The Challenges Facing India's Economy

Hello, and welcome to the World Economics section of Teen Political News. I’ll start off by saying that I don’t have any experience whatsoever in the art of writing blogs, which probably isn’t a great sign for you the reader. But I’ve taken on this challenge to put across my views on the emerging economies, the India’s, China’s and the Middle-East of this world, to try to get to the root of what drives these economic powerhouses, and to gain an understanding of what problems they are facing in their effort to sustain this purple patch. You may not agree with everything I say, but as far as I know, by creating debate and opinion, my job as a blog writer will have been a success.

So where do I begin? Let’s start off with India. The so-called superpower of the millennium, India was growing at over a staggering 9% over the last 3 years (just to put this into perspective, the trend rate of growth in the UK is 2.75%). Overseas investment was at an all-time high, $20billion was poured into the Sensex (Indian stock exchange) as investors rode on the crest of the economic wave. India was benefiting from a period of liberalisation in the early 1990’s carried out by the current Prime Minister, then finance minister Manmohan Singh. These reforms greatly lowered barriers to trade and liberalised capital markets, resulting in trade accounting for 45% of GDP in 2008 and huge levels of foreign direct investment. Even the cricket team was doing well for once, as we won our first World Cup for 24 years in 2007. The cricket-mad nation was on a high, and was loving it.

So was I. Despite living in England for the best part of my life, India has always held a special place in my heart, I support India as vociferously and devotedly as any cricket fan out there (I think my throat was sore for about a month following the World Cup triumph), and I always make it a point to go to India at least once a year. I could see the changes taking place and to be a part of it was a special feeling.

Yet, at the same time, I felt on more than one occasion that too much was happening too quickly - surely the reforms of the 1990’s could not be replicated to allow for current high levels of growth to continue. Make no mistake, the sustainable rate (trend rate) is growing very quickly, and the significant gap between actual level of growth and sustainable level of growth is being reduced, mainly due to a boom in manufacturing and technology. The efforts by the government to increase the quality of the infrastructure in order to support this are there for all to see. In the major cities, electrical supply is no longer a problem, public transport networks are sprouting all around the country, and almost every Indian you see in a city will now own a mobile phone. For this, the government must be applauded as the multipliers caused from their spending have played their part in the surge of the economy.

However, the economy is still stubbornly growing well above the trend rate, and this has created that menace for every economy, inflation. Although I agree that some inflation is necessary for an economy to function smoothly, the large level of inflation currently being experienced by the global economy (due to rising commodity, oil and food prices) has some very significant drawbacks, especially in India’s case.
It can be said that India has created its own troubles with its obstinate pursuit of high economic growth, yet I feel that in many ways it has been the victim of its own success.

With investment constantly rising and the housing market booming, employment was at an all time high and a real positive wealth effect was being felt in the nation. This increase in prosperity created more effective disposable income and increases in purchasing power, and rapidly rising demand is a definitive cause of inflation. Although the Reserve Bank of India (RBI) could be blamed for not foreseeing this, the chances are that they realised that high inflation was a good enough price to pay in order to maintain the 9% levels of growth being witnessed at that time.

An ever increasing population, as well as a rising standard of living and greater distribution of wealth are other reasons for rapidly rising demand. High demand has not been the sole cause of inflation however. As we all know, over the last year rising commodity, food and oil prices have created inflationary pressure on the global economy. India has also felt the effects. Higher costs of production for manufacturing firms have led to rising prices in the domestic markets. What’s the result? An astounding 12.4% inflation - a twenty year high. Worrying? Definitely. But damaging in the long-term? Well that depends…

Recent inflation has reduced the competitiveness of Indian exports, has further served to widen the wage inequality gap (middle-class workers in India are in extremely weak bargaining positions and so have suffered cuts in real wages), has resulted in many policy changes (mainly related to the banning of the exports of raw materials to reduce demand), and has caused the RBI to become ‘bearish’ and raise its lending rate to 9.0%, a seven year high. Growth is going to suffer in the short-term. There is absolutely no doubt about that, and we can see the signs of it already with growth of 7.75% in the financial year ending in 2008, down already from years before. High interest rates will ensure that growth will stay low in the near future as well, as the RBI tries to rein in inflation to a target of 7.0% by next year. I feel that this is beneficial. India needs to cool down and grow below the trend rate during this period of global instability. The economy was in danger of overheating, but now has a chance to regroup, rethink its policies and economic strategies and then push on to greater heights once this global slowdown is over.

