Cyrill Vatomsky, Where All Politics Are Global

At last, I got off my behind and actually did what I promised: I am posting this podcast of the latest Embassy of The New World Order radio show on KSCO AM 1080.
To get to the podcast, follow the link with the title of the article and then click on listen.

And as I promised elsewhere I talked a bit about the The New Republic column by Michael Idov. I tried to put some of Idov's  observations  tp make a point that although he is writing about Russia, he in a sense is not. He describes a late feudal society and lots of features of contemporary Russia are universal. Some Russians love to talk about how unique it is and how it always takes its own way. Too bad most of the time it is a detour.

Cusiously this article created quite a flurry of posts in English Language Russia-related blogosphere and opinions are quite different. Some predictably claim Russophobia, some liked it for its lack of corny  Cold War era slogans.

So i used the article as a trampoline to satisfy my own propensity for tangents ranging from Chinese manufacturing to Friedrich Barbarossa to Felipe Calderon and his meek attempts to revitalize Pemex. All of that by the way came from the Idov's article.

Predictably, when issue of globalization is addressed (and I did talk about the Columbian Free  Trade deal in the very end) some jump to talk about immigration. Illegal immigration is a painful subject int eh US especially among the talk radio population. So I got some of that as well.

As always, this is just a quick note, not even a summary of what the show was about. I thought it was a good one, so give a listen if you have time and interest.

Truly.

Well, I know I have been neglecting my shows and my blog, and have not posted anything since August. And for that I am profoundly sorry.

 This one turned out to be quite good even by my own demanding standards. In the midst of the brouhaha about Putin being made Time's man of the year, I thought I need to make my point as well. And I did devote 2 hours to it. Here are some basic highlights, but as usual, the podcast has more stuff in it:

• The initial assertion by Time's Managing Editor: "He (Putin) stands, above all, for stability—stability before freedom, stability before choice, stability in a country that has hardly seen it for a hundred years" is so inane, it could have been uttered by a Santa Cruz City council member. Stability is not a goal, it is a tool to achieve other goals.
• Time Magazine and its managing editor completely missed what are Putin's goals.
• Stability of Putin's personal power, stability of his clans, these are his goals, not stability of the country.
• If it is economic stability, then, Putin has little to do with it. I would claim otherwise - the current economic prosperity of Russia happened despite Putin, not because of him. It was caused by oil prices and if it had not been for Putin's nationalization policies, it would have been better.
• In a sense Time completely missed why is it they made Putin "man of the Year". Does Putin deserve it more them other runners up? Yes he does. But not because of what Times thought.
• Putin deserves to be the Person of the Year because of his personal achievements - not many can usurp a huge country, nip a small bud of democracy, turn it into a fief for himself and his minions and make people love him for that even more. That is no small feat.
• It does seem that unlike its managing editor, Time's photographer saw it clearly. Putin does look like a Don. Very appropriate. 

Happy podcasting. Merry Christmas, Happy New Year,

The August 12 KSCO AM 1080 broadcast of the Embassy of the New World Order, featuring Dr. Laina Farhat-Holzman. As usual, this is only an outline to accompany the podcast of the show. Please go to the blog page at http://cyrillvatomsky.com to download or stream the mp3 file.

The show covered lots of subjects in no particular order:

• My disagreements with Laina on how dangerous the results of Turkish elections last month were. I personally think that the situation in Turkey makes it a great example of how economic liberalization of 1980-s resulted eventually in establishment of a moderate Islamic party. Laina is very concerned and has been vocal about it on her blog as well.
• The issue of Kosovo and how it affects other aspects of foreign relations. I am coming on record as no longer supporting independence for Kosovo. It is a geopolitical issue and I am treating it as such. US insistence on Kosovo independence is ill advised because if pushed through, it will cause problems for one of the staunchest supporters of the US - Georgia that also wants to be a NATO member. Geopolitically Georgia's location on the Caucasus isthmus between Black and Caspian Seas is way more important to the US then Kosovo will ever be. I think that the US should drag its feet and give this issue to the Russians as a victory. Creating the precedent of Kosovo independence will push South Ossetia and Ablhazia away from Georgia.
  
