Ray

What are we to do about Russia?

Well, obviously the world can't put Russia in the buggy and we all go riding as we would have done for the Lonesome Lover!

It is very apparent that Putin is not going to toe Yeltsin's subservient line. Russia has been humbled by the breakup of the USSR and a "defeated" nation always lick the wounds and gets ready to bite back. Therefore, Putin's fight is not unnatural. However, that does not mean that Russia can claw back to the 'glorious' days of the Soviet power! It maybe flush with oil money, but then it has lost its strategic space and the access to strategic minerals and industries that the USSR used to bank on as axiomatic.

Further, with the demise of the USSR and the rise of Islamic fundamentalism, the strategic balance the world over has changed. All bow to the Rising Sun and the Rising Sun or already Risen Sun is the US. Russia can only hope that the US plays its cards wrongly so that there can be a power shift. But that does not seem to be in the offing!

Yet, Russia's nuisance value, if it can be called so, continues.

International industries will not turn back from Russia no matter what the media may state. The reason is simple. There is great business prospects and cash flow irrespective of the problems. And businesses are for money and not for politics! And while there will be concerns, it will take a lot more for the businesses to turn their back onto the riches they see in Russia's Ali Baba's caves!

In fact, the political philosophy that Russia follows is but the result of the actions of the West, if seen pragmatically. A nation that could not breathe without govt control is today technically free to breathe and be natural. Obviously, the Russians are confused and hence cannot control or savour their new found individual freedom. Thus, bizarre actions are not out of place!

Russia shall be looking for cracks in the western resolve and they will exploit it to the hilt as in Iran and Kosovo. It has much to gain by acting as the champion of the 'underdog', as the nations targeted feel that they are!

If one observes the world events, Russia is indeed putting a finger on all the pies where there is some international discord and at the same time, extracting its pound of flesh with its surging economy!

A witch's brew!

__________________


"Some have learnt many Tricks of sly Evasion, Instead of Truth they use Equivocation, And eke it out with mental Reservation, Which is to good Men an Abomination."

I don't have to attend every argument I'm invited to.

HAKUNA MATATA

T_igger_cs_30

__________________
FEAR NAUGHT

I don't work here ...I am an analyst!

Adux

This Putin propaganda is getting a bit of hand, ofcourse when you have Boris Berezvosky 'the kingmaker' sitting in UK trying to make revolutions in Ukraine, Latvia and Russia. He is being hailed by Neil Bush and the rest of fatarnity as the champion of human rights and democracy, Somehow everyone failed to look into his past.

There are many a cases where Russia is being pushed to the corner. That is not the way to deal with the Russians. They are way to powerful to be dealt with likes of third world.

lwarmonger

Part of the problem is that they became third world. Now they are trying to claw their way back into the first.

The problem is that first world strength is ultimately determined by economic power, which underpins military and political power. Putin is not taking actions that strengthen his nation's economy... over the long term the Russian economy (independent of energy prices) will continue to decline relative to the rest of the world unless foreign investors are willing to come.

Adux

Sir,

Russians have a huge technological and educational base, they are not the same as oil producing arab states. So they are not exactly third world in my opinion. They have matured industries, what they lack is managment of economy and a proper stock market.I am of the firm belief and I am sure rickusn would back me upon this, Russia is building itself up, and their chances of success looks more likely than ever before. It will be diplomatic stupidity to keep on provoking Russia, when in reality Russia and the west has the enemy now : Islamic Terrorism.

There is a concerted effort especially on the part of UK to undermine Russia, Whatever Putin maybe, the Oligarch's were worse. Oligarchs were pumping money into the UK coffers, when it stopped, Putin became bad. Lets not always be goodie goodie two shoes here. The west has also played enough dirty politics as much as the ruskies. I am sure Litvenko was killed by the FSB, but then again along with Boris Brezvosky, a former oligarch who didnt even pay his own shareholders was planning coup attempts in Moscow from London. What will be the US reponse if somebody was attempting to overthrow a elected US President?

