Hmmm...Washington slaps in Moscow in the face with one hand, and extends the other hand out for Russian cash...

The neocons never asked who would pay for their new American empire-building.

"As Washington contemplates future relations with Moscow, U.S. pundits and policymakers should keep two fundamental realities in mind. First, America and its European allies need positive relations with Moscow, if for no other reason than to forestall Russian steps that could seriously damage Western interests. For example, as Russia’s current account surplus continues to balloon alongside rising oil prices, Moscow is emerging as an increasingly important purchaser of U.S. Treasury securities and agency paper. Would those calling on Washington to deliver various ultimatums to Russia prefer that Moscow dump its dollar denominated assets? Russian Finance Minister Alexei Kudrin told us recently that Moscow is preparing the ground for the possible introduction of contracts to purchase Russian oil that would be denominated in rubles, rather than dollars. Does the anti-Russia camp want Moscow to take such a step, given its likely negative impact on the dollar’s long-term value?"

Former Soviet President Mikhail Gorbachev on the Russia-Georgia crisis:

THE acute phase of the crisis provoked by the Georgian forces’ assault on Tskhinvali, the capital of South Ossetia, is now behind us. But how can one erase from memory the horrifying scenes of the nighttime rocket attack on a peaceful town, the razing of entire city blocks, the deaths of people taking cover in basements, the destruction of ancient monuments and ancestral graves?

Russia did not want this crisis. The Russian leadership is in a strong enough position domestically; it did not need a little victorious war. Russia was dragged into the fray by the recklessness of the Georgian president, Mikheil Saakashvili. He would not have dared to attack without outside support. Once he did, Russia could not afford inaction.

The decision by the Russian president, Dmitri Medvedev, to now cease hostilities was the right move by a responsible leader. The Russian president acted calmly, confidently and firmly. Anyone who expected confusion in Moscow was disappointed.

The planners of this campaign clearly wanted to make sure that, whatever the outcome, Russia would be blamed for worsening the situation. The West then mounted a propaganda attack against Russia, with the American news media leading the way.

The news coverage has been far from fair and balanced, especially during the first days of the crisis. Tskhinvali was in smoking ruins and thousands of people were fleeing — before any Russian troops arrived. Yet Russia was already being accused of aggression; news reports were often an embarrassing recitation of the Georgian leader’s deceptive statements.

It is still not quite clear whether the West was aware of Mr. Saakashvili’s plans to invade South Ossetia, and this is a serious matter. What is clear is that Western assistance in training Georgian troops and shipping large supplies of arms had been pushing the region toward war rather than peace.

If this military misadventure was a surprise for the Georgian leader’s foreign patrons, so much the worse. It looks like a classic wag-the-dog story.

Mr. Saakashvili had been lavished with praise for being a staunch American ally and a real democrat — and for helping out in Iraq. Now America’s friend has wrought disorder, and all of us — the Europeans and, most important, the region’s innocent civilians — must pick up the pieces.

Those who rush to judgment on what’s happening in the Caucasus, or those who seek influence there, should first have at least some idea of this region’s complexities. The Ossetians live both in Georgia and in Russia. The region is a patchwork of ethnic groups living in close proximity. Therefore, all talk of “this is our land,” “we are liberating our land,” is meaningless. We must think about the people who live on the land.

The problems of the Caucasus region cannot be solved by force. That has been tried more than once in the past two decades, and it has always boomeranged.

What is needed is a legally binding agreement not to use force. Mr. Saakashvili has repeatedly refused to sign such an agreement, for reasons that have now become abundantly clear.

The West would be wise to help achieve such an agreement now. If, instead, it chooses to blame Russia and re-arm Georgia, as American officials are suggesting, a new crisis will be inevitable. In that case, expect the worst.

In recent days, Secretary of State Condoleezza Rice and President Bush have been promising to isolate Russia. Some American politicians have threatened to expel it from the Group of 8 industrialized nations, to abolish the NATO-Russia Council and to keep Russia out of the World Trade Organization.

These are empty threats. For some time now, Russians have been wondering: If our opinion counts for nothing in those institutions, do we really need them? Just to sit at the nicely set dinner table and listen to lectures?

Indeed, Russia has long been told to simply accept the facts. Here’s the independence of Kosovo for you. Here’s the abrogation of the Antiballistic Missile Treaty, and the American decision to place missile defenses in neighboring countries. Here’s the unending expansion of NATO. All of these moves have been set against the backdrop of sweet talk about partnership. Why would anyone put up with such a charade?

There is much talk now in the United States about rethinking relations with Russia. One thing that should definitely be rethought: the habit of talking to Russia in a condescending way, without regard for its positions and interests.

Our two countries could develop a serious agenda for genuine, rather than token, cooperation. Many Americans, as well as Russians, understand the need for this. But is the same true of the political leaders?