• Religion has been discussed a lot in different parts of the show, including a little exchange with a caller that claimed he had seen Jesus. I actually asked for an opportunity to be introduced, but I don't think it went anywhere. I am an atheist, so it is pretty silly to try to convert me.
• Lots been said about moderate religions, and a potential for moderate Islam. In general the consensus was that Islam is preoccupied with appearances and acts like a testosterone poisoned teenager. Grow up already.
• Just a bit about the death of democracy in Russia. Or was it an abortion or maybe a miscarriage. 40% of Russians are apparently ready to vote for whomever Putin appoints, regardless of the person. There does seem to be any pretense anymore in Russia about democratically electing their presidents. Too bad.
• A caller wanted our opinions of the rise of China and supposed future confrontation between US and China. Maybe, someday, but for now China is hardly a military giant. As for economics, I want prosperous China.
• Some talk about America leaning left and most importantly, my take on the split in the "conservative" movement in the US.
  

Take a listen.

 

 

In April of this year Russian President Putin declared that Russia declare moratorium on adherence to restrictions set up in the Conventional Armed Forces in Europe (CFE) Treaty. Today he  made good on the promise.

There has been quite a bit of point counter point arguments between Russia and NATO over the years regarding the treaty but the basic disagreement goes to the heart of the philosophical differences between the current Russian position and that of the West.

The original CFE Treaty took some 10 years to negotiate and it was signed in November 1990 by 30 countries:

Since the treaty came from and was still a part of the Cold War, initial CFE limitations were set up to achieve a balance between existing military blocks or alliances: NATO and the Warsaw Pact. Each block was limited to 20,000 tanks, 20,000 artillery pieces, 30,000 armored combat vehicles,  6,800 combat aircraft and 2,000 attack helicopters.

Subsequent geopolitical disaster of the fall of the USSR and the Warsaw Pact, as Mr. Putin eloquently called it, completely changed the military, but most importantly political and philosophical landscape of Europe. The idea of pan European unity became possible, old captive Warsaw Pact members abandoned their forced allegiance and decidedly moved towards Europe eventually integrating themselves into the European Union and NATO, completely distorting the original CFE regime.

Naturally, further negotiations were necessary and in November 1999, 9 years later to the day, the Adapted Conventional Armed Forces in Europe Treaty was signed. It is worth to note that Boris Yeltsin was still President of Russian Federation. The main difference between the original and adapted treaties reflected the sea of change in philosophical approach of how Europe looked at itself. Instead of a the Cold War standoff between the two adversary alliances, the troop ceilings were to be replaced with a ceilings based on each of country and /or adjacent territory . The principle of two rival gangs was replaced with the principle of a community. Or so it was envisioned.

Results of the Adapted Treaty were less then spectacular, since it never went into effect. September 11th 2001 not only distracted attention from the treaty but, what was worse, the Adapted Treaty became a negotiating chip between NATO, US, Russia and multiple minor signatories. Instead of pushing forward towards complete ratification of the treaty and bringing legality to the new concept of Europe, unnecessary bickering  continued. Still basking in its past glory and happy with enlargement, NATO decided to use Russian military presence in Georgia and Moldova to apply pressure on Russia. This marginally related issue did not yield anything of substance and as a result, Belarus, Kazakhstan, Russia and Ukraine are the only parties that ratified the treaty. It is quite shameful that none of the European countires managed to break ranks and move ahead with what was most definitely a major positive step forward for Europe.

Was excessive Russian military presence in "flank" areas a concern? Yes it was. Was it worth postponing ratification of the Adapted CFE treaty that had so many positive implications? Not at all. This is yet another miscalculation from the Bush Administration that keep piling on and on.

Although Russia is one of the four countries that actually did ratify the Adapted Treaty, it is not without blame. And here comes the fundamental philosophical difference between current Russian policy and the new concept of Europe that went into the foundation of the treaty. The government of Vladimir Putin still thinks in terms of spheres of influence, in terms of territorial control rather than economic and social integration. Putin stubbornly tries grasping at straws of old imperial grandeur, harassing Georgia and other neighbors. This return to the rival gang view that seemed to be on its way out is back.

Russia considers NATO expansion as a threat to itself, which also reflects Russia's idiosyncratic relationship with its past. It is no longer the communist dictatorship out to impose its communist ideology over everyone, but it cherishes what it used to be. After all, Putin did call the fall of the USSR the greatest geopolitical disaster of the XXth century. The 6 "exceptional circumstances" that Russia lists as the rationale to  suspend the treaty come exactly from the adversary standoff mentality. The last one about the Baltic states is simply laughable. I must add here that there are some vivid discrepancies between the Russian and English versions of the reference memo to the Presidential decree published at Kremlin.ru.

