value of all investments in the home country
made directly by residents—primarily companies—of other countries. The stock of outward FDI is the
cumulative US dollar value of all investments in foreign countries made directly by residents—
primarily companies—of the home country. Direct investment excludes investment through purchase
of shares. [aka portfolio investment-TR] FDI stock captures the value of MNEs at a given moment in
time. FDI flows depict the extent to which capital has moved across borders over a given period
(usually one calendar year).”

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 accordingly challenge traditional MNEs from the developed world. Outward FDI from
Brazil had been primarily composed of greenfield investment in the form of commercial
offices abroad which focused largely on supporting export activities. In recent years mergers
and acquisitions involving Brazilian firms have grown in size and importance. One of the
chief strategies for this form of investment on the part of Brazilian MNEs has been to
diversify operations, although mergers and acquisitions have also enabled Brazil’s MNEs to
add value to their chains of production. Outward FDI from Brazil is still largely focused on
Latin America, in part due to uncertainties faced by foreign entrants in these markets that are
believed to be less acute than those in Africa and Asia. Brazilian MNEs’ regional
concentration has enabled these firms to become dominant suppliers in Latin America in a
manner that would have been impossible were the companies more geographically and
culturally dispersed. This allowed Brazil’s companies to exercise greater bargaining power as
well as respond to localized needs of customers more efficiently.

“Brazilian MNEs do have a noteworthy presence in the African countries of Mozambique and
Angola, both of which have Portuguese heritage and language, which has helped entry into
these markets. South Africa has also attracted Brazilian investors because of the expertise of
Brazilian firms in the mining industry. It is expected that the geographical dispersal of
outward FDI from Brazil will diversify in the near future in favour of Africa, Eastern Europe,
and Asia. This is due both to the large market and resource availability in these regions, as
well as the relative increase in political risks in Brazil’s traditional investment locale of South
America.

“Natural resource companies are the major source of growth of Brazilian MNEs,
accounting for about two-thirds of the foreign assets of Brazil’s largest twenty MNEs. The
high concentration of primary sector industries—including oil and gas, minerals, and
agribusiness—reflects the challenge faced by Brazilian MNEs in adding value within the
domestic market. Brazilian MNEs’ focus on the extractive sector may be the consequence of
inward FDI from countries such as China that capitalized on the natural resources and low-
cost labour available in many Latin American countries. Despite this orientation, Brazil’s
large MNEs have not demonstrated an internationalization strategy related to natural
resource acquisition, but have instead prioritized technology acquisition, as noted above.”

—Ibid., pp 27-28

Collins’ sketch of Russia’s current economic status underlines its qualitative similarity to
Brazil:

“Russia has two firms in the top 100 of the 2011 Fortune 500 list of the world’s largest
corporations: Gazprom (35th) and Lukoil (69th), both of which are in the extractive sector.
The Boston Consulting Group 2011 list of Global Challengers includes six Russian
companies: the Evraz Group, Gazprom, Lukoil, Norilsk Nickel, Severstal, and United
Company Rusal. Russian MNEs are dominated by those in the extractive sector and are
motivated by market-seeking rather than cost-savings strategies, in large part because of the
ready availability of resources at home. Russian MNEs tend to share important attributes in
terms of their ownership structures, motivations, and business strategies. First, in contrast to
firms from the developed world, Russian MNEs internationalized rapidly, often through the
leveraging of their natural resources base. Novolipesk Iron & Steel and Severstal are good
examples of this ‘born global’ strategy that is also seen in other BRIC MNEs. The second most
common characteristic of Russian MNEs is their relatively large absolute size. Gazprom,
Lukoil and Norilsk Nickel have particularly sizable capitalizations and asset holdings. One of

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 the comparative strengths of Russian firms is their large size at home, termed ‘ownership
advantage’, which has enabled them to resist foreign competition as Russia’s borders have
opened to inward FDI. The large domestic size of Russian firms is the result of the rushed
privatization process in the 1990s in which foreign investors were almost totally excluded
from ownership. During this period outward FDI was insignificant, taking the form of
offshore tax havens rather than genuine internationalization. These large oligopolies
consolidated their respective industries through mergers. Modern Russian MNEs now
display a high degree of horizontal and vertical integration of production capacities which
also include distribution networks and banking, linking services to non-services outward
FDI. Most Russian companies operating abroad retain strong ties with domestic natural
resources. Until recently, most Russian MNEs were in the oil and gas, metallurgy, and
electricity generation and distribution industries. Russian firms have exploited the ties to
their natural resource base as collateral to raise loans for FDI, particularly during periods
where the prices for these commodities were highest.