There are many things in its favour.

The culture of India is one factor that has, in my opinion, been one of the founding and uncelebrated factors of the resurgence of its economy over the last 15 years. The increased work-ethic, the ambition to succeed, and most importantly the falling levels of corruption (for this, the government must be given a hearty slap on the back), have been essential in not only creating but maintaining the high growth rates. I have witnessed this first hand, and I can say that the competition for success and the astounding amount of hard work that people are putting in to achieve their dreams is something I have not seen anywhere else in the world. People from underprivileged backgrounds are now daring to dream, and are also reaching those dizzying heights. Laxmi Mittal started off with nothing, and is now one of the richest men in the world. This is perhaps one of the major benefits that India is experiencing from having a large population, and long may it continue.

Another factor is the very strong housing market in India. Although investment has tailed off in recent months, this is as a result of the higher interest rates implemented by the RBI to control inflation. There is no denying that the housing market has very far to go, and I think this has a lot to do with the fact that until recently it was not based on the ‘credit’ culture. To own a house in India, you had to pay the full value upfront, and no loans were given. This is probably one of the reasons for apartments being the main form of dwelling. Only after retirement did people buy or build their own houses. This meant that the people of India built up very little debt, and thus were able to spend freely and without concern after retirement. My grandfather earned and saved for 25 years before he owned his first house. Although recently the trend of mortgages is hitting India, these are very low risk as a large upfront payment is still required, and as a result India has hardly felt the effects of the global credit crunch. The housing market will be a backbone for the Indian economy in the future, and I think that foreign investors will be lining up to get onto the Indian property ladder.

Finally, India has benefited from a great deal of investment in the past (as mentioned earlier) and will continue to do so due to its unique opportunities and high growth. This is beneficial to both the investor and the economy. The cheap, skilled labour, low rent and access to a high quality and improving infrastructure will ensure that investment remains attractive. The investor gets the returns from his investment that he is looking for, while the economy benefits from the rising levels of technology, capital and skills – all leading to increasing efficiency. This will help the trend rate of growth to continue rising, and will serve to dampen inflationary pressures in the future.

On this note, however, a word of warning. The right balance must be found between domestic investment and foreign input. India must not get too reliant on investors from abroad to keep investing in order to be able to sustain its success, but must develop its own firm foundations from which to build on. There are a lot of resources in India that are currently not being fully exploited, such as agriculture. As long as these are built on and expanded, India will be able to keep developing and going from strength to strength.

India will turn into an economic powerhouse, simply because it is in too strong a position at the moment to be thrown off course by a temporary global slowdown. True, it is not all rosy - there are challenges that must be faced and overcome. There would be no satisfaction in success if there were no difficulties to be dealt with along the way. The foundations have very nearly been laid, & for sure the potential is there. It is now up to the government, and more importantly the people of India, to make sure it does not go to waste. China's in its sights, and India is going places. Watch this space.


By Kunal Gupta, TPN's Emerging Economies & International Economics

Are we heading for a recession?

YES! It's simple really, everything is messed up. I blame three things for the UK going into recession; firstly all the CEO's of the major banks; they decided when times were good to go into sub-prime lending and basically give huge mortgages to people, who were barely able to pay them back. As soon as the Bank of England raised interest rates in response to inflation, bang! Loads of people started to default on their mortgages! Of course we must not forget that a lot of these mortgages were given excellent reports (AAA ratings). This was not done by the banks but by a independent body! This means that when one bank say, for example Halifax bought a bunch of mortgages from Northern Rock, they were that this is a sound investment. Wrong! People started to default on these mortgages. This resulted in a major problem, banks no longer trusted each other. They stopped buying mortgage books, and lending money to each other, both of which are fundamental to the banking systems. Banks started getting into trouble due to the irresponsible way they lend. Northern Rock for example was unable to secure a loan off any other bank, so as a last resort had to go to the Bank of England for emergency funds. As soon as the stock market found out about this, their stocks plummeted. Due to the fact banks were unwilling to lend anymore money people found it extremely difficult to get a mortgage. This resulted in the Housing market slowing down due to a lack of demand, and unfortunately this affects consumer confidence, and therefore the whole economy started to slow down.

