The Kremlin may well want to encourage speculation as to whether President Medvedev was truly instructing Prime Minister Putin on making state enterprises "comptetitve", but it is wholly unlikely that the two would do anything that wasn't pre-arranged between them. If it were otherwise, a political rupture would be underway, with wide repercussions, and nothing indicates such a thing now. (Of course, human nature being what it is, no one likes to take direction too long from even the most illustrious former boss.)

The follow-up to the President's speech Friday does make it seem, in any case, that Mr. Medvedev is serious and wants to proceed with economic change. (See also here.)

Government-run enterprises are famously less efficient than private ones. Corruption is more likely, too. So, having taken possession of the "commanding heights" of the economy away from Yeltsin era oligarchs, the Putin/Medvedev team (or the Medvedev/Putin team, as you will) may now be ready to privatize again on a broader basis--and with fresh capital from abroad.

At least one critic, economist Vladislav Inozemtsev, thinks Medvedev's words are "inspiring", but "not realistic.".

"The problem," he says, "is that most of the people listening to the speech in the Kremlin’s St. George Hall on Thursday--especially those who sat in the first row--are the very ones who have gained the most from the raw materials-based economy and imperfect democracy that Medvedev criticized so harshly. How will Medvedev possibly be able to overcome the powerful clan in the government and Kremlin that is most interested in continuing the anti-modernization status quo?"

Two trends of Russian government policy seem to be shifting, as witnessed by President Medvedev's major address today in Moscow. The first is the tendency in recent years for government to punish those individuals and companies deemed guilty of economic misbehavior. Now, it seems, the Kremlin is taking a more free market approach.

In foreign policy--connected to business, as well--the Kremlin seems eager once again to bring foreign capital back into the country, and to protect it. Russian leadership also seems to be warming a bit to the U.S., and cooling to Iran.

At least that is the interpretation many are putting on the fairly general statements in the Medvedev speech. See the following report from Stratfor:

Thursday, November 12, 2009
A Speech, the Russian Economy and U.S. Relations

"AS RUSSIAN PRESIDENT DMITRI MEDVEDEV was preparing to make his second State of the State address on Thursday, some major shifts in Russian domestic and foreign policy appeared to be taking place. Those shifts seemed destined to affect not only the speech, but Russia as a whole."

“The speech will be a test for U.S.-Russian relations.”

These reforms reportedly will be the heart of Medvedev’s speech. The global financial crisis hit Russia pretty hard, but it also has revealed some deep and dangerous inefficiencies in the Russian economy that could seriously damage the country in the future. As previously discussed, in order to combat these inefficiencies, Medvedev – along with his mentor, Deputy Chief of Staff Vladislav Surkov, and Finance Minister Alexei Kudrin — have come up with a plan to invite Western investment and technology back into the country, taking many key companies private and quashing mismanagement — mostly by the security services — in some critical Russian corporations.

These reforms have been highly controversial: They not only would reverse the centralization of the Russian economy – a trend that has been under way for the past four years – but would deprive many within the Federal Security Bureau (FSB) of their economic power.

On Wednesday, the day before Medvedev’s speech, we learned that criminal investigations have been launched into 22 state companies — all of which are tied to the FSB. Also, late Tuesday night, Medvedev signed a document calling for a major overhaul of state firms.

"These are signs that Putin has signed off on the plan by Medvedev’s clan to reform the Russian economy. The president’s speech was expected to make those changes public."

"But the speech also was to be a test for U.S.-Russian relations. The Russian presidents — first Putin, then Medvedev — have used the State of the State address as a vehicle for criticizing the West. Last year, Medvedev used Soviet-era rhetoric and declared Russia’s return to the ranks of the world’s great powers."

"Relations between the United States and Russia seem to have taken a sharp downturn since that speech, with Washington continuing its support for former Soviet and Warsaw Pact states like Georgia and Poland, and with Russia continuing its support for Iran."

"But Russia’s stance may be shifting. In the past week, Medvedev has said that he might be open to shifting Moscow’s position on Iran to support Western-organized sanctions. There also have been a string of statements out of Russia’s Foreign Ministry, pushing for Iran to agree to a nuclear deal with the West."

'The question is whether Russia means it or not. Medvedev may be opening a window of opportunity for the United States on the Iran issue. The Russians know they need Western investment and technology in order to strengthen and stabilize their economy. But the West has not wanted to deal with Russia while there were no guaranteed protections for investors and Russia was supporting anti-Western regimes like Tehran."

Moscow could be stringing all these issues together — conceding on Iran, while giving the West an opportunity to forge a new economic relationship with Russia.

"The tone of Medvedev’s speech therefore was expected to signal whether Russia is really going to extend an olive branch to the West or continue with the current standoff."

"All of these gestures — the speech, economic reforms and shifts on Iran — come just ahead of a meeting between Medvedev and U.S. President Barack Obama, who will talk in Singapore on Sunday. And that could be the true litmus test of how serious both sides are about a change in relations."

In the past two decades, the world has witnessed yet another historical opportunity missed: the fall of the Berlin Wall has not led to a logical conclusion – Russia’s full economic, political and even military integration with Europe and the West in general. In the recent past, Russia’s Westernizers’ centuries-old dream of joining Europe was nearly within reach, but then it faded again, to wait for another miracle.

In the 19th century that goal was closer than ever, as Europe and Russia were strongly linked within a unified cultural and economic space despite their religious differences and many political upheavals. Even Fedor Dostoyevsky, generally highly critical of the West, noted that Russia needed Europe, and that Europe was Russia’s second Fatherland.

The Bolshevik coup of October 1917 destroyed the natural process of Russia drifting toward Europe, but the end of the bloody communist experiment should have removed the remaining barriers for that process. However, this has not happened so far. Now, will it take place, at long last? Will Russia even try to overcome the West’s rejection as the balance of world power is shifting to Asia?