“Despite market reforms, the Russian government maintains a significant and indeed
growing degree of control over its largest companies….

“Russian MNEs have traditionally invested in firms from the developed world, especially
in North America and Europe, despite the fact that many Russian MNEs began their
expansion in other countries of the CIS, particularly where this involved assets inherited from
the dismantling of the former Soviet Union. Targeting developed country firms is rooted in
Russian MNE’s desire to gain access to advanced technologies that are presumed to be
possessed by developed country firms….

“Apart from rapid economic growth in the area, the reasons for Russia’s
internationalization towards the CIS mainly include the geographical proximity and
cultural and linguistic ties, which have led to close political relations as well as similar
business practices. The UK is the largest single target country, followed by Canada and the
US. Investment through mergers and acquisitions in the CIS by Russian firms has grown
again recently. Outward FDI from Russia in the developing world is a relatively recent
phenomenon, with a focus primarily on Asia and Africa, but again focused on new markets
rather than cost-savings. This pattern reflects a preference for regional expansion followed by
true globalization. So far Russian firms have not managed to purchase major companies in
the US or Western Europe, yet some Russian firms, such as Severstal, have used a successful
strategy of acquiring troubled enterprises at favourable prices. The primary motivation for
the globalization of Russian firms is thought to be one of technological advancement, such
as more efficient oil production methods.”

—Ibid., pp 50-52, emphasis added

In our discussion I think that too much significance has been attributed to FDI figures. While
they are certainly worth factoring in, the decisive criterion or determining which countries
qualify as imperialist is their role in extracting value from neo-colonies. Having said that,
there are a few things related to FDI I want to address. Barbara presents several graphs in
her 20 March document, two of which show Brazilian FDI (both FDI flows and net outward
FDI ) dropping steeply after 2006 (when it was briefly above that of Russia’s).

In my 15 July 2013 response to Dorn/Decker’s critique of “Is Russia Imperialist?” I pointed

out that Russia’s surging outward FDI was closely paralleled by those of several Mid East

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petrostates and therefore should not be viewed as a classic case of the imperialist export of
capital. I also addressed the significance of the growing divergence of Russian and Brazilian
FDI stats since 2006. Barbara’s recent contribution reiterates the assertion that this
divergence shows “that Russia has become an imperialist power.” I have attached my July
2013 response to Dorn/Decker on the significance of recent fluctuations in relative FDI
between Russia and Brazil as “Appendix A.” It summarizes some discussion by academics
of possible causes and the significance of this phenomenon and points to various factors that
tend to refute the proposition that Russia has entered a “different league” than Brazil.

It is unfortunate that Barbara’s recent document simply recycles her earlier (mistaken)
argument without even attempting to comment on the evidence I presented to challenge this
conclusion. 3 I know that the passage of time and the numerous documents sent back and
forth on this subject make it easy to lose track of threads in the discussion. So in response to
her reiteration of the June 2013 suggestion that the recent divergence of Russian and
Brazilian FDI means that “when it comes to foreign investment they [Russia and Brazil] are
in different leagues,” I can only recycle my July 2013 response.

12. Decker’s Response & Riley’s Rejoinder

—Decker’s 9 April 2014 response to Riley, with Riley’s 11 April 2014 interpolations

In his 8 April response to Barbara and me, Tom revisits several old arguments attempting to show
how Russia is in the same league as Brazil (or is even a notch below it) within the global capitalist
system. He adds a handful of new quotes taken from the Vale 2011 study and the David Collins book,
none of which is surprising.

