Are Emerging Markets a Good Investment?

Garry Kasparov
Garry Kasparov December 13, 2015

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Should you invest in emerging markets like China and Brazil? The rapid economic growth and rising stock prices in emerging markets may look enticing, but don’t ignore the high risks involved. Consider diversifying investments into mutual funds, ETFs, and ADRs, or even a separately managed account (SMA).

For an in-depth discussion of investing in the Russian emerging market, Doug speaks with former world chess champion Garry Kasparov. After he retired from professional chess in 2005, Garry became a pro-Democracy proponent for Russia and is the author of the new book Winter Is Coming: Why Vladimir Putin and the Enemies of the Free World Must Be Stopped.

Is Russia a good prospect for investment? What is life really like in Russia today? Is the current regime as popular at home as it appears to be in the press? Have the Russian people simply swapped one authoritarian regime for another? Listen to Garry Kasparov’s answers to these questions on this episode of The Goldstein on Gelt Show.

Follow Garry Kasparov and his work by visiting his website, You can also follow him on Facebook and on Twitter @Kasparov63.

Watch Winter is Coming on YouTube.

Read the Transcript

Interview with Garry Kasparov

What does former chess world champion Grandmaster Garry Kasparov say about Russia under Vladimir Putin? What does he think about investing in Russia today?

Douglas Goldstein:    Garry Kasparov was the youngest world chess champion in history in 1985, at the age of 22, and he retired from professional chess in 2005 after a record of 20 years as the world’s top ranked player. After that, he joined the Russian Pro-Democracy Movement against the regime of Vladimir Putin. His newest book is called Winter is Coming: Why Vladimir Putin and the Enemies of the Free World Must be Stopped.

Using your chess player strategic mind, you’ve written Winter is Coming, which is a very harsh critique of the Putin regime and yet from the outside, it appears that the Russians love him. Everything we see on the outside makes it look good, so how can people like me who don’t know the tactics of the chessboard of Russian politics really know what to believe?

Garry Kasparov:         First of all, there’s no politics in Russia as such, because the moment you say “politics,” people in Israel, America, and Europe think about registered political parties, campaigning, debating, and having elections. Russia today is a full-blown dictatorship. It’s Vladimir Putin who makes all the decisions, and of course you know as in every dictatorship, officially everybody is in love with a dictator. Germans love Hitler, Soviets love Stalin, and I’m sure North Koreans all officially love Kim Jong-Un or whatever the name of the family dictator is now. We should look at real life in Russia, and you don’t have to be an expert in so-called Russian politics. You can simply look at the economic data. Economic conditions have been deteriorating. When you look at the Russian budget, despite of all these problems, the recent problem is always Russian finances due to the drastic drop of oil prices. Putin’s regime keeps spending money on the military, on security apparatus, and on its propaganda machine. It’s a typical war budget, and as it happened with every dictator before, he could be left on Sunday night but by Monday morning he could be very different.

Can the Power of Social Media Break the Absolute Power of a Dictator?

Douglas Goldstein:    When we get that information, I think as you’re describing him as a dictator. He controls the media, and he’s in charge of it, but today with the ubiquitous social media platforms, the way people communicate is unlimited. Is that not getting out to the west?

Garry Kasparov:         I think it’s a common misunderstanding about the importance of social media for political purposes. Even in the United States, which probably has the highest rate of access to internet and social media, television still plays a very large role in promoting political causes. People can get a debate on the big screen, and the while social media is getting bigger and bigger, television is on top even in the United States, and even in Europe. Now as for Russia, we have let’s say 100 million people out of 140 million with access to internet. But typically of this crowd, they use internet for social and cultural change: for social media, for advertising, for buying and selling, and only 10% if not less look at the internet for political use. We have to admit that the Kremlin built a very sophisticated presence on the internet. These are the famous troll factories that are all over the place, trying to suppress all the Putin activities there. Then I would say that out of these, 2 million people in Russia were potentially putting this on the internet, but at least 8 million have been hired by the Kremlin control website. So we’re ending up with a small amount of people who learn about the situation of Russia from alternative sources, but even for them it’s quite difficult to live in an atmosphere, a very poisonous atmosphere of Putin’s propaganda machine. My mother, who is 78, still lives in Moscow and was born under Stalin. She saw everything during the Soviet years, and she tells me that while Soviet propaganda foretold some kind of positive future, bright future ahead of us, such as we are making sacrifices today but tomorrow we’ll all benefit, working for a common good, Putin’s propaganda machine is selling only the count of death. It’s about conflict, war, and confrontation. It’s about enemies, and Putin is very good at creating enemies because as long as Russia, according to his propaganda machine, is surrounded by enemies, Putin is indispensable. He is Putin the Great, who is the only protector of Russia from its endless enemies.

Should Westerners Invest in Russia?