Number two! Our amazing Labour government (Sarcastic tone)!! Unfortunately for the citizens of the UK, the Labour government is not in a position to particularly help us in this time of crisis. Gordon Brown has claimed it was he, who gave the UK 10 years of economic prosperity. Well then it must also be him to blame for the mess we are in right now. You can trace the start of the UK's economic problem back to when Labour first took power in 1997. The first mistake was Gordon Brown's decision to sell a load of our gold reserves when the market was at it's lowest. We lost millions if not billions! Secondly it was the Labour government's decision to spend spend spend during an economic boom. Basic economic sense tells us that you save when the country is doing well, and spend when it is doing badly, to get it going again. So now we do not have the money to kick start our economy and stop it going into recession.

Number three! Rising fuel, and food prices. Despite lower demand and higher interest rates than a year ago we still have inflation at 4.3%(CPI). Why? Well it's all down to rapid economic growth in countries such as India and China, which is pushing up the price of raw materials, and food. Everyone was shocked when oil reached over $100 a barrel, well it recently hit over $150 a barrel. Don't be shocked it could still go higher! This is causing inflation as the price of everyday goods is pushed higher and higher. I mean think about it almost everything contains plastic, and what is plastic made from? Crude OIL! This high inflation is causing a real headache for the Bank of England's Monetary Policy Committee! This is because they have been set an inflation target by the Chancellor of the Exchequer of 2% + or - 1%. So in other words inflation cannot go above 3% or Mervyn King has to write to Alistair Darling explaining why inflation has gone so high. Well he better get his pen out! However the Bank of England must also consider the economy before it raises interest rates to combat inflation. Well as we know the economy is not performing well. In the second quarter of this year the economy did not grow at all, nor did it shrink, it stayed exactly the same. This is for the first time in 16 years. When the economy is performing like this a rate cut is really required like in the USA to stimulate demand. The BOE is, therefore stuck between helping the economy and stopping inflation.

There are still some positives surprisingly. Unemployment has remained low, and recently mortgage levels have returned to the level they were before the credit crunch. Therefore there is hope the housing market will start to recover, and this boost in consumer confidence, combined with low unemployment may stimulate demand, and thus the economy. The BOE also expects inflation to come down as oil returns to more like $100 a barrel. This means it will be able to cut interest rates to help the economy. Great we'll be ok? Afraid not, even if inflation comes down a bit the BOE cannot slash interest rates like in the USA. Yes it will become easier to get a mortgage but you still need 20% deposits at the moment, and on a £200,000 house that's still £40,000! Have you got that in your back pocket?

Hope you have enjoyed my view of where our economy is headed. I am sure some of you will disagree with my view as to why we are headed into recession. That's fine but the fact is a recession looks extremely likely!


By Paul Charnock (TPN's UK Economics)

World News: PML-N Withdraws from election (Pakistan)

‘It will be a bad day for democracy’ said former Prime Minister Nawaz Sharif as he pulled his PML=-N party out of the Pakistani elections in September.

After serious disagreement between PML-N, Pakistan’s second largest party, and the current coalition ruling party PPP, over issues such as reinstating judges and the next presidential successor, Sharif claims that the PPP, led by Benizir Bhutto’s widower Asif Zadari, has never stuck to it’s promises saying:

"When written documents are repeatedly flouted, trust cannot remain,"

Sharif wants to reinstate the judges sacked by former President Pervez Muzharraf, who was removed by the PPP-led coalition last week, as soon as possible. The PPP aren’t too keen on this, Asif Zardiri fears that the reinstatement of these judges means that he is open to corruption charges that he and his wife were charged with before they left Pakistan for a self-imposed exile in Dubai in 1996. Zardiri believes that the judges could invalidate their return in 2007, before Bhutto’s assassination. However, Sharif says he has absolutely no intention to bring down the government…at least not at the moment. Sharif believes it’s not in his country’s benefit to bring down a democratically elected government especially with problems with the economy and rising terrorist militancy throughout the country.