3In his chapter on Brazil, David Collins raises parallel suggestions in speculating on why Brazil’s outward
FDI, while exhibiting “a general trend of sustained increases,” is currently the lowest among the BRICs. The
fact that Russian outward FDI has been greater than Brazilian since 2006 has not led Collins to conclude that
the two belong in different categories. In fact he suggests that negative FDI flows resulting from the
repatriation of capital from foreign affiliates by Brazilian MNEs “should not be seen as an indication of
decline”:
“Although its level of outward FDI is the lowest among the BRICs, Brazilian firms have
internationalized significantly in recent years relative to other developing countries. Still, Brazil has
shown a relatively low level of outward FDI compared to the overall size of its economy. This could
indicate that Brazilian firms have found a sufficient market for their goods and services among
domestic consumers, obviating one of the traditional primary motivations for internationalization
among MNEs. Alternatively, the relatively low level of internationalization might suggest that Brazilian
firms have encountered regulatory barriers that have impeded their outward expansion. Brazil’s
annual outflow of FDI in 2010 was USD 11.5 billion, considerably less than the peak of USD 28 billion
in 2006 before the global financial crisis which began in late 2008. In 2011 Brazil experienced a net
withdrawal of FDI from Brazil of over USD 1 billion, the only BRIC state with negative FDI outflows in
the past decade, however, negative values for FDI outflows represent the repayment of loans (intra-
company transfers) from foreign affiliates to their parent company in Brazil and as such should not
be viewed as an indication of decline of Brazilian MNEs. Prior to 2006, Brazil’s highest annual
outward FDI flow was only USD 9.8 billion in 2004.3 This illustrates a general trend of sustained
increases in outward FDI flows.” [p 25 , emphasis added]

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 I point out that Barbara’s evidence from Vale 2011 does not stack up to what she thought it
did. I also compare and contrast a 2012 Vale study on Brazil that shows, among other things,
that Russian investment is not aimed at producing superprofits and that Brazilian
“greenfield” investment (mostly in backward countries) is roughly six times as large as
supposedly imperialist Russia’s. I also cite material from David Collins that confirms the
above and shows that Russia cannot be considered to be in a different league from Brazil
economically. If none of this surprises Josh so be it.

I’m not particularly interested in responding to his document, which Tom will perhaps view as proof
that the Imps are incapable of addressing what he may think is a devastating critique. (As I said to
Tom during the Toronto pre-conference discussion after he complained repeatedly that we had
“chosen not to respond” to some of the arguments he had made in the past, it is neither useful nor
serious to assert that “failure to respond” to random points/facts indicates an inability to deal with
them – especially when it should be clear that those points are only meaningful in the context of a
theoretical framework we reject.)

It seems fairly clear that the imps have found it extremely difficult to find evidence that
Russia is extracting value from supposed neocolonies in the CIS, Syria etc. on any significant
scale. In fact, as we have shown, gas has been sold to CIS members at a substantial discount
and Syria has had huge debts written off. This, not OFDI stats, has always been the central
issue in my estimation because value extraction is, after all, what defines imperialism of the
modern, “finance capital” type. To reject this as a “theoretical framework” is to essentially
reject a Marxist approach to the question.

In our exchanges there have been many questions which do not strike me as "random" that
the comrades have sidestepped or ignored. For example in my July reply to Decker-Dorn I
pointed out that the document they cited to show that Russian ODFI flow had risen as
Brazil’s had fallen also showed the opposite tendency for the ODFI stock figures for each of
them.

I wondered:

“If it had been Russia, rather than Brazil, that had risen so rapidly in global equity
investment tables the comrades might have been tempted to interpret it as evidence that
‘Russia has further entrenched itself as a finance capital power.’ “

This was not a side point but directly relevant to the issue they had posed. There are various
other examples that could be cited—few more egregious than the failure to offer a plausible
explanation for why “finance capital imperialist” Moscow is losing out to “neocolonial”
Warsaw as the center of finance in Eastern Europe. Of course this cannot be explained
without violating the imps’ “theoretical framework,” so the lack of interest in responding is
easily understood.

I think that the failure to engage has been a problem. During the recent Toronto discussion
when Josh said he felt that there had been a parallel tendency on our part to avoid addressing
some questions I immediately proposed that we send each other five questions and agree to
respond in writing within a week. Josh brushed that proposal aside.

I rather suspected that one of the questions he did not want to answer involved the four
petrostates. It seems that I was mistaken in that assumption, but it is clear that the difficulty

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 making the evidence fit within the framework of Russia as an imperialist state accounts for
the lack of interest in addressing many questions we have posed.