2. The excessive parties to the CFE Treaty that belong to NATO, and the exclusive group that formed among CFE Treaty members as a result of the widening of the alliance;

3. The negative impact of the planned deployment of America's conventional forces in Bulgaria and Romania because of this exclusive group mentality;

4. The failure of a number of parties of the CFE Treaty to comply with the political obligations contained in the Istanbul Agreements relating to the early ratification of the Adapted Treaty;

5. The failure of Hungary, Poland, Slovakia and the Czech Republic to comply with commitments accepted in Istanbul to adjust their territorial ceilings;

6. Estonia, Latvia and Lithuania’s failure to participate in the CFE Treaty has adverse effects on Russia’s ability to implement its political commitments to military containment in the northwestern part of the Russian Federation. Estonia, Latvia and Lithuania’s actions result in a territory in which there are no restrictions on the deployment of conventional forces, including other countries’ forces.

Russia is afraid of the ever growing Estonian army?

Russian military analyst Aleksandr Golts, speaking to RFE/RL's Russian Service, called Putin's decision "a deeply unfriendly act," adding: "The irony is that even though NATO countries haven't ratified the adapted agreement, they all observe its terms. No one is going over the prescribed limit."

A deeply unfriendly act indeed. With a stroke of a pen Putin annuls almost 3 decades of negotiations and significant progress.

It fits quite well with the tension building course Putin has embarked on since his Munich speech, including recent threats to target more missiles at Europe for wanting to build a missile defense shield.

Sean from Sean's Russia Blog suggests nothing more than symbolism

There is also no doubt that talk about a "New Cold War" will get another gasp of life even though there seems to be an early consensus that Russia's move is mostly symbolic. "Stability" between European countries is hardly at risk. The bigger risks to stability are increasing tensions over immigration, Islam, and European integration show within European countries, not between them. Plus Russia's influence over Europe does not reside in its hard power, but in its economic soft power. The real area of global insecurity stretches across the Central Asia and the Middle East.

All quite true, but it still begets the question "why?" If this is nothing more then a symbol or an attempt to further solidify his base at home before elections, than the trade off of further aggravating already tense relations with the West is hardly adequate.

I frankly have very little doubt this is not a cosmetic or symbolic move. It fits all too well with the recent pattern of Russian foreign policy. It longs for the lost former glory and power while aware it can't sustain a new Cold War. I also have very little doubt there will be quite a lot of expressed support for Putin's move from Russian Internet users. One of them had recently affectionately mentioned an old Russian saying to me: "God rid us of our friends and we will fight off our enemies ourselves." It is a chilling sentiment if it can take over a society.

Just consider what would our reaction to the recent pattern of Putin's hostility be if  we thought Russia could sustain and win a new Cold War. This will most certainly be a subject tomorrow on my Embassy of the New World Order radio show on KSCO. 11 AM PST

 

 

 

 

When US President George Bush and Russian President Vladimir Putin met in Kennebunkport last week, a lot has been said about low expectations for the meeting. Every new agency of note and every pundit knew the meeting was not going to result in anything of substance.

At the time my personal view was that Putin was trying to feel out what it would be like when he is no longer the President of Russia. Putin is no democrat and he had successfully illustrated it with his domestic and foreign policy. Russia never had a respected former leader with a possible exception of Yeltsin, who was pretty much removed from public and especially political life after he had appointed Putin as his heir. Unlike Western Democracies where former leaders are not overthrown failures, feudal societies rarely respect those that are no longer in power.

When Putin became the democratically appointed President, he immediately proceeded to set up friendly personal relationships with his peers: Schroeder, Berlusconi, Blair, Bush, Chirac. With exception of Tony Blair, Putin was quite successful in this task. Gerhard, Silvio and Jacques are no longer his peers but they do not have to worry much about their future. Well, Silvio might, and Gerhard got himself a cushion job with Gazprom. Bush is the only one left and he will still be President after Putin steps down next spring.  And so my opinion was that the trip to Kennebunkport  was exactly what it looked like - a private meeting sprinkled with some new initiatives just to cover its nature. Putin offered a Russian radar, Bush said in essence even if we take it, we will still deploy stuff in Eastern Europe.

I have not given any of this any further thought until I stumbled over a very lengthy Kommersant account of what was going on at the IOC get together in Guatemala: Russia's surprise coup in securing the 2014 Winter Olympics  to be held in Sochi, on the Black Sea Coast.

I was in Russia when the idea of having 2014 Olympics was first floated by the Kremlin.  Ian Pryde via Ria Novosty places the 20014 Olympics in Sochi in broader context.