Another issue that the two parties are bickering about is the issue surrounding the next Pakistani president. Pakistani constitution law states that a new president must be elected within 30 days of the decease of the last one, the two parties were meant to decide next Tuesday upon their successor. PML-N were putting forward Saeeduzzamam Siddiqui, a former Supreme Justice, as a non-partisan candidate. The PPP are putting forward their leader, Zadiri, as their president candidate. Sharif argues that the Pakistani president must be accepted by everyone, considering that Pakistan has a history of Presidents ignoring the democratically elected governments, rather than a President that only the PPP recognises, the best way he thinks to deal with this is through the election of an non-partisan President. However, something that both parties have agreed on is the reduction of powers the President has. Former President Pervez Muzharraf declared a State of Emergency after a spate of terrorist attacks and civil strikes in his country, Pakistani judges and laywers took to the street and were forcibly arrested. Mr Muzharraf’s security forces also stormed a mosque which prompted riots from extremist Muslims throughout Pakistan. Mr Muzharraf, a firm US ally and a stalwart against International Terrorism, took power through a coup, however he was forced to resign as head of the army and as President by the PPP, threatening criminal and political charges against him.
Although the BBC, and other International observers, claim that the movement of Sharif to the opposition will not make the PPP-led coalition collapse, it would make the PPP’s grasp on power extremely awkward leading to political uncertainty in an already fragile country.

The consequences for the loss of power in Pakistan would be severe for the stability of the region. With no political direction and with a weak and indecisive government in power, militant factions in Pakistan would seize the chance to topple the already weakened democracy that is installed in Pakistan and turn the country into the next terrorist haven in the Middle East. This would have a huge effect on the NATO mission in Afghanistan, most notably in the Kandahar and Helmand provinces, as they are already fighting a massive battle against militants who retreat to their save havens in West Pakistan. The added hostilities with India over the Kashmir province and the fact that Pakistan controls an arsenal of Nuclear weapons means it is vital for the decision makers and political parties in Pakistan to stick together and come to a decision, if this does not happen India may feel it’s security is undermined and take action, and the security mission in southern Afghanistan would be impossible to win. So before another bush fire is ingited in an already enraging inferno, Pakistan has a duty upon itself to make sure it’s democracy is firm and ready to take on the extremist militants during this economic and political low.

By Peter Self (Editor of TPN and International Affairs)

How will history look back at Poland and the US?