I do, however, feel the need to address the following accusation Tom makes in his document:

“A sharp spike in oil prices in the early 1970s resulted in a similar dramatic upturn in
‘petrodollars,’ but no one interpreted the massive outflow of FDI from OPEC countries (most
of which was recycled through imperialist financial centers) as signaling the emergence of
Kuwaiti or Saudi Arabian ‘finance capital.’

“In his 27 March document ‘Russia’s Emergence as an Imperialist Power’ Josh attempted to
deal with this argument with three graphs (which he labeled 2A, 2B and 2C) that showed
Russia ‘exceeding’ or ‘greatly exceeding’ a ‘selected group of so-called “petro states”’ in
terms of outward FDI, net outward FDI and FDI as a percentage of GDP. The ‘petro states’ he
selected did not, however, include any of the four [UAE, Kuwait, Bahrain and Qatar] I had
cited last July as having doubled, tripled or quintupled their FDI. In order to get the results he
wanted Josh chose a different quartet: Iraq and Nigeria (which were both undergoing major
civil conflicts), Venezuela (where the Bolivarian government was directing much of its oil
revenues to various redistributive projects, including supplying Cuba with oil in exchange for
medical personnel) and Iran (which has been under increasingly tight imperialist sanctions.)
While Josh’s graphs largely show what he wanted them to they failed to prove his point.”
[emphasis added – JD]

Tom made the same unpleasant allegation in his presentation at the Toronto pre-conference,
suggesting that I had cherry-picked the data set in order to prove that Russia does not resemble the
petro states. I told him at the time that there was no basis to his accusation, and that I had chosen
the countries somewhat at random based on the fact that each of them had been brought up at
various points by Nimp comrades as possible analogues to Russia. Given that Tom has not written
directly about the many other conclusions I drew on the basis of the graphs in my 27 March
document, it appears that he feels that repeating his baseless accusation is sufficient to discredit my
document as a whole.

The whole issue of OFDI flows is essentially an ancillary one in my view. In my July reply to
Decker-Dorn I cited a Financial Times report listing four petro states that had experienced a
steep rise in OFDI during the same period that Russia did. This received no comment.
Months later when Josh took up the issue of petrostates and produced a graph that left out all
the ones I had cited earlier it did look to me like “cherry picking” the data. Now he has
included them and his graph looks the same. I was perhaps predisposed to be suspicious
because in their 19 June 2013 polemic he and Barbara had cited CIA and EU reports on
Russia that mentioned that its service sector is comparable in size to most EU countries to
bulwark their assertion that Russia should be seen as roughly the equivalent of the Western
imperialist powers, when both reports made it clear that Russia was at a qualitatively lower
level of development.

While it is a bit odd to have to demonstrate that Russia plays a different role in the global capitalist
system than Kuwait, I have nonetheless added Kuwait, along with the UAE, Bahrain and Qatar, to the
most significant graph (Outward FDI), which appears below. I’ve also added Kazakhstan just for fun.
As before, all figures are official FDI flow statistics collected by UNCTAD. The result speaks for itself:
including Tom’s favorite petro states doesn’t change a thing (apart from making it more difficult to
visually distinguish the petro state lines in the graph). From the mid-2000s onward, Russia’s outward
FDI has significantly exceeded that of the petro states (with the exception of Saudi Arabia, which
Russia began to outpace only in the late 2000s). From the late 2000s onward (i.e., after the onset of
the global economic crisis), Russia’s outward FDI has moved closer to the G7 average as it leaves the

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petro states behind.

Josh’s most recent graph does not show any spike of the OFDI from the four petrostates that
the Financial Times reported had doubled, tripled, or quintupled. This is a bit of a puzzle. I
can only presume that the data sets are somewhat different—with UNCTAD using raw, or
gross figures and FT reporting something more like net ones. When I introduced the FT
report originally last July I noted that much of it was at variance with other reports of
surging Russian OFDI (ie, it showed Indian outward investment rising relative to other
BRICs but Russian and Brazilian remaining static):

“The FDI Intelligence item cited above (and attached as Appendix A) reported little change in
the relative position of Brazil and Russia in terms of outward investment. I would presume
that this is because the figures are discounted for round-tripping, tax avoidance, money
laundering, etc.”

