September 2008 Archives

Ah, there's nothing quite like American conservatives fighting amongst themselves to make an election interesting, and wake us up from eight years of the Bush consensus slumber. First, the party's base really began to crumble this week with the exposure of deep doubts over the abilities of Sarah Palin following her collapse in a milk toast interview by Katie Couric. Ever since Kathleen Parker at the National Review published her attack on Palin, many are following suit. Some believe the heaps of abuse and mockery (see video below) being thrown out against the Alaskan governor plays to her advantage, but others think that populist charisma won't be enough to survive the debate and media.

Naturally one of the principle areas of focus in these criticisms of Palin is her claim of Russia expertise, which is one of the main points raised by an attack letter from the American Conservative - Pat Buchanan's outfit. But looking beyond the individual, the letter highlights some of the central points of disagreement between Neocons and Conservatives as it relates to Russia policy. These are nicely summarized by the Across the Pond blog:

Joshua Keating at FP Passport points to this darkly humorous quote from the Foreign Minister of Poland, Radoslaw Sikorski:

"Of course we don't like it when the Russian president or Russian generals threaten us with nuclear annihilation. It is not a friendly thing to do, and we have asked them to do it no more than once a month."

Not long ago, I read with great interest a blog post over at the Volokh Conspiracy, which makes reference to recent comparisons between the administration of George W. Bush and the political philosophy of the Nazi-era law professor Carl Schmitt - a man whose principle argument supported that any effective government must contain a dictatorial element within the constitution, as best expressed through the seizure of "emergency" powers. Volokh cites a paper by Adrian Vermeule and a posting from Sandy Levinson - in addition Opinio Juris was all over this Schmitt stuff even earlier. Volokh writes:

The legalists in American law schools rage at the Bush administration for claiming constitutional authority to wage the war on terrorism rather than going to Congress but are indifferent when the Bush administration cites, as authority to address the current financial crisis, a statute enacted by Congress seventy years ago and a judge-made doctrine that permits agencies to interpret ambiguous statutes expansively. Is it really so difficult to see that these two cases are the same from the perspective of the rule-of-law values that the rule of law is supposed to advance: public debate and authorization of policy by a representative body for the purpose of addressing events that it is actually aware of? I say that you have to approve of both or neither.

Now that we have seen the Bush-Paulson package, which was filled with this kind of language, get shot down by mostly House Republicans, the Schmitterian legacy once again hangs predominantly over the Bush administration's final days. But Bush isn't the only one out there carrying the Schmitt torch. In my many years of reading and writing about Putin's Russia, I too have developed a significant interest in this frightening brand of constitutionalism, not least because it seems that Vladimir Putin is, like Bush, an ardent believer in the Schmitt doctrine.

The colour of freedom and joy

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

President Medvedev has signed an ukase about the official flag of the FSB. That is, as I understand it, for full and complete happiness, the only thing this agency, which in essence has the entire country and all of its resources under its control, was still missing was its own flag. Now they have one. As a chekist once said to me, rejoicing over the second trial against me, “now even the president is one of us” (this is when Putin had been appointed president in the year 2000).

The mass information media reported that previously the FSB had had only an emblem. On it – the Russian double-headed eagle on a background of a shield and sword. About the flag in the Medvedevite ukase is said that in the right part of it will shine the state crest – the double-headed eagle. And in the upper – the Cross of St. Andrew (the apostle Andrew the First-Called – the patron saint of Russia) on a red field. The main body of the new chekist flag – is light-green. In the opinion of the newspaper «Komsomolskaya pravda», “this color in heraldry symbolizes hope, freedom, abundance and joy."

Any regular visitor to this blog has likely already read the transcript if not seen the presidential debate - but for those who haven't, the video below shows how each candidate's comments played to the television audience.

From a very interesting article by Charles Glover in the Financial Times, more evidence of Russia's "dual state" of functioning courts and non-functioning political courts:

“If you get a ruling from a high court in London, it is seen as a real moral victory, whereas a judgment in Russia is just a judgment in Russia,” says Dmitry Dobatkin, a partner at Linklaters law firm in Moscow. It is like confirmation of being in the right, versus winning a narrow legal victory.”

The prestige of the Russian justice system is low. This is partly because of a reputation for bribery and being vulnerable to political interference, partly because the court system is crowded and delays are endemic. In addition, there have been high-profile cases where experts believe justice was not done and the courts functioned as an arm of the executive.

Rising to this challenge, Russia’s president Dmitry Medvedev – who worked as a lawyer before entering politics – has made legal reform part of his agenda, and even coined the buzzword “legal nihilism” in an interview after his inauguration, vowing to reform the system. (...)

An interesting column from Melik Kaylan at Forbes, who spends some time following Mikheil Saakashvili during last week's UNGA, and gets into a debate with Owen Matthews about Russia's ambitions and the legitimacy of their current grievances. The fundamental question of the debate: does a NATO presence in the Ukraine or Georgia really actually pose a security threat to Russia, or only a defense against expansionism?

We had the McCain-Obama debate on. At the bohemian Greenwich Village brownstone of our friend Ann Marlowe, the leading literary salonista of our time, Misha ate and watched and greeted a stream of well-wishers. Upstairs, Owen and I debated the Russia/Georgia matter. He had just penned a quasi-sympathetic large profile of Misha in Newsweek. I had just published a story in The Wall Street Journal, the first to detail the destruction of Georgian cultural sites during the recent invasion.

I have said before in this space that Owen, like many others, believes Misha made a mistake in the recent conflict by drawing his six-gun first--I believe the Russkies drew first, but Misha moved quicker. Owen and I ranged back and forth over the topic. So I suggested to him that we have it out in public, here, in my column. Let him speak for himself.

Russia and South Korea have signed a preliminary agreement on a $90 billion energy supply project involving Gazprom and Kogas. The 30-year project is planned to go ahead in 2015, and will allow Russia to diversify away from Europe as well as linking South and North Korea. Russia blames the US for stalls in talks to renew the START 1 treaty aimed at reducing both countries’ nuclear arms supplies. Ukrainian Prime Minister Yulia Tymoshenko will visit Russia this week to discuss energy relations. Did the Russian government engineer a slowdown in oil production by raising taxes? Gazprom may build a $935 million natural-gas pipeline in Russia's Far East next year. Is TNK-BP finally solving some of its problems?

Russian research firm the Romir Group has released a new study suggesting that inflation in the country is at roughly 40% - significantly higher than official estimates. The MICEX continues to suffer. Pledging a further $50 billion to increase liquidity in the Russian banking system, Prime Minister Vladimir Putin took a swipe at what he called a financial "contagion" spreading from the US. Polyus Gold has made an offer of $390 million for a 50% stake in KazakhGold. On the effects the credit crunch is having on real estate in St Petersburg. The general financial turmoil could cause land prices to drop, aggravating the already falling price of housing. Private equity firms haven’t given up on Russian opportunities, says this report.

TODAY: Gorbachev launches own political party; Union of Right Forces in league with the Kremlin?; Lavrov says Russia not disrupting Middle East balance of power; troop set to withdraw from Georgia this week; surprise military drill.

Mikhail Gorbachev and “maverick ex-KGB officer turned billionaire banker” Alexander Lebedev have announced plans to form a new opposition political party - the Independent Democratic Party of Russia. Has the Union of Right Forces been in league with the Kremlin this year?

Foreign Minister Sergei Lavrov is defending Russia’s military ties with Syria against accusations that they disrupt the balance of power in the Middle East. But others argue that Russia is seeking to fill the region’s vacuum of power, and regaining influence there. Russia and India have extended military cooperation for another ten years.

I have always wondered if there was a quantitative minimum level of GDP growth necessary for the successful consolidation of authoritarian capitalism - sure, the people might say, this government has taken away my right to vote, jailed and even killed some of our journalists, and erased any sense of independent civil society, but hey, look how good business is! (click here to read an earlier discussion on the economic perks of autocracy.)

Case in point, there seems to be a lot of distress and open tensions between the Russian government and the titans of the business sector, who are more than a little bit unhappy that the Kremlin's unnecessary and childish Cold War games of confrontation with the West have crashed the stock markets and cost them more than half of their holdings. Is it possible that the global economic crisis may be loosening the Kremlin's grip on power? It turns out that the cost of political consciousness among Russia's elite may only be a couple of billion dollars.

After the very acrimonious meeting between the government and the Russian Union of Industrialists and Entrepreneurs, it appeared that the long-standing "pact" between businesses and the Kremlin were beginning to show its first serious fractures since the show trial and imprisonment of Mikhail Khodorkovsky. Medvedev even appointed a new committee which will focus on repairing Russia's reputation with the West - a shift in attitude that stands in stark contrast to the hard line siloviki. Then, just a week later, Alexander Lebedev dropped his bomb, becoming the first oligarch to openly criticize Putin and get away with it. According to the New York Times report, Lebedev has "called the Kremlin’s cold war-style talk “silly” and “stupid” and said it was “funding idiotic things,” like the Sochi Olympics, rather than modernizing Russia’s economy. He has blamed the war in Georgia for 40 percent of the stock market collapse."

And now, today, this from the Moscow Times: Gorbachev, Lebedev to Form Party

Well, we can never say that Russian politics are boring...

Henry Kissinger is beginning to remind me of one of those perennial Latin American dictators - like Argentina's Juan Peron returning from exile for an ill-fated third term, the former secretary of state seems to keep coming back, again and again, to cast his difficult legacy and influence over the U.S. foreign policy establishment.

This year's presidential election is no exception. Kissinger has been involved in the McCain campaign on an unprecedented level, offering an official endorsement and assuming a role on his team of foreign policy advisers. Then during VP candidate Sarah Palin's on-the-job foreign policy training in New York last week, a good deal of emphasis from the media focused on her meeting with Kissinger - like a young jedi visiting the master yoda - to suggest that whatever shortcomings Palin may have in this area, she can always defer to the wisdom of this foreign policy overlord. Of course she later flubbed the details of what she learned from Kissinger during the CBS interview, but that's beside the point.

But perhaps most astonishing was the bitter argument over Kissinger's position of talks without preconditions with rogue leaders between Senators John McCain and Barack Obama during Friday's debate. It seems that both candidates have committed a colossal error in kowtowing to Kissinger, argues Christopher Hitchens, and even further, neither appear to understand his approach or remember what he was just recently saying about Russia.

Free cheese or Marketing, Russian style

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

This morning I got a phone call at home from Galina Starozhilova, an employee of the municipality of Maryino, who invited me to pick up some gift certificates for my son to the entertainment center Fentezi-Park at office No. 4. I thanked her, thinking that I’d have to drop by the municipality some time.

But then I remembered that somewhere in the house I’d already seen such a certificate, not used by my son. I found it and started attentively reading everything that was written on it. And here’s what I discovered.

Read the fine print: “On Friday, Saturday, Sunday, on holidays and days of school vacations the certificate is not valid!”

As may be expected, Fox News has gleefully teed off with all the recent Russia-Venezuela military-oil-nuclear stories to produce some scary news segments, which seem to make the mistake of assuming that Hugo Chavez ever needed Russia's help to turn Venezuela into the "new Cuba" of the 21st century (that was already happening a long time ago). Nevertheless, the short interview with Mark Brzezinski is actually entirely reasonable and intelligent ... which appears to frustrate the anchor, who was looking for a more aggressive opinion.

It looks like Rice and Lavrov "agree" on something...

From Condoleezza Rice's article in Gazeta Wyborcza:

Finally, the United States and Europe will not allow Russia's leaders to have it both ways - drawing benefits from international norms, markets, and institutions, while challenging their very foundations. There is no third way. A 19th century Russia and a 21st century Russia cannot operate in the world side by side. To reach its full potential, Russia needs to be fully integrated into the international political and economic order. But Russia is in the precarious position of being half in and half out. Russia depends on the world for its success, and it cannot change that.

From Sergei Lavrov's speech at the Council on Foreign Relations:

And I had already a chance to explain that you cannot really have -- you can't really have it both ways, punishing Russia by cancelling some of the meetings and some of the formats which are really important for the entire world, and at the same time demanding from Russia to cooperate on the issue which is of crucial importance to you in particular.

Last week I read a number of news articles which made reference to an important op/ed published in the Polish newspaper Gazeta Wyborcza by Secretary of State Condoleezza Rice. I have finally tracked down a full translation of the piece, which urges the Poles to remain vigilant on the front lines of these disputes with the "more authoritarian" Russia. The article serves as a good example of the narrative of Washington's strategy to engage with Russia's European neighbors - one that already seems to have worked with the Czechs, who during the UNGA accused Russia of acting like a colonial power in its carve up of Georgia.

Rice writes: "Perhaps more disturbing, though, is that Russia's attack fits into a worsening pattern of behavior over several years - among other things, its use of oil and gas as tools of coercion, its threat to target peaceful nations like Poland with nuclear weapons, and its curtailment of law and liberty at home. The emerging picture is an increasingly authoritarian and aggressive Russia. (...)

Whether Russia's leaders overcome their nostalgia for another time, and reconcile themselves to the sources of power and the exercise of power in the 21st century, still remains to be seen. The decision is Russia's, and Russia's alone. And we hope that Russia's leaders choose responsibly - for the sake of their people and the sake of the world."

The Moscow Times is running a column by Glenn Kolleeny and Randy Bregman of Salans which argues that Russia's Law on Foreign Investment in Strategic Companies reaches far beyond its legitimate purpose to protect certain industries from foreign influence, and overextends into transparent protectionism and enrichment of non-competitive local companies and individuals. Needless to say, it bodes very poorly for Russia's future economic development and diversification that the number of hydrocarbon fields deemed "strategic" has tripled since 2006, which explains why Russia's oil production is stagnating during these years of peak demand.

The authors write:

The recently published list of technologies critical to national security, raises real concerns about protectionism. The list consists of broad categories of technology covering everything from weather forecasting to "processing, storage, transfer and protection of information" technology. The majority of Russian companies have technology that could be considered "critical."

National legislatures have an obligation to create laws that provide for protection against foreign control of assets vital to national security. Unfortunately, the recent steps taken in Russia to implement the Law on Foreign Investment in Strategic Companies seem designed to lead to protectionism, a decrease in foreign investment, and competition.

Another horrifying dispatch from the New York Times about the war the world would rather forget:

In a campaign to punish families with sons suspected of supporting the insurgency, at least a dozen homes have been set ablaze since midsummer, residents and a local human rights organization said.

