Russia’s Need for FDI to Develop Its Energy Sector

            When the Soviet Union collapsed in 1991, the government opened up the energy sector and sold shares to private investors. The sector has suffered from years of stagnation and underdevelopment, leaving it inefficient and uncompetitive. Accordingly, the new Russian energy companies faced substantial challenges in creating successful enterprises. Many of these new energy companies sought to overcome their obstacles by inviting foreign investors to assist in the transformation of the industry. These investors – including ExxonMobil and Total S.A – brought their modern technology and expertise to help Russian energy company’s modernize and become more efficient. Today the Russia’s oil and natural gas output is among the largest in the world.   

            While the country has been able to capitalize on its vast reserves of natural resources it has again reached a point of stagnation in its energy sector. State owned energy companies dominate the industry and despite years of high energy prices these state owned enterprises have begun to grow inefficient and lack to capabilities to exploit new energy sources. This is attributable to the lack of competition these companies face, resulting in reduced incentives to innovate and become more efficient. Gazprom, which maintains a virtual monopoly on the nation’s natural gas industry is a wonderful example of this. Seemingly, Russia’s recent agreement’s with China show an appreciating for the need to modernize and expand its energy industry.

            Russian companies such as Gazprom and Novatek (Russia’s second largest natural gas company) are aiming to develop gas reserves in Eastern Siberia. This is a massive undertaking that requires a substantial capital investment. Given the EU’s falling demand for energy and China’s growing demand for energy resources, it seems logical to attempt to push into Eastern Siberia in the search of oil and natural gas. Moreover, the need for capital to develop new energy sources makes China an ideal partner.

            PetroChina has recognized the opportunity that investment into Russian oil fields presents and is reportedly considering a $10 billion Russia Gas investment. Spokesman Mao Zefeng has stated that they are willing to promote cooperation with Russia’s oil companies in the hopes of investing in Russia’s upstream oil and gas exploration. Furthermore, the Chinese National Petroleum Company (“CNPC”) has agreed to buy 20% of the Yamal LNG development, controlled by OAO Novatek. This will be a mutually beneficial deal because it will allow for the development of Russia’s Siberian oil fields and will give the Chinese company a substantial interest in a profitable venture. Furthermore, it allows China to hedge any higher natural gas import prices they may have to pay since they will share in the profits.

            In the 1990’s Russian entrepreneurs were able to utilize foreign capital to develop an industry that has allowed Russia to prosper and regain its position as a dominant international power. Today Russia has recognized that it will once again need foreign investment to further develop its energy industry. Yet many of those private investors who pledged billions of dollars in the 1990’s to develop Russian energy companies were left in the cold once Russia nationalized much of the industry. China is likely aware of this and will proceed with some level of caution.

PetroChina Said to Study $10 Billion Russia Gas Investment, http://www.bloomberg.com/news/2013-09-10/petrochina-said-to-study-10-billion-investment-in-russian-gas.html

Power of Siberia, http://www.gazprom.com/about/production/projects/pipelines/ykv/

The Russian Oil and Gas Industy After Yukos: Outlook for Foreign Investment, Jason Waltrip.

Russian Federation—Concluding Statement 2013 Article IV Consultation Mission, http://www.imf.org/external/np/ms/2013/061713.htm

 

Studies Point to Vast Oil Shale, http://www.ft.com/intl/cms/s/0/437c44b6-1f19-11e3-b80b-00144feab7de.html#axzz2fSzX0y00

           

Ideological Factors in Human Trafficking

Ideological Factors in Human Trafficking                                                      

I would like to expand on an interesting, and previously unknown to me, facet that I mentioned last week in my broad overview of human trafficking in Central Asia. Sulaimanova mentions that many women lured into pursuing these risky opportunities that take them abroad, and ultimately trap them within a trafficking ring, had an “idealistic view of life in wealthier countries that encourages victims to be lured abroad” (Sulaimanova, 2004). Across the literature I have come across similar occurrences. Women struggling economically are looking for any opportunity to provide for themselves and their families, which already makes them highly vulnerable. This is further compounded by an inaccurate perception of wealthier countries as utopias where they can accept offered work as waitresses, dancers, models, etc. without fear of harassment or abuse.