At the end of the day however the whole question of OFDI is something of a sidelight. The key
to solving this issue is clearly the point of origin of the value flows originate rather than their
destination. Imperialism is defined by the fact that “over the long term, semi-colonies suffer a
net outflow of value to more ‘developed’ imperialist countries.” If that cannot be shown to be
the case for Russia, and thus far attempts by the imps have failed to do so (see my 8 April
response to Decker-Dorn) then we cannot conclude that Russia is imperialist.

13. Dots for Joining

--Bill, 23 March 2014, with interpolations by Tom, 28 March 2014

Tom's reply to Dave raises some issues about the way in which the argument we have been having
has been conducted, expressing frustration about those who hold Russia to be imperialist failing to
engage with his arguments and his facts, but somehow half-realising that we who hold that position
are similarly frustrated by a sense that he and his side fail to engage with our arguments and our
facts. At the last conference I think all sides were, if not angry about the other not answering their
arguments, at least very sad, and that perhaps, has continued, but really neither the anger nor the
sadness has been very helpful.

We can agree that one side or the other in this argument is more or less correct, and that the other
is failing to engage. But only the resolution of the argument will lead to agreement on which side it
is that fails to engage. The argument will not be furthered by that complaint on either side ... though
I know from my own experience that it is an irresistible temptation to make it sometimes.

I think that the documentary record re: engagement speaks for itself. I do however agree that
we have now begun to seriously engage on the substantive issues.

Though the words have not been used too directly, I think it is clear enough that those who do not
regard Russia as imperialist think those of us who do are impressionists who deny fundamental
precepts of the materialist understanding of history. Most of our side of course, have the reciprocal
view, that you (leaving your mistaken views on economic realities aside) have a crude economic
reductionist and empiricist view blind to certain deeper processes and denying the law of combined
and uneven development and the complex mediations between economics and politics as
understood by Lenin and Trotsky.

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So we've got to get on with it, clearing the way forward, idea by idea, fact by fact, argument by
argument. It was to this end that a few weeks ago I started introducing a series of questions, in an
attempt to make step by step clarifications. That resulted in a very strong complaint on a Skype
discussion that I was introducing a hostile interrogatory tone to the discussion. That was not my
intention.

One of our difficulties is that on our side we simply do not accept that the kind of orientation to the
data that you ask of us will provide definitive answers. Just to take one example, that I think was
alluded to in an earlier stage of the discussion: the sixth largest supplier of mobile phone networks
internationally (with a revenue of $23 billion a year) is called VimpelCom Ltd. Seventy percent of its
revenue comes from Russia and Italy, and the balance from Ukraine, Kazakhstan, Uzbekistan,
Armenia, Georgia, Kyrgyzstan, Cambodia, Laos, Bangladesh, Pakistan, Burundi, Zimbabwe the Central
African Republic, and Canada. Its headquarters are in Amsterdam and in the statistics it shows up as
Dutch. It is 48 percent controlled by the Russian AlfaGroup who have 56 percent of the economic
rights. The AlfaGroup is under the control of Mikhail Fridman, one of the most powerful oligarchs. As
well as Alfa's 48 percent, VimpelCom is 43 percent controlled by Telenor, a Norwegian telecoms
corporation, with the balance held by various minority interests. [Wikipedia]

This company is discussed briefly in the item that Barbara sent a link out for in her recent
contribution. It is not uncommon for some of the more successful Russian TNCs to seek
partners with more advanced technologies and connections in Western Europe. As we have
noted previously telecommunications requires on-site capacity (PLO “oligarchs” are fairly
heavily represented in this field as a result). Of course Russia has connections with most of
the neo colonies listed dating from the Soviet period. Fox Business News website (16 January
2013) reported that “Vimpelcom has been trying to sell its businesses in Burundi, Zimbabwe,
Central African Republic, Cambodia and Laos in order to focus on its main markets of Russia
and Italy, sources previously said.” This suggests that VimpelCom may have found pumping
value out of some of these more backward countries to be more difficult than anticipated.

Now VimpelCom is just one example, discovered by accident, of Russian imperialist investment
accruing superprofits. Business often hides its tracks, whether for reasons of deception or simply
because business is not served by filing information on the questions most interesting to us, so it is
lucky when you find examples such as VimpelCom.

Tracking capitalist investments and earnings can be a tricky thing, as it is not just Russian
companies that try to cover their tracks to avoid regulation and taxes etc. We have to work
with the best information we can find. In general the financial press has a more or less
accurate sense of the big picture at least—on the whole I think they can be relied upon to
“follow the money” fairly accurately.