The burnings have been accompanied by a program, embraced by Ramzan A. Kadyrov, Chechnya’s president, that has forced visibly frightened parents of insurgents to appear on television and beg their sons to return home.

“If you do not come back I will never forgive you,” one father, Ruslan Bachalov, said to his son on a recent broadcast. “I will forgive the man who will kill you.”

“I have no other way out,” he added. “The authorities and the president demand that I bring my son back.”

In a surprise move, Russia has backed a new United Nations Security Council resolution condemning Tehran’s nuclear program. Venezuelan President Hugo Chávez has signed a deal granting five major Russian energy companies access to Venezuelan oil, and announced that Russia would help his country develop nuclear energy. The Venezuelan oil minister says OPEC has no further plans to alter production levels. Gazprom may be on the verge of reaching an agreement to buy the east Siberian Kovykta gas field from TNK-BP. Georgia has temporarily halted imports of Russian electricity. Gazprom, Lukoil and Rosneft are some of the global energy companies interested in a stake of Spain’s Repsol. Polish gas monopoly PGNiG has announced plans to spend $547 million abroad next year on oil and gas exploration and extraction.

The London Stock Exchange has gained on last week’s suspension of the MICEX. The Russian stock market is undergoing a reshuffle at its highest level. Oleg Deripaska wants London's High Court to dismiss a multibillion-dollar lawsuit filed against him by former associate Michael Cherney, arguing that it should instead be held in Russia. Former Unified Energy System chief Anatoly Chubais will be the first Russian consultant at JPMorgan Chase. On the Russian drive to improve its facilities for aluminum production, despite the metal’s decline in price. Russia’s wheat exports are booming. Vladimir Potanin has tightened his grip on Norilsk Nickel in a new buy up of common shares.

TODAY: Russia to overhaul its army; Lavrov calls for international solidarity on terrorism; Union of Right Forces may disband over Kremlin row; Rice says Russia shouldn’t have a veto for Nato.

President Dmitry Medvedev has announced an overhaul of Russia’s strategic nuclear forces and army. Medvedev says that the need for an upgrade was demonstrated by the Georgian war. Some take this as a sign that Russia is seeking military confrontation. Russia’s current nuclear reserves should last it 60 years, says this report. Foreign Minister Sergei Lavrov is calling for a revival of the international community’s initial solidarity regarding the fight on terrorism after Sept. 11.

The leader of the Union of Right Forces, Nikita Belykh, has resigned from his party, which may disband entirely over a dispute about proposals regarding cooperation with the Kremlin. The Committee to Protect Journalists is renewing efforts to have a number of barred foreign reporters allowed back into Russia, calling on Medvedev to respect press freedom.

Back in 2004, I remember discussing the disturbing political convergence happening in both Russia and Venezuela with an American journalist, arguing that a unique blend of resource nationalism, populism, and repressive authoritarianism was beginning to take root in parallel processes, eventually establishing the basis for a new alliance. I was quite nearly laughed out of the office of this journalist, who refused to believe that there was any reason to take Russia's new diplomatic efforts in Latin America, and its relationship with Venezuela's Hugo Chavez especially, with any degree of sincerity or concern.

Somehow I don't think that I would have quite as much trouble pushing that argument today. For those looking for a quick catch-up piece, Ellen Barry's article in today's New York Times lays out the latest critical developments, including the Medvedev-Chavez orchestrated oil deal which Chavez compares to "a colossus being born."

So when can we stop pretending that nobody knew this was coming?

Having watched the first presidential debate a couple of times now, and having reviewed the transcript, I am inclined toward the opinion that Sen. Barack Obama secured an unexpected victory over Sen. John McCain - however he won it on points, not by knockout. At no point did either candidate completely overwhelm and dominate any single foreign policy issue, but rather it came down to the question of stylistic exposition.

This is very interesting for several reasons. Firstly, the foreign policy debate was meant to be the one for McCain to dominate, and Obama's unexpected competence in this area will require some major adjustments from the Republican campaign to get some points back in the upcoming two debates. I need not even remark upon the predicted outcome of the vice presidential debate, as there are even some rumors among Republican operatives that I know talking about pulling Sarah Palin off the ticket. I don't attribute much credibility to that rumor, but the fact that people are even quietly talking about it doesn't give one much confidence for the outcome of the debate.

With regard to Russia, both candidates were exceedingly strong and critical.

In case you've been living in a cave this September, last night was the first presidential debate between Senators Barack Obama and John McCain. Below is a portion of the transcript relating to Russia.

LEHRER: New lead question.

Russia, goes to you, two minutes, Senator Obama. How do you see the relationship with Russia? Do you see them as a competitor? Do you see them as an enemy? Do you see them as a potential partner?

OBAMA: Well, I think that, given what's happened over the last several weeks and months, our entire Russian approach has to be evaluated, because a resurgent and very aggressive Russia is a threat to the peace and stability of the region.

Their actions in Georgia were unacceptable. They were unwarranted. And at this point, it is absolutely critical for the next president to make clear that we have to follow through on our six-party -- or the six-point cease-fire. They have to remove themselves from South Ossetia and Abkhazia.

For anyone who has doubted that Germany's Social Democratic Party (SPD) wasn't the closest genetic clone to Putin's United Russia, one need not look further than the latest comments from Finance Minister Peer Steinbrück, who this week lashed out in aggressive criticism of the United States.

Laying the blame squarely on the U.S. leadership for the crisis, Steinbrück reached for the apocalyptic: "The U.S. will lose its status as the superpower of the global financial system. The long term consequences of the crisis are not yet clear. But one thing seems likely to me: the USA will lose its superpower status in the global financial system. The world financial system is becoming multipolar. (...) Wall Street will never be the same again. A few days ago there were two Mohicans left remaining out of the investment banks. Now they no longer exist. (...) The world will never be the same as it was before the crisis. The whole world over we must adjust ourselves to lower rates of growth and--with a time lag--unfavorable developments on labor markets."

Sound familiar? Well, it should ... like many in the SPD, Steinbrück is reading from the exact same script of virulent anti-American talking points coming straight out of the Kremlin. The mimicry is actually astounding. Just three weeks ago, Dmitry Medvedev issued his challenge to the United States, remarking that "the world must be multi-polar. Single polarity is unacceptable." Back in June, he also was the first to blame the United States for the financial crisis, declaring that "the inconsistency of the USA’s formal role in the world economic system with its real capabilities was one of the central reasons for the current crisis."

It may be bad enough that one of Germany's historically great political parties now acts in the interests of a foreign nation, but even worse, this anti-American narrative is a strategic disaster, investing the party's future wholly dependent upon the victory of Sen. John McCain.

Editor: Our blog has recently posted about the voyage of president Medvedev to Kamchatka and his visit to an atomic submarine. In connection with this, our correspondent Grigory Pasko also has his comments.

The president, it seems, is different, but the rake’s the same…

Grigory Pasko, journalist

I recalled the phrase of journalist Akram Murtazayev “Whoever hasn’t stepped on the same rake three times isn’t a Russian” when I read the reports about the visit by President Dmitry Medvedev to an atomic submarine on Kamchatka. The mass information media reported (I cite from the wonderful military newspaper Krasnaya zvezda [Red Star]:

President of Russia Dmitry Medvedev began a working journey to Kamchatka with a visit to a base for submarines of the Pacific Ocean Fleet. On board the atomic underwater cruiser of strategic designation St. George the Victorious the Supreme Commander in Chief designated two main tasks in the military sphere: "First, this is the modernization of the Armed Forces themselves, and second, this is a strengthening of the status of the military serviceperson, which includes within itself too a raising of the monetary allowance…"

Frontline Club recently held a debate on the war in the Caucasus featuring Pavel Andreev, from RIA Novosti, Oksana Antonenko, of IISS, Damien McElroy, journalist on The Telegraph and Roy Allison from the LSE. Kim Sengupta, defence and diplomatic correspondent at The Independent, chairs the discussion.

From a book review by Moisés Naím in the Washington Post:

As Scowcroft and Brzezinski move on to discuss China, Russia and Europe, a central point they repeatedly make is that the United States must shed the bunker mentality that has infused its foreign policy since 9/11. According to Ignatius, both men want "to restore a confident, forward leaning America. . . . Their idea of a twenty-first century American superpower is a nation that reaches out to the world -- not to preach but to listen and cooperate and, where necessary, compel."

That position, in turn, is rooted in a recognition of what Brzezinski calls the global political awakening. "For the first time in history," he contends, "all of the world is politically activated . . . creating massive intolerance, impatience with inequality . . . jealousies, resentment, more rapid immigration." These demands for dignity and higher living standards (which governments often are unable to meet), coupled with the proliferation of weapons of mass destruction, lead Brzezinski to observe ominously that "today, it's much easier to kill a million people than to govern a million restless, stirred-up, impatient people."

Just came across this breaking blurb in the FT ... more comments forthcoming:

The Tories are cultivating private relations with Gazprom, the Russian gas monopoly, despite David Cameron’s tough public stance on the country’s invasion of Georgia, Alan Duncan, the shadow business secretary, has revealed .

Mr Duncan said it would be a mistake to treat the company as a “pariah”. He revealed that he visited Gazprom this month for the third time, in a bid to build a relationship.

“It’s better to have a scratchy relationship with Russia and hence Gazprom than none at all and ... such relationships could probably be more easily built up in opposition than in government,” he stated.

Russia’s energy minister is discussing ways in which the country’s oil reserve could influence global oil prices. Mosenergo will create its own engineering firm to handle turbine construction for Russian energy companies including Gazprom. Dresdner Kleinwort won’t reveal why it is cutting its coverage of Russia’s oil and gas sector. Russia is ‘wielding enormous leverage’ in disputes over the Iranian and North Korean nuclear programs. The high cost of energy on global markets ensures that the Russian economy has a solid foundation.

Arkady Dvorkovich, the Kremlin’s top economic aide, is optimistic about Russia’s future position on the global economic stage, emphasizing the currently shaky US situation. Alfa Bank and Uralsib have cut their growth predictions for next year. Prime Minister Putin is concerned that vulnerable banks could be the subject of hostile takeovers. President Medvedev insists that plans to modernize the army will not be affected by the economic crisis. How will Russia attract long-term investors? Nasa could be set to purchase Russian spacecraft. Yulia Latynina sees government support for the Russian stock market as a code for ‘money laundering’. A temporary ban on short sales has been lifted. Highland Gold, backed by Roman Abramovich, seems to be surviving the current slump. Transmashholding’s deal with Canada’s Bombardier has fallen through over a pricing dispute.

TODAY: Putin pledges South American support, Russia offers $1 billion loan to Venezuela; former Soviet states urge UN and Nato vigilance, tensions continue on both sides; Ukraine could charge Russia for use of Black Sea port; Communists displeased over Solzhenitsyn tribute.

Prime Minister Vladimir Putin demonstrated his willingness to prioritize relations with Latin America as it was revealed that Venezuela would receive a $1 billion Russian loan to fund arms purchases. President Dmitry Medvedev has hinted that the presidential role carries too much power. Putin apparently thinks that the World Trade Organization has lost the desire to accept Russia as a member.

In a move likely to further aggravate Nato, Putin is calling for an open border between Russia and South Ossetia. Former German Chancellor Gerhard Schroder has warned Nato that a membership invitation to Georgia could lead to a war with Russia. The US is continuing to make threats to Russia over troops still stationed in the breakaway regions of Georgia, but what of Russian resentment stemming from the war?

Watch CBS Videos Online

A few days ago we ran a translation of an important article from Nezavisimaya Gazeta about a shift in the Russian government's attitude to relations with the West. Then today, this from the Financial Times:

Dmitry Medvedev on Thursday unleashed unusually harsh criticism of the Kremlin’s overly centralised system of decision making, indicating the Russian president was dissatisfied with his government’s own crisis management skills after the Georgia crisis and recent financial market turmoil.

Speaking to officials in the eastern province of Kamchatka he said: “It is too bad when all decisions, including those on operational issues, are made by the president. That means we do not have a system of management.”

[Editor's note: Andrei Novikov is a Russian journalist, who at one point was subjected to involuntary psychiatric confinement after publishing articles critical of local government. His case first rose to international attention on this blog and was supported by Reporters without Borders. From time to time, he contributes opinion essays to us. Below he explores some of the tricky issues of the ceasefire agreement between Russia and Georgia.]

A GAME OF BILLIARDS IN THE BLACK SEA?
The Medvedev- Sarkozy plan may collapse…

By Andrei Novikov, Independent Journalist

The war in Georgia is turning more and more into a war around Georgia, a gradual internationalization of the conflict is taking place. America is getting good and ready very slowly, and will be getting good and ready for another year yet. The real outcome of Russia’s adventurism in the Transcaucasus became the rallying together of the countries of Eastern Europe, the Baltic and Ukraine, who felt a threat to themselves. The creation of the long-awaited Black Sea-Baltic belt, from the Baltic States from the Black Sea, which surrounds Russia. Yet another consequence of the war could become a sharp divide in society itself within Russia.

Not the right look

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

Once upon a time, back in the days when I was a military journalist, on one of the ships of the Pacific Fleet I observed the following picture: An admiral stepped onto the ship’s deck. He was met by the ship’s deputy commander for the political unit (there used to be a position like that in those days, simply referred to as “zampolit” [an abbreviation equivalent to “DepPolit” in English—Trans.]). I knew the zampolit (let’s call him Anatoly) well – he was a principled and decent young man. The admiral immediately started to rant, the moment he set foot on deck: you’re doing this all wrong, and this is bad too... Anatoly explained that the ship was in port for a major overhaul, all life-support systems had been turned off, and therefore there was only so much that could be done to keep things shipshape. Realizing that he had been in error, the admiral thought for a moment, and then suddenly turned and asked the zampolit: “And why isn’t your hair cut?” Anatoly, apparently, hadn’t expected such a radical transition from one topic to the next, and he hesitated with his answer. The admiral went off on all cylinders: he now howled at the officer for not having his hair cut. He had already completely forgotten about the disorder on the ship.

This ability of some officials to seize upon something that has nothing whatsoever to do with either the matter at hand or with the law continues to – no, not amaze me, but to shock me.

Photo: FSIN general Oleg Filimonov (source)

Georgia's President Mikheil Saakashvili goes on Fox News Channel for an interview Neil Cavuto, and quickly finds himself pressed up against a wall to declare his preference for the Republican ticket over the Democratic. Doesn't Cavuto know who the Kremlin wants to win? Saaskashvili makes a narrow escape from the questioning, but check out the transcript below for some very awkward and funny moments (though probably not as cringe-worthy as this one). You can see that Cavuto smells blood after the president describes Biden as "smart" and Palin only as "delightful."