Today, August 20th, is a historic day for the world. Not necessarily for the right reason. The US and Poland have signed an controversial deal to position a missile defence system on Polish soil with a view to protect the West from rogue states such as Iran and North Korea.
The timing of this deal is highly unfortunate considering what is going on in Georgia at the moment, but Condoleezza Rice was undeterred when she went to Warsaw. The Americans, and the Polish, know very well what the Russian stance is with regards to this Missile Defence complex. Prime Minister Putin, back when he was President in 2007, warned that Russia would aim its nuclear missiles towards European cities, as this is a blatant penning in of Russia. The US has disregarded this as ‘saber rattling’ , saying that it will protect the West and much of Europe from “rogue elements” in the Middle East. The deal has yet to be ratified by the Polish parliament, yet despite Russian threats that the site could be a target for a nuclear attack; Ms Rice and Poland’s Foreign Minister Radek Sikorski signed the deal.
Looking at it from a British, no European, perspective you would first think ‘great!’ America has spent money on protecting European countries and itself, nothing could be better! However, what a stupid and ignorant error on behalf of the Americans!
In my opinion this is something that will cause the already damaged relations between the Russians and the West to fracture even more. The Russian admiral for the Baltic fleet has said that Russia is looking to re-arm it’s Baltic fleet with nuclear arms again, the Russian navy is heavily under-funded, yet because of this move it’s funding is probably going to rise to it’s Cold War level.
Poland as well has made a huge mistake, does it not realise that Europe relies on Russian co-operation against terrorism and we rely on Russian energy supplies! Russia has, and will, cut the energy supplies to certain countries in Europe, like it did to the Ukraine in 2006, to have its dirty way over us, we’re almost hostage to this bully. John Li from Hong Kong left a comment on the BBC website saying “For Poland this is sheer folly to become a pawn in the battle between the US and Russia” I totally agree with this comment, it couldn’t highlight what is causing the greatest problem in these relations any better!
Suddenly, Eastern European nations and former Russian satellite states are flocking to the West looking for guaranteed protection (haven’t they learnt there lesson from Georgia?!?) . With the Baltic states and many Eastern European ex-Soviet states such as Hungary and Bulgaria having already joined NATO, and with the Georgian and Ukraine bid to join within the next 5 years, the signing of this deal couldn’t of come at a worse time.
Sir Michael Jackson, former head of the British armed forces, said that the Russian people are extremely sentimental. Also a large number of Russians live in these ex-soviet states, and they believe these countries are still rightfully there’s due to the high number of ethnic-Russians in their populace. Also the Russian people are a extremely proud nation, everyone knows the Russians lost the Cold War, everyone knows the West made a laughing stock of Russia during the 90’s, everyone knows this deal is in someway, if not completely, directed against Russia. History shows, once surrendered a country that is beaten to the ground is going to re-emerge stronger and more threatening than before, why are we trying to tempt Russia into another Cold War? What does the West gain from this?
In this era of globalisation, surely we should be looking to combat risks that damage the world such as global terrorism and climate change, why can’t we go back to the relationship we had before the Litvinenko saga, where Western and Russian security services were co-operating against the common enemy…terrorism. Historic moments such as the Putin/Blair summit and the Bush/Putin summits both show that the West and Russia have, and can, co-operate, after all the Russian government offered a site in Azerbaijan as a radar sit for long range threat protection. Anyway, the BBC sources state that the closing speed of the interceptor and target will be so high that it would make a successful detonation of the missile more difficult than hitting a bullet with another bullet. Despite the $100bn the US has spent on this project, the Pentagon has not proved the system works.
In another twist to the tale, the Czech Republic signed an agreement with the US to place tracking radar stations there in July, and Hungary looks set on making a similar deal with the US. More anger projected from Moscow at this move, a solution and end to this frail and frankly extremely dangerous relationship is in dire need.

By Peter Self (Editor of TPN)