It is crucial to remember that most victims are lured abroad by traffickers voluntarily, not kidnapped. I mentioned many of the methods used by traffickers in my last post. Victims saw an opportunity and they took it. Although most understand what is expected of certain professions, they do not understand the exploitation and violence that they will experience. An official from Inter-Pol Ukraine “estimated that 75 percent of the women do not realize they will be forced into prostitution” (Hughes, 2000). This reveals a significant percentage of women who do go abroad knowing that they will expected to be prostitutes. However, their expectations are still widely inaccurate. Several articles mention a woman who went abroad with the understanding she would prostitute, who went willingly because she thought it would be similar to the film “Pretty Woman” with a man supporting her (Hughes, 2000; Sulaimanova, 2004). The “romanticizing” of prostitution is not exclusive to Hollywood; the Russian media, TV, and film industry have portrayed the “carefree and prosperous” life of elite prostitutes in Moscow in the late 1980s in movies such as “Interdevochka” in 1989. The influence such exposure may have had was reflected in two public opinion polls conducted among girls in high school in 1989, where prostitution “made the top ten of the most prestigious and desirable professions” (Tverdova, 2011).

In Russia and Central Asia, the idealistic picture many of those in desperate economic situations have of these professions abroad is not only supported by movies, but also through tales told by those who have worked in those professions and returned. These second-hand accounts may be the only information potential victims receive if they are in areas that are educationally underserved and inadequately connected to the communication tools we rely on to check facts and obtain reliable information. Naturally, these stories are embellished and highly inaccurate. A method used by traffickers to recruit additional women is to send a “Second Wave” of previously trafficked women home to spread glamorous tales and entice new women abroad. Recruiting replacements is often the only option victims have of escaping traffickers, or victimized women see an opportunity to profit from the system that took advantage of them (Sulaimanova, 2004). An account exemplifying this was given by a Ukrainian woman recruited by a friend who had told her she would earn US$2,000 a month at a club in the Netherlands where prostitution was optional, which turned out to be far from the case (Hughes, 2000).

An additional aspect that should be taken into consideration are the sociological factors that can influence the susceptibility of women to trafficking. Their low social status in Central Asia has both obvious economic implications for women (increased job discrimination, lower relative income, and higher unemployment) and social implications. In the patriarchal societies of the region, domestic violence against women is an additional problem that pushes many young women to run away, and additionally, if they are pulled into a trafficking ring, being mistreated as an “inferior human being” only “confirms their worst fears” (Sulaimanova, 2004). Lower social status also carries with it the decreased likelihood of sympathy from the police or immigration officials that is compounded by complicity and corruption. Trafficked women in the region tend to distrust the authorities because they have been both prosecuted by them and witnessed their collusion with traffickers (Tverdova, 2011). Moreover, the predominantly Muslim societies within Central Asia view it “as almost taboo to openly discuss the trafficking of women for prostitution,” which aids stigmatization and discourages efforts at enforcement (Jackson, 2005).

All of these factors aid in the deception that is a key tool used by human traffickers to first locate potential victims, and then to persuade them to come abroad. Even if they are able to return home, victims are often shunned by family and friends not only because they are now seen as shameful, but also because many are accused of volunteering.  While many victims do enter into these schemes willingly, they do so under false pretenses.

Hughes, Donna M. 2000. “The “Natasha” Trade: The Transnational Shadow Market of Trafficking in Women.” Journal of International Affairs, Spring 2000. Available at: http://www.uri.edu/artsci/wms/hughes/natasha.htm

Jackson, Nicole J. 2005. “The Trafficking Of Narcotics, Arms and Humans in Postsoviet Central Asia: (Mis)Perceptions, Policies And Realities,” Central Asian Survey, 24:1, 39-52.