SAAKASHVILI: Well, first of all, I met both of them. I mean, Joe Biden is a longtime friend, amazingly smart guy, who gets very good perspective on Georgia's situation.

I met Sarah Palin. She was wonderful. She was absolutely delightful.

CAVUTO: Did you have or get a sense of any of those doubts that some of your colleagues at the U.N. have?

SAAKASHVILI: Look, I don't know who was — I mean, I — first of all, I have huge, you know, trust in America's people judgment. That's why America is so attractive for us, that this is elections. You know, people have wise judgment. And, in the end, they will decide.

And, so, I can hardly comment on individual candidates, at least beside the things what I have said.

But it's very important to remember that, when Ronald Reagan was coming in, everybody was saying: "Who the hell is that guy? He doesn't know anything about politics."

A couple interesting pieces out there today on the Russian market jitters and what the falling price of oil is exposing.

First, from CFR.org:

In fact, the 2008 crisis bears several similarities to the economic breakdown that unfolded almost exactly one decade prior. The first and most obvious is the rapidly plummeting price of oil, the commodity on which Russia's economy floats. While oil prices currently remain well above the lows of a decade ago, current prices have lost significant ground since their July peak of over $147 a barrel, hitting a low in early September of just over $90 (CNN). This sharp volatility proved unnerving for Russia, which produces more oil than any country other than Saudi Arabia. Moscow also relies on exports of natural gas and other commodities, the prices of which have also plummeted from summer highs. Additionally, analysts say the short-term outlook for commodity prices is anything but certain. Major producers worry that failing financial institutions, which had speculated heavily in crude and pushed up prices, could now be forced to rapidly unwind those positions, potentially leading to further price declines. Anders Aslund, a fellow at the Peterson Institute for International Economics, wrote in the Moscow Times that this phenomenon could stretch beyond oil and lead to broader withdrawals of investments in Russian markets.

And from the Financial Times:

The fall in the oil price from a July high of $147 a barrel back to $100 has helped expose a fragility in heavily indebted Russian companies, banks and individuals leading to a sudden process of deleveraging and credit restrictions similar to that which has stalked US and European economies for the past year.

In this speech Sen. Joe Biden talks about Barack Obama's instincts on Russia, emphasizing the importance of a strong alliance with Europe to counter Russian aggression in its near abroad. Biden also raises the issue of decreasing Europe's dependency on Russian energy, but insists that open and cooperative dialogue with Moscow must continue to forge a successful relationship.

One would think that Azeri President Ilham Aliyev would be pretty pleased to receive Vice President Dick Cheney's official delegation a few weeks ago - it was after all the highest ranking U.S. politician to ever visit the country. However that's not quite how it played out.

Amid numerous reports that the meetings in Baku were cool if not cold, Aliyev additionally snubbed Cheney by not showing up to the airport to welcome him, and then immediately telephoned Medvedev right after their meeting to explain what the U.S. energy strategy is for the region. This made the mercurial vice president so angry that he apparently skipped town on a dinner to be held in his honor.

The Russian press has been having a field day parading the "failure" of the Cheney delegation to hardball the Azeris into energy supply commitments to the Nabucco pipeline following the war in Georgia. Apparently Cheney's famously subtle soft power approach and velvet tongue didn't really win over anybody in Azerbaijan.

Today, this impression of failure was made official as Baku announced that it will reduce dependence on Trans-Caucasian pipelines and send more oil up through Russia ... a development which makes the whole invasion worthwhile for the Kremlin. Elhar Nasirov, the vice-president of Socar, Azerbaijan's state oil company, seemed aware of how alarming the announcement was: "We don't want to insult anyone . . . but it's not good to have all your eggs in one basket, especially when the basket is very fragile."

We don't think this is anything to really worry about yet. The Azeris simply recognize a lame duck presidency when they see one, and will wait to negotiate with the next administration. Like any successful dictator, Ilham Aliyev is master at playing the great powers off each other, and will not find any long-term advantage in turning his country into a Gazprom subsidiary (leave that to the Italians).

In case anybody forgot what the Ukraine, Poland, and the Baltics think about the Russian invasion of Georgia, there was a strong reminder this week at the UNGA:

Victor A. Yushchenko, the president of Ukraine, told the General Assembly that his country condemned Russia’s action and he hinted that Ukraine would not succumb to Russian intimidation over its ambition to join NATO.

“It is essential to turn down blackmailing and threatening vocabulary,” Mr. Yushchenko said.

He said Ukraine opposed all acts of aggression in the region, as well as Russia’s recognition of independence for the two separatist Georgian enclaves, South Ossetia and Abkhazia. The “renewal of the rhetoric of the cold war provokes our deep concern,” Mr. Yushchenko said.

Azerbaijan is sticking to plans to reduce oil exports to the EU and increase shipments to Russia and Iran, as the South Caucasus country - home to another Russia-influenced frozen conflict in Nagorno-Karabakh - seeks to spread risk; There is continued speculation that Robert Dudley would quit BP by year’s end mounted as he was set to attend his last board meeting as chief of TNK-BP, BP’s Russian joint venture; PM Putin stated that Igor Sechin, deputy prime minister of Russia, will head the governmental commission for the development of power generation; Sechin added to journalists that Oil companies are prepared to supply diesel fuel and fuel oil to power plants at fixed prices.

Russia's ally Kazakhstan has pulled out of business deals worth billions of dollars in Georgia, a state official said today; Aerospace and transport technology firm Bombardier has stalled talks to acquire a stake in Russian railway engineering firm TransMashHolding; Russia's dollar-denominated RTS index fell fell just 1% to 1,299.97; Sberbank and leading Russian brokerage Troika Dialog both rejected reports on Thursday that the state-run retail savings bank had purchased the investment company; Russia's Finance Ministry today stated that the liquidity situation was stabilizing and would improve; President Medvedev is having some fun criticizing U.S. management of the economy, remarking that the plan amounted to a "partial nationalization of their financial sector."

TODAY - Russia's foreign minister says the country has not become isolated since its war with Georgia; Medvedev to modernise its armed forces, says Russia not be affected by the financial crisis; OPEC head Chakib Kheli says Russia is welcome to join the cartel, another Chechen murdered, UK hopes Russia will reconsider recognition, and Russia will modernize Nicaragua's military.

Moscow's chief diplomat commented that contrary to claims that Russia has become a pariah since the invasion of Georgia, they are feeling quite popular at the UN General Assembly. "I have (had) more requests for bilateral meetings during the current session than in recent years," he said.

Lavrov reiterated that Russia had only intervened to protect the South Ossetians from being killed by Georgian attacks. He acknowledged however, that Russia had originally considered the idea of preemptively attacking the Georgians, which he claimed could have saved several hundred Ossetian lives.

Russia has chosen to "fight back" against U.S. criticism by refusing to attend talks at the U.N. on Iran's nuclear issues. Lavrov laid it bare during a speech at the Council on Foreign Relations: "You cannot really have it both ways, punishing Russia by canceling the forums that are very important for the entire world at the same time demanding Russia's cooperation on the issues that are of importance to you."

Sen. John McCain's nominee for Vice President Sarah Palin has really turned the Russia foreign policy thing into a meaty issue with claims of expertise given her governorship of Alaska - though probably not in the way that will foster constructive or new ideas for any of us policy wonks.

We don't think too many informed people are buying the argument that she is a closet Kremlinologist, but then again, the audience they are asking to believe that claim may not be quite so foreign policy savvy. Furthermore, there is something to be said for the value or lack thereof of "experience" with Russia.

So as she takes her first foray into diplomacy with meetings with Afghan, Colombian and other world leaders in New York (which is only marginally further away from Moscow than Wasilla), what, exactly, will be her role? In an article in the IHT, it appears that McCain's top Russia guy Steven Biegun accidentally lets it slip that Gov. Palin will more or less just sit and listen and develop relationships while policy is handled behind the scenes. This seems like quite the gaffe:

The Wall Street Journal has a report today about how the Russian military incursion into Georgia in August set out to do more than just annex territories, but also damage the Georgian sense of national identity and pride. For a country which seems to always be talking about its "humiliation" at the hands of the West with the fall of the Soviet Union, it seems that these kinds of attacks on symbols of national patrimony were entirely avoidable, and in the end undermine Russia's claim for the moral high ground in the conflict.

Thus far the destruction includes severe bomb damage to the Museum of Prince Matchabelli, which housed the personal effects of the Georgian royal family's famed anti-Russian rebel, who was native to the region; destruction by arson of the church of St. George in Sveri, a rare 19th-century wooden structure; shelling damage to the 12th-century Ikorta church with its graves of revered Georgians; and extensive bomb damage to the monastery complex of Nikozi Church -- dating from the 11th century, it is perhaps the most important site of all. This is an extremely selective list, but it gives the reader an idea of why the area matters deeply to Georgians, and in a perverse way to Russian-backed militias allowed to plunder as they drove out residents at gunpoint and, according to eyewitness accounts, began looting buildings. Satellite imagery shows that specifically Georgian villages were extensively torched and in some places are being bulldozed flat.

The Kommersant has featured an interview with former director of the International Energy Agency Claude Mandil, who believes Nabucco can only be implemented with Russia, and not against it, but that the war in Georgia has "somewhat clouded relations between Russia and the EU". Russian power producer OGK-2 is seeking a $1.6 billion capital increase to fund the purchase of coal deposits, as "other forms of funding dry up amid the credit crisis", the company's head stated today. OAO Rosneft, Russia's largest oil producer, rose as much as 6 percent to 210.90 rubles today, while OAO Lukoil, the biggest non-state oil company, gained 0.5 percent to 1,657.73 rubles on the Micex. The yield on Lukoil's 7.1 percent bond maturing in 2011 advanced 104 basis points to 11.16 percent today.

OAO Gazprom climbed in Moscow trading after a newspaper said the state-run company has implemented plans to pay back 230 billion rubles ($9.2 billion) of debt by the end of the year. Gazprom, whose debt bill exceeds $50 billion, "has not suffered in the global financial crisis and is confident it will be able to fund all its projects in due course", its chief executive was quoted as saying in business newspaper Kommersant today. That said, its capitalization almost halved to $193 billion last week with the dive in the Russian share market. Russian tycoons Vladimir Potanin and Mikhail Prokhorov are close to a final asset split deal involving stakes in metals giant Norilsk Nickel and gold miner Polyus. Eclipse Aviation, US maker of four-seat light private jets, said it had reached an agreement to begin assembly of the aircraft in Russia from 2010. The supervisory board of the Russian state bank Vnesheconombank, chaired by the Russian prime minister Vladimir Putin, had approved construction of a plant in Ulyanovsk to begin assembly of the Eclipse 500.

TODAY: Russia's permanent mission at NATO headquarters today stressed to cease slowing the work of the Russia-NATO council; Venezuelan President Hugo Chavez will sign an array of political and financial agreements and discuss the possibility of a joint Russian-Venezuelan bank; Russian technicians to help direct China's first-ever spacewalk; Kremlin and the Parliament of Abkhazia ratify treaty.

Russia's permanent mission at NATO headquarters in Brussels urged the military alliance today to stop hindering the work of the Russia-NATO Council."The Russia-NATO Council was formed as a mechanism for political dialogue on current and especially urgent issues of European security," the Russian mission stated today."We regret yet another display of capricious politics and call upon our partners to take this matter seriously".

Russian dignitaries strongly believe there is the sense of fragility in today's system of European security and its failure to meet current threats and challenges."In these circumstances, the discussion of a new model for European security is extremely urgent," the statement went on to state.

Venezuelan President Hugo Chavez will sign a collection of political and financial agreements during his upcoming visit to Russia.

Moscow is abuzz over a very interesting piece that appeared on Friday in Nezavisimaya Gazeta. The paper reported that the Kremlin does not intend to escalate the current state of confrontation with the West in general and the United States in particular. According to the article, in the near future a package of measures will be implemented with the goal of improving relations and easing tensions between Russia and its Western partners. The information is attributed to several sources within the presidential administration.

Apparently, the decision to shift policy was influenced in part by Russia's isolation in its recognition of Abkhazia and South Ossetia. The West's restraint with respect to sanctions against Russia was understood as a signal that the West ultimately does not want to raise the stakes over Georgia. Furthermore, the severity of the current financial crisis in Russia has shown that its economy cannot flourish in isolation.

Nezavisimaya Gazeta tells us that an informal working group has been established, headed by Alexei Gromov, Deputy Chief of Staff of President Medvedev's Executive Office. It is believed that Gromov was behind the establishment of the "Russia Today" TV channel, aimed at delivering Russian viewpoints to non-Russian audiences, and the "Valdai Discussion Club" annual meeting of foreign journalists and political scientists with the Russian leadership.

The working group has had certain parameters set for it. For example, any climb-down on Georgia is excluded, as would be any significant concessions in "the economic sphere", such as ratification of the Energy Charter Treaty.

Nezavisimaya Gazeta says that the Kremlin may even liberate a number of Russian prisoners viewed in the West as political prisoners. However, according to the article, any such moves are unlikely to affect Mikhail Khodorkovsky.

The article further states that while appreciated at home, Foreign Minister Sergei Lavrov is perceived by some as having gone too far, for example in his heated exchanges with David Miliband. Lavrov now personifies the growing Russia-West confrontation. As a result, he may be moved from the Foreign Ministry to another position, perhaps given a vice premiership, allowing someone else to become the face and voice of Russian foreign policy. Gromov is cited as a possibility.

The article concludes saying that a new era in Russian foreign policy may soon emerge, involving a constructive partnership with the West. In this new era, Russia will be a strong counterparty, not weak and timid.

So a very interesting article, which is not quite consistent with the theme of the anti-Kudrin attacks that appeared in the Russian press at the height of last week's stock market crash. Evidently, the clan wars continue.

Holy cow - you've got imagine that any government who lands a deal with Venezuelan President Hugo Chavez has got to cringe a little bit with the hyperbolic statements he tends to make afterward. This one comes from the Wall Street Journal report on the Venezuela-China agreement to build two oil refineries ... a creeping relationship we've been warning about for a while.

"China is showing the world that it isn't necessary to harm anyone to be a great power. They are soldiers of peace," he said, according to a Venezuelan government statement. Asked about his absence from talks this week on the sidelines of the United Nations in New York, Mr. Chavez said: "It's much more important to be in Beijing than in New York."