Putin was not only the key to the success in Guatemala, but was also the driving force behind Sochi's nomination in the first place.

It was Putin's  project, it was his child, his personal legacy. He came to Guatemala to be the main spokesperson for the Sochi bid. 

Путин в ночь прилета в Гватемалу из США после встречи с Жаком Рогге два с лишним часа ужинал с президентами самых влиятельных федераций МОК и их женами.
The night of arrival to Guatemala from the US after meeting with Jacques Rogge Putin spent two and a half hours dining with presidents of most influential IOC Federations and their wives.

But until I read one little line in the Kommersant article, I never thought of putting the two events together. Here is the background first:

"The main thing," said Svetlana Zhurova, a Russian gold medalist in ice skating at the Games in Turin, "is to get to the second round… There Europe will help us. Europe will vote for Europe!"

The voting was quick, and short work was made of the Austrians. It later emerged that Salzburg had received 25 votes, Sochi 34, and Pyeongchang 36.

So Sochi advanced to the second round and then wins it, but the voting tally suggests something different from what Zhurova hoped for.

Mr. Chernyshenko brought over a memo from the IOC, from which it emerged that Sochi had received 51 votes to Pyeongchang's 47, meaning that Sochi had picked up 14 of the votes that had gone to Salzburg in the first round. Strangely enough, I noticed, most of them came from Americans.

Americans?

Mr. Putin asked for a personal audience with Mr. Bush while on the way to Guatemala. Could it be that this was the main subject of the meeting. Could Bush offer any assistance in securing American votes?

This victory means a great deal to Putin and his future. He could get himself a job bigger then chairmanship of Gazprom. According to the same Ria Novosti article:

In fact, major Russian state and private companies such as Russian Railways, Gazprom and Interros are already hard at work in developing the region's infrastructure, and with gold and foreign currency reserves now at over USD400 billion and rising, Russia will hardly have any problem finding the money.

Putin can be the Olympic Tzar for Russia, he will be constantly in the news, he will  be able to  play out populism of the Olympic hysteria to exert powers over his own successor and all state monopolies. A perfect position for the person that needs to sit out four years before he runs for the President again in 2012.

After three days of grandiose forecasts and pompous back slapping at the St. Petersburg Economic Forum, some sober and colder analyses of what had been said and claimed appeared in Kommersant Business Daily. The article by Andrei Illarionov {link in Russian only} former Putin's economic adviser starts off with a satirical title "Bananotechnology" - a reference to recently touted government investment in nano technology in Russia that is gradually acquiring the shape of Nikita Khrushchev's corn cob with a hint at a banana republic status. Some serious real successes (like reviving of the Aeroflot Boeing contract, and the total $14 billion worth of signed contracts) of the forum aside, "pink glasses" metaphor would do no justice to verbal and virtual gongs, incense, crystal balls and other Al Gore-like obscurantism in economic forecasting oozing from VIP participants of the forum like former World Bank head James Wolfenson, Russian President Putin, and his two minions - come democratically appointed heirs -Servey Ivanov and Dmitry Medvedev. As Financial Times noted sourly , the economic forum was reminiscent of old Soviet style gatherings

"where the only speakers were chosen by the ruling bureaucracy."

Here are some excerpts from Illarionov's article, mixed in with my comments. The article strikes hard by its uncompromising pro-capitalist drive. Not surprisingly, the discussion thread at Kommersant web site is full of nasty attacks by rabid nationalists calling the author a deserter, a traitor, a Yankee lap dog, a paid CIA stooge and what not. It was also quite interesting to read what some of them think of the US and how strong the fruits of the USSR propaganda still are.

James Wolfenson, a senile retiree from World Bank claimed Russian GDP increased five fold since 1995. Illarionov sardonically suggested Wolfenson should have consulted any number of acquaintances from his rolodex or maybe just try a simple Internet search to get a 55% figure instead.

In retrospect, both World Bank and Citigroup could probably do better then employ him in any intellectual capacity. I remember commenting about his senility some years back when he could not figure out why anarcho-antiglobalists were opposing his favourite Davos get together.

Mr. Putin's speech has been mentioned before and by this blog among others . Russian President proudly proclaimed that direct foreign investment in Russian economy grew by two and a half times. The following sentence mentioned accumulated foreign investment to have surpassed $150B.

Listeners might have had an impression that the latter number relates to the direct foreign investments mentioned in the first sentence. This however is not true.