Sulaimanova, Saltanat. 2004. “Migration Trends in Central Asia and the Case of Trafficking of Women,” in In the Tracks of Tamerlane: Central Asia’s Path to the 21st Century, eds. Dan Burghart and Theresa Sabonis-Helf. Washington, D.C.: National Defense University, Center for Technology and National Security Policy, 377- 400. Available online

Tverdova, Yuliya. 2011. “Human Trafficking in Russia and Other Post-Soviet States.” Human Rights Review 12(3): 329-344.

Uzbekistan's Response to International Human Trafficking

            Central Asia is known as one of the most problematic source regions for the forced labor and sex trade.  Governments of the countries in this region are taking different steps to curb the rising numbers, including cooperating with and appealing for assistance from inter-governmental organizations (IGOs).  The government of Uzbekistan, while engaging in some basic preventative measures to make it more difficult for export traffickers to operate, is lagging behind in actual investigation and prosecution of alleged and known parties involved in forced labor or sex operations. 

In 2003, the official attitude of Uzbekistan reflected an apparent desire to address human trafficking.  At a seminar in Tashkent dedicated to preventing human trafficking, which was hosted by the Uzbek youth-activism NGO Istikboli Avlod (Future of Generation) the Foreign Ministry of Uzbekistan, and USAID, Deputy Foreign Minister Vladimir Norov declared that the Uzbek “government intends to step up its activity on preventing human trafficking.” [1]  To what extent has this promise been fulfilled since then? 

                In terms of international collaboration, the government of Uzbekistan, with help from IGOs, has made noticeable progress in developing an organizational anti-trafficking framework since 2003.  In 2012, authorities within the Uzbek government took steps toward collaboration with the Organization for Security and Cooperation in Europe (OSCE) by participating in workshops and briefings organized by the OSCE Project Coordinator.  The objectives of their collaboration were two-fold.  Firstly, the project aimed to increase inter-agency communication and information sharing between the territorial offices of the anti-trafficking commission and Uzbek police and state authorities.  Secondly, the project launched transit and destination workshops, which served to educate law enforcement personnel on how to better protect the rights and security of victims of trafficking.  This project also served to educate “consular personnel [to] learn how to identify potential victims of human trafficking and refer them for assistance.”  What can be taken from this?  It seems that Uzbek authorities are compliant and participatory with international organizations training and improving the anti-trafficking capacities of Uzbek law enforcement and diplomatic personnel, but how exactly is the Uzbek government responding to crimes and threats of human trafficking?

                Uzbek judicial authorities have been participating in IGO-funded training seminars.  In 2012, the United Nations Office on Drugs and Crime hosted a training seminar, of which the “main participants of the training were the trainers/experts currently working at the specialized national training centers which provide advanced training for judges and prosecutors in all respective countries. In total, there were 28 participants from all five Central Asia countries representing Supreme Courts, Ministries of Justice and General Prosecutor's Offices.”  This was a comprehensive training, intended to address capabilities of prosecution against violators of human trafficking laws, as well as protecting and rehabilitating victims of forced sex or labor traffickers.  Judging from this, Uzbekistan’s judicial capacities to effectively address human trafficking cases are noticeably improving.

There are a few convictions that have recently been carried out.  In June 2013, an Uzbek woman who was the leader of a trafficking ring in Thailand was sentenced to fourteen and a half years in prison and fined roughly $600,000 USD.  Unfortunately, despite the widespread suspicions and claims of an increase in trafficking activity from the country, actual prosecutions and convictions of suspected traffickers are declining in number.  What’s worse is that official statistics on investigations, prosecutions, and convictions are often obfuscated and unreliable.  Since 2010, there has been a steady decline in actual convictions of alleged human traffickers.  According to the U.S. State Department 2013 Trafficking in Persons Report:

“In 2012, law enforcement agencies reported conducting 1,013 trafficking investigations, compared with 951 investigations in 2011. Authorities reported prosecuting 531 trafficking cases in 2012, compared with 444 in 2011, and reported that 626 people were convicted on trafficking-related offences in 2012, compared with 636 in 2011.  The government reported that 357 convicted offenders were sentenced to time in prison and 34 traffickers were sentenced to correctional labor, compared with 434 convicted offenders sentenced to time in prison in 2011.” [5]

                This decline in convictions could be attributed to an apparent complicity of Uzbek police in human trafficking operations.  In 2012, Gulnaza Yuldasheva, after accusing police and government officials in the border city of Chinoz, Tashkent Province of being involved in the trafficking and abduction of her two brothers to Kazakhstan, was convicted of extortion and sentenced to two years in prison.  In spite of the increased international collaboration and aid to Uzbek systems, there are still many accusations of Uzbek police being affiliated in crimes of trafficking.  According to Samariddin Mamashakirov, spokesman for the Agency of Foreign Migration Affairs of Uzbekistan, the Uzbek 2008 anti-trafficking law provides for the safety of migrants seeking to leave Uzbekistan for jobs abroad.  It is evident that the stated guarantees of this legislation are not being upheld by authorities in Uzbekistan.

Considering these mixed results in prosecution of parties involved in international labor and sex trafficking, in addition to the domestic forced labor policies which are still enforced by the Uzbek government, the U.S. State Department has downgraded Uzbekistan to Tier 3 status on the Trafficking in Persons evaluation.  Tier 3 countries are countries “whose governments do not fully comply with the minimum standards and are not making significant efforts to do so.” [8]  While the Uzbek government is ostensibly cooperative and in favor of international aid and collaboration to fight human trafficking, the actual manifestation of effective investigation, prosecution, and conviction of guilty parties drastically needs to improve.  There is still potential for the new generation of prosecutors, judges, and law enforcement officers, in conjunction with IGO and NGO information-sharing, to realize their potential to curb Uzbekistan’s struggle with human trafficking.

Sources:

1.    UzReport “Uzbek government takes steps to prevent human trafficking” Times of Central Asia 25 September 2003

2.    Organization for Security and Cooperation in Europe http://www.osce.org/uzbekistan/101504

3.    The United Nations Office on Drugs and Crime https://www.unodc.org/centralasia/en/htsm-tot-for-judges-and-prosecutors.html

4.    Radio Free Europe Radio Liberty “Uzbek Woman Sentenced for Human Trafficking” http://www.rferl.org/content/uzbekistan-human-trafficking/25012404.html

5.    US Department of State Trafficking in Persons Report 2013 http://www.state.gov/documents/organization/210742.pdf

6.     Daniel DeFraia Global Post August 3, 2012 http://www.globalpost.com/dispatch/news/regions/asia-pacific/120803/human-trafficking-uzbekistan

7.    “NE DOPUSTIT'' RABSTVA V SOVREMENNOM MIRE” Samariddin Mamashakirov September 1, 2013 http://www.narodnoeslovo.uz/index.php?option=com_content&view=article&id=3070:aktualinaya-tema&catid=111:actual-topic&Itemid=50

8.    US Department of State Tier Placement Guide 2013 http://www.state.gov/j/tip/rls/tiprpt/2013/210548.htm

A War of Words – Social Leaders’ Attempts to Challenge Russia’s Foreign Agent Law

In early September, President Obama met with leaders of Russian NGOs during the G-20 Summit in Saint Petersburg.  He stressed that the “Russian law on NGOs will be harshly criticized at the ‘highest level.’” Obama also reinforced his belief that the Russian and American law have nothing in common, including the usage of the term “foreign agent.” 