Judge not, lest ye be judged

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

"…Right after Medvedev came to power, I have noticed signs of changes. Previously, for such an interview, I would have been sent to the dungeon. But from May to August they have not applied such harsh measures towards me. Nevertheless, the denial of my parole application shows that there is still a long way to go before there are any major changes…. My parole application was denied on the pretext that I had not mastered the skills of a seamstress! Is this not a mockery of justice?"

From the interview of M.Khodorkovsky to the newspaper «Figaro», September 2008. [The above is a translation of the Russian version of the interview, which differs slightly from the published French version—Trans.]

A normal interview. You can see a real living person through it.

This person noticed signs of changes after Medvedev arrived. I for one, haven’t seen squat. At any rate, not changes for the better. To me, for example, a sign of these changes would be the release of Mikhail Borisovich. But Medvedev didn’t release Khodorkovsky. I think that none of this has anything at all to do with Medvedev in the first place: everything, just like before, is decided by Putin’s team (not even he himself, although the 2000 Putin and the 2008 Putin are like night and day).

According to newspaper reports and my sources in France, the recent negotiations between Nicolas Sarkozy and Dmitry Medvedev over Georgia were – to put it mildly – "very strained."

Several insiders with whom I've spoken have quoted Sarkozy as belting out “let’s get out of here; its not negotiable” in the middle of the discussions. The rest of the story I have heard through the grapevine goes like this: Apparently, shortly after the talks began Medvedev left the room, leaving the French president alone with the negotiators. Four hours into the talks with the Russian president still nowhere in sight, Sarkozy lost his temper. With the protocol snub of having been left with Russian negotiators as his interlocutors, the French president stood up and told his team they were walking out. Someone frantically went looking for Medvedev, who came back from whatever it was that had taken him away from Sarkozy. Medvedev arrived to find a very angry Sarkozy. The Russian president appealed for calm, and the negotiations then continued. They finally then hammered out their accord. Sarkozy looked and sounded particularly testy at the news conference following the negotiations; all this might just explain why.

Of course I can't say that I was present to see this all with my own eyes, but so far the French government has not issued any correction or comment about the Le Figaro piece...

Most observers are expecting Sen. John McCain and Sen. Barack Obama to use the first foreign policy debate this coming Friday to discuss U.S. policy toward Russia, and most likely highlight their (at times passionate) disagreements. What many may not realize is that there are still some areas of general consensus by both candidates in this area, as shown by Senate Resolution 322 (DOWNLOAD HERE), signed by Senators McCain, Obama, and Joe Biden, which expresses support for Mikhail Khodorkovsky and other political prisoners who have fallen victim to the failures of Russia's judicial system.

Today we have sent out a press release (see below), to remind everyone of this 2005 resolution, and urge the candidates and U.S. voting public not to forget the plight of those trapped in the gulags of contemporary Russia.

Realistically, we all recognize that U.S. policy toward Russia is an incredibly challenging subject for both the candidates to discuss in light of the conflict in Georgia, involving complex and sensitive issues ranging from energy security to nuclear proliferation. However, within the cacophony of urgent issues surrounding U.S.-Russia relations, we must not lose sight of these kinds of critical barometers measuring Moscow's willingness to repair its international reputation and return to the rule of law - a desire expressed by President Dmitry Medvedev himself.

This becomes all the more important because it would cost Russia nothing to release these prisoners (apart from bringing accountability to a few corrupt officials), and they would have only everything to gain in terms of their global reputation. Russia can be a difficult country for Westerners to understand, but today more than ever the best measure of change is when we can observe decisions which require courage. At the end of the day, after all the hype and hyperbole we can expect to see in the coming months, there is simply talk vs. action. For Russia's leadership to take action to reform the legal system, prevent political interference, and release political prisoners would send an important signal that it is truly committed to building trust with its own people and the international community.

Until then, talk is just talk.

Ukraine has started electricity imports from Russia as domestic thermal power plants experience problems with coal supplies. The state company Petroleos de Venezuela S.A. announced a new agreement with Gazprom concerning the Russian monopoly’s first foreign project to produce liquefied natural gas. Gazprom will invest about $850 million in the course of seven years and receive the income from the sale of 700,000 tons of liquefied natural gas, that is, about $420 million at current prices, per year. Ukraine's President Viktor Yushchenko urged his country's government to sign a contract for natural gas shipments from Russia's OAO Gazprom for domestic use in 2009.

Russia's stock markets extended losses Tuesday as the Standard & Poors ratings agency revised its long-term outlook on seven Russian banks over liquidity concerns. Eurocement Holding today purchased6.52% of voting shares of Switzerland's Holcim - the world's second largest cement producer - on the open market. The Dubai government's sovereign wealth fund, Dubai World, has pulled out of a $5.3 billion deal to buy control of Russian power firm OGK-1 due to poor market conditions, stated a source. Onexim Group today acquires a 50% stake in Renaissance Capital investment bank for $500 million, director general of the company said yesterday. The president of the company Mikhail Prokhorov stated that Renaissance Capital is planned to become the basis for a global investment bank.

TODAY: Georgian authorities to protest to the European Union about violations of the Sarkozy-Medvedev agreement by Russia; Corruption in Russia is at its worst for eight years, watchdog Transparency International states; Georgia states it had shot down a Russian reconnaissance drone over Georgian territory just south of South Ossetia; Venezuelan President Hugo Chavez arrives in China for a three-day state visit, part of a world tour including Russia, Portugal and France; .

Georgian dignitaries today propose to protest to the European Union about “violations of the Sarkozy-Medvedev agreement by Russia.” Tbilisi has stressed that the agreement was violated in the village of Khurcha, a region near the border with Abkhazia, where one Georgian policeman has died and two were wounded in gunfire issuing from as of now unknown sources. Shota Utiashvili, head of the Georgian Interior Ministry information department, told Kommersant that "on Sunday night, a diversionary group crept up to the village from the direction of the Russian checkpoint located nearby and it opened fire with snipers rifles, machineguns and grenade launchers."

Ruslan Kishmaria, Abkhazian presidential representative in Gali District, responded in stating that "this was an internal Georgian clash and the Abkhazian side has no relation to it.”

Watchdog Transparency International said on Tuesday that corruption in Russia is at its worst for eight years, stoking investor fears just a week after Russian markets suffered their biggest losses in nearly a decade.

The annual survey issued by the Berlin-based watchdog put Russia in 147th place alongside Bangladesh, Kenya and Syria.

Below Richard Danzig of the Truman National Security Project discusses the available carrots and sticks in U.S.-Russia relations following the conflict in Georgia. The speech is a few weeks old, but still interesting.

Opinio Juris is one of my favorite blogs, and just last week I submitted a comment piece for the Russian online journal Gazeta.ru dealing with the exact same subject as this post about Carl Schmitt:

My reason for moving away from Schmitt as a means of explaining or understanding political or legal theory in America is that the connection is simply historically too contingent. Schmitt’s clarity as to things like emergencies can be found in many forms of philosophical discourse, and I think it is more useful to locate them in sources that have a greater historical connection to the intellectual roots of the debates in America, if the purpose is to understand those debates in an American context - Thucydides, or even Machiavelli. Put another way, I don’t really think that Schmitt is comprehensible outside the context of Weimar. Nothing is weirder or more intellectually misplaced to me, these days, than to read somewhere about the “Schmittian” approach to emergency in the Bush administration, for example. No one in the Bush administration had ever read Schmitt, ever heard of Schmitt, and to describe the approach as Schmittian adds, in my view, very little intellectually to understanding what it thought it was doing, or what it was doing. This is not to suggest that it did not have a strongly held view of the role of executive power, particularly in an emergency, nor is it to deny that Schmitt had interesting things to say about emergencies and parliamentary democracy. But the one does not really connect with the other, at least not in the way that makes it useful for American legal theory. We are not Weimar.

If this means that I think there are limits on ahistorical application of ahistorical political theory, well, at least in the context of a philosopher who cannot help but be located in everyone’s brain as forever about Nazis and Weimar, yes.

The following is a translation of a rare interview with Mikhail Khodorkovsky by the French newspaper Le Figaro. See the original source here.

“When Russia is wrong, Europe must say so”

Interview by Laure Mandeville
Le Figaro
September 20-21, 2008

INTERVIEW – “Le Figaro” has obtained the first interview granted to the French press by Mikhail Khodorkovsky, the Russian tycoon imprisoned in Siberia. His lawyers provided us his written answers to our questions.

For five years, Mikhail Khodorkovsky, the former oil tycoon who made his fortune in the tumultuous and dangerous waters of the 1990s, has been serving a nine-year prison sentence following a highly politicized trial and conviction for “grand scale tax evasion”.

For some of you who regularly read this blog, you may want to file this note under "Gazprom - Preemption" - because it's a topic we have seen come up time and time again.

We have written quite a bit in this space about Russia's energy interests in Bolivia, but I find it particularly interesting to the note the devastating timing of the latest announcement that they are forming a new $4.5 billion joint venture in the tumultuous Andean country with Total and Yacimientos Petroliferos Fiscales Bolivianos (YPFB), the state-held entity.

You see, what is extraordinary about this major energy deal is that Gazprom is pushing it through at precisely at a time in which nearly any other rational minded foreign investor would be running for the hills. Bolivia is the midst of one of President Evo Morales's biggest political crises (and there have been many), as an arrest warrant was issued for Governor Leopoldo Fernandez of the Pando region following weeks of riots between pro-government supporters and opponents resulting in up to 18 deaths and hundreds of wounded. Although crisis talks are now underway between government and opposition, many believe that President Morales is facing a "brewing civil war."

This is a classic example of a Gazprom business announcement which demonstrates the value of what I call "political currency."

Tony Halpin's new article in the Times of London probably carries one of the paper's less tactful headlines today: "Russia engages in 'gangland' diplomacy as it sends warship to the Caribbean."

Halpin reports: Deputy Prime Minister Igor Sechin made clear that Russia would challenge the US for influence in Latin America after visits last week to Venezuela, Nicaragua and Cuba. He said: “It would be wrong to talk about one nation having exclusive rights to this zone.” Moscow was infuriated when Washington sent US warships into the Black Sea to deliver aid to Georgia after the war. Analysts said that the Kremlin was engaging in gunboat diplomacy over the encroachment of Nato into Russia’s former Soviet satellites of Georgia and Ukraine.

However of far more significance in my opinion is Venezuela's recent military and energy dealings with China, which is tremendously more serious than a symbolic series of war games with the Russians. The Russians are looking for short-term leverage in response to events in the Caucasus, while the Chinese typically undertake these types of relationships with long-term position in mind. This is a real foreign policy worry for Washington.

You can practically listen to the crumbling sound of U.S. influence falling apart in Latin America, especially in the advantageous moments of the final days of a lame duck presidency.

Dandelion Salad points to this video of former Secretary of State Colin Powell speaking about the war as a "predictable" conflict that could have been avoided. I'm less inclined to believe that the actual substance of Powell's arguments is all that different from McCain's statements - though clearly only one of them is trying to win an election.

I've kept mostly mum about Vice Presidential nominee Sarah Palin's ongoing claims of being an expert on Russia affairs because 1) so many others out there are doing a pretty good job tearing this narrative to shreds, and 2) because it is simply a patently ridiculous claim that any given Alaska politician automatically gets to put on the Kremlinologist hat whenever necessary (furthermore I wouldn't say that many governors of Texas are exactly high regarded for their knowledge of Mexican foreign policy issues).

I think it's quite an innocent line for the campaign to push - what candidate for office doesn't trump up every experience that they can point to? But what's interesting here is that they are still clinging to the Palin-as-Russia-expert line despite all the open derision, and continuing to push the argument despite clear evidence that nobody is buying it.

This one comes from the CBS From the Road blog:

On a clear day, it is, in fact, possible to see the unpopulated Russian island of Big Diomede from the Alaskan island of Little Diomede, which is inhabited by a small native population. Still, Palin's hometown of Wasilla isn't much closer to the Russian capital of Moscow (4,318 miles) than New York City is (4,663 miles).

But rather than downplaying Palin's suggestion that she possesses special knowledge of Russia, the McCain/Palin campaign has continued to tout Alaska's proximity to the world's largest nation as a feather in her cap, without offering any evidence of actual experience Palin has in Russian affairs.

The Boston Globe appears to believe that the hard line being pushed by Secretary of State Condoleezza Rice on Russia is inappropriate and unnecessary, especially when compared to the realist assessment of Minister of Defense Robert Gates, who apparently believes that Russia poses no military threat...

Defense Secretary Robert Gates offered a more dispassionate view the same day, noting that there is no real military threat from Russia. NATO countries should seek a prudent "middle ground" in responding to the war in Georgia, Gates said, and they should avoid sending provocative signals to Moscow. Rice may be the Russia expert, but American policy would be better shaped by Gates's unflustered view of Russia.

I'm not sure what's more strange about this op/ed: the portrayal of Gates as the dovish peacenik despite his clear awareness of Russia's energy assault on Europe, or the assumption that treating Russia as exceptional case and responding softly would actually produce the future policy outcomes the West is looking for. Having internal competition between the State and Defense Departments over Russia policy is an ideal goal for the Kremlin to pursue.

Ukraine’s economy is suffering even more than Russia’s, partly thanks to the latter cutting its energy price subsidies. Nigerian militants have called a ceasefire, potentially halting attacks on oil and gas facilities in the country which have seriously damaged oil production for many major companies. Gazprom has signed a deal to develop an offshore gas field with Petroleos de Venezuela. BP’s appointment of a new Russia head at TNK-BP apparently signals that it intends to take a ‘tough new line’. A dispute over pipeline expansion could lead BP to sell its stake in the Chevron-led Caspian Pipeline Consortium. The Russian government is planning to implement further tax cuts for the oil industry in 2010.

The Finance Ministry’s original list of three banks that would receive emergency budget funding has stretched to twenty eight, to offset damage done to liquidity in the banking sector by last week’s stock market tumbles. Alexei Kudrin has revealed that the financial crisis may have cost Russia as much as $15 billion in capital flight thus far. The crisis may provide oligarchs with prime opportunities for buying cheap shares, suggests this report. The UK Telegraph gives a summary of countries affected by the crisis, hinging Russia’s recovery on the price of oil. Read the FT on Russia’s ‘cooling’ car market, which could be weakened further by the falling oil price. Read an interview with the owner of steel company Severstal, who insists that Russia’s relations with the West remain intact.