A bipartisan commission led by Senator Chuck Hagel and former Senator Gary Hart has recently been established at Harvard to report on American-Russian relations to Congress and the next president. It includes serious people, and, judging by the commission’s early statements, its members understand the importance of Russia and the importance of constructive bilateral relations.

But the members of this commission should be careful. Their mandate is to present “policy recommendations for a new administration to advance America’s national interests in relations with Russia.” If that alone is the goal, then I doubt that much good will come out of it. If, however, the commission is ready to also consider the interests of the other side and of common security, it may actually help rebuild trust between Russia and the United States and allow them to start doing useful work together.

Mikhail Gorbachev is the former president of the Soviet Union. This article was translated by Pavel Palazhchenko from the Russian.

Best Buy and Victoria Secret may be coming to St. Petersburg and Moscow swank shopping districts, but what other foreign investors are doing in Russia right now should be worrying (to us all):

http://biz.yahoo.com/ibd/080822/issues01.html

Investors Business Daily, Aug. 22

Investors Looking To Leave Russia? -Friday August 22, 7:03 pm ET

"The Georgia Invasion: In contrast with the West's otherwise tepid response to Moscow's new nationalism, one group has taken a tough stance -- investors, who are leading the march out of Russia's markets.

On Friday, Russia's central bank announced that its foreign currency reserves -- a key part of its economic stability and an indicator of foreign investor support -- had plunged $16.4 billion in the most recent week, to $581.1 billion (see chart).

Until Russia's move into Georgia, there seemingly had been only massive capital inflows, thanks mainly to the rising price of oil, which makes up 20% of Russia's gross domestic product.

Now, it seems, investors are fed up with the rampant militaristic nationalism, red tape, corruption and anti-investor sentiment in Vladimir Putin's Russia. Some have decided to head for the door and take their money with them.

Last week's decline was the largest since Russia's 1998 currency crisis, which led to a collapse of the ruble and rampant triple-digit inflation. So far this time, there's no major visible impact on Russia's economy. But if the flow of money leaving Russia turns into a flood, it could send Russia's markets into a tailspin, creating massive problems for Prime Minister Putin and his handpicked president, Dmitri Medvedev.

No doubt, foreign investors weren't cheered by another signal sent by Russia's regime last week. Without comment, Russian authorities decided to keep oil tycoon Mikhail Khodorkovsky, whose biggest crime seems to be he became Putin's political foe, in prison -- despite his being eligible for release.

Any continued movement of capital out of Russia could prove disastrous. As we noted above, Russia really is a hollow economy, its growth kept afloat by soaring oil prices and a commodity boom which have both boosted investment in Russia and made its overall economy look much better than it is.

In fact, Russia is an economic nightmare in slow motion. Due to poor health care and widespread alcoholism, its population is declining by 500,000 a year -- a trend that's expected to accelerate in coming years. Inflation is revving up again, after declining for several years, and now is growing at about a 14% yearly rate -- and rising.

Moreover, data from the European Bank for Reconstruction and Development show that, despite the oil-fed boom, Russia's GDP per capita is just 2% above where it was when the Berlin Wall fell.

That means, essentially, there has been no growth at all for 20 years. Of the 15 former Soviet republics that got their freedom after the collapse of communism, 11 are growing faster than Russia.

This is Russia's big vulnerability under Putin. With oil prices falling, Russia's reserves will come under more pressure -- and the import boom that has kept the new class of Russian oligarchs happy will come to a screeching halt.

This year, foreign investment is expected to fall for the first time in six years -- just as lower oil prices kick in. Russia could be in real trouble, and it couldn't happen to a nicer regime.

Putin needs his hard-currency earnings from oil sales to bolster his military. With grand designs on controlling key choke points in the world economy via a revived Russian military, he'll need lots of money in the coming years.

Can he do it? Without a sustainable economy, it's doubtful. With just twice as many people, the U.S. economy is 29 times as large as Russia's. There isn't an area of technology we're not ahead in. Russia will spend about $31 billion this year on defense, and has planned a $189 billion, 5-year expansion. Even so, that's about what the U.S. spends in five months.

Based on its demographic implosion and lack of a non-oil economy, our guess is Russia is in for a rough couple of decades, not the boom times many have predicted. If foreign investors keep looking for the exits, Russia's good times may be over for good.

Putin may seem menacing now. But he's likely to discover the same thing Mikhail Gorbachev did -- no matter what he does, he's still going to be too far behind the U.S., both militarily and economically, to challenge us. He'd be better off worrying about China."

-Seems to me, if Putin and his assistant (Medvedev) wants to continue 'playing chess', they should work tirelessly to get the Russia-Georgia conflict off front page news. At a minumum, at least get the heck out of Poti. What are they thinking? Or NOT thinking?