As of April 1 2007 $151B is the total for foreign investment, including indirect, i.e. mutual, portfolio, bonds, and other instruments. According to Illarionov the main investment appeal indicator is direct private foreign investments. As of April 1 2007 Russia accumulated $73B. However serious this absolute figure might look, as a percentage of GDP this looks very modest - only about 7% GDP. Deduct direct investment in upstream oil and gas and the number gets even smaller: 4.5% of GDP.  Compare this to direct foreign investment is Ukraine that exceed 19% of GDP, 25% of GDP in Latvia, Lithuania and Poland, 42% in Georgia and 59% in Estonia.

I already mentioned Mr. Putin's macroeconomic claim regarding G-7 countries' share of World economic output drop from 60 to 40 . I have to admit, I took the former number for granted without double checking. I have forgotten the predictable ease former Soviet apparatchiks show while dealing with numbers. Mr. Putin it appears had outright lied.

That in 2007 G-7's share of world economic output was 41% was true. But it is also true that G-7's share was not 60% but 51%.

But even these claims paled in comparison with forecasts. Mr. Wolfenson "promised" that Russian economy and economies of developed nations will grow 20 fold by 2050...But nobody seemed to have time to stop and think in St. Petersbourg, comments Illarionov.

For a country whose population declines so rapidly, a 20 fold GDP grows would translate into a 25 fold GDP per capita growth. History does not know anything even close among economic miracles of the past: in 43 years Japan's GDP per capita grew 10 times, 12 times in Korea, 13 times in Taiwan, and 17 times in China.

Someone is smoking something. This smacks of return to absurd and laughable gigantomania of USSR forecasting. One of Putin's potential democratically appointed heirs Sergei Ivanov advanced even more futurama claiming that by 2020 Russian GDP will be among the top 5 in the world and per capita GDP by purchasing power parity (PPP) would be $30,000 in 2005 prices. Another candidate for democratically appointed heir Mr. Medvedev agreed. That was the same Medvedev that lamented the death of capitalism when UK frowned at his Gasprom buying a UK energy supplier to create a vertical monopoly. No wonder they can spout any nonsense while they think that monopolistic capitalism is the true capitalism.

These two clowns do not understand what smart people elsewhere understand perfectly well: you can not reach 50% of per capita GDP of the most economically advanced nation. To reach such a level means to transcend the developing economy status that can drive economic growth simply by sheer power of expansion. At higher levels of development economic growth requires a completely different environment.

Growth rates depend more on social and state institutions like protections of private property, separation of powers, free mass media, independent judiciary, civil liberties, political rights, and law.

I had to do a double take when I read this next figure Illarionov mentions.

Russian economy could have experienced fast economic growth in the oil industry, but looting of Yukos by the state and other swindles {possible translations also include: fraud, shady deal, racket, and hustle} annual oil production rates have tumbled from 13% to 2%. Russian economy could have experienced fast growth in natural gas industry, but Gasprom is squeezing independent producers, while increasing its own production by 0.6% in 8 years.

These are horrendous numbers for a country so dependent on oil and gas sectors for almost everything, for a country where according to some figures up to 60% of Government Budget is derived from oil and gas revenues. Illarionov was one of the few on record predicting the 1998 default that crippled Russia big time. This time he is calling for a complete reversal of the current direction that Putin and both his heirs apparent represent.

 

Back in Russia there was an old joke about a young surgeon right out of college performing his first surgery, then frustrated at his own failure, he started slashing the poor patient yelling "this one doesn't work, bring me another one!" I know: gross, but illustrative. Russia seems to have a problem with getting bilateral agreements to join WTO. In order to join this heir to GATT, any applicant must conclude bilateral negotiations with every single existing member. Russia has been so pushy lately, using economic policy for purposes of political pressure, some countries like Georgia that was hit by a wine and mineral water embargo just seem to balk.

What does a frustrated President of Russia have to do in this situation? Call for another body. Mr. Putin wants to create his own WTO, since he can't get into the real thing. A temper tantrum to be sure; not as gross, but still illustrative.

Naturally, Mr. Putin immediately got supporters for his grandiose idea of setting his own skull and bones: the biggest friend of all Russians (according to the polls, no less) Narsultan Nazarbaev, the democratically self elected President of Kazakhstan wants to join in. Kazakhstan is not currently a WTO member.

Mr. Putin insisted that "International organizations are in need of restructuring and modernization."