TODAY: Putin ‘defiant’ on troops in breakaway regions, signs new agreements with France; Medvedev responds to Condoleezza Rice; EU struggling on human rights issues against Russia. Aslamazyan to pay fine and go free; cartoons banned. Yushchenko on Russia.

Russia’s decisions on troop numbers in the former Georgian regions of South Ossetia and Abkhazia will be taken ‘defiantly’, without consulting the West, which has urged Russia to withdraw completely from the areas.

Russia and France strengthened their cooperation over the weekend, signing agreements on education, renewable energy and Kyoto protocol. France’s Prime Minister, François Fillon, who met with Prime Minister Vladimir Putin in Sochi, said that EU-Russia talks could resume next month. US Defense Secretary Robert Gates has played down the image of Russia as a threat, balancing out some of Condoleezza Rice’s more incendiary statements. President Dmitry Medvedev has responded mockingly to Rice’s comments on Russia’s legal system.

Aluminum cucumbers

Grigory Pasko, journalist

In the September 19 issue of the newspaper «Moskovsky komsomolets» is printed an article «And on the seacoast by the bay Putin walks…» Sub-heading - «At the economic forum in Sochi they acquainted the premier with a mermaid». [Even the most illiterate Russian would instantly recognize these as references to «Ruslan and Ludmila», an epic fairy tale in verse written by Alexander Sergeyevich Pushkin, universally lauded as the greatest Russian who ever lived: the tale opens on a seacoast by a bay, with a talking cat walking around an oak tree to which it is chained, and a mermaid perching improbably on one of the tree’s branches. It does get better…—Trans.] What the article speaks of is that after his speech at the forum Putin set off to inspect stands with models of various construction investment projects. The author precisely describes the act of the passing of the «tsar» surrounded by his retinue along the row of models and people. The retinue servilely clarifies where is whose model and who is standing behind it. The «tsar» nods the head and benevolently hears everyone out.

Here’s how Putin’s encounter with Kadyrov is described.

From Anders Aslund in the Daily Star:

Putin continues to deny that Russia's financial problems were caused by his war in Georgia, and it took the Central Bank more than a month to provide substantial liquidity injections. But it was already too late, as the liquidity problem had become a matter of solidity. Overtly, Russian stock valuations look attractive, but by heaping abuse on foreigners, Putin has scared the foreigners away, while Russian investors have no money at hand. With every statement, Putin erodes Russia's political risk profile.

As is customary, many Russian businessmen pledged their shares to borrow money for stock purchases. As the stock market dives, they receive margin calls and are being forced to sell their shares at ever-lower prices, causing the stock market's downward spiral to accelerate. In Soviet fashion, the Moscow stock exchanges closed for four days in a row in the week of September 15, because stocks plunged too fast. By denying the problem, the authorities have aggravated the lack of confidence.

It seems that Vladimir Putin has a thing or two to teach Venezuelan President Hugo Chavez, and vice versa. The expulsion of Jose Miguel Vivanco of Human Rights Watch from Venezuela is eerily familiar to Russia-watchers, who recall the fiasco involving HRW executive director Kenneth Roth. Roth was denied a visa to enter Russia after publishing a critical 72-page report on the country's human rights situation under the Putin administration, and Vivanco has similarly been ejected from Venezuela after publishing the tome "A Decade Under Chávez: Political Intolerance and Lost Opportunities for Advancing Human Rights in Venezuela."

As you may imagine, HRW had little positive to say about the condition of human rights and liberty in either petro-authoritarian state. The executive summary of the report states: "President Chávez has actively sought to project himself as a champion of democracy, not only in Venezuela, but throughout Latin America. Yet his professed commitment to this cause is belied by his government's willful disregard for the institutional guarantees and fundamental rights that make democratic participation possible. Venezuela will not achieve real and sustained progress toward strengthening its democracy—nor will it serve as a useful model for other countries in the region—so long as its government continues to flout the human rights principles enshrined in its own constitution."

I believe this is a very disappointing development, and I hope that Vivanco is able to continue his good work in Venezuela in the future. Government leaders should not fear these types of civil society groups, even when they strongly disagree with the conclusions of their studies.

This one comes from Bellona about our Russian correspondent, Grigory Pasko.

Pasko case to raise complex issues of law and fact in European Human Rights Court

By Charles Digges

The European Human Rights Court has found in favour of hearing a complaint filed by Grigory Pasko, a Russian naval journalist who was jailed in 2001 and later freed on parole, and whose reporting shed a dark light on the careless radioactive waste handling practices of Russia’s nuclear Pacific Fleet.

The European Human Rights Court has found the core issues of the complaint filed by Pasko against Russia to be admissible for a hearing on their merits. The hearing is expected to take place in the third quarter of 2009.

The Court held in its unanimous decision to accept Pasko’s application that his trial in Russia “raises complex issues of law and fact” under Articles 7 and 10 of the European Convention on Human Rights.

The Court will therefore examine whether or not the conviction of Pasko for treason through espionage for having intended to transfer state secrets to Japan was a violation of the basic legal principles, and the result of an ill-founded persecution occasioned by his lawful activities as a journalist.

Continue reading here.

From the Financial Times:

As trading resumed after a two-day closure to halt panic selling, the rouble-denominated MICEX Index surged 28.7 per cent and the dollar-denominated RTS 22.4 per cent, its biggest one-day rise, after the government pledge to boost liquidity by more than $100bn (€70bn, £55bn).

Alexei Kudrin, Russia’s finance minister, defended the support plan for the stock market as preventing the crash spreading to the rest of the economy. The market fall “created problems on the balances of enterprises, in collateral, loans and led to margin calls. It could have grown into a very big system of non-payments,” he said. (...)

In her much-ballyhooed speech before the German Marshall Fund, Sec. of State Condoleezza Rice suggests that maybe Russia shouldn't be quite so proud that Nicaragua and Hamas figure among their only supporters...

One of the best things about being the editor of this blog is that all kinds of people email me interesting stuff to post that often gets missed by the media. Case in point, I've exchanged a few emails with a reader from Tbilisi, who has notified me of some interesting events happening there this week, concerning not Russia's military activities in the country, but rather the businesses and economic interests which piggybacked across the border with the tanks to begin conducting business within Georgian sovereign territory, yet not officially subject to its legal jurisdiction or regulatory oversight.

We report this here because it may be of interest to many of our international law readers who are interested in jurisdictional and regulatory questions in the context of invasion and occupation.

Today at a press conference, Giorgi Arveladze, Chairman of the Georgian National Communications Commission (photographed), announced that his agency has issued a fine of more than $350,000 (500,000 Georgian Lari) to the Russian mobile phone operator MegaFon, which stands accused of illegally operating on the Georgian radiofrequency spectrum without a license. According to the press release from the Commission, MegaFon had previously been operating without license in several areas of South Ossetia, but expanded this coverage following the invasion.

The release also comments that "The Commission also draws attention at the circumstances that, considering the “Megafon”’s economic intervention during the open and direct Russian occupation since August 7, 2008, the company might be involved in the Russian political and military plans. We believe that the illegal and unjustified participation of the private company in the political events is unacceptable and reprehensive."

See after the jump for maps and comments from Arveladze.

[Editor's note: just this week Mikhail Tanich, the poet profiled below by Grigory Pasko, would have celebrated his 85th birthday.]

Mikhail Tanich: «Jail – is the Russian melody…»

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

Over the past 16 years - from 1992 through the year 2007 – there have been more than 15 million people convicted of a crime in Russia. More than one in ten out of a population of 140 million. Nearly a million people per year. Of these, 5 million and then some have been deprived of liberty.

Vladimir Radchenko, first deputy chairman of the Supreme Court (ret.), head of the center of the Institute of Legislation and Comparative Legal Studies under the government of the RF, considers that humanization of criminal legislation and of the practice of its application can not be evaluated simply as a manifestation of liberalism. On the contrary, it is a necessity for the gradual return to health of the social situation in the country.

Procurator-General of Russia Yuri Chaika considers it imperative to change criminal policy in the sphere of judicial proceedings, in order to improve the situation in places of the deprivation of liberty.

Even representatives of the service for the execution of punishments have begun to talk of the imperativeness of changing criminal policy. They are practically screaming that the jails are overcrowded.

Not long before his death, the poet Mikhail Tanich wrote such lines:

Boris Reitschuster, the Moscow correspondent for one of Germany's largest circulation magazines, FOCUS, had the opportunity to visit Mikhail Khodorkovsky's mother, Marina, who continues her son's philanthropy work at a large orphanage they founded, despite considerable political pressures to close the institution down. The following is a translation of his article from the most recent issue of the magazine. (click here to read a 2006 interview with Marina)

Mikhail’s Orphanage

Part of the ex-oligarch Khodorkovsky’s empire was a boarding school - now being run by his mother

Boris Reitschuster
Focus, September 15, 2008, pp.156

The Kremlin took her son away and now she must take care of her other 180 children. “I am always afraid of a closure, particularly so in the summer vacation,” says Marina Khodorkovskaya. The 74 year-old retiree is Mikhail Khodorkovsky’s mother. He was once Russia’s richest man, until he challenged Vladmir Putin and landed in jail in 2003. The fallen oligarch put the children in his mother’s hands; boys and girls who had no parents or came from socially disadvantaged families live in the boarding school. Khodorkovsky founded it in 1993 in Korallovo, a good 50km northwest of Moscow, and continues to finance it despite his imprisonment. The scenes still have not left Marina Khodorkovsky’s. “It was a bit like in the war,” she remembers, as the state began its attacks on Yukos, her son’s oil company, and men suddenly entered the school in combat uniforms and Kalashnikovs.

Garry Kasparov tees off in the Wall Street Journal on Russia's economic crisis:

Dictatorial power demands to expand into every available space. Establishing effective penalties will require great political will, especially in Europe. There Mr. Putin has defenders like Silvio Berlusconi, who boasted last week about how he prevented the EU from levying sanctions against Russia over its actions in Georgia. The Kremlin also has many influential employees, including former EU leaders Gerhardt Schroeder of Germany and Paavo Lipponen of Finland, who both took plum positions with the Russian energy giant Gazprom immediately after leaving office.

With their reliable business partners in the West, the Kremlin has opened up a lucrative market for what could be called democracy offsets. In exchange for oil and gas from Russia, they provide democratic credentials and pretend Mr. Putin and Mr. Medvedev are elected officials rather than mafia bosses.

Until Russia has a government that is accountable to its citizens, no company or individual will be safe here. The silver lining of the meltdown will be the weeding out of so many of the foreign and domestic profiteers who greedily abetted Mr. Putin's drive to turn Russia into a dictatorship. But there are still many who hope that all will be back to business as usual once the dust settles. Apparently they think the show must go on, even though many of the lead actors have left the stage -- and the theater itself is ablaze.

From the Lex Column of the Financial Times:

The crisis has highlighted that Russia is hardwired into the global economy. It cannot escape external factors such as dollar or oil price shifts. And a confrontational foreign policy has a cost in terms of battered confidence and capital flight. That may restrain future aggression. Above all, Russia wants a seat at the top table of world affairs – but its claim to one relies on having a big enough economy.

There may be another restraint: the oligarchs. Putinism was built on the understanding that if tycoons play by Kremlin rules they will prosper. The recent military adventurism undermined that grand bargain. Lower commodity prices, slowing growth, will make it trickier to sustain the gusher of cash into their pockets. Oligarchs have been hit hard by the market fall; the market rescue package came only after a restive business elite made clear its displeasure to the Kremlin. Vladimir Putin’s entrenched power makes more vocal opposition highly risky (as Mikhail Khodorkovsky can attest). But after the recent jolt, oligarch loyalty is no longer a given. Unlike Mr Putin, they care more about their yachts and Belgravia mansions than about Georgia joining Nato.

United Company RusAl could spend as much as $3 billion in China over the next seven years, expecting the country to generate half of its revenues. Gazprom is seeking bank loans of $700 million. Is the company really as powerful as people think? BP and Gazprom may follow through with last year’s plans for a joint venture.

Prime Minister Vladimir Putin insists that Russia will not turn its back on the free market, but will the market crisis give anti-Western Kremlin hawks more clout for arguing against capitalism? And how will it affect Russian politics at home? The government has made $29 billion available to support its devastated markets, and dismissed the notion of tax cuts for this year. Investors will be pleased to hear that President Medvedev is making the economy his ‘top priority’. The MICEX is currently the world’s cheapest market. The Sochi Investment Forum’s planned emphasis on investment ‘might seem bitterly ironic’ given the ongoing crisis. Read a detailed report on Echo Moskvy’s continuing problems.

TODAY: Russia could block Nato from using its airspace; Robert Gates’ statement on Russia harshly interpreted, Condoleezza Rice tries a violent verbal attack although even US commentators are unimpressed; new military assertiveness; corruption; allies.

Russia has threatened to block NATO from using its airspace for operations in Afghanistan, citing member states’ ‘hostile’ policies toward Moscow.

US Defense Secretary Robert Gates most recent statement on Russia has not been taken kindly by this Russian newspaper, although the New York Times portrays his position as cautious about provoking hostilities. Condoleezza Rice’s strong rhetoric on Russia this week, which was critical on a range of issues, marks a ‘one-way ticket to insignificance’. Mikhail Gorbachev sees her stance as reckless. Russia is refusing to allow OSCE observers to patrol in South Ossetia.

This week the Economist is finishing off an online Oxford-style debate on Russia. The Proposal: The West must be bolder in response to the newly assertive Russia. The PRO position is argued by Anne-Marie Slaughter while the CON position is argued by Dmitri Trenin. I recommend my readers go on over, read the copious statements and arguments, and cast their vote.

My take on all this? I suppose I feel like I have been debating this point on this blog for two years ... even at the last Economist debate I participated in way back in 2006, I felt like I was going through the "chicken little" experience, facing great resistance to whatever warning or urgency I addressed to developments in Russia. Now that the sky is indeed falling, this topic of "the bold response" has entered the mainstream, but I can't say that we are enjoying a more intelligent dialogue.

On the one hand, a bold response from the West is absolutely necessary to prove to the siloviki that you can't achieve your desired outcomes through confrontation, but rather cooperation and consensus. The response cannot just be bold, but must also be intelligent, focused on the specific divisions between key figures of the government, and not aimed at damaging the interests or well being or ordinary Russian citizens. On the other hand, myopic, Cold War-like confrontation very much serves the interests of the authoritarians in power, justifying their every seizure of institution, gagging of the press, and near complete erasure of rule of law in the name of protecting the security of the nation against a foreign enemy. We cannot presume that the Kremlin is a rational decision maker - they are not seeking long-term national interest, only short term personal survival and (oftentimes) wealth.