President Obama hasn’t been the only one criticizing the foreign agent law.  Russia’s Human Rights Commissioner Vladmir Lukin filed a complaint in the Constitutional Court challenging the usage of the terms “foreign agent” and “political activity” claiming that they are “politically and legally vague.”  This vagueness allows for the arbitrary enforcement of the law which fines organizations and their leaders for anything perceived as “political.”  The basis of his complaint is fines imposed on four NGOs the government claims are engaged in foreign activities.  One organization mentioned was fined because it had invited the United States Embassy’s deputy political counselor, Howard Solomon, to participate in a roundtable discussion on America’s “reset” with Russia. Lukin’s complaint stated that the foreign agent law violates several articles of the Russian Constitution, including freedom of speech and freedom of membership in organizations. 

Even President Putin has been critical of the law’s wording.  In early August, Putin admitted that there needs to be a “clear cut definition” of what constitutes “political activity,” but he reaffirmed his position that the law does not need to be more strict or lenient. Since then, Putin has shown a willingness to work with NGOs in order to improve the law’s application.  On September 4^th, he attended a meeting with the Presidential Human Rights Council during which Council members shared three suggestions for the law’s improvement. First, they recommend that the term “foreign agent” be changed to “NGO financed from foreign sources.” The Council also agreed with Putin that “political activity” must be better defined, specifically tying it to “political party activity.”  Lastly, members believed that changing the term “foreign agent” in the civil code would improve the law. 

Vedomosti reports that a source close to Duma leadership believes that the Council’s suggestions have little chance for success since there is an “understanding that a conceptual revision will not occur since the law is effectively fulfilling its preventative function.” Although, the source admits that the law’s phrasing “may be clarified.”  President Putin seems to have affirmed this source’s predictions.  He agreed with the Council’s recommendation to better define “political activity,” commenting that “political activity is primarily in the sphere of political parties,” but he reaffirmed his position that NGOs “engaged in politics supported by foreign money should openly designate themselves as such.”  However, President Putin did not appear to support the suggestions to remove the word “agent.” Kommersant reported that, “judging by appearances, it is precisely this word that Vladimir Putin likes: it is impossible to find fault with it (it is a copy from English of an American law) and it sounds offensive, thus reaching its goal.”   Many NGO leaders claim that being labeled as a “foreign agent” carries negative connotations, including an association with spies.  The embrace of such connotations harms their work in society since the populace will be inherently suspicious of them. 

Whether or not President Putin will accept the Council’s suggestions is yet to be determined. However, an editorial published in Nezavisimaya gazeta offers its analysis of Putin’s possible actions and motives:

“The initiative of the Presidential Council is good because it will clarify the priorities of the government and the nature of the law. If the government wants to control the interference of foreign governments or foreign capital in Russian domestic politics, then the president would accept the proposals of the Council….If the purpose of power is stigmatization and marginalization, and thus weakening its [the government’s] critics among NGOs…the president is unlikely to accept the recommendation of the Council.”

During the meeting, Putin also hinted at the inherent anti-American nature of the law.  He quoted an Indian politician who stated: “We have not won our independence for the Americans to use our NGOs as puppets.” Indeed, a common trend in the application of the foreign agent law has been the Russian government’s attempt to link Americans with the financing of Russian NGOs, and to find ways to reduce foreign influence in Russian civil society, thereby cutting the puppeteers’ strings.  The day of Putin’s meeting with the Council, The Voice of Russia, the Russian government’s world radio service, released a report citing Foreign Ministry sources claiming that the U.S. State Department is intentionally interfering with Russian domestic politics through their continued support of NGOs.  This allegation, coupled with attacks on State Department supported grant programs and the fining of NGOs who invite State Department experts to round tables, illustrates that the Russian government is trying to crack down on Western influences in Russian civil society. 