There are some strong indications, however, that Russia’s integration with the West is not at a dead end. The country’s rise from the ashes after the collapse of the Soviet empire forces Europeans to go on considering and evaluating possible future scenarios for closer economic and security cooperation. It appears that “Old” Europe is ready for stronger ties with Russia, and even within Eastern Europe (what is curiously known as “New Europe”) widely divergent approaches prevail. While Poland hysterically demands more military hardware and even American soldiers as defense against possible Russian invasion, other former Warsaw Pact countries are quietly expanding their trade relations with Moscow and welcome new gas and oil pipelines now being built. The Czechs’ overwhelming rejection of the U.S. missile defense shield is an important indicator of divisions on Russia policy even in the former Soviet-dominated countries.

What is even more encouraging is Medvedev’s push toward creating a new security architecture in Europe with Russia as its integral component. True, this idea has not so far met with great enthusiasm from Moscow’s Western partners, but the Kremlin should continue exerting pressure on this issue and back it up with specific details and logistic plans as well as a strong PR campaign to get the message across, not being content with vague unsubstantiated appeals.

The West should also welcome recent statements from Medvedev and Putin denouncing Stalin’s terror and their rejection of communist policies and dogmas. At the same time Europeans should be more modest in setting themselves up as knights in shining moral armor while painting Russia totally black. One should remember that it was not only Nazi Germany that invaded Russia in 1941. Among the troops that participated in the Operation Barbarossa, as assault on the Soviet Union was codenamed, were the Slovak Expeditionary Force, the Royal Hungarian Army, the Italian Expeditionary Corps, two Romanian Armies, Norway’s Army High Command, as well as volunteers from France and many other countries, 4.5 million “civilized” Europeans in all. We should also remember that Holocaust was also a shameful European phenomenon and those who liberated most of the death camps were the Russians.

Russia should be more outspoken in claiming a well-deserved credit for liberating the world from the Nazis, from the communist menace, and from the threat of nuclear war. Then again, the role of Russian democrats, including at the RF government level, in helping former Soviet republics acquire independence should not be forgotten, as it now all too readily is in these newly independent states and elsewhere.

Medvedev’s recent speech in which he frankly admitted Russia’s deficiencies and outlined his new vision for the country’s development should be followed by his major address indicating Russia’s goal of becoming an indivisible part of the European home.

For its own security’s stake the West should correct the tragic mistakes in their policies towards Russia made by the Clinton and George Bush Jr. administrations. It should mount a new effort to engage Russia – instead on listening to anti-Russian lobby and relying on proxies in the former Soviet space who play the anti-Russian card and expect Washington and Brussels to solve their problems, mostly of their own creation.

Edward Lozansky is president of American University in Moscow.

If you're looking for behind-the-scenes insight, one of the better places to find it is through reports and assessments from STRATFOR, a leader in geopolitical intelligence, analysis and research.

Yesterday, in its "Geopolitical Diary," the company's analysts took on the issue of Moscow-Tehran relations. Against a backdrop of the Iranian regime's nuclear program and its unwillingness to cooperate fully with the IAEA (International Atomic Energy Agency), STRATFOR suggests that Russia could be "about to shift its international role within the Iran talks."

Russia traditionally has been staunchly against sanctions on Iran. But in the last few weeks, Moscow suddenly grew quiet. During this time, U.S., U.K. and French officials have visited Russia to discuss the Iran issue. Moreover, STRATFOR sources in Moscow have stated that the West has been much more vocal in the possibilities of Western investment and cash going back into Russia, should Moscow want to be partners with the West.

The continuing effort to get a full accounting of Iran's nuclear program will not to end anytime soon. But if STRATFOR's analysis is right and Russia does shift its role, we could very well see a dramatic change in the tone and pace of the negotiations. The mullah might not like finding themselves alone. (For reference, see Edward Lozansky's post of October 26 on this topic.)

Tuesday, November 10, 2009
Courting Russia on the Iranian Nuclear Issue?

Monday Marked the 20th Anniversary of the Fall of the Berlin Wall, the beginning of the collapse of the Soviet empire. The day holds mixed feelings for Russia, although Russian President Dmitri Medvedev was in Berlin to celebrate the anniversary. Russia has come a long way since Nov. 9, 1989. After the collapse of the Soviet Union, Russia fell into utter chaos for nearly a decade and has spent the second decade since pulling itself back together politically,economically, and socially, and also launching itself back onto the international stage.

One of the themes that Medvedev repeated while giving a series of interviews in Germany was on Russia’s current place within the international system — as a partner to European states, a counterbalance to the United States and as a mediator within the Iranian situation.

It is this theme as mediator within the Iran negotiations that has really struck a chord with STRATFOR, especially as so many twists in those negotiations have occurred within the past few days — all this leading to the question of whether Russia is about to shift its international role within the Iran talks.

The past few days have been particularly busy for the players involved in the Iran issue. Over the weekend, there were leaks from an International Atomic Energy Agency (IAEA) report stating that Iran had been experimenting with two-point implosion — a warhead configuration — followed by Iran’s rejection of an IAEA proposal to ship Iran’s nuclear material out of the country for enrichment, a deal that was said to be in place after a meeting with the P-5+1 countries. Also on Monday, Iran announced that the three hikers from the United States arrested on the Iraqi border with Iran would be charged with espionage. With each of these issues, Iran was not only dragging out negotiations with the West, but also raising the stakes.

It would have been expected that Washington would come out with a new ultimatum to Tehran, but instead announced that it was giving Iran more time to consider the nuclear proposals. The announcement was as if the United States slammed on its brakes on the Iran issue.

Even more baffling was that this announcement was made while Israeli Prime Minister Benjamin Netanyahu and Israeli Defense Minister Ehud Barak were in Washington to meet with U.S. President Barack Obama and a string of security officials. The Israelis have been relatively quiet on the Iranian nuclear issue while in Washington, with Netanyahu saying that the international community needs to unite against Iran, but not specifically responding to what seemed like the United States giving Iran a free pass excusing its weekend antics.