After the cut, I have some excerpts of the closing statements from both Slaughter and Trenin. Go have some fun on the live chat, and make your voices heard ... though you might find it hard to drown out the trolls.

The Washington Post is reporting on some early leaked quotes from a speech being given right now as I type this at the German Marshall Fund from Secretary of State Condoleezza Rice. It appears the State Dept. is showing its willingness to step up the criticism.

"The United States and Europe must stand up to this kind of behavior, and all who champion it," Rice says, according to the excerpts. "For our sake -- and for the sake of Russia's people, who deserve a better relationship with the rest of the world -- the United States and Europe must not allow Russia's aggression to achieve any benefit. Not in Georgia -- not anywhere."

She mocks the scant international support that Russia has received, saying, "A pat on the back from [Nicaraguan President] Daniel Ortega and Hamas is hardly a diplomatic triumph." And she dismisses the impact of dispatching "a few aging Blackjack bombers" to "one of Latin America's few autocracies."

Largely as a result of its actions in Georgia, "Russia's international standing is worse now than at any time since 1991," Rice says. "And the cost of this self-inflicted isolation has been steep." Among other consequences, she says, "Russia's leaders are imposing pain on their nation's economy."

Steve Clemons at Washington Note unearths a previously unknown letter from last February written from Sen. Chuck Hagel to Condoleezza Rice and Robert Gates warning that recognition of Kosovar independence would make for big trouble with Russia.

He writes: "Across the board, officials are clearly concerned about the consequences -- including unintended and uncontrollable consequences -- of a Kosovar declaration of independence. This includes a former senior Russian official known for his pro-Western views, who told me that, "there is no way that one cannot view a Kosovar declaration of independence as anything but a precedent" for other similar conflicts."

Nikolas Gvosdev was the first to leave a comment on the blog, remarking that DC was myopic in thinking that if Russia didn't apply the precedent to Georgia within the first 24-48 hours, that it had acquiesced.

To see an expert ply his trade is often a beautiful thing. But to watch Gerhard Schröder do what apparently he does best, which is to push Russian interests in the West in exchange for hundreds of thousands of euros, is an often revolting, stomach-churning disgrace. Shouldn't we expect higher moral conduct from our former heads of state?

Somebody should really let the former chancellor of Germany know that he actually is probably doing more damage than good in representing Russia. Moscow deserves a more credible voice in Europe, and it's hard to believe anything this guy says even when he might have a point. Yesterday, for example, he gave a speech before a German-Russian business group in Dresden, extolling the virtues of uncritically aligning Germany's interests with Russia - the subtext of which was of course that the trans-Atlantic relationship should be abandoned or downgraded, and that Berlin's preferential relationship with Moscow over its loyalty to other EU members would help to disaggregate Europe.

He was also there to pitch the war, and convince Germany that it's perfectly OK for Russia to invade sovereign nations absolutely no consultation with the international community. He told the audience in Dresden, "Europe should accept that Russia, just like any other country, must defend its security interests," that NATO's membership talks with Georgia and Ukraine "should be kept off the agenda," and that Europe shouldn't look to diversify energy supply because "Russia is reliable, stable and so close to Europe."

To top it all off, he repeated the favorite Russian threat, that if Europe didn't bend over to Russia's energy demands, that they would take all this gas and oil and go the Chinese.

Interestingly, the very next day Schröder hopped on a flight to Russia to report the results from his assignment to the Kremlin and his employer Vladimir Putin.

An article by Joshua Kurlantzick, one of our favorite writers, argues that the middle class in many countries has turned into an anti-democratic force. Certainly seems true in Russia, where the narrative of the day is authoritarianism in exchange for economic growth. Will the three-day market crash motivate the middle class to ask for their rights back?

From the Boston Globe:

And the villains, surprisingly enough, are the same people who supposedly make democracy possible: the middle class. Traditional theories of democratization, such as those of Harvard professor Samuel Huntington, predict a story of middle class heroics: As a country develops a true middle class, these urban, educated citizens insist on more rights in order to protect their economic and social interests. Eventually, as the size of the middle class grows, those demands become so overwhelming that democracy is inevitable. But now, it appears, the middle class in some nations has turned into an antidemocratic force. Young democracy, with weak institutions, often brings to power, at first, elected leaders who actually don't care that much about upholding democracy. As these demagogues tear down the very reforms the middle classes built, those same middle classes turn against the leaders, and then against the system itself, bringing democracy to collapse.

This is a process now being repeated in Africa, Asia, and parts of Latin America, regions that once seemed destined to become the third and fourth waves of global democratization, following the original Western democracies and the second wave in southern Europe and several other regions. The pattern has become so noticeable - repeated in Venezuela, Russia, Bangladesh, and other states - that one must even wonder about democracy's future itself

There seems to be an emerging pattern of Russia's leadership copying the scripts of Hollywood blockbusters as a guide to foreign policy ... I wonder if Jean Claude Van Damme is being considered as a replacement for Foreign Minister Sergei Lavrov...

From an Paul du Quenoy op/ed on Al Jazeera:

But it is perhaps worth recalling German unification chancellor Otto von Bismarck's warning that Russia is never as strong or as weak as it looks. As we approach the spectre of a new cold war, however, we can rest confident that Russia's strength is of the exaggerated quality.

Last week, Russian bombers landed in Venezuela. After mauling its former colony of Georgia, Russia is now reaching out to a Latin American well-wisher, whose leader spoke positively of its actions and just severed diplomatic relations with Washington.

Ugly shadows of the Cuban Missile Crisis, we are told, loom over the tranquil Caribbean.

One would have to read far into most news stories, however, to learn that Russia's "power projection" consists of just two Tu-160 bombers, which were entered into service in 1987.

Almost as old as the classic film Top Gun, their stated purpose is to train over neutral waters for a few days and then return to Russia.

Hugo Chavez, the Venezuelan president and a former air force general himself, plans to fly "one of those monsters," as he calls them, and excitedly announced that "Yankee hegemony is finished."

In defense of the Russian Air Force, Top Gun debuted in theaters in 1986 - a full year before these Tu-160s were mobilized.

President Dmitry Medvedev has called on security chiefs to establish a formal border in the Arctic, territory which he views as crucial to Russian energy security. Arms control advocates see the nuclear energy accord between the US and India as potentially damaging anti-proliferation efforts. Henry Kissinger writes on how the world’s biggest oil consumers might change the current dynamic of energy supply and demand. Britain’s impending energy shortfall will leave it vulnerable to Russia, says one journalist. Gazprom and LUKoil have been fined for charging identical prices for gasoline and diesel. The International Energy Agency has warned that the world economy faces a recession if the price of oil stays above $90 a barrel. The US says it will take measures against companies it believes are assisting Iran with its nuclear program.

Russia has halted trading on its stock markets for the second day in a row in an attempt to prevent a crash caused by ‘panic-selling’, and to protect Russian banks, the three largest of which will now receive extra funds from the government. It’s Russia’s managerial class who are really set to suffer, says one journalist. Read a selection of Russian opposition commentators on the crisis. This journalist says that Russian leadership is to blame.

Sochi, whose 2008 Investment Forum opens today, may be turned into a luxury resort after the 2014 Olympics. Cutting pollution is not high on the list of priorities for car connoisseurs in Russia, where ‘gas guzzlers’ are hugely popular. Aeroflot has forbid its subsidiaries to use its name in an attempt to protect its companies' reputations from being damaged by the weekend's plane crash. Diamond producer Alrosa has made over $15 million at an international auction. Rosboronexport says it has revived military contacts with Africa.

TODAY: Medvedev signs treaties with former Georgian territories, US struggles to respond; economy in trouble but Russia is a serious power on the world stage; relations with Latin America slowly strengthening; visa requirements with Israel scrapped; vodka smuggling.

Russia has sealed its diplomatic ties with Georgia’s breakaway regions by signing friendship treaties that pledge military assistance. In response, the US is preparing ‘stinging language’, with Secretary of State and Russia-expert Condoleezza Rice set to call into question the legitimacy of Russia’s goal to rebuild itself. The Ukrainian government is under pressure to join Russia in recognizing the former Georgian regions’ independence. South Ossetia was fiercely pro-Russia long before the outbreak of war, but ‘no one really paid attention,’ says the BBC.

Despite the dire state of the MICEX, Russia’s increasing global power and influence on the UN’s actions is shifting the world balance.

Few would describe relations between the United States and Russia as open or friendly over the past number of years, but the steep slide into open stridency following the invasion of Georgia really puts the matter rather beyond doubt. Whenever we see these kinds of swift changes in tone or unexpected abandonment of diplomatic moderation, it's an alarm bell that means a change in thinking has occurred within the Kremlin, or at least among some of its members.

Although President Dmitry Medvedev has gone to great lengths to publicly express that he has no preferences for the outcome of the upcoming U.S. elections, I think that there are some compelling reasons why we can read into the recent conduct and words of the Russian leadership that they prefer that Sen. John McCain secure victory over Sen. Barack Obama.

I am not unaware that this is a seemingly controversial if not reckless theory, but let me assure you that I don't arrive to this conclusion simply as a trouble making contrarian, but rather from a few observations of Putin's domestic political expediencies. This has absolutely nothing to do with which candidate would run a more successful Russia policy (nor is it an endorsement), but rather much more to do with what benefits the siloviki see in having a John McCain administration installed in the White House.

Regular readers of this blog know that once in a while we like to feature translations from the Russian state-run media to provide a glimpse into exactly what kind of extremism and hyperbole is regularly getting pumped into the public sphere. Our favorite is RBK Daily, which in its enthusiasm to please the powers that be, often runs off a little too far into the absurdity of anti-Western vitriol. This one below, for example, reads like a blueprint for how the Soviet Union intends to use ordinary people in the West, disillusioned as they are by the Great Depression and the general warmongering of their governments, as a fifth column to undermine efforts by bourgeois-controlled newspapers to spread paranoid and hateful lies about the Leninist peace-loving nationalities policy and the workers' state in general. Unfortunately this is an RBK Daily piece about today's Russia.

Russia will take to the streets

In order to prove its rightness to ordinary people in the west

Yesterday in Brussels there took place a rally in support of the actions of Russia in the Caucasus. More than a hundred residents of Russia, South Ossetia, Belgium, Germany and Serbia, gathered together before the building of the Europarliament, protested against the strengthening of the role of NATO in the foreign policy of the European Union and explained to passers-by just who precisely had unleashed the latest war in the Caucasus, calling upon them not to believe the propagandistic clichés that the western mass information media make active use of in coverage of the conflict between Russia and Georgia. Such a practice must become the norm – specifically direct-action campaigns are the most effective way to bring the position of Moscow on one or another question to ordinary people in the west. The media sector in the EU and the USA has for a long time been under the firm control of the local political elites, conducting a sufficiently harsh censorship policy.

The story of Svetlana Bakhmina, a former lawyer for Yukos who has been arrested and held in jail for more than six years for doing nothing more than perform her job, is one of the saddest in a long history of judicial travesties surrounding the persecution of Mikhail Khodorkovsky (the medical blackmail of Alexanian is probably a close second).

Today Reuters reports that that she has been denied her request for parole, despite her condition as a pregnant mother-of-two. It is outrageous, tragic, and incomprehensibly disproportionate and cruel what these gangsters who call themselves officials have done to this poor woman in the name of intimidation. We get the message already, OK, siloviki? When one tries to defend their rightful and legitimate interests through the courts in Russia, they will be criminalized. Her unlawful imprisonment has already served its purpose, so let this deserving mother go home to her children.

From Reuters:

Yevgeny Kuzmin, judge at the court in the Zubovo-Polyansky district of the Mordovia region in central Russia where Bakhmina is being held in a penal colony, said he had heard her parole application on September 10.

"She was denied release," Kuzmin told Reuters by telephone. "The reason for the denial is in the court's resolution, but this resolution is only available to parties in the case."

I think it's ridiculous for U.S. officials to gloat over the financial crisis in Russia as though it were caused mainly by the invasion of Georgia. It seems that undersecretary William Burns would like to take credit for the worst stock market performance Russia has seen in a decade, but that's probably why the guy doesn't work in finance. There are four major determinants of Russia's economic growth potential: 1) price of oil, 2) inflation, 3) fiscal and monetary policy and government spending, and 4) the price of natural gas. There's more, but these are the big ones ... and a perfect storm of unfortunate developments in one or several of these areas, which is happening now, can cause investor confidence to crash and bring in an unsustainable number of call options. So many of these banks are so heavily leveraged into each that they may truly be de-coupled, but as one analyst has said, during a time of crisis the country's economy appears to be a giant "pyramid scheme."

Russia's got some serious financial issues at the moment and frighteningly surreal perspectives on the problems from the government, but the war is not the main reason it is happening. (Note to Alexei Kudrin: never say that the market slump is nearing the bottom unless you want to discover a whole new cellar)

Reuters:

"At least in part because of the Georgia crisis, Russian financial markets have lost nearly a third of their value, with losses in market capitalization of hundreds of billions of dollars," William Burns, undersecretary of state for political affairs, told a Senate hearing. (...)

"Capital is fleeing Russia, with $7 billion leaving on August 8 alone," he said. Opportunity costs for Russia are even greater, with its plans to diversify the economy and rebuild infrastructure at risk, he said.

"Russia and the Russian people are paying a considerable price for their country's disproportionate military action," Burns said.

The war with Georgia is having serious commercial repercussions across the Baltics, as Russia tightens its borders to incoming trucks of foreign goods. This probably isn't exactly helping the country's financial crisis.

Following the bombing of Pearl Harbor, Japan's Admiral Isoruku Yamamoto was famously quoted with the line that the attack had "awoken a sleeping giant." Though one would hardly qualify Russia's invasion and occupation of Georgia as an event of Pearl Harbor-like magnitude, the war has certainly been effective in awakening a sleeping energy competitor in the European Union, which seems to have spent the past five years since the takeover of Yukos unconscious to the advance Russian energy imperialism.

It's really quite amazing that it has taken this long for Europe to show awareness of what's being orchestrated from Moscow. For several years now, this blog and many other sources have documented the innumerable aggressive moves, both political and corporate (often with Gazprom, one cannot separate the two), to staple down and co-opt alternative suppliers, businesses, and routes literally across the world with the universal goal of increasing Europe's dependency on Russian state-owned or state-controlled oil and gas.