"These structures that were created for many active players look outdated, undemocratic and awkward, unable to consider changing balance of power" ... "One can see this in the stalled Doha Round of the WTO" - said the Russian President according to the Vzglyad Business Daily , that adds also that old methods do not work in new conditions, whatever it means. USA Today offers this version :

Putin said the stalled Doha round of global trade talks were a sign of the problems with the organization: "Old methods of decision-making at times don't work.".

Again, whatever it means. Too bad USA Today leaves out some of the more interesting quotes from Vzglyad Business Daily.

Medvedev, Russian First (or is it second) Deputy Prime Minister and at the same time Gazprom Chairman of the Board is in agreement. To be sure, some accusations of protectionism Putin and Medvedev level against developed western economies are quite true and should make the US and Europe feel ashamed. These protectionist barriers need to go.

It is however amusing to hear this from the President of Russia who had presided over a de-facto nationalization program creating a situation in Russia when state investments in the economy just recently surpassed private sector investments. It is also amusing to hear Medvedev's "When someone wants to take something away from somebody; that someone will without exception loose something of his own". No kidding, Sherlock. Go tell this to Shell or BP, mister Chairman of the Board of Gazprom.

Jokes aside, however, Putin's and Medvedev's comments should be taken very seriously. They don't only illustrate frustration of people tired of the slow process; they suggest a certain mindset that an international super body like WTO needs to react to changing balance of power - economic or otherwise. This is exactly the opposite to what WTO needs to be - an impartial arbiter of economic disputes. Putin's suggestion is also quite a bit arrogant, since WTO is not something that was concocted recently. It took half a century to become what it is now. Putin's little plan is nothing but a regional trading setup like NAFTA. Any claim of some grandiose future and an alternative to WTO is yet another example of longing for lost power of the USSR and the bypolar world. To support this general idea Putin seems to be invoking the tried old claim of the decline of the developed capitalism.

"The world is indeed changing before our eyes. Countries that yesterday seemed hopelessly behind are today the fastest growing economies of the world," Putin told a gathering of business leaders and government officials at an economic forum in Russia's second-largest city of St. Petersburg according to AP via CNN.  

"If, 50 years ago, 60 percent of the world's GDP came from G-7 countries, then today it is the other way around," he said.

Coming home from the last week G-8 meeting and immediately juxtaposing himself and his country to the old G-7 suggests he received a very cold shoulder in Germany. Mr. Putin needs to decide for himself if he wants to be a member of the good old boys or whether he wants to lead the pitchfork brigade to topple it. If Mr. Putin decides to abandon G-8, he might not get to be the rebel leader. China could easily overshadow Russia's economic prowess and claim the leadership ring, since without China's 15% of World's GDP Mr. Putin's claim would be meaningless.

Putin also said that global financial markets have evolved around "one or two" currencies -- an apparent reference to the euro and the dollar -- and their fluctuations often have highly negative effects on many countries' economies and financial reserves.

"There can be only one answer to this challenge: the creation of several world currencies, several financial centers," he said.

Here is yet another pipe dream. The more I read about Mr. Puttin's speech while writing this piece, the more I see how utterly ignorant he is about the fundamentals of capitalism. He thinks the global financial system can be changed by a decree. He is not alone, of course. Lots of conspiracy theory nutcases think it is run by decrees, but what a company to keep!

Russia's WTO ascension is a very complex issue. On one hand, blocking it from WTO membership will only exacerbate its problems and will reinforce the paranoid view of the West that a lot of people in Russia seem to be developing. On the other hand, if Russia becomes a WTO member before the Ukraine, does anyone have any doubts Russia would try to use its membership as an instrument of political pressure, just like Georgia does now?

With either Medvedev or Ivanov posed to be Putin's heirs, there isn't much one can expect in terms of change. After all, Mr. Medvedev is on record suggesting that preventing Gazprom from becoming an integrated vertical natural gas supplier in UK by blocking its potential takeover of Centrica would "mean the end of real capitalism" The man does not understand that real capitalism is where monopolies like his own Gazprom are legally prevented from existence.

Overall, however, Russia needs to become a WTO member and the sooner the better. WTO membership will help tame the feeling of isolation and weird aspirations of being a counterweight to the capitalist west. It will start molding Russian wild state capitalist kleptocracy into something more humane. In the long run it might help break up state monopolies and with them might help loosen the stranglehold the current crop of Putin's oligarchs has over Russian politics and government. Mr. Putin's current apprehension about the WTO is very easy to understand:

'Globalization does not respect spheres of influence,' said Peter Mandelson, the European Union trade commissioner. 'Membership in the WTO is Russia`s ticket to a rules-based system.'