This has led STRATFOR to question what Washington is telling the Israelis on what the U.S. will be planning while giving Iran “more time.” Other than the United States also having its own motivations to drag out negotiations like the Iranians, there are two options that come to mind: first would be that the United States is planning a military intervention. The United States would not try to give many hints if they were planning a surprise military strike, but would act as if it were still interested in the negotiation process.

But Washington could be attempting a different option: to get Moscow to reverse its support for Tehran. Russia has traditionally been staunchly against sanctions on Iran. But in the last few weeks, Moscow suddenly grew quiet. During this time, U.S., U.K. and French officials have visited Russia to discuss the Iran issue. Moreover, STRATFOR sources in Moscow have stated that the West has been much more vocal in the possibilities of Western investment and cash going back into Russia, should Moscow want to be partners with the West.

These incentives from the West have certainly given Russia something to think about. In the past, Russia has only been willing to give up its support for Iran if the United States made large concessions, like its relationship within Russia’s entire sphere of influence — a price Washington has not been willing to pay. However, now Russia may be willing to concede for a partial recognition within the sphere and the Western cash into Russia.

Medvedev has already shown that he is open to this line of negotiations, saying that he and Obama will be discussing Russia’s economic issues as well as Iran when they meet on the sidelines of the Asia-Pacific Economic Forum this weekend in Singapore. Now the devil will be in the details. Russia has been picky in the past in accepting U.S. incentives, but this time there is the possibility that Russia may now be up for purchase.

STRATFOR (www.stratfor.com) is a leader in geopolitical intelligence, analysis and research. The article above comes from their "Geopolitical Diary." You can subscribe through their Web site.

Brett Rogers, a Chicago native, was the underdog of the fight in his own hometown. Fedor Emelianenko was the celebrity and the favorite of the crowd that came to see the Strikeforce-M1 fight at the Chicago's Sears Centre Arena. My personal experience watching the fight was unique, as I watched the match at a bar in Nashville, TN. Dozens of American Southerners came to a local establishment to support… the Russian! Could one imagine just 20 years ago that a Southern crowd would be cheering to the images of a Russian beating the crap out of an American. Rocky, indeed, is an outdated material. Now, one can only hope that politicians in Moscow and Washington would catch up with the times...

After the fight, the first people from Fedor’s camp who came out onto the mat were long-bearded Orthodox priests from Fedor’s village. Fedor wrapped himself in a Russian flag and put a giant wooden cross on his neck. My American bartender poured me a free drink to celebrate Fedor’s victory and asked where Fedor was from. I said “from the Russian version of East Tennessee.” The fable-like Russian fighter is a loving father, strong believer, and the most dangerous heavyweight fighter in world history.

Read the ESPN coverage of the fight in the extended post.

Previously undefeated Brett Rogers gave the Russian legend his toughest fight in recent years at Strikeforce/M-1 Global "Fedor vs. Rogers," but Emelianenko prevailed with a dead-on right hook that cracked Rogers' chin and then pounced on his larger foe with crushing follow-up punches. Referee John McCarthy halted the melee 1 minute, 48 seconds into the second round.

After attending the postfight press conference, Emelianenko was sent to local hospital with a broken nose and an injured left hand.

The first exchange -- a looping right and left from Emelianenko and a sneaky left from the burly Minnesotan that snuck under the Russian's right arm -- shattered the Russian's nose.

Emelianenko struck and grabbed Rogers for the first of a few key clinches, then tossed the 265-pound fighter to the canvas as if he were 50 pounds lighter. Rogers wisely rushed to his feet before Emelianenko could snag an appendage.

Rogers was hardly ready to quit, though. Pushing Emelianenko to the fence, he stalled the former Pride champion, as blood trickled down his face.

Emelianenko then sent Rogers backwards with a right before taking him down. As the Russian maneuvered for a keylock, Rogers used his strength and size to turn the tables and gain top position. His opening upon him, Rogers unloaded with hard punches before Emelianenko gained his bearings. Emelianenko reversed to the top position again and trapped Rogers' arm against his head for an arm-triangle choke. Rogers recovered guard when Emelianenko attempted to pass from half guard. The bell sounded with a much closer round than most would have expected.

"The main thing is not to be nervous, to take some time during the first round to learn a little bit [about] the opponent and then to look for some [weakness] and then to use it," Emelianenko said through an interpreter.

In the second round, Emelianenko's hands began to fly with shocking speed and accuracy. Rogers defended at first before the stunning hook found its home and signaled the beginning of the end for the Minnesotan, who tasted defeat for the first time.

The nationalists assassinated attorney Markelov for his work in defending other victims of nationalistic attacks. When the crime took place in downtown Moscow, Anastasiya Baburova was interviewing the lawyer. She drew attention to the crime scene and started chasing the killers; so they shot her as well. One of the saddest part of this story is the complete misunderstanding of the Russia’s most troubling problem: the Western press continues to paint a portrait of a authoritarian Medvedev/Putin tandem and suggesting that there is a liberal alternative. The truth is, whether one likes Medvedev and Putin or not, the only other viable alternative to their rule--and a quite popular one--is nationalistic fascism. We, at Russia Blog, extend our sympathies to the families of Stanislav and Anastasiya.

On November 3, 1957, humans killed their first space tourist. Laika, we at Russia Blog salute you, “Bow-wow old friend, bow-wow.”

While the Russian government looks around for a spare $600 million to build their nuclear wessel by 2021 (hopefully using the Mobile Banka as their prototype), Reuters reports that an upstart Barcelona-based company, Galactic Suite, plans to use Russian rockets and a yet to be named Caribbean island to compete with Virgin Galactic and the New Mexico spaceport:

[Galactic Suite] plans to open the first hotel in space [and] says it is on target to accept its first paying guests in 2012 despite critics questioning the investment and time frame for the multi-billion dollar project. The Barcelona-based architects of The Galactic Suite Space Resort say it will cost 3 million euro ($4.4 million) for a three-night stay at the hotel, with this price including an eight-week training course on a tropical island.