Douglas Goldstein:    You are talking about power, and as an outsider, and again I apologize, I definitely see this differently from you. Outsiders look at a guy like Putin. He’s tough and he’s determined, and he gets what he wants. Let’s say you are investor, and you say, “I can invest in the United States, where it’s a very weak government and a very weak president, but who knows which way they are going? Or I can invest in Russia with the real power house.” What would you say to someone who’s making that decision?

Garry Kasparov:         If you have money to waste, you’re welcome, I’m sure. Putin is waiting for you and anyone else to come in. You mentioned America with a weak president, and I couldn’t agree more. He’s almost non-existent. By the way, inside America he is always backing tough regulations that are making business more and more difficult. But Russia is unlike the United States, or Europe, or Israel. There are no rules that could protect your investments, so it’s not about one person. It’s about the strength of the institutions. In Putin’s rising institutions, or all institutions, whether it’s about the judicial system, a parliament, or the press, it’s all being destroyed, and Putin represents just one unit - the interest of Vladimir Putin.

In Putin’s Russia, he represents the country. Again, that happened before: Hitler with Germany, Stalin with the Soviet Union, Mao Zedong with China, and for a while, it always looked as a dictator could get anything he wanted. But eventually, they all cross this ultimate red line, and it seems to me, reading the news from Russia, they are following the same official news about the drivers of long-haul trucks that are being robbed by a new tax. It all goes to benefit one of Putin’s closest friends, and whether it’s Social Security, health care, or culture, education and the military, expenditure is going up and up. Russia is being stretched, from Ukraine to Syria, and creating new enemies like Turkey, which suddenly out of the blue became the number one enemy on Russian television. There are too many conflicts, and I think that even for Putin’s all-powerful magic inside Russia, it’s a bit too much. That’s why, as with every dictator, we know that he will collapse all of a sudden. He looks very strong from the outside, but there are so many problems inside that nobody can anticipate because we don’t have elections or proper institutions to measure if the public is more content.

What Might Happen in Russia?

Douglas Goldstein:    Are there any opportunities in honest, non-corrupt Russia, or is there no chance across the board, which is why you titled your book Winter is Coming?

Garry Kasparov:         But let’s not forget you have winter, but then in Syria we should have spring. As for the future of Russia, I believe that there is a future, and Russia could be a normal democratic country, joining the family of western nations. Let’s not forget that there are no predetermined genetic parents to dictatorships. You look at North Korea and you think that Koreans all are just born to be part of this dictatorial state. But the South Korea is a flourishing block of economy and stable democracy. The real challenge for Russia will be the transition period, and the longer Putin stays in power, the drier the political desert that he created will be. That’s why, if somebody from the outside thinks that for Putin staying in power for the stability of Russia, it’s not stability. It’s the stability of the graveyard, and the sooner we can get rid of this dictator, the better the chance of Russia to survive as one state in the 21st century.

Douglas Goldstein:    But there was a transition period. Russia really was moving as a result of Ronald Reagan, which seemed from the outside again to be a truly democratic system to bring in capitalism. What happened? Why couldn’t they sustain it?

Garry Kasparov:         I could tell people to read the book, because I spent a lot of time in the pages in the book explaining that. It’s good that you brought in Ronald Reagan, because starting from the beginning of the Cold War and from Harry Truman to Ronald Reagan, there was a consistent foreign policy with minor modifications, but within the range when the administration changed in the United States. This policy helped to contain Communism and then to defeat it. But since the end of the Cold War, we could see that American foreign policy was more like a pendulum swinging from one side to another. Bill Clinton did very little, Bush did too much, Obama has been doing nothing, and so it’s very important that we see America restoring its leadership role and coming up with a comprehensive foreign policy that could address the most important issues that we are dealing with, and of course many of these problems are very close to Israel’s borders.

Douglas Goldstein:    I believe a lot of Russians, maybe Russian expatriates, listen to this show and follow what you are doing. If you could leave them with one thing to do now to help the cause, what would you like them to do?

Garry Kasparov:         I don’t think there’s much we can do right now because the change wouldn’t come from outside. But it’s very important that people in Russia will no longer see Putin as an invincible leader. As we know from the fall of the Soviet Union, Afghanistan played a crucial role in weakening the all-powerful image of the Soviet regime. Putin needs to be defeated politically. For instance, the collapse of Assad’s regime in Syria that Putin wants to protect so badly could be one of the signals for Russia that it’s time to go after our own dictator. Of course, I welcome everybody to look at and to join my Twitter and Facebook because I’m regularly making comments on these events. I still believe that the day will come when many of us who are now forced to go into exile will be able to contribute for the future of our country.

Every piece of viable information is there on, and of course I recommend people to look at the book. It’s not in Hebrew, but it’s in almost all languages except Russian. It is very important for people to recognize the true nature of Putin’s regime and the real danger of this regime for the world, because it’s too easy to be trapped by the current threat that’s coming from the Islamic State or others, terrorist and radical groups all over the place without recognizing that. As I said in the book, there’s the “boss of bosses,” and he’s in Moscow. As long as he’s there, he will keep stalking conflicts and chaos.

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