A map published by Kommersant together with some reports from Bush-Putin talks at the G-8 summit in Germany suggest that Putin's offer of Azeri radar site will go nowhere and in reality does not do much at all. However, it becomes evident why is it that Russia is so adamant against the radar station proposed to be installed in the Czech Republic.

His [Bush's] main argument was that interceptors installed in Poland  will not be able to neutralize more then one ICBM, while Russia has "a huge arsenal that the proposed system would be incapable to intercept".  

Bush's point is also confirmed by looking at the map as well as preliminary calculations. In case of a Russian launch against the USA, missile would take the north-east trajectory since the shortest route lies over the North Pole. Earth rotation will also contribute to shortening of the distance. American interceptors based in Poland will be way to the West and will have to "catch up" Russian-launched ICBM. There will be not enough velocity or range to achieve that.

The most important aspect of the confrontation seems to be the ability of the proposed Czech radar to cover most of the Russian territory. That's the reason to use Azeri radar.

The funniest thing is that Putin's demarche might not bring him what he wants and result in exactly the opposite. US has been courting Azerbaijan with plans to build trans-Caspian pipeline in order to offer an alternative route for Kazakh oil and Turkmen gas, that will essentially remove Russian monopoly on transits from Central Asia. Azerbaijan seems to be quite excited about the prospect of having more US presence with or without Russia. I think it will not be too difficult to separate the two proposals as not related and go for both of them.  

Legend for the map

1. Blue 1: Range of the proposed Czech radar

2. Red 2: Range for proposed Poland based interceptors

3. Blue 3: Aleutian Islands radar station range.

4. Red 4:  Alaska based interceptor range

4. Ceyon 5: Coverage of the Azerbaijan based existing radar.

6. Missle Sylo: Russian missle location by divisions.

7. Russian strategic missle submarine bases. 

 If you are reading this as an email you will have to visit the blog itself and see the map there.

 

 

There is still no resolution for the eight day ban on medical specimen exports from Russia and some 100,000 patients in have been affected, according to Gazeta.ru:

These are people taking part in two-year clinical tests. In their cases we are talking about hours. 8 days, 200 hours, doctors have to cancel visits

Kommersant offers a list of 17 children that have been saved by the program which the Russian President doubts there were any need for at all. Gazeta.ru also quotes an anonymous source from clinical therapy field:

We already have 17 women with breast cancer and 14 HIV infected patients that do not receive adequate therapy.

Government officials have been promising a speedy resolution. I have reported on last week's promises from Mr. Belyannikov, The Federal Customs Head. Nothing happened since. More from Gazeta.ru: 

On Tuesday evening, Mikhail Zurabov, Deputy Minister of Heath Care and Social Development stated that the problem with export of medical specimen from Russia would be resolved "within hours". According to Zurabov, a joint directive from Federal Customs Service and Ministry of Health Care and Social Development would outline the regulatory process of obtaining export permissions. This however would only apply to clinical samples related to actual treatment, not clinical tests.

Needless to say, nothing has happened within hours yet. Claiming to have enough time to ponder, the good minister decided he had a couple of weeks to come up with regulations pertaining to export of clinical test samples. Also according to the same article in the Gazeta.ru, even deputy chair of the State Duma Committee on Science and Education is in the dark:

We are still in information vacuum. Nobody has seen the actual text of the ban. It has never been published. We do not know who issued it and what its Issue Number was,  while the Customs Service adheres to it nonetheless.

There is apparently an internal struggle going on and probably within the top echelons of Russian state power. Kommersant notes an interesting quote from Mr. Putin's Friday interview to international mass media where he also threatened Europe with missiles and compared himself with Mahatma Ghandi. When someone did ask Russian President about the medical specimen export ban, his reply was, at best strange:

"Если вы говорите, что эти образцы вывозятся для того, чтобы оказать людям какую-то помощь, у меня, конечно, возникает вопрос: кому и какую помощь до сих пор оказали? Есть такая статистика? У меня такой статистики нет. И вообще, у меня сомнения, что кому-то оказана какая-то конкретная помощь после вывоза каких-то биоматериалов"

If you are saying that these specimens are exported in order to provide people with some help, I naturally have a question: what kind of help has been provided so far and to whom? Is there any statistical data? I do not have any. In general, I doubt there has ever been any specific help provided to anyone based on export of some bio samples.