But critics have questioned the project, saying the time frame is unreasonable and also where the money is coming from to finance the project. [Galactic Suite CEO Xavier] Claramunt said an anonymous billionaire space enthusiast has granted $3 billion to finance the project.

Perhaps the mysterious backer is this bozo:

Cirque du Soleil's Guy Laliberte

With a mere $10 billion price tag, Russia Blog’s money is still on the Russo-Japanese space elevator -- just remember to swallow every 40 stories to keep your head from exploding…

In his recent article, Bruce Chapman—Discovery Institute’s President and former Director of the White House Census Bureau—rightly criticized the Russian government for cancelling the scheduled 2010 Census. (The census was moved to 2013). We want to believe that it was Russia Blog’s criticism that forced prime-minister Vladimir Putin to revisit the issue. The original official reason for the census cancellation was the lack of budget funds. While FSB, among many other government agencies, is using taxpayers’ money to renew its branches’ auto-fleets with brand new bullet-proof Mercedes-Benz’s S 350 L 4Matic (yes, with expensive woods, luxurious leather, hi-end stereos, and iPhone connectors; any U.S. FSB agents want to change their employer?), it was extremely hard to believe that Russian economy was doing that bad. Russia’s Census Bureau (RosStat) was despaired by the cancellation, as they had spent significant funds and effort preparing for the act.

In Russia, criticism of the census cancellation was very muffled, as most Russians sincerely don’t understand its value. Most likely, Medvedev and Putin were not afraid to reveal the information that could be compared to the one of 10 years ago; even with the global financial crisis, it is very hard to beat Russia’s humiliating conditions at the end of Yeltsin’s era. It still remains a secret what exactly moved the Kremlin to cancel the census in the first place. What Russian government most likely hadn’t realized were the potential economic consequences had census been canceled. International corporations use census results for their marketing, expansions, hiring, and other business objectives, and the corporate-oriented Kremlin must have heard that message loud and clear. The census, according to Putin, will take place in 2010, and the Russian government committed the necessary 10.5 billion rubles (360.5 million USD) to finalize the effort.

Several recent occurrences, in conjunction with each other, have been contributing factors to the increased commentary about the history between Russia and Poland. The recent instances include: this past August's OSCE resolution on (among other things) the Molotov-Ribbentrop agreement, along with last month's 70th anniversary of World War II's beginning (on September 1, 1939), the Obama administration's scrapping of the missile defense shield program in Poland and the Czech Republic and a Polish parliament resolution stating that the World War II Soviet massacre of thousands of Poles at Katyn had genocidal traits.

Russia: Other Points of View (ROPV) features two articles on the subject of Russo-Polish history, which together, provide a more complete overview than has been generally (if not exclusively) evident in mass media. The two ROPV articles are Gordon Hahn's "NY Times Paints Problematic Portrait of Putin in Poland" (September 15) and Rodric Braithwaite's "Russia, Poland and 'History'" (September 25). Some additional points relate to the topic of what these articles discuss.

"If only the Polish government had succeeded in coming to an agreement with Denikin before his defeat. Denikin's offensive on Moscow, upheld by a Polish offensive from the west, could have had a much worse ending for us; and it is even difficult to guess its final results. The complex combination of capitalistic and nationalistic interests did not allow this coalition to be formed, as the Red Army was able to face its foes one by one, which considerably lightened its task."

The preceding is cited on page 322 of Dimitry Lehovich's "White Against Red: The Life and Times of General Anton Denikin," (W.W. Norton & Company, New York, 1974) with reference to page 114 of a 1964 released Ministertsva Oborony (Defense Ministry) volume one book "Izbrannye Proizvedennia" (Chosen Works), which was published in Moscow by Voennoe Izdatelvstvo (Army Publishing House).

Bolshevik leader Karl Radek said that Pilsudski "shamefully treated Denikin and the Entente." Radek's comment is cited on page 208 of George Brinkley's "The Volunteer Army and Allied Intervention in South Russia, 1917-1921," (University of Notre Dame Press, 1966) with reference to page 86 of Radek's 1923 book "Vneshniaia Politika Sovetskoi Rossi," (Foreign Policy of Soviet Russia) published in Moscow by Gosizdat (State Publishing House). In his book, Brinkley notes that Pilsudski was not obligated to support the Whites.

Tukhachevsky and Radek are referring to a period (in 1919) during the Russian Civil War, when the Reds and Poles agreed to a then secret truce in their conflict. Radek's mention of the Entente refers to the World War I Allied side, which included the Whites. (The non-Russians of that Entente were not so involved in the Russian Civil War, as some have suggested. Concerning outside involvement with the warring Russian Civil War factions, the Bolsheviks received support in varying forms from some Western based sources.)

The White commander Anton Denikin was born and raised in the Polish part of the Russian Empire to an observant Polish Catholic mother and observant Russian Orthodox Christian father. He hoped that a successful White-Polish strategic alliance would lead to an improvement in Russo-Polish relations.

Pilsudski appeared to be keen on establishing a geo-political structure of pro-Polish states, to serve as a buffer against what he seemed to view as an inherently threatening Russia, regardless of its form of government. He also sought a Poland with borders that included areas where Poles were a small but sizeable minority.

Pilsudski chose to back Symon Petliura, who supported an independent Ukrainian state. Petliura faced several obstacles. Although having gained momentum, the idea of a separate Ukrainian national identity was not at the level that it was to achieve in more recent times.

The rival Reds and Whites supported some form of togetherness between Russia and Ukraine. Within the former Russian Empire territory of Ukraine, there was support for this view (which still exists to a degree).

Relations between the Russian Empire born Petliura and the Austro-Hungarian born Galician Ukrainian leadership became strained. The sudden coming together of people (Habsburg and Romanov ruled Ukrainians), who lived under different empires over an extended period was not so easy to piece together. Politically, the pro-Petliura Ukrainians were more left of center than the Galician Ukrainians.