An intro, an apology and some right-wing crap

Hello, let me introduce myself and apologize. I have never, ever written a blog before so I can guarantee that it will be an odd article. In fact, do you call them articles on t'internet? It's post or something like that. Those of you who have read Polself's magnificent work, then I hope you'll be pleased with my right-wing ramblings. I am a staunch Tory (indeed a member), and thus I am naturally unhappy with the Labour government. Here goes my right wing crusade. Liberals, look away now.
The problem with Labour at the moment is that they are too namby-pamby with crime. “It’s not their fault” they say. Well quite frankly, that is rubbish. A person has total control over themselves, with the exception of those who are mentally ill, of course. (That's bound to offend someone). A person, who has offended once, will inevitably offend again. This, of course, is mainly the scourge of our society, the ones we call “chavs.” I don’t like them. There are often 12 or 13 year olds on the metro who take the Michael out of me for being ginger. I like to tell them that they should be in school or that they are very clever (in a sarcastic tone) for noticing my hair colour. They can’t deal with intelligence. These people often commit petty crimes such as vandalism and making loud noises etc. Instead of handing out ASBOs, which are worn with pride by some, the government should introduce on the spot fines for this idiotic behaviour. It would be a great source of revenue for the government, and would certainly be a deterrent. The only thing people love more than themselves is money. This would be especially effective on those carrying knives. In fact, I would allow police to search people on suspicion alone, like Boris is doing in London. Yes, I am aware that this may be against human rights, but honestly, would you really like to see a potential criminal walk away free on the basis of human rights? I certainly wouldn’t.
For the more serious crimes, like murder, I would re-introduce the death penalty. A preposterous statement in today’ society I know, but I really think it would help reduce crime. It would serve as a huge deterrent for those who think about committing any sort of crime. It would also reduce the tax burden. It costs on average around £6000 to keep a prisoner in jail, in addition to the luxury cells they receive. With the execution of the serious offenders, the tax payer may have an extra couple of quid in pocket. The death penalty will also reduce prison overcrowding, which is a major problem for the government at the moment. If I was Prime Minister, I would re-introduce this, it is a simply marvellous idea.
Moving on from that slightly flawed but right argument, I’d like to talk about the massive cost of living that has encircled the UK taxpayers recently. With fuel prices rising to nearly £1.30 a litre and CPI Inflation at over 4%, it has become increasingly difficult to be prosperous in the UK. I, naturally, blame Labour. Since 1997, New Labour has literally thrown money at the public services. This is all well and good but when you consider the huge wastage of money on pointless computer systems and equipment used once every 2 years, it is hugely annoying. The government has run budget deficits every year since 1997 i.e. they have spent more than they have earned in tax. This sounds very good for those who know little about politics and the economy. They seem like a caring government. WRONG! If the Chancellor (Gordon Brown) had any competency, then he would have run budget surpluses (opposite of budget deficit) in the time of economic boom, i.e. saving for a rainy day. But Mr Brown did not do this and now the government has its hands tied. We are in a bit of a pickle now aren’t we Mr Brown? People often forget that Brown sold all of the UK’s gold reserves when the market was at rock bottom, so basically the UK has lost a load of money. Yes, we have experienced 10 years or so of economic boom, but I would argue that the Conservatives beforehand started this. They are the ones who made inflation the prime economic goal and introduced supply side policies. Labour has taken the credit for this, which I don’t like, because they have now screwed up our economy and it is their fault.
What else do I need to talk about? Ah yes, any good Tory will bang on about Europe and how bureaucratic and infuriating local councils are. Right, Europe. The EU is an intrusive and irritating organisation which is slowly sucking up the UK’s sovereignty. I recently read an article that the EU had legislation which limited the size and bendiness of cucumbers and bananas. That is absolutely ludicrous. There is mass food shortages in Africa, and the EU are disposing of food that is perfectly edible because it doesn’t look right. Thankfully, the EU has repealed this legislation. Nevertheless, the EU is something that the UK really doesn’t need. Local council legislation is something that really exasperates me. I’ve read about local councils fining people because their bin lid wouldn’t go all the way down. Preposterous! My council, Tynedale, is quite good actually. I find no problems with them, but some councils are very, very tedious indeed.
That'll do for a first post, I hope. None of the stats have been made up, well most of them. I think it's gone well. My right wing ramblings have probably made me some enemies, and that’s fine. I may have got some fans, you never know. I have really enjoyed writing this article, being a right winger and all; it feels really good to lay into socialists and Labour. I’m assuming it was like marmite this article; you either loved it, or absolutely despised it. Fabulous. Anyway, this is me signing off for now. My next article, sorry, post, will be when something interesting happens politically in the UK, like when Gordon Brown resigns or something; fingers crossed!!!



Sam Shepherd is the writer for UK Economic and Political affairs

Extremism in Russia, should we be scared?

Rather than talk about Georgia and the, which has already been done to the death by the media, I am going to talk about how Russia poses a threat to world peace and how it is vital to learn from past mistakes made.

In Politics, especially international affairs, it is vital to learn from past mishaps. 19 years is a long time, but the generations that lived under the iron fist of communism still remember the days of when Russia was a mighty superpower, not one trying to be on par with the West. Many look back at Russia during it’s Communist days with a certain nostalgia, even if that regime wiped out 1/3rd of it’s own population.

Alexander Solzhenitsyn, who passed away earlier this month, was a very influential writer in the 20th Century. He was exiled in 1974 for his anti-government feelings and spent 20 years in prison. He was the author of The Gulag Archipelago and One day In the Life of Ivan Denisovich, both very anti-regime. He moved to Vermont, USA where he continued to write heavily against the Communist regime in Russia. When the USSR collapsed around Moscow many revered Solzhenitsyn, many loathed him. The post-communist economic strife, and the creation of the sudden free-market in Russia, made people wonder what is freedom if old people have to scrabble through the rubbish left behind on rich people’s plates? Although Solzhenitsyn made it clear that he felt it wasn’t him who collapsed the Soviet Union and created this backlash, he said he was purely waging a war on Communist ideology where people were in 3 different groups; those who were the executioners, those who were the downtrodden and those who were indifferent to the sufferings of others. Many far-left Russians argue nowadays what’s the point in having Capitalism if it creates a social cleavage between the rich and the poor? With Russian oligarchs spending their money on yachts and football clubs rather than the state’s infrastructure and industry, Russia has an extremely bleak future.
So, certainly many look back at the collapse of the Soviet Union with relief, especially in Eastern Europe, but many Russians long for a strong leadership to lead them to supremacy, it’s the ‘slave mentality’ according to a Russian meeting Solzhenitzen at Olga station, that make Russians long for a strong leadership and a clear goal to work towards.