But there's a lot more investments than VimpelCom. How do I know that? Well it is in the nature of
things that billionaires must invest their billions. It is simply not possible to spend billions of dollars
on personal consumption. A billion -- a thousand million -- is a VERY high number. And so a
billionaire simply has too much to spend it all on private yachts and pedicures and high class
hookers. They invest their money. Somewhere. The other members of Russia's finance bourgeoisie
are like Mikhail Fridman, making ordinary imperialist investments, and although we might not be
able to name the firms in which they are investing, there are certainly thousands of them.

Of course it is not possible to know what stocks and bonds are held by each individual
Russian oligarch in their Swiss, Cayman Islands or Cypriot accounts. But of course there is

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 nothing special about Russian billionaires in this regard--those from Ukraine, Kazakstan,
Nigeria etc. are equally hard to track and are also doubtless equally anxious to make the
highest possible return on their investments. Whoever manages to do so will indeed share in
the value pumped out of wherever the companies they are invested in do business. This is a
somewhat different question than the activities of Russian or other TNCs which also of course
seek to pursue the maximum profit in any market they enter.

The available data does not do justice to the reality, but there's enough to make a very strong case
indeed. In their document of 19 June 2013 Josh and Barbara presented data which shows that Russia
has been a global net exporter of Foreign Direct Investment flow since 2009. Josh's reply to Dave of
17 March 2014 and Barbara's reply to Roxy of 20 March 2014 are both very important contributions,
adding considerably to the picture both theoretically and empirically, with Josh citing material which
shows the general under-reporting of Russia's stock of outward investment and Barbara citing
material which proves a continuing and increasing flow of such investment.

As I demonstrated in my 15 July 2013 reply to the 19 June 2013 contribution by Josh and
Barbara on the FDI question, there is no good reason to put Russia in a different category
than its fellow BRICs (particularly Brazil). It can hardly be an accident that all bourgeois
analysts consider it a “developing” or “emerging” economy rather than a “developed” (i.e.,
imperialist) one. Barbara’s recent contribution seeking to demonstrate surplus value
extraction by Russian TNCs represents a real step forward in our discussion to which I
intend to reply as soon as I have the opportunity.

We have shown there are real oligarchic financial institutions with real money for real investments,
that they in fact make such investments, and that they are getting real returns. [I take it this is a
reference to Barbara’s research. I cannot recall earlier imp contributions that sought to show this.--
TR] It has been asserted that Russian outward investment is predominantly state sponsored and
narrowly focussed for purposes of state and perhaps towards long term aspirations, but the contrary
evidence is far stronger. [I think that we are now agreed that Russia’s substantial investment in
Syria, previously cited as a likely site of imperialist value extraction are in reality mostly politically
motivated subsidies from the Kremlin, rather than investments intended to generate a stream of
income. Likewise Belarus.] And of course it is. Russian oligarchs are not distinguished among
capitalists by attributes of self-denial and delayed gratification. They have money to invest and they
want profits and they want them soon.

And there are a lot of them. And they are intertwined with the Russian state. And the state is one of
the more powerful states on the international arena, and has expansionist policies which serve their
interests. And this helps the billionaires' investments return higher profits.

I think this requires factual substantiation. It is very close to the nub of the question—i.e., the
relationship of Russian capital to neo-colonial countries. Is it the recipient of a substantial,
long-term, net flow of value from less “developed” nations? I welcome attempts by imp
comrades to demonstrate this, and regard it as a positive development in the nature of our
discussion.

But somehow we are not getting this across.

On our side, we think it is highly significant that you use the same arguments to show that Russia is
not imperialist today as you previously used in your now-abandoned attempt to show that Russia

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was not imperialist before the Revolution. You do not see the significance.

This is not quite right. On 26 October 2013 I responded at some length to your September
2013 “Twenty Points” document, in which (point 4) you made a similar observation.

You think that capacity to compete on the world market is proportional to labour productivity (and
so to the organic composition of capital). We think that world power status and international
spheres of influence may interfere with that proportionality.