The demise of European empires after World War I, saw Poland's reestablished clout and Pilsudski seeking to once again have all of Galicia as a part of Poland. (Galicia had been under Hungarian allied Polish and later direct Polish rule from about the middle 1300s to late 1700s). Eastern Galicia had (and still has as a part of Ukraine) an overall Ukrainian majority, with its largest city Lviv (Ukrainian)/Lwow (Polish), having (at the time, but no longer) a Polish majority. (As a result of the Molotov-Ribbentrop agreement and with the exception of a period under Nazi occupation thereafter, eastern Galicia has been a part of Ukraine since 1939.)

Petliura's difficult predicament made him the significantly lessor of partners with Pilsudski. Petliura agreed to recognize eastern Galicia as a part of Poland; in exchange for Polish support of a geo-politically Polish allied Ukrainian state headed by him.

The Galician Ukrainians became allied with the White Russians. Somewhat analogous to the Galician Ukrainian-former Russian Empire Ukrainian nationalist relationship of that period, the Galician Ukrainian-White Russian alliance involved two groups, who did not live with each other in the same country. The historical reality reveals that the eastern Galician based Ukrainians staunchly opposed Polish, Nazi and Soviet attempts at being the dominant power over eastern Galicia. (The degree of Galician Ukrainian support for the Nazis lessened, due to the latter's harsh rule.) In a hypothetical Bolshevik defeat, it would appear that the Galician Ukrainian-White Russian alliance had a good potential for breaking down. On the other hand, the White Russians did not set eastern Galicia being a part of Russia, as a condition to their alliance with the Galician Ukrainians. In Ukrainian Galicia today, whatever misgivings towards Petliura, Poland and the Soviet Union do not seem to counter with a fond recollection of the White Russians.

Pilsudski's objective had mixed results. All of Galicia became part of Poland between two world wars, with the Bolsheviks establishing control over the land desired by the Polish supported Petliura.

Towards the end of the Russian Civil War, there was some limited cooperation between the Poles and Whites. This happened after the Bolsheviks had noticeably strengthened their position.

The discrimination that non-ethnic Poles faced under Polish rule between two world wars and the greater flaws of Hitler and Stalin are academically viable subjects. It is inaccurate to equate the Soviet domination of Poland with what the Nazis did. Ethically, the last point should not be used to sugar coat the described Soviet manner. A complete accounting of this subject notes that in Poland, (as well as in some other countries) there existed indigenous non-Soviet Communists, who supported Soviet policies.

It can be counterproductive to live too much in the past. Taken to its extreme, historical one-upmanship nurtures a faulty and divisive imagery, which leads to the greater likelihood of misunderstanding. Russia at large should fully understand the mood in Poland and vice-versa. Russia itself experienced depravation during the Soviet period. At times, there is a seeming impatience with the perception of how Russia en masse treats certain actions of the Soviet Union. In terms of getting a complete picture, one should not overlook that Russians are not so monolithic on a number of historical issues.

The annual May 9 Victory Day holiday in Russia and some other parts of the former Soviet Union does not honor the "genius" of a dictator (Stalin). Rather, that day commemorates the World War II suffering and heroic defense of a people. Victory Day does not focus on the post-World War II Soviet treatment of the countries it dominated. One can provide other comparative examples, relative to what is and is not highlighted in other countries. Offhand, it appears difficult to find examples of countries observing a holiday which highlight their past aggression and/or subjugation over other nations.

Russia has shown an openness on the past. The Russian government recently announced that Aleksandr Solzhenitsyn's Gulag Archipelago will be required reading in state schools. A recent Russian Orthodox Church Outside Russia (ROCOR) statement on Andrei Vlasov was carried in Russian media. The ROCOR release favors a more open review of Andrei Vlasov. Vlasov was a Soviet general, who in Nazi captivity became a non-Nazi/nominally allied with the Nazis opponent of Stalin. His forces ended up opposing the Nazis towards the end of World War II. In 1946, he was hung by the Soviet government. Whether one agrees with the ROCOR's sympathetic opinion of Vlasov or not, its call for a more open appraisal of him serves to delve further into critically discussing the Soviet period. The ROCOR is affiliated with the Russian Orthodox Church of the Moscow Patriarchate, which has been critical of the Soviet past.

The pessimists on contemporary Russia can emphasize the background of some Russians' and Russian institutes' prior roles. A constructive criticism of that country includes the recognition of how people and organizations the world over can change, while encouraging the younger generation to pursue a better path. It is not only Russia which can benefit with some change. In Russia, the continued existence of positive and negative trends reflect an ongoing process.

Michael Averko is a New York based independent foreign policy analyst and media critic.

Iran’s nuclear ambitions, the deteriorating situation in Afghanistan, and the rising threat of Islamic fundamentalism, not only present a clear and extreme danger, but also provide the perfect logical base for closer U.S.-Russian cooperation. Of course, it is always easier to say what should have been done afterward, but shouldn’t we at least learn some lessons from the not-so-distant past? No matter how much we despised and hated communism and the Soviet rulers, politicians with vision could have predicted the disastrous consequence of supplying the Afghan Mujahedeen, including Terrorist Number One Osama bin Laden himself, with tons of cash and the most sophisticated weaponry, like Stinger rockets.

After Jimmy Carter, along with his National Security Advisor Zbigniew Brzezinski, yielded Iran to the Ayatollahs, it became pretty obvious that Islamic militancy was becoming a major threat to the West, a threat which overshadowed even the Soviet one. Anyone with basic understanding of the internal situation in Soviet Union knew that by the late 1970s - early 1980s, communism has exhausted its zeal. Not only did the Soviet intelligentsia reject its appeal, but even the highest Kremlin rulers, including members of Politburo, were privately laughing at their own speeches and slogans. Telling anecdotes and humiliating jokes about communism became major social entertainment. This, together with the sad state of the Soviet economy, should have led the White House to let communism pass into the ashes of history by way of a natural death, instead of creating a supposedly anti-Soviet Frankenstein’s monster, who has turned out to be the worst U.S. and European nightmare.

