July 31, 2008
Thanks to energy prices, Russia has more than half a trillion dollars in reserves and US$44 billion in debts
The Duumvirate. I regard The Economist as a generally worthless commentator on Russia, useful only because it is a reliable guide to the "mean sea level" of conventional opinion. In its 6-12 October 2007 issue, it was confident "It has always been a question of how, not if, Vladimir Putin would retain power". Now it's not so sure: maybe Medvedev is in charge. Its latest piece (Johnson's Russia List/2008/130/6) finally understands that Putin could have amended the Constitution easily and run for a third term.
The point is not that The Economist has become any more thoughtful but that its change of mind is an indication that conventional opinion is coming around to the idea that maybe the whole thing wasn't, as the October 2007 headline read, "Vladimir Putin: The Never-Ending Presidency". Revisiting my five hypotheses, I am coming to think that the choice is now between Numbers 4 and 5: I never thought 1 and 2 very likely and 3 is certainly dead. For what it's worth, but presumably signalling new tactics if not a new strategy, there has been criticism of some of Putin's legacies appearing in the Russian press.
PM Putin watches President Dimitry Medvedev give a speech
Russia in a nutshell. Having been away for a while, I am catching up. What occurs to me is this simple summary. Putin saw his job as stopping the rot and can justifiably regard himself as having been reasonably successful at doing so. Medvedev sees his job as "modernizing" Russia; or perhaps a better term is establishing "good governance". These are two different but related missions. Each has the persona and skills for his task and neither would be very convincing at the other. But they are on the same team trying to get to the same place.
Color revolutions. Vladislav Surkov, widely regarded as the Kremlin's chief political theorist, has just said that the threat of a "colour revolution" being introduced into Russia is now over. (By the way, I am now much more sceptical about the, shall we say, spontaneity of the "Orange" and "Rose" "revolutions" than I was at the time -- and I was sceptical then). I never thought such a thing could happen in Russia but it is clear that some in the Russian Presidential Administration did. Another fear that probably had a bearing on Putin's decision to stick around.
Russian Views of the U.S.. A VTsIOM poll on how Russians view the USA shows that the generally positive impressions of five years ago are unchanged. About 50% had positive attitudes in both periods while the negatives have actually declined from 29% from 40%. Which certainly goes against a lot of conventional wisdom.
Mechel. Thanks to some rather Stalinesque remarks by Putin, the company's value has taken a hit and people are starting to worry about Russia as a reliable investment area again. Putin's complaint seems to be that the company may (or may not) have been evading taxes but it seems a stunningly inept thing to say in public. Interestingly, today Medvedev said that officials "should stop causing nightmares for business". Stay tuned.
Khodorkovsky. Applied for parole on the 16th. As usual there are two opinions, each asserted with utter conviction: 1) the request will be rejected 2) the request will be approved. We'll soon know.
Russian Economy. Still growing but slowing: GDP is up about 6% since last June, but June's increase in industrial production (0.9%) was the lowest since November 2002. Inflation is now predicted to be about 11% for the year. But, thanks to energy prices, Russia has more than half a trillion dollars in reserves and US$44 billion in debts.
Natural gas prices. Will be rising. Gazprom's CEO expects a European price of at least US$500 tcm by the end of the year and has cut a deal with Turkmenistan that will greatly raise the price. Ukraine's arrival at "world prices" may be sooner than it hopes, given that much of its gas is from Uzbekistan. Get ready for more "Russia's energy weapon" thinkpieces.
Estonia. 8.2% of Estonia's residents are denied citizenship; mostly Russophones, they have taken Russian citizenship -- what would you do if you couldn't get it from the country where you live? The government has rejected an amendment to allow their Estonian-born children to become citizens automatically. This rather obvious violation of basic rights will, no doubt, prevent Estonia's joining the EU or NATO. Or perhaps not.
Caucasian rumours of wars. Has a low grade shooting war begun in South Ossetia? Or is it another of the periodic flare-ups? The campaign season in mountainous areas is short and starting to end. Moscow sent some fighters over the territory in an admitted show of force it hoped "dampened the zeal of hotheads in Tbilisi".
Abkhazia. The German Foreign Minister has been trying to sell a settlement plan. Three stages are reported: Tbilisi will promise not to use force and refugees will return, then some reconstruction and only then a resolution of Abkhazia's status. Too little too late, I think, but it may prove to be the basis for something in the end.
Patrick Armstrong received a PhD from Kings College, University of London, England in 1976 and retired in 2008 after 30 years as an analyst for the Canadian government. He was Political Counsellor for the Canadian Embassy in Moscow from 1993 to 1996. He has been a frequent speaker at the Wilton Park conferences in the UK.