Though the war in Georgia highlighted concerns of Russia's increasing stranglehold over access to Central Asia's energy, the first big move made by Europe is focused on Nigeria, where the Financial Times is reporting that the European Union has offered Abuja financial and political backing for a $21 billion trans-Saharan pipeline to pump its gas directly to Europe - posing direct competition to an alternative proposal from Gazprom.

Here's a bit of a slam from the FT Lex column. More economic analysis coming later today.

Russia likes to think anything the west can do these days, it can do better. Apparently that goes for financial crises, too. Russia’s two stock exchanges have suspended trading two days running, after double-digit falls, for the first time since Russia’s 1998 default. Russia even has its own victim. KIT Finance, a Moscow investment house, confirmed today it was in talks to find a buyer after it failed to make payment on several short-term loans.

Russia has undoubtedly exacerbated its market woes through its military adventures in Georgia. But those compounded external factors pushing the Russian market down, including the turn in the oil price, falling commodity prices, a strengthening dollar, and rotation out of emerging markets.

Due to oil price drops over the last two months, the world's total energy costs have fallen by more than $4 billion a day. The Lehman Brothers collapse has helped further the drop. On the European Union’s push to stimulate investment in renewable energies. Read TNK-BP’s statement on the resolution of its shareholder dispute.

MICEX traders have resumed transactions following an hour-long suspension and a day of record losses. The government may resort to tax cuts - its $20 billion cash injection has not eased lending rates. The current problems may derail Russia’s ‘powerful negotiating position’, but despite the turmoil, an optimistic Prime Minister Vladimir Putin says Russia's defence spending will grow by 27% in 2009 and insists that the economy is strong enough to weather the storm. Or is Russia ‘far more vulnerable than it thinks it is. Or the government thinks it is’? There is still some debate as to how closely Russia’s troubles relate to the Lehman collapse. The Duma is taking steps to reassure business owners that it will reduce inspections.

TODAY: Ukraine’s government collapses, Yushchenko accuses Russia of stirring tensions; Asian displeasure shows in Georgia loan; Russia in Venezuela again; arms exports, contemporary art.

Following disagreements over how to address Russia in the wake of the Georgian war, Ukraine’s government has, by many accounts ‘collapsed’, with the president and prime minister at odds and another parliamentary election on the cards. President Yushchenko has accused Russia of trying to destabilize his country. Ukraine may be ‘the main battleground in the impending geopolitical confrontation’, but what of the other former Soviet states?

In a sign of Asian displeasure at Russia’s attack on Georgia and recognition of the breakaway states, the Asian Development Bank, which includes China and Kazakhstan, has extended a $40 million loan at the lowest possible rate to Georgia. International ceasefire monitors will not be able to operate in South Ossetia without the breakaway region’s permission.

Der Spiegel has an interesting article on Turkey's precarious position as a critical energy transit country now that Georgia has been virtually knocked off the map (in terms of investment). It seems that ultra-nationalist Vladimir Zhirinovsky, who's always good for a laugh, has offered both to annex Turkey as well as trade them natural gas for nuts.

"No one loves you the way I love you," the thick-set populist who speaks fluent Turkish, recently sang before a Turkish audience in Istanbul.

Zhirinovsky, a graduate of Oriental studies, visited Turkey for the first time in 1962 as a translator for the Soviet Union's State Committee for Exports. During his visit he was arrested for spreading "communist propaganda" and spent 17 days in jail. Later he wrote a pamphlet about his experiences and recommended that his country annex all Turkic countries because the Russian soldier "must clean his boots in the Indian Ocean."

Now Zhirinovsky's passion for the southern neighbor has been reignited once more. "Learn Russian, don't look to the West, look north," the troublemaker preaches during his regular visits to Turkey. "The EU doesn't want you, but we want you. We'll give you gas, you give us nuts!"

Don't get me wrong - I'm a big fan of the famous Antep pistachio myself, and Turkey is the third largest producer in the world after the United States and Iran, but I think there are already enough nuts like Zhirinovsky to last Russia for quite a while.

An article from the St. Petersburg Times reports that the number of prisoners granted pardons and paroles has sharply dropped off under Vladimir Putin, yet fails to identify exactly which experts have voiced doubts about Mikhail Khodorkovsky's lawful eligibility and entitlement to parole. Simply put, he should be let out under the rights and processes afforded to him under Russian law.

Under Yeltsin between 700 and 800 prisoners were granted pardons each year, but in the Putin-Medvedev era the process has come to a standstill.

The regional commissions produce decisions but then the cases have to receive the blessing of a regional governor and then move on to — and get stuck in — Moscow. Results have been discouraging. Forty-two people were pardoned in 2005, and only 9 in 2006.

From David Remnick's long, very long, article in the new New Yorker about Echo Moskvy and editor in chief Alexei Venediktov, we get an inside look into Russia's most interesting and unique media outlet, which some have described as the country's last remaining "pressure release valve" (it is indeed 60% owned by Gazprom). See also more about Venediktov's strange experience in front of Vladimir Putin over here. My only complaint about this interesting article is that Remnick makes Yevgenia Albats sound like a nutcase, which is unfair and inaccurate - at least she understands why the Kremlin still allows Echo to continue existing...

At the meeting in Sochi, Putin turned his attention—and his icy glare—to Aleksei Venediktov, the editor-in-chief of Echo of Moscow, criticizing the station for its broadcasts about Georgia. Many of the loyalist editors in the room were delighted as they watched Putin rough up Venediktov on a range of editorial and factual points. Not for the first time, there was the sense that Putin might shut down the station. Later, in a hallway, Venediktov protested to Putin that he was being “unjust.” Putin pulled out a stack of transcripts to underline his points, saying, “You have to answer for this, Aleksei Alekseevich!” Venediktov was shaken, but he calculated that Putin would never have invited him to Sochi with the rest of the delegation had he intended to get rid of him or Echo of Moscow. That could have been accomplished with a telephone call.

“Afterward, we met one on one, and there Putin’s tone was more positive,” Venediktov told me. “But he made his point. He was demonstrating his ability to do whatever he wants with us at any time.” When Venediktov returned to Moscow, he made clear to his staff that they had best “pay careful attention” to their coverage, be sure of their facts, and get sufficient government views. But no one was fired, and it was clear that he had managed to escape the worst. “Poka,” Venediktov said. “For now.” (...)

Isn't it amazing that no matter how many cases we see of political interference in the Russian economy, that nobody seems to learn their lesson? We're disinclined to agree with Kliment in his view that the money will come running back so quickly as relations with the international community continue their willful deterioration.

Lionel Laurent at Forbes.com:

Investor confidence in Russia is going nowhere fast. Following the conflict with Georgia, and a rapid unraveling of the price of oil to close to $90 a barrel, Russian stocks suffered a hammering on Tuesday as Wall Street's woes added to investor jitters over Moscow. (...)

While this proves that Russia is still a long way from turning the clock back to before the outbreak of hostilities with Georgia--which sparked a slump in Russian stocks and a decline in the rouble's value--it may not be accurate to interpret this as a sign of fundamental weakness in the Russian economy.

"It is still early to say that there are real structural problems with the Russian economy," said Alexander Kliment, an analyst with Eurasia Group. He told Forbes.com that there had been crises in investor confidence before while Vladimir Putin was president, such as when the oligarch Mikhail Khodorkovsky was sent to jail or when control of the Sakhalin-II project was seized from Royal Dutch Shell. But each time investors had returned "with short memories and deep pockets." (....)

But although Eurasia Group's Kliment admitted Russia had never been so vulnerable to systemic risk since that dark period in post-Soviet Russian history, he did not think we were there just yet. "I don't think this is just a Russia story," he said. "It's a New York story, it's a London story ... globally, it's not as surprising as it would otherwise be."

The AFP is reporting today that eleven people have been arrested in a criminal operation to smuggle vodka via an underwater pipeline from Russia to Estonia. Though certainly a lucrative black market trade, it doesn't look like they were sending the good stuff:

According to prosecutors the men had pumped at least 6,200 litres of illegal spirit to Estonia, avoiding paying 57,000 euros (900,000 Estonian Crowns) in excise duty.

"The investigation also revealed that the men had tried to sell some of the alcohol in Tallinn in early November 2004 but the quality of the spirit was too bad and no buyers were found. They then transported their cargo back to Narva and later managed to sell it in Tartu, the second largest town in Estonia," Luuk said.

And here all along we thought that Gazprom wasn't a dynamic company ... As least they weren't smuggling tanks and arms for the separatists like in some other former Soviet countries...

A while back we wrote about the colossal diplomatic blunder Moscow was making when they thought that the Shanghai Cooperation Organization would be the ideal venue for them to drum up support for separatism and annexation in the Caucasus (having ignored a couple hundred years of Chinese history). Now it looks like Asia, led by Beijing, is pumping money into Tbilisi. Yes, that's about the exact opposite outcome the Kremlin was looking for...

From the IHT:

The Asian Development Bank, in which China plays a leading role, has extended a $40 million loan at the lowest possible rate to Georgia. The Shanghai Cooperation Organization - which includes China, Kyrgyzstan, Kazakhstan, Tajikistan, and Uzbekistan as well as Russia - refused to countenance Russia's recognition of two breakaway regions of Georgia. The rebuff of Putin is all the more striking because - at least from Putin's perspective - the central purpose of this group was to form an eastern counterweight to NATO.

China and the Central Asian states may share the Kremlin's resentment of American dominance in the world, but they are not so eager to construct a multipolar world that they will act against their national interests.

This is really no laughing matter now. When I woke up today, the RTS and the MICEX were down by more than 10%. When I check back a little later, the markets have halted trading after indexes crashed down to 17%.

Steven Dashevsky of Unicredit nails it when he tells the FT that "This is a good old-fashioned panic. It doesn’t feel like there is anyone domestically that can put the brakes on."

Not that this has the government too worried. Just yesterday, President Dmitry Medvedev explained to a group (RSPP) of the country's largest industrialists (who are getting a little bit frustrated with the state as they have seen 1/3 of the country's GDP wiped off the stock market) that the country is not in crisis: "First of all, despite the active political life that never ceases in our world, the economy, fortunately, is not so highly dependent on political life. I think therefore that in the current situation our economic policy should remain unchanged regardless of various political events, change in leadership in some countries, other changes the political season could bring. We have big internal economic potential and a good solid domestic base, and so, despite the global economic problems today, the situation in our economy is absolutely stable overall. There is certainly no crisis or pre-crisis state here and our development continues. We are of course affected by international problems too, but I think it is within our power to resolve all of these problems on our internal market."

Markets aren't like potemkin civil society or democracy - you can't just erect false institutions and expect to control events. The fact is that investor confidence in Russia is very much tied to internal and external political developments, and indeed the international isolation caused by the military adventures in Georgia have been very damaging to the economy. It leaves one baffled therefore to see the timing of Vladimir Putin's announcement of a whopping 27% increase in military spending for the coming year - which seems to us like an illustration that he's more concerned about his own populist survival than the checking accounts of the mid-level billionaires of the RSPP. Bob has written it many times in the past, but authoritarian capitalism really can start to break down below a certain level of GDP growth...

The price of crude oil has fallen to a seven month low. A new report by the International Atomic Energy Agency says that Iran has substantially improved its nuclear enrichment facilities whilst continuing to stall a UN investigation. France's Total is in talks with state-run Kazakh oil producer KazMunaiGaz over Eni’s position as operator of the Kashagan field. The economic crisis is having a particularly damaging effect on the renewable energy sector.

Lehman Brothers’ filing for bankruptcy has affected Russian markets, but President Dmitry Medvedev has insisted that Russia is not in crisis and announced that the government will provide liquidity to the banking sector. The markets, however, aren’t listening. Russia’s currency and foreign exchange levels are not suffering, but stock market troubles have been ongoing since July - do global oil markets have anything to do with the current situation? Bigger Russian companies may be buffered by their lower levels of debt, and six of Russia’s largest may use surplus cash to buy back shares in an attempt to ease the market slump. Merrill Lynch and the European Bank for Reconstruction and Development are planning a venture with billionaire Viktor Vekselberg to build Russian hotels. Moscow apartment prices are falling. Russia’s S7 is one of three companies shortlisted for buying a stake in Austrian Airlines. This year’s Russian harvest is a substantial increase on 2007.

TODAY: Nato demands that Russian troops leave Georgia; Russia building embassies, demanding observers in breakaway states; WTO membership no longer under question; Sevastopol navy base under scrutiny; Aeroflot to rebuild image.

Nato is demanding that Russia withdraw fully from Georgia and remaining firm in its condemnation of the invasion, but continues to evade any solid promises on Georgian membership. The war of words over who started the war continues as Georgia releases new evidence. President Dmitry Medvedev is threatening the West over potential Caucasus conflict-related sanctions. The IMF has approved a Georgia's $750 million loan. Russia is building embassies in South Ossetia and Abkhazia, and wants OSCE and European Union observers to be deployed there as soon as possible, as it is worried about terrorist attacks. Meanwhile, its army is apparently putting on a display of war trophies captured during the conflict.

Here Mary O'Grady of the Wall Street Journal talks about how Russia and Venezuela's increasingly close relationship should be carefully watched by Washington. She argues that both Hugo Chavez and Evo Morales are using Russia to make broad anti-American gestures in response to declining domestic popularity.

She writes, "With the economy in shambles, inflation hovering around 30% and the opposition beginning to unite, Venezuela's messiah is feeling some heat. It is not impossible, assuming fair elections (which is far from certain), for opposition candidates to win at least three important states and perhaps as many as six. For a man with dictatorial ambitions, this is anathema. Which is why the Uncle Sam boogeyman is being trotted out, the Russians were called in, and Washington's ambassadors have been sent packing."

An interesting article from the Washington Post illustrates how the Russian state's grip on the media has tightened considerably since the war.

The Kremlin controls much of the Russian media, and Putin occasionally meets with friendly groups of senior journalists to answer questions and guide news coverage. On Aug. 29, though, for the first time in five years, he also invited the editor in chief of Echo Moskvy, the only national radio station that routinely broadcasts opposition voices.

For several minutes, according to people who attended the session or were briefed about it, Putin berated the editor in front of his peers, criticizing Echo's coverage of the war with Georgia and reading from a dossier of transcripts to point out what he considered errors.

"I'm not interested in who said these things," one participant quoted Putin telling the editor, Alexei Venediktov. "You are responsible for everything that goes on at the radio station. I don't know who they are, but I know who you are."