The alternative is yet another war in the Middle East, in addition to Afghanistan and Iraq, which America can ill afford. However, the winds of war are already blowing across the Persian Gulf, as ever-more influential voices in Washington come to the conclusion that war is inevitable despite all the horrible consequences.

Russia can help to avert this disaster, but at the same time the West should understand that the Kremlin is in no position to antagonize Iran, and not only for economic reasons. Taking into account the violent Islamic insurgency in the Caucasus and the role that Iran could play in further destabilizing the situation, Russia should be given some security guarantees if all hell breaks loose over there. In addition, in order to offer Russia more incentives, the United States should rethink its poorly-devised pipeline policy of undermining Russia’s interests in the Caspian region.

It looks like Obama is making some encouraging moves in the right direction. Scrapping the anti-ballistic missile defense in Eastern Europe and dropping the plans for Georgia and Ukraine to join NATO is certainly a very welcome change from the disastrous Bill Clinton - George Bush policies of treating Russia as a defeated power. Now even such hawks as Brzezinski call for closer NATO - Russia ties, which is a good sign. The Kremlin has also made some reciprocal positive moves by offering logistical help to NATO in Afghanistan, and indicating its willingness to vote for tougher sanctions against Iran if the latter fails to abandon its nuclear weapons ambitions.

This was enough to prompt Teheran to indicate that it was prepared to ship its declared enriched uranium to Russia, which is the first step in accepting the original Russian proposal to perform the whole process of enrichment for Iran.

However, this is only the beginning. More dramatic steps toward stabilizing the Middle East should be taken, and the two young leaders, Obama and Medvedev, have the obligation to find a proper solution and succeed in these most difficult times.

Edward Lozansky is president of American University in Moscow.

Western fears that Russia may use its dominance in gas production and distribution to influence political decisions in Europe are dealt another blow with word that the Azeris and Turks are making considerable progress on an alternative route.

The Russian "threat" thereby diminishes.

It is helpful when the media cover major industry conferences, for seemingly boring meetings sometimes reveal real news. That is what happened at the World Gas Conference in Buenos Aires recently, as reported by The Telegraph in England.

The confirmation of new gas supplies is cheering Americans eager to diminish the nation's reliance on foreign oil and Europeans who feared over-commitment to Russian resources.

By the same token, it is upsetting to some Russians, understandably.

"Needless to say, the Kremlin is irked. 'There's a lot of myths about shale production,' said Gazprom's Alexander Medvedev.

"If the new forecasts are accurate, Gazprom is not going to be the perennial cash cow funding Russia's great power resurgence. Russia's budget may be in structural deficit."

Regardless, this is a big story with real consequences, if true.

There are signs of human rights progress in Russia. Editors of Novaya Gazeta, home to the reporter, Anna Politkovskaya, who was murdered three years ago seem to feel confident that the killers are known.

The unsolved Politkovskaya murder has bedeviled the reputation of the Kremlin on human rights issues in recent years. Many have speculated on possible government involvement in the killing. If, in fact, progress is made in locating and prosecuting the actual murderers, Russia's image for civil order will be improved accordingly

In another development, Nashi, the government-backed student group that acts as a kind of youth activism front for the Kremlin leaders, is now coming under open criticism in a potentially consequential way. Once again it is the rule of law that itself is on trial. Crucial to the outcome is the integrity and resolve of the official investigative body, Pamfilova.

Summary of contents:

- Introduction
- Global Tea Market Summary
- Issues and Trends Affecting the Global Market
- Analysis of the Russian Tea Market
- Analysis of the Indian Tea Market
- Comparison of Russian and Indian Tea Markets
- Opportunities for Indian Tea Producers

Introduction

Tea is the oldest and the most widely consumed beverage in the world after water. It is estimated that there are over 2,000 different types of tea.[1] Though several varieties of tea such as green tea and herbal tea are now becoming popular, by far the most important tea to international trade is black tea. In the global tea market, China, India, Kenya, and Sri Lanka are the major producers and also play a major role as exporters of tea, while Russia, U.K., U.S., Pakistan, and Japan form the major markets for these exports. Consumer awareness of the health benefits of tea and premiumisation [2] have been the growth drivers of the tea market recently.

World tea production rose by more than 3%, reaching an estimated 3.6 million tons in 2006.[3] Record levels of tea production in China, India, and Vietnam in 2006 offset declines in major tea producing countries.[4] The global market size for tea in 2007 in terms of retail value was $23.323 billion and in terms of retail volume was 1,765 million kilograms.[5] The year-on-year growth rate of the global tea market for the period 2006-07 in terms of retail value was 4.5% and in terms of retail volume was 3.5%.[6] The average global per capita consumption of tea in 2007 was 0.3 kg.[7] Driven by double digit growth in sales of black specialty tea bags, green tea and other types, the global tea market is expected to grow by almost 10% in value and over 13% in volume between 2005 and 2010.[8]

Global Tea Production: In 2007, China was the largest producer of tea followed by India, Kenya, and Sri Lanka. Graph 1 on the next page shows the production volume of the world’s major tea producers.

[9]

Global Tea Exports: In 2007, Kenya was the largest exporter of tea followed by Sri Lanka, China, and India. The following graph shows the export statistics for the world’s major tea exporters.

[10]

Though, India is the second largest producer of tea in the world, the domestic consumption of tea is quite high, resulting in India’s exports being only the fourth largest.

Global Tea Imports: In 2007, Russia was the biggest importer of tea followed by the U.K., U.S., Pakistan, and Japan. The following graph shows the import statistics for the world’s major tea importers.

[11]

Global Supply and Demand of Tea: From 2004 through 2007, global supply of tea has exceeded demand. Graph 4 below, shows the global supply and demand statistics for tea during that period.

[12]

As the global supply of tea has consistently outstripped global demand, major tea producers have been pursuing differentiated marketing strategies and focusing only on those markets that have high rates of growth. Given the dynamics of the global supply and demand for tea, understanding market needs and developing niche or specialty tea products becomes crucial for market players.