We note that Russian commodities are generally not competitive on the global market and
that Russia’s economic situation would be rather similar to Ukraine’s were it not for the
substantial revenues gained from the sale of oil and gas abroad. Russia’s “world power
status” has done little that we can see to offset the fundamental fact that it lags far behind the
advanced capitalist countries in most fields.

You think that when Trotsky says Czechoslovakia was imperialist because it was highly economically
developed, that implies that because Russia is on the whole not so developed, it is therefore not
imperialist. We do not follow your logic.

Nor Trotsky’s either, at least on this question.

We think that high levels of raw material production have historically always been one in the array
of indicators that Leninists have seen as tending to indicate that a country is imperialist. You
apparently think they are a counter-indication.

Some imperialist countries have abundant raw materials (e.g., Canada and Australia) but
historically economies composed of “hewers of wood and drawers of water” have more often
been imperial hinterlands. Until relatively recently a bourgeois euphemism for imperialist
was “industrialized.” Colonial projects a century ago tended to feature mines and plantations
—which is where we get the name “banana republics.” Having negligible natural resources
of their own, imperialist countries like Japan and Holland went abroad to acquire them using
their more advanced industrial-military capacity to do so.

We think that the military power and geostrategic influence Russia has to facilitate hydrocarbon
transit through Central and Western Asia and Eastern Europe (pipelines etc) is highly analogous to
the military power and geostrategic influences Western imperialists have or had on particular rail
links and trading choke-points (such as the Straits of Gibraltar or Malacca or the Panama or Suez
Canal), and that power over such trading routes is a characteristic element of imperialist power
contributing to its capacity to extract surplus profits. You do not.

The Suez and Panama canals were commercial imperial projects undertaken by colonial
powers and carved out of more backward countries. Panama was detached from Colombia for
this purpose. The pipeline arrangements undertaken in the recent past by all the various
competitors have not had this quality. Control over natural resources and vital shipping
lanes, along with any other sort of territory whether land, sea or space is also of vital interest
to all bourgeoisies. The difference between Milosevic, Saddam Hussein etc and Tony Blair,
George W. Bush et al is not in their desire to exercise geostrategic influence but their ability
to do so.

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We believe that some part of the flow of superprofits to Russia is incorporated in prices received for
hydrocarbon exports, ie, that this untraceable element of these revenues is a function of its
imperialist status. You dismiss hydrocarbon income as counter-indicative of imperialism.

You will understand that we cannot accept “untraceable” revenues as proof of Russia’s
imperialist status. I am not sure why you think that energy corporation revenues are
“untraceable”--in a macro sense the petrochemical market is generally viewed fairly
transparent I think, i.e., it is generally possible to find out how much gas or oil is sold by
what companies to whom for how much. Presumably you are not suggesting that the prices
of hydrocarbons on the world market include some sort of built-in superprofit—because of
course the cost of extracting, refining and bringing oil to market varies considerably. This is
why as the price of a barrel goes up wells that were previously unprofitable are brought back
on stream and vice versa.

We do not “dismiss hydrocarbon income as counter-indicative of imperialism,” but we

observe that many of the world’s largest producers are not imperialists, and, conversely, that
many imperialist countries do not produce oil or gas. In short revenues (however large)
derived from sales of this natural resource do not qualify a country as imperialist.

You think that getting oil and gas from the ground in Russia through pipelines to Central and
Western Europe is a technical-economic activity different in kind from that characteristic of
imperialism, and that therefore any extra profits from that investment cannot be "surplus-profit" (or
the fruit of imperialist advantage).

I expect we can agree that the production, transportation and marketing of commodities
(including oil and gas) is characteristic of capitalism, and not specifically imperialist. Iran
has been building a pipeline to send gas to Pakistan. Venezuela has built several regional
pipelines. Surely no one finds them “characteristic of imperialism.” Super profits are obtained
by imperialist countries in neocolonies by taking advantage of lower prices for labor or raw
materials through financial manipulation, or brute force, etc. Superprofits more generally are
available through higher than average productivity (usually involving a technological edge)
or through some sort of monopoly position in the market. The hydrocarbon extraction by
Russian companies is overwhelmingly domestic, and the production and sale of these
commodities therefore involves the "normal” cycle of capital accumulation.

We think the necessary industrial activity represents continuing investment of capital and labour
power, including in the semi-colonies through which the hydrocarbons flow, all of which add value
to the product sold, and facilitate surplus value for the imperialist investors.