Foriegn Investors will flock to Russia no matter what, The Oligarch's werent doing business, they were infact raping Russia. I will be amazed if the current Russian economy declined, i expect it to flourish even more under Mendenvev(spelling?), as I expect him to loosen some of the screws tightened by Putin. Which were needed when the Oligarchs were around.

PS: The greatest success of the West in my opinion, if it would be able to get Russia join the EU. Crack open on the SCO, China is no friend of Russia anyways. Time to look for new enemies.

T_igger_cs_30

I have pretty well learned never to say "never happen" but if it does will be an awfull long time in coming

Adux

Well the Brits and their Psuedo-Political Correct Brigade isnt making it any easier nor is poking the Russians where it hurts by the west. They may have short term benefits, but in the long term Russians going against the West is not in their interest even by a long shot.

lwarmonger

Well, the Russian economic difficulties are threefold. First, much of their current boom is due to higher energy prices, of which they are a major beneficiary. While energy prices remain high. However, this artificially inflates the Russian economy, and in essence turns the ruble into a petro-currency (making manufacturing and other exports less competitive in the long term because the ruble is artificially high). While the Russians possess a much larger industrial base than any of the other oil nations, they are no longer (and haven't been for a while) in the first tier of nations economically.

Problem number two, is that so much of their industrial plant is focused on heavy industry. Steel and cement are good industries, but not for a first world nation. They have relatively low output (in value) per head when compared to higher end manufacturing, in little prospect for improvement (steel isn't going to advance by leaps and bounds anymore, certainly not as fast as cars, aircraft, services, computer technology, ect... all industries where Russia lags behind). While Russia does possess some information technology and other advanced industries (most are still in the growing stage), these will be hamstrung by problem number three unless things change.

Problem number three... capricious behavior on the part of a large government against business will inevitably scare business away. Foreign investment and the free exchange of goods are important to any nation, but especially important to Russia. If they are going to grow their important "modern" industries they can't continue to make doing business in Russia difficult for foreigners, because it is that foreign capital that is going to finance those industries and keep them competitive.

And finally, I don't really see how the West is provoking Russia. We have expanded NATO and the Europeans expanded the EU, yes, but former Warsaw Pact countries started lining up to join almost as soon as the Soviet Union collapsed. Russia kept her alliance together through force, and when it fell apart it wasn't our fault that their former "allies" couldn't wait to join us.

I'm not saying the oligarchs were good for Russia, they most certainly weren't. However Russia is becoming increasingly random in how it treats all business. If a nation randomly demand taxes from certain industries that are reliant upon foreign investment, those foreign companies will take their money elsewhere, and those industries (especially the new ones that aren't very established) will stagnate and die. And I'm gonna be honest with you... I don't see how the British have made an attempt to undermine Russia. So I've got to ask you how have the British been undermining Russia?

Ok, the two parts of this sentence aren't really connected, so I'll address the first part, because the second part I already addressed and agreed with. If you randomly steal from foreign businesses they aren't going to come to your country. That is true for any nation, and is most true for nations where operations are already iffy (due to crime, corruption, red tape ect).

I'm gonna be frank. Economically, there are greener pastures than Russia that are being more friendly to business. Foreign investors don't flock to any country "no matter what..." they have to be confident that they are going to make money. The more random seizures and taxes and bribes that occur the lower the margins and the riskier the investment. The lower returns on riskier investments mean that fewer companies will consider it worthwhile to invest in Russia, and will ultimately make restoring trust more expensive.

Not even an option... from a Russian or European perspective.

Adux

Sir,

I expect the price of oil to fall to 60 dollars by the second of this year. Current price is artifical and not sustainable for long periods of time. Russians are aware of this and I agree with you they dont have a first tier economy but they are not third world either, and their base is excellent. Population is Russia's biggest problem, I have heard % has picked up this year. If yes, good for them.

Maybe. But the cement makes sense to Russians, Since China and especially India, we are experiencing boom. The last two years, a bag of cement has gone up by 50% in value. The Government is planning to import cement. Russia has an advantage over the west here, they have good R&D capability as well as cheap basic items. Something that is being serviced by China for the West. And India wants Steel like no other nation. So why not?