Highest Per Capita Consumption Markets for Tea in 2007: Turkey, Ireland, U.K., Poland, Russia, and Japan had the highest per capita consumption rates for tea in 2007. As can be seen from Graph 5 below, the average per capita consumption of tea in Russia was 1.3 kg, which was far greater than the average per capita consumption of tea both globally (0.3 kg) and in India (0.7 kg).

[13]

Prices of Tea at Different World Auctions (Q3): The following table compares the prices of tea in 2008 (in third quarter) at different world auction houses of major tea producing countries with the prices of tea in 2007 (in third quarter). As is evidenced by the table, all regions saw double digit rates of price growth over the past year.

[14]

Issues and Trends Affecting the Global Tea Market

Rising Affluence: Rapid economic growth in a number of developing nations such as China, India, and Russia, has resulted in an increase in middle class consumers who have high disposable incomes. These consumers have exhibited premium purchasing behavior, upgrading their purchases from unpackaged tea to branded and specialty varieties.[15]

Growing Health and Wellness Trend: The growing health and wellness trend has been a major driver for the value growth of tea in the global tea market. These consumers are willing to pay a premium price for the advertised health benefits of specialty tea varieties such as herbal/fruit tea and other tea.[16]

Analysis of the Russian Tea Market

Russia has a long history of tea drinking because of its proximity to China and Central Asia. Russia is the largest market for tea in the world, both in terms of all tea varieties, as well as for just black tea. In 2007 in terms of retail value the Russian market was worth $3,266 million and in terms of retail volume it was 161.44 million kg.[17] The year-on-year growth rate of the Russian tea market, for the period 2006-07 in terms of retail value was 12% and in terms of retail volume was 2.3%.[18] The Russian market also has one of the highest per capita consumption rates for tea. In 2007, per capita consumption of tea in Russia was 1.3 kg compared to the average global per capita consumption of tea, which was 0.3 kg in the same year.[19] Retail prices for tea in Russia are relatively high and growing. In 2007, the average retail price for tea in Russia was $20.2 per kg, compared to the average global retail price of $13.2 per kg in the same year.[20]

Sales of Tea by Sub-Sector in Russia: In traditional tea markets like Russia, there is a growing demand for premium specialty and healthy tea varieties as can be seen from Table 2 below.

[21]

Forecast of Tea Volumes by Sub-Sectors for the Period 2007 to 2012: Due to the rising affluence and growing health and wellness trend, there is a growing demand for specialty premium teas such as green tea, herbal/fruit tea, and other tea, as reflected in the forecasted values below.

[22]

Competitive Landscape Analysis of the Russian Tea Market: The top five players in the Russian tea market, namely Orimi Trade, Ahmad Tea Fabrika, Unilever SNG, Mai Kompanya and Akbar Bros Ltd, contributed to more than 50% of the total sales in 2007. In Table 3 on the next page are the names of the major players in the Russian tea market and their respective market shares.

[23]

Analysis of the Indian tea market

In 2007, India was the second largest producer of tea in the world after China. In the same year, the annual tea production in India was 945 million kg.[24] India was also the fourth largest exporter of tea in the world, with export volumes close to 178.75 million kg.[25] The Indian market size for tea in 2007 in terms of retail value was $876.4 million and in terms of retail volume 226.04 million kg.[26] The year-on-year growth rate of the Indian tea market, for the period 2006-07 in terms of retail value was 3.5% and in terms of retail volume was 2.6%.[27] In 2007, per capita consumption of tea in India was 0.7 kg, which is far less than the per capita consumption of tea in Russia, which was 1.3 kg in the same year.[28] The retail prices for tea in India are very low. In 2007, the average retail price for tea in India was $3.9 per kg, which is substantially less compared to the average retail price for tea in Russia ($20.2 per kg) and also to the average global retail price for tea ($13.2 per kg) in the same year.[29]

Supply and Demand of Tea: For the period of 2005 through 2008, supply of tea in the Indian market has exceeded demand. This, combined with the fact that global supply of tea has also exceeded demand, is the reason for the prevailing low prices of tea in India. Table 4 below gives the supply and demand statistics for tea in India.

[30]

Sales of Tea by Sub-Sector in India: In India, tea has high market penetration, thus the market growth rates for the projected period are expected to fall. The value growth of the global tea market is driven by new variants and flavors specifically targeted towards the health and wellness segment. However, Indian consumers are not very receptive to non-tea leaf based tea such as fruit/herbal tea due to the traditional habit of adding milk to tea.[31] The following graph shows the sales of tea by sub-sector in India.

[32]

Forecast of Tea Volumes by Sub-Sectors for the Period 2007 through 2012:

Competitive Landscape Analysis of the Indian Tea Market: The top five players in the Indian tea market, namely Hindustan Unilever Ltd, Tata Tea Ltd, Duncans Industries Ltd, Wagh Bakri Ltd and Goodricke Group Ltd, contributed to more than 60% of the total sales in 2007. Given below are the names of the major players in the Indian tea market and their respective market shares.

[33]

Comparison of the Russian and Indian tea markets

The following table gives a comparison of the Russian and Indian tea markets.

The following table provides sales prices of several different sales channels:

[34]

The following is a breakdown of the profit margins that tea producers can expect by utilizing different sales channels:

[35; 36]

As can be seen from the table above (which is merely a rough estimate), if the Indian tea producer chooses to sell his tea locally at one of the auction houses he can expect a profit of $0.37 per kg, if he chooses to export his tea to international markets he can expect a profit of $0.95, and if he chooses to sell it locally to an Indian retailer he can expect a profit of $1.15. It’s quite clear from the table that Indian tea producers can make the maximum profit margins by entering the Russian market and selling tea directly either to Russian distributors or to retailers.

The market size for tea in Russia in terms of retail value is $3,266 million [37] and by capturing just 0.5% of this market, Indian tea producers can increase their turnover by more than $30 million and earn substantially higher profits on each new dollar of sales revenue generated. The Russian tea market also provides a fertile ground for sales of premium specialty tea varieties like herbal/fruit tea, flavored tea, green tea and others, which the Indian tea producers can exploit. Therefore in considering the size of the Russian tea market and the strong growth rate that the tea market is experiencing there, we strongly feel that it is the right time for Indian tea producers to enter this market and reap the benefits of this opportunity in collaboration with our firm.