The Russian government’s attacks on Western support of NGOs has also been coupled with the expansion of presidential grants to bring Russian NGOs closer to the government. Even more financial support is now on its way.  During Putin's meeting, he confirmed that the Russian government will contribute an additional 200 million rubles this year to NGOs working in the field of human rights.  Furthermore, during the next three years, the government will add an additional 500 million rubles to its support of human rights organizations. These funds will be distributed through a transparent contest administered by Ms. Ella Pamfilova, former head of the Presidential Human Rights Council.  However, Mikhael Fedotov, current head of the Presidential Human Rights Council, admitted that these additional funds will not be enough to completely end all foreign support of NGOs.  He also suggested two more ways to fund NGOs.  One idea is to create an “international investment forum in charitable work to attract foreign finds for Russian NGOs.”  He gave little detail as to who would organize such a forum and how it would be managed.  His second suggestion seems more plausible, but, again, draws Russian NGOs closer to the Russian government and its interests.  Fedotov suggested that that Russian businessmen give “transparent donations,” further adding that he didn’t “think they will become poor” by doing so.

The Russian government’s continued expansion of financial support for NGOs demonstrate that they are embarking on a multifaceted campaign to draw Russian NGOs away from foreign influences.  Government officials are also engaging in an open dialogue with NGOs in order to placate criticism of the law’s application as was evidenced by the president’s meeting with the Council.  Mr. Lukin, a well-respected member of government, and his complaint certainly strengthens NGOs battles against the wording and application of the law.  The Constitutional Court has three months to make a decisions regarding Mr. Lukin’s complaint, while President Putin has time to consider the suggestions of his Presidential Council.  It remains to be seen what influence, if any, these will have on the application of the law and the continuation of NGO inspections that will resume shortly. 

Sources:

Biriukova, Liliya and Anastasiya Kornia.  “SPCh obsudit s Putinom agentov” Bedomosti. September 3, 2013. http://www.vedomosti.ru/politics/news/15880291/s-putinym-obsudyat-agentov

Gorodetskaya, Natalia and Irina Nagornikh.  “NKO dobaviat na pravozashchitnuyu deiatel’nost’” Kommersant.  September 5, 2013.  http://www.kommersant.ru/doc/2271293

“Inostrannye agenty nuzhny vlasti” Nezavisimaya gazeta.  August 30, 2013.  http://www.ng.ru/editorial/2013-08-30/2_red.html

Kolesnikov, Andrei.  “Polupravozashchitniki.”  Kommersant.  September 9, 2013. http://kommersant.ru/doc/2271606

Kozlov, Viacheslav and Grigorii Tymanov. “Desiatka posle dvadtsatki” Kommersant.  September 7, 2013.  http://kommersant.ru/doc/2273981

---. “Vladimir Lukin poprosil agentskuyu skidku.”  Kommersant.  September 3, 2013.  http://kommersant.ru/doc/2270113.

“Novye mekhanizm finansirovaniia NKOv Rossii mozhet hachat’ deistvovat v 2014 godu.” Nezavisimaya gazeta. August 28, 2013.  http://www.ng.ru/politics/2013-08-28/2_nko.html

Petrov, Vitalii.  “Biznesmeny ne obedneiut.” Rossisskaya gazeta. September 4, 2013.  http://www.rg.ru/2013/09/04/nko-site.html

“Putin: zakon of NKO ne stoit uzhestochat’ ili liberalizirovat’” Novaya gazeta.  August 2, 2013.  http://www.novayagazeta.ru/news/74954.html

Raibman, Natalia.  “Ombudsmen Lukin poprosil Konstitutsionnii syd proverit’ zakon ob inostrannykh agentakh.”  Vedomosti. September 3, 2013.  http://www.vedomosti.ru/politics/news/15882151/ombudsmen-lukin-poprosil-ks-proverit-zakon-ob-inostrannyh

Roth, Andrew. “Russian Group Fears Fine After Talk With Americans.” The New York Times.  April 16, 2013.  http://www.nytimes.com/2013/04/17/world/europe/russia-prosecuting-kostroma-center-under-foreign-agent-law.html?_r=0

“US State Department and Russian NGOs: A Blatant Interference in Russia's Internal Affairs.”  The Voice of Russia.  September 4, 2013.  http://voiceofrussia.com/2013_09_04/US-State-Department-and-Russian-NGOs-a-blatant-interference-in-Russias-internal-affairs-1931/?from=menu