You are precise in your assesment, except they have started chugging now. I expect the Russian economy to pick up in growth, even after the Oil goes down.

Lots of it has to do with propaganda, Russian government has only acted against Oligarchs. Neil Bush going with Boris Bersverzky to Lativa to 'educatonal software'. Whatever that was?

Lobby to harrass Russia is in works and Russia cant do much now, Other than what it is doing now. Completely unecessary.

Anyways, I have a feeling Menendev would do more to integrate with European community.
Ofcourse it is right, But I hope the West also does should factor in reactions of Russia, and it will not be like in 1990's.I am sure you are aware they were a superpower and is more than capable of building themselves back into one, as their current trend seems to suggest. Expansion of NATO currently is harrassing Russia, and there is no two ways about it.

I am sure there is a better way of handling Russia.



Like I said before, Unless Oligarchs are involved Russian government doesnt interfere. I have people running business in Russia, and they are doing extremely well. As far as I am aware Russian government hasnt stopped any company from making profits, unless they intend to steal resources of russia or not pay a fair price for it. something that led to creation of the oligarchs.

I am sure aware, Britain openly supports very anti-russian government faction. Boris Bersvozky lives in london and used it as the base to start the Orange revolution in Ukraine and start his Kommersant newspaper in Ukranie as well as in Russia. Which I might add is still running in Russia. Most of the money coming out of Oligarchs ended up in Britain and their Football clubs. Oligarchs out of power was a loss of income to Britain. 10-15 billionaire's out of the Financial Collapse of 1990's. I am sure you know that money is dirty. Russian government acted to protect its country and its people.

Brits had to open a British council office without clearance from the Russian govenrment, they dont let that happen in Britain nor do they let that happen in my country. As much as I hate to say this, In this case Brits were a arrogant bunch.




Ofcourse there are greener pastures than Russia, like say India. But there are some areas which Russia is doing very well, and is the best place to make money.


Sir,

Why is that? I am more interested in this.

physicsmonk

well if i believe Parag Khanna's article in NYT its an option from European perspective atleast.
The New York Times > Log In
it has Quotes like this

its a long article and i dont agree with all his premises except the one on India.

Adux

P.Monk,

That article is utter tripe IMHO, his assumptions on the first paragraph's itself lost its creditability. Playing up the Chinese threats and advantages not their disadvantages.

Lwarmonger,

The New York Times > Log In

physicsmonk

Iagree.even I said I dont agree with his premises except when he says India lacks strategic apetite.

lwarmonger

Russia's industrial base is being hampered because their exports are artificially priced high. I'm not so sure that the price of oil is going to drop as drastically as you suggest, but ironically the longer it remains high the more difficult things will be for Russia over the long term. If Russia is ever to develop a modern information age economy, it's dependence on oil and gas exports is going to have to decrease.

Because you have an educated population! There is demand for cement and steel, sure, but the value of production is so much lower than an information economy has, which is why most Western nations outsourced most of their heavy industries (the ones they retain are the high end manufacturing with large value output, or those with national security implications). The resources you have in the "heavy" portion of your economy would see much better returns in more modern areas, and be competitive for far longer.


These industries are starting from so close to zero as to render percentage growth terms meaningless. Making it out of the infancy stage requires a lot of foreign investment and expertise, and in order to compete internationally those industries still have a lot of growing to do.

The Russian government has been gathering areas of the economy that it specifically views as important to itself. The oil and gas industry was targeted, and most of it is now controlled by the Russian government. That kind of attitude towards private enterprise in any portion of your economy has ripple effects. And sets a bad precedent. Rule of law and consistency is very important to attracting foreign investment, and Russia hasn't been doing a good job at either. You are correct in that thus far it has been very focused, so there hasn't been much of a backlash (in fact foreign investment has greatly increased over the past couple of years). However the more intervention occurs, the harder it will be to keep the dollars and euros flowing.

How so?

Do you really think Menendev would be calling the shots?