If you have any questions about this report or would like to obtain additional information regarding this opportunity, please feel free to contact Alexander Aginsky at a.aginsky@aginskyconsulting.com.

FOOTNOTES:

1 Arndorfer, Travis, and Kristine Hansen. “The complete idiot’s guide to coffee and Tea,” page 198. New York: Penguin Group, 2006.
2 A growing trend towards premium and specialty brands
3 “Tea prices to maintain upward trend in 2008,” Commodities Now. February 14th, 2008. Available online at:
http://www.commodities-now.com/content/market-news/market-news-20080214133555.php?
PHPSESSID=34967b
4 Ibid
5 “Global Market Information,” 2008 Euromonitor International.
6 Ibid
7 Ibid
8 Ibid
9 “Indian Tea Statistics,” Tea Board of India. Available online at: http://www.teaboard.gov.in/inner2.asp?param_link_id=410
10 Ibid
11 Philip Parker. “The World Market for Tea: A 2007 Global Trade Perspective,” Icon group Ltd.
12 “Indian Tea Statistics,” Tea Board of India. Available online at: http://www.teaboard.gov.in/inner2.asp?param_link_id=410
13 Ibid
14 Ibid
15 “Global Market Information,” 2008 Euromonitor International.
16 Ibid
17 Ibid
18 Ibid
19 “Global Market Information,” 2008 Euromonitor International.
20 Ibid
21 “Global Market Information,” 2008 Euromonitor International.
22 Ibid
23 “Global Market Information,” 2008 Euromonitor International.
24“Indian Tea Statistics,” Tea Board of India. Available online at: http://www.teaboard.gov.in/inner2.asp?param_link_id=410
25 Ibid
26 “Global Market Information,” 2008 Euromonitor International.
27 Ibid
28 Ibid
29 Ibid
30 “Indian Tea Statistics,” Tea Board of India. Available online at: http://www.teaboard.gov.in/inner2.asp?param_link_id=
31 Ibid
32 “Global Market Information,” 2008 Euromonitor International.
33 Ibid
34 “Indian Tea Statistics”, Tea Board of India. Available online at: http://www.teaboard.gov.in/inner2.asp?param_link_id=
35 DISCLAIMER: This table is not based on real numbers. Most of the revenue and profit estimates in this table are based on numerous assumptions and can deviate from the reality of the market conditions by very wide margins. Producing a table with these numbers based on actual facts will be one of the goals of our primary research conducted by our firm as part of the engagement. E- approximate estimated price
* from Russian tea customs
** freight carriers
37 “Global Market Information,” 2008 Euromonitor International.

Last week was marked by two intimately connected major events: Obama announced the scrapping of the plan to deploy Missile Defense Shield elements in Eastern Europe, and NATO Secretary General Anders Rasmussen made an arguably even more impressive speech listing three global security initiatives aimed at rapprochement with Russia. It would hardly be an overstatement to call the two events historic, for never before have a US president and a NATO secretary general made such promising and friendly moves toward Russia, and not just by word but actually by deed. NATO’s readiness for a joint US-Russian missile defense system and a serious consideration of Medvedev’s idea for a new Euro-Atlantic security architecture amounts to acknowledging Russia’s role as a major player on the European continent. This can also be regarded as an invitation to Russia to complete a military and eventually also a political and economic integration with the West.

The content of Obama’s speech came as no surprise due to leaks to the press long before the official announcement. As was to be expected, both in America and in other countries, particularly in Poland and the Czech Republic, a massive campaign to condemn this decision was launched even before the speech. Vitriolic outbursts accusing Obama, at best, of weakness, incompetence and enormous concessions to Russia, and at worst, of something amounting to the betrayal of the country’s interests, inundated the US media. It has to be said, though, that there were also numerous supporters of Obama’s decision, even among prominent republicans, such as Brent Scowcroft, former national security adviser under George Bush Sr., and many others.

All those appeals looked pretty pathetic, because they as good as made nonsense of Bush’s endless harangues about the missile defense in Eastern Europe targeting Iran alone and in no way aimed at Russia. To listen to these “intellectuals,” the system must have been devised precisely for containing Russia; otherwise what’s the point of these jeremiads?

Now all eyes are on Moscow and judging by the statements of the Russian leadership to date, the initial reaction was fairly positive. This is encouraging. However just as the folks in the Kremlin invariably demand deeds rather than words from others, the Russians would do well to act likewise now.

There is very real danger of Moscow taking these initiatives as yet another cunning move by Washington and Brussels, with Russia being told to make some tangible geopolitical concessions in exchange for the scrapping of Bush’s costly and, worse, ineffective toy plus a few meaningless promises from NATO.

"Those who are talking about a concession to Russia are primarily those who are looking for a bargaining chip in seeking extra dividends of some kind from us," said Dmitry Rogozin, Russia's envoy to NATO.

Clearly, no one expects any sort of gratitude or charity for Obama, as this is purely a matter of pragmatism. The fact is that Russia, just as America, Europe, China, India – the list could be extended indefinitely – is interested in stability in Afghanistan and not interested in seeing Iran in possession of nuclear weapons.

It so happens that Russia, for various geographical, historical, economic, and other reasons, is the one country capable of making a substantial and in the case of Iran perhaps crucial contribution to the settlement of precisely these problems. It would be wrong to say that currently Russia is not doing anything to this end. Yet it could do much more, and not just to please Washington or Brussels, but primarily for the sake of its own security. If this viewpoint prevailed in the Kremlin, that would be precisely the reciprocal step to meet Obama halfway that might be followed by other positive steps toward each other. Eventually this might kick-start the irreversible process of the integration of Russia and the West that has been our cherished dream ever since the collapse of communism.

Edward Lozansky is president of American University in Moscow.