Throughout the 1990’s the victorious West, taking advantage over the weakened Russian government, pushed the Russians further down. Investing cheaply in its infrastructure and making a laughing stock of Russian troops in Kosovo. For a country that was scaring the rest of the world only 9 years earlier this was hard to bear, especially when it looked like Chechnyan terrorists were routing the Russian army in Chechnya.

You may read that above and wonder, so what if we treat Russia in this way, what implication does this have for the West? The answer is very severe. Dictatorships tend to spring up in Economic and Political strife, when the country is going backwards rather than forwards, we saw this in 1920’s Germany and Russia and 1949 in China. Usually a Civil war breaks out between those who are moderate and those who are extremist. The huge problem Russia faces is that it’s not between just the moderate and just the extremist. It’s rather a three-way battle between the moderates, the extremists and the ultra-extremists. I am very surprised we hear very little in the Western media of the emergence of extremism in Russia. As Ross Kemp’s series showed, it’s not just the Communists that are looking for political clout in Russia, there has been a growth in the amount of Fascist ideology. The Russian election of 2007 had a very small turnout of 61% and there were shouts from many Western commentators of foul play with the German government calling the Russian government ‘Not democratic’. What we can see from the fact that only 61% voted and Putin had to resort to foul play to win the election, is that the Russian government is very scared of emerging extremism, let’s be frank it’s already rife throughout the Russian durma, you cannot exactly call Putin and Medvedev moderaist can you? After all Putin changed the election system to the Party List System and changed the law the limit the number of opposing parties in the Durma, isn’t this exactly what Hindenburg did before Hitler took power? The truth is there is a lot of support for these smaller extremist parties in Russia, especially among the working class. Russians are becoming more and more disillusioned with democracy; more and more Russian jobs are being taken by Muslim immigrants coming from the South. Infact this has got so bad that there’s almost an ethnic cleansing of immigrants from certain parts of Moscow, with the Russian press and police turning a blind eye as groups of thugs board trains and beat immigrants to death than boast about it on websites later.

It’s not just in the working class the Fascists has support, many anti-fascist groups say that the Police and the Army have been infiltrated by Russian Fascists. Politics also boasts a number of parties, organizations and movements. From the extremely Fascist and anti-semantic Black Hundred and Pamyat to the Russian National Socialist Party and the Russian national Union led by the neo-Nazi Russian MP Konstantin Kasimovsky. The support of the Fascists in the Russian durma isn’t kept private behind closed doors, politicians such as Nicolai Kuryanovich and the former head of the RNU Alexander Barkashov have all expressed their ultra-nationalistic views over Russian media. One only needs to look at the Coordination Forum of Countering Anti-Semitism (CFCA) and see how many time incidents have sprung up in Russia regarding ‘skinheads’.

The problem isn’t new, fascism has been around in Russia for nearly two decades now, parties have taken advantage of new civil rights to promote racial hatred, although it is not likely in the near-future that the extremists gain political representation, it is worrying that a country that controls most of Europe’s gas supply, has such military clout over it’s neighbours and has nuclear arms at it’s disposal has an undercurrent of extremism. The question is not if, but when, the two forces of Communism and Fascism again fight to make Russia’s history, and when this happens it’ll be a big wake up call to the West, rather than giving the red flag like it has in the past. After all German Fascism, Russian and Chinese Communism and Japanese Imperialism are all by-products of an indecisive West in the past. The West from now on has to act more firmly and decisive with Russia, which after all despite it’s huge land mass and military, is still an extremely weak country with an under-funded and poorly trained army.