The Soviet Union was a superpower, but they aren't going to be one again. While Russia has the ability to become a great power, Europe is continuing to integrate economically and is very far ahead of Russia, as is China.... and the US retains its commanding lead with an economy over ten times the size of Russia and military spending larger than everyone else in the world combined.

If Russia tries to become a military and political superpower it will only fail, and weaken itself economically in the process.

The Russian government exercises control over sections of the economy and businesses that it feels are important (oil and news thus far), and punishes people who oppose it. That creates a problem for investors, because who knows what section of the economy the government will decide to intervene in next, although until now the effects have been limited.


The British government's support for these oligarchs springs from the fact that they are being prosecuted for political purposes. The business interests that they have are not particularly significant to Britain (in monetary terms they are a drop in the bucket), however the fact that the Russian government is going after companies owned by them for political reasons is disturbing.

I also find it interesting that most of those being prosecuted for fraud and tax evasion are those who oppose President Putin.

The Russian foreign minister specifically said that the expulsion was in retaliation for the British expulsion of Russian diplomats in their on-going dispute. The offices were opened as part of the Russian-British cultural treaty of 1994... I believe the excuse the Russians are using to close them is tax violations. A very common theme these days, and one I have a hard time believing.

Russia can be a lucrative market, and has a lot of potential. However my impression of President Putin is that he is going to continue to intervene in the economy against those whom he wishes to harm politically. Right now that is the oligarchs who oppose him, and certain companies in targeted areas of the economy (the energy sector and telecommunications). If/when it starts becoming nation states (or their companies), that is when the flight of capital will begin.

Russia's interests are not Europe's. Russia doesn't want to be part of the EU, in fact it sees itself as opposed to the EU in many areas (Ukraine, Baltic States, energy... not opposed here, but reaping every advantage it can and attempting to play European nations off against one another, ect). Russia right now is a nation that is trying to recapture what it lost when the Soviet Union fell. It doesn't want communism back (well, most Russian's don't), but it does want strong government (in the Russian sense of the word that means semi-authoritarian) and to be a force to be reckoned with independent of other powers. That is incompatible with a future in the EU.

On the other hand, Europe doesn't particularly want Russia either. There is already considerable backlash over the Poles and other Eastern Europeans who are entering Western Europe looking for employment. Part of that saturation of the job market is also what is driving the hypocritical opposition to Turkey's becoming a member ("you're too muslim," "your military intervened to make you secular," ect). They don't want more relatively poor people who will undercut their wages and whom they have no way of keeping out.

And the EU will not accept Putin's government. There have been a lot of claims about fixed elections (it is my opinion that any election fixing that has occurred has been quite gratuitous as there is no doubt in my mind that Putin is quite popular... excluding his opponents from public information mediums has completed the process), and the opposition is being increasingly frozen out of the political process. Putin is looking increasingly like an elected king to the bulk of Western Europe, and they aren't going to allow someone they view like that into the EU.

And finally there are the Eastern Europeans. They view Russia with suspicion (especially Poland), and any move to include Russia in an expanded EU would encounter substantial opposition from those nations that can still remember being dominated by Russia.



One final thought. In a lot of your posts I have gotten the impression that you consider opposition to Putin to be opposition to the Russian government, and by extension to Russia. I'm not sure whether that is consciously or subconsciously, but I think it to be part of the problem that Russia has with a truly western style democracy. As an American I can oppose the election of a candidate. I can vote against them, and I can oppose their views publicly. If their party controls the legislature and the presidency I can oppose them as well. However that does not make me against the US government. It means I disagree with the people who occupy those positions within the government. I still have my obligations as a citizen and a soldier, and fulfill both to the best of my ability regardless of which party controls what branch of the government.

Now, if the government starts selectively enforcing laws against people who disagreed with the party in power, that is time to start worrying. If people begin to associate the party in power as being the government, that is even scarier. From my perspective as an American, that is what is happening now in Russia. And the Russian people seem to be fine with that, because those who are being prosecuted and barred from participation are unpopular, and the economy is doing quite well.

T_igger_cs_30