I think this is the most revealing quote and it actually points directly to where this ban came from and why is it so difficult to resolve it. This ban is the product of the retrograde, paranoid and ignorant mentality of FSB/KGB apparatchiks. There is no other explanation anymore. Now, with such an abysmal competency level, do we still want to believe that Kremlin would never have anything to do with Litvinenko murder because it did nothing but hurt it? They would never do something like that to themselves, would they?

Putin's government seems to become the epitome of gross miscalculations.  

 

 

I am honestly looking for something positive to report about Russia while browsing various web sites of Russian newspapers and press agencies. I probably should stop altogether, since I am afraid I sound way too negative. Well, my desire for Russia is to improve way beyond its current state and I do not think its current administration is leading it in the right direction, if it is leading it anywhere at all.

Gazeta.ru reports that according to Arkadi Dvorkovich, Head of The President's Expert Office (whatever that might be) state investment in the economy have surpassed private capital investments. This, according to Dvorkovich reveals poor investment climate. No effing shtick Sherlock!

Besides "poor investment climate" surely not related to Yukos, Royal Dutch Shell and TNK-BP affairs - why would they really - the newspaper speculates about the increase of government stake in businesses as well and offers a figure of 40%. Do I get this right and does it mean that 40% of the economy is controlled by the state? And this is the sector of the economy that is most active in investment and borrowing. This is not a healthy situation. But to be sure, it is better then it was in the USSR.

The newspaper then mentions some "experts" that think this is not because government wants to control everything, but rather because it just happens this way based on day to day economic demands. One of these experts compares  Russia's economy with a boat, that the state investment is trying to steer it in the right direction using state investments.

I am left wondering what that right economic direction could possibly be if in order to steer towards it, the state needs to control more then 1/3 of the economy.

Kommersant is following up on the medical specimen export ban, offering Mr. Putin statistics he had admitted lacking. Wouldn't it be prudent to have statistics first and band second? No matter, there was an interesting little sign during the highly publicized interview Putin offered last Friday. He actually expressed doubt that all that export of medical specimens was warranted. Kommersant does a great job of providing data to the contrary of Mr. President's opinion.

But to me this little blurb of news opens a very interesting peek into Putin's economic philosophy. Why hire someone else when we should be doing it ourselves? Yes I understand that this is a very slim sampling rate, but add to it all recent actions of Russian government designed to strike it all alone, limiting participation of outsiders - Shtokman, Sakhalin to name just a few. It suggests to me that Putin, and most likely all of his entourage are stuck in the zero-sum economic model and do not understand benefits of capitalist integration, sharing the wealth so more of it can be created again and again.

In the heart of it lies trust in individuals. Just like Democrats in the US, Putin and his government do not trust individuals and especially the market. Yes sure, the scope of distrust is different but the roots are in the same old left wing ideology. A welfare state? A corporate state? Merger of business and state? What a progression comes to mind: Mussolini - Chavez - Putin - Clinton.

There is a fairly simple explanation for Mr. Putin's smug threat to target Europe with missiles. One only needs to recall what was going on in Europe in the early 1980-s, According to John c. Kornblum, former US ambassador to Germany:

This is exactly what President Putin is aiming at:


The plan is to recreate the old nuclear war fears. I frankly have no way to predict or even to speculate whether Putin's plan will succeed or backfire. I do hope that the Europeans in general and Germans in particular will remember at least two things:

• Deployment of Pershings most certainly drove Russia to the negotiation table. Mikhail Gorbachev admitted this much in an interview to Radio Echo Moskvy[link in Russian only]:

• It was about deployment of Pershings - nuclear missiles after all - not a harmless radar station and missile interceptors. One thing is to have someone target missiles at you because you have missiles targeted at them, quite another thing is to have somebody targeting you because you are trying to protect yourself. If the intellectually superior Europeans understand this distinction, then Putin's gambit will fail.
  

There is an additional wedge he is trying to drive in here. He most certainly will expect the more lenient Western Europe to pressure rowdy and unfriendly Eastern Europe, notably Poland and Czech Republic to abandon cooperation with the US missile defense plans. It is only yet another example of how Russia is forcing Europe to take the solidarity test. Energy blackmail over the last year and a half was hardly different. Will Europe stand together with those they have invited and accepted into their Union? So far it had not.

If Putin succeeds in driving this wedge and fanning another hysteria in Germany and elsewhere in Europe, this will be a sorry testament to Europe's state of mind. I do hope this will not have to come. But I have to admit that I have my doubts.