Not sure what you mean by “surplus value” here. Every capitalist enterprise that employs
living labor seeks to create surplus value (aka profit). This is not equivalent to the generation
of superprofits in neocolonies. In Marxist literature the costs of bringing goods to market
(whether by rail, ship, pipeline or road) are usually treated as part of the necessary overheads,
not as a source of added value. Typically Russian energy corporations (like other oil and gas
producers) pay transit fees to countries through which their lines pass. As far as I am aware
the rates paid by Gazprom et al are roughly in line with those paid by their competitors.
Where do you see “superprofits” arising in the shipment of gas from Russia to Europe?

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You seem to think that the bourgeoisie of Saudi Arabia and the bourgeoisie of Russia are
qualitatively similar in their configurations and their relations to their states. We see discrepancies --
far more than simply their rather different number of billionaires (8 Saudi billionaires as against 111
Russian according to a Wikipedia table, though that may be skewed).

I do not think you can prove your case with billionaires. Wikipedia’s billionaire lists seem to
be based on Forbes which, according to the description of their “methodology,” specifically
excludes royalty, heads of state, etc. from their lists. So that is why the Saudis are so
underrepresented. As a rule neo colonies have historically had greater social inequality than
“advanced democracies.” If we check the Forbes list for BRICs we find China with 152, Brazil
with 65 (more than Germany with 58!) and India with only 52. Even Ukraine has 10
billionaires.

The following is a link to an item on billionaires per capita

http://www.slate.com/blogs/moneybox/2013/03/04/forbes_billionaires_list_countries_with_th
e_most_billionaires_per_capita.html

The list of the top ten per capita is as follows:

1. Monaco (3/35,427)
2. St. Kitts and Nevis (1/53,051)
3. Guernsey (1/65,573)
4. Hong Kong (39/7.1 million)
5. Belize (1/356,600)
6. Cyprus (3/1.1 million)
7. Israel (17/7.8 million)
8. Singapore (10/5.2 million)
9. Kuwait (5/2.8 million)
10. Switzerland (13/7.9 million)

We think that any capitalist state will use what power it has internationally to get the best profits
possible for its bourgeoisie, and that military might allows for the levering of higher profit levels. So
we furthermore think that in the real existing world a capitalist great power will in fact be able to
garner profits at a higher level than a capitalist state that is not a great power. You apparently think
that (in the case that a capitalist great power is somewhat economically backward) it will not use its
power for the purposes of increasing its profits.

What you need to try to demonstrate, it seems to me, is that this is actually happening as
regards the Russian bourgeoisie—not merely that they, like every other capitalist class in all
countries big or small, are willing to use whatever they have to advance their
interests/increase their profits. I am not sure that, as a historical generalization it is
necessarily the case that a capitalist great power (imperialist division) is able to “garner
profits at a higher level than a capitalist state that is not a great power.” If we were to
compare Swiss or Austrian to the German bourgeoisie, or the Dutch to the French or the
Canadian to the American would we find a significant advantage attributable to great power
status? Perhaps we would, but it does not seem self-evident to me.

Clearly each side is getting impatient with the other, but in the IBT comrades do change and have
changed their minds in the past and are capable of doing so this time round too. So let us proceed.

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 Amen.

14. Motions on Russian Imperialism

--excerpt from minutes of 2014 IBT Conference, 18 April 2014

Motion by Lichtenberg on Russia:

That we endorse the political thrust of the following documents:

1. “Is Russia imperialist?” by Riley.

2. “Why Russia is not imperialist” by Breitman.
Passed

Counterposed Motion by Bill, Dorn, Decker, and Briggs on Russian imperialism:

1. We reaffirm Lenin's Imperialism, the Highest Stage of Capitalism including its designation of
Russia at the time as an imperialist power.
2. We accept Trotsky's discussion of Russia as an imperialist power, subject to great combined and
uneven development, as described in the History of the Russian Revolution.
3. We affirm that Russia today is an imperialist power, also subject to great combined and uneven
development.
4. We note that inter-imperialist rivalries between Russia and American-led western imperialism
are an important feature of contemporary international politics.
5. To the extent that those inter-imperialist rivalries approach armed conflict we are for the defeat
of imperialism on both sides.

Defeated

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