Lehman Brothers has folded, markets are diving, and a lot of powerful people in Russia are beginning to feel the heat. Tightening access to international credit and mounting stock losses are hurting Russian billionaires as well as state-owned corporations, prompting calls by some businessmen to heed Western complaints over Kremlin policy in Georgia.

It appears that when it comes to containing Russia, the invisible hand of the markets may in fact be the best way for the West to temper the Kremlin's actions in its near abroad.

As reported by Bloomberg:

The head of the country's biggest business association, the Russian Union of Industrialists and Entrepreneurs, met President Dmitry Medvedev today, urging him to take ``anti-crisis'' measures.

``The stock market is plunging, capital is fleeing, there is a severe shortage of liquidity in the banking system, prices for many core exports are falling and inflationary pressures are strengthening,'' the business group's Alexander Shokhin said in a live televised Kremlin meeting. Current policies ``may turn out to be inadequate,'' he said.

Italy’s Enel and United Co. Rusal are in talks to build a new power unit for Enel’s OGK-5 generating plant near the Ural Mountains. The head of Enel says he sees no political risks for his business in Russia. Tensions in the oil markets are relaxing after Hurricane Ike inflicted less damage than expected. The Polish president believes military intervention in Georgia was aimed at obstructing Europe's efforts to cut reliance on Russian energy resources.

Russian companies are struggling to refinance a backlog of $45bn in foreign debt, as the debt market shuts to third-tier borrowers and the cost of borrowing increases by over 2%. The crisis is apparently causing business leaders to back complaints about Kremlin foreign policy, although investors who favor the long-term perspective have not pulled out their funds. Will the MICEX slump threaten Russia’s oil boom? Finnish tire maker Nokian Renkaat, struggling to retain its value, is one of the companies to feel the effects of the Russian slump. As part of its plan to improve its armed forces, Russian spending on arms will rise to a record $47.9 billion next year, and the country has resumed long-range bomber missions. Russian shoppers are boosting western consumer markets.

TODAY: Lavrov in Abkhazia, Nato in Georgia; Moldovan separatists heartened by Moscow’s position on Georgia’s breakaway regions; Aeroflot crash kills all passengers; journalists under scrutiny; refreshing Russia's contemporary art.

Georgia has responded angrily to Russia’s decision to send its Foreign Minister Sergei Lavrov on a supportive visit to Abkhazia. Lavrov’s visit coincides with the arrival of Nato envoys in Georgia in a similar show of support. Medvedev has described Nato’s invitation of membership to Georgia, extended last April, as ‘unjust’, and compared the Georgian attack on South Ossetia to 9/11. Separatists in Trans-Dniester, a breakaway region in Russia’s Moldova, ‘have taken heart from Moscow's recognition of Georgia's rebel regions’. One consequence of the Georgian war is an intensified focus on journalists ‘who work near the boundaries of what the Kremlin tolerates’, including an investigation into radio station Echo Moskvy. The Georgian Security Chief says that Russia has fulfilled its commitment to pull troops from the country.

Investors aren’t burning with desire

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

First such a report from the RIA Novosti agency: Prime minister of the RF Vladimir Putin is demanding that works start right away on erecting bridge crossings across the Vostochny Bosfor [Eastern Bosporus] strait and the Golden Horn cove.

“Construction works on the most complex sections from the engineering point of view – bridge crossings across the Bosfor Vostochny [Bosporus of the East] strait and the Golden Horn cove – must start right away”, declared Putin at a meeting on questions of preparation for the APEC-2012 summit.

“They are already reporting, that already supposedly they are going on. I, it is true, have not seen these works, but, at any rate, preparation for them already must start”, underscored the premier.

Vladivostok in the wintertime (photo by Grigory Pasko)

Adam Wolfe is blogging about a favorite topic of mine today: Russia's intrepid (and worrying) push into African energy.

The ultimate goal for Russia would be a gas pipeline from Nigeria, through Niger, ending at Algeria's export terminals on Mediterranean coast, then on to Spain. The Nigeria/Algeria Trans-Sahara Gas Pipeline (TSGP) is estimated to cost $13 billion, but some argue that it is technically and politically impossible. The MoU seems to remove some of the political obstacles, but not all. (...)

Obviously if Gazprom is successful in these deals it would reduce the European Union's leverage over Russia. It'd also change the balance of power between the US and Russia, since Europe would have to be more careful about provoking Russia with stupid offers of NATO membership for Georgia and Ukraine. I'll be keeping an eye on further developments.

This is unbelievable:

Moscow government wants to hand pick juries MOSCOW (AP) - Moscow's city government is pushing for federal legislation to give major Russian cities the authority to hand pick juries for trials, officials and lawyers said Friday.

The proposal is the latest indication that the authority and independence of juries in Russia is eroding, less than 20 years after the restoration of jury trials. It was unclear how the proposal would fare if parliament takes it up.

The proposal is "a profanity on the very idea of jurors," defense lawyer Viktor Parshutkin said.

An idea this brilliant could only come from the inimitable mind of Duma speaker Boris Gryzlov.

From time to time, we receive occasional contributions from the highly respected Russian human rights lawyer Stanislav Markelov, who heads up Russia's Rule of Law Institute. His most recent piece focused on the Olympics and the war. Mandatory disclaimer: Markelov's article does not necessarily represent my opinion, this blog, or its editors.

Ingushetia – the missed opportunity of the Caucasus?

By Stanislaw Markelov

A killing – is always more than just death. A killing raises the most painful and acute questions: “Who is at fault?”, “How will they answer?” and “Is the aggrieved party of relatives and like-minded people prepared likewise to cross the line of blood and death?”

The Ingushetian flag flies over a summer camp for children from different parts of Russia's turbulent North Caucasus play during a summer camp near the village of Michurino, about 30km (19 miles) south of the Caspian Sea city of Derbent, in Russia August 18, 2007. (Reuters)

Interesting analysis from the Economist:

To endow this idea with more political weight, some diplomats think that Georgia might be given the equivalent of the European road maps being followed by Balkan countries, though without (for now) a promise of membership at the end. The Balkan comparison does not stop there. “The long-term implication of the Sarkozy deal,” says one diplomat, citing the pro-Western Serbian president, “is that Georgia has begun to adopt the [Boris] Tadic line.” That means pledging not to use force to regain lost lands, and focusing instead on EU integration and rebuilding the economy.

Russia's suggestive banter may have some overtones of childish games, but it's clear they really want to produce some different outcomes in their talks with the West by bringing up these threats. From the IHT:

"Our neighbors are close to us in many respects, and are a traditional area of interest for the Russian nation," he said. "We are so close to each other, it would be impossible to tear us apart, to say Russia has to embark on one path, and our neighbors on another. The issue here is our shared common history, the connection of our economies and close affinities of our souls."

Medvedev also said that Russia would build economic and military ties with nations willing to do so even if the West dislikes some of these alliances.

"There are many other interesting places in the world with governments maintaining friendly ties with us," he said. "And if they like developing economic, humanitarian and military ties with us, we won't say no."

I wonder who on earth he could be referring to? There's no reason for Washington to really fear this relationship ... although they would like to pretend otherwise, Iran's interests are not aligned with those of Russia - for example, Gazprom explicitly needs sanctions against Iran to prevent the development of its massive natural gas reserves.

Here's an interesting bit from Jossip:

Along with blue jeans and Bruce Springsteen, a new American commodity is being controversially exported to the Motherland. South Park, which sparked controversy and loud public cries for it's removal from American television in 1997, is finally making its way over to Russia, where some fundamentalist religious groups are hating it. Along with Family Guy, Brendon Small's Metalocalypse, and 12 other raunchy cartoons, public prosecutors are seeking to ban what America long-ago gave up trying to regulate. Wonder why?

"(The cartoons are) promot[ing] violence and cruelty, pornography, anti-social behavior, abound with scenes of mayhem, the infliction of physical and ethical suffering, and are aimed at invoking fear, panic and terror in children. . . Practically all the cartoons exploit the topic of suicide, and characters demonstrate readiness to risk their lives for the sake of deriving extreme sensations.”

It's funny that these groups should get so bent out of shape by a cartoon when their president speaks with such wondeful, family-friendly poetry as "wiping bloody snot" off the nation's nose in reference to the invasion and occupation of a country thirty times smaller. You'd think the cartoon would be a hit....

The International Energy Agency predicts that global oil demand could fall to its lowest level in six years this year. Exxon Mobil and Shell are both shutting refineries in anticipation of Hurricane Ike. LUKoil’s two major shareholders have increased their stakes. Read The Economist’s take on India’s nuclear deal with the US. India is now seeking further nuclear deals with France and Russia. What effect is the high price of oil having on the world economy?

As the MICEX fell for the third day in a row, Prime Minister Vladimir Putin said that foreign capital inflows could fall by 45% this year, but that he does not believe the drop is related to the Georgian war. Alexei Kudrin says Russia is considering using money from its national wealth fund to support its markets, and President Medvedev has publicly backed an inflow of additional funds. Standard and Poor’s advises against this. Deutsche Bank is reportedly eyeing retail banking acquisitions in Russia. Just days after the raid of News Outdoor’s offices in Russia, the Murdoch-owned advertising arm appears to be up for sale. Russia and Ukraine are trying to increase next year’s agricultural output. A Moscow Times columnist suggests that investors are troubled by Russia’s recent Communist nostalgia.

TODAY: Putin’s three-hour interview both “pugilistic and needy”; Medvedev focuses on military; confusion over South Ossetia’s aims; ongoing tension over Georgia affecting UN debates.

Prime Minister Vladimir Putin gave a three-hour interview yesterday during which he “turned the air blue”, joking about his sharing of power with President Dmitry Medvedev, defending the invasion of Georgia and denying that the Kremlin has imperial visions. He also criticized the UK for providing refuge to Russian dissenters, and warned the West that the planned US missile defense shield would start an arms race. His tone alternated between “pugilistic and needy,” says the New York Times. Foreign Minister Sergei Lavrov is in Poland to protest its planned US-backed missile defense base.

Medvedev says that Russia is prepared to cooperate with the US in the fight against terrorism, and is talking about Russia’s need to modernize its military.

I think it is very respectful and commendable that despite these current days of war, extreme diplomatic hostilities, and fundamental disagreements between the United States and Russia over the future direction of the international system, that some people in Moscow have taken a moment today to memorialize the victims of the September 11th attacks. Let's never forget that the Russians are a people who have suffered immensely from the cruelty of terrorism, and there is no reason these basic humanitarian values transcend the highs and lows of politics and government.

Day of the Prisoner

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

On the website Grani.ru, the writer Eduard Limonov, who heads the National-Bolshevik Party (which has been banned in Russia), wrote an article about how in July in Moscow there took place a congress of political prisoners.

In the words of Limonov, around a hundred political prisoners gathered. “To the congress came not many guests”, writes Limonov, "inasmuch as we did not call many. However, honest and direct, appeared the lawyers Mikhail Trepashkin (himself a politzek in the recent past) and Sergey Belyak”.

Both with Trepashkin and with Belyak I am acquainted. With Limonov I have not yet had the chance – we are acquainted with one another “in absentia”. If one is to believe another website – www.politzeki.ru – then to the number of political prisoners I also belong. Why they did not call me to the congress – I don’t know. That’s not a question to me. Of course I would have gone. Not because I share all the views of the natsbols, but because I also consider them, the convicted National-bolsheviks, to be political prisoners of modern Russia.

It is incomprehensible why they did not call to the congress Sergey Kovalev, Alexander Nikitin, Valeriya Novodvorskaya and others who had been persecuted among others for political motives as well.

Yesterday I published a short blog post about important developments in one of my cases, involving allegations of tax fraud and money laundering involving high-profile Central American businessmen. I promise not to flood this mostly Russia blog with Latin America news today, but it's important that I post this translation of a news article by La Opinión, a Spanish-language Daily based in Los Angeles. I continue to believe that there are some important comparative overlaps between Latin American nations and Russia in terms of deficient rule of law and a lack of accountability over security services. OK, thanks for reading, back to our regularly scheduled programming...

Court Ruling Against Owners of Pollo Campero

A Bermudan Court Points at Two Shareholders of the Bosch-Gutierrez Group as Responsible for Fraud

Isaias Alvarado, La Opinion (9/11/08)

A tribunal in Bermuda ruled against two shareholders of the Bosch-Gutierrez business group (Multi-Inversiones) of Guatemala, owners of the fast food restaurant chain Pollo Campero, for the crime of fraud.

The case LISA S.A. contra Leamington Reinsurance Company LTD y Avícola Villalobos is derived from a lawsuit which began nearly ten years ago in Guatemala and was transferred outside of this country in search of “impartiality” of judicial authorities, say lawyers on behalf of the plaintiff.

Eduard Kokoity, the former wrestler and South Ossetian separatist, today offered conflicting versions of his new country's relations with Moscow, saying originally his new government's strategy was to join Russia but now disavowing the comment and stating there was no plan to relinquish independence.

Russian Foreign Minister Sergey Lavrov reiterated Kokoity's words and the Kremlin's strenuous denial that such a merger would take place. “South Ossetia is not intending to link up with anybody,” he said. “They have understood that without a declaration of independence, they cannot ensure their own security.”

Moscow's most recent chess moves vis-à-vis Georgia and South Ossetia raises some eyebrows. As though it weren't enough to have torn open a severe rift in relations with the West by invading Georgia, unilaterally proclaiming the independence of South Ossetia and Abkhazia, and promising Russia a military base, now Russia has Kokoity declare his vision for assimilation into greater Russia. This represents a historic and unprecedented event for the Russian Federation, standing out as the first annexation of another sovereign country’s territory by force since the fall of the Soviet Union. It appears the the siloviki's zeal for conglomeration of industry has spread to a redefinition of borders.

Or has it?

The other day we linked to a sardonic column by Yulia Latynina which commented on the contradiction between Russia's current rampant anti-Westernism combined with its enthusiastic embrace of its well marketed branded goods. In a similar vein, today Diane Francis at the National Post blog takes a look at the extremely positive experience being enjoyed by the most American of all corporate titans imaginable: McDonald's!

Few people realize that the world's most profitable and busy McDonald's are located in Russia (Pushkin Square is #1, and Munich's Karlsplatz Square is #2). According to a Wall Street Journal article from last October, "Of the 118 countries where McDonald's Corp. does business, none can boast more activity than Russia. On average, each location serves about 850,000 diners annually -- more than twice the store traffic in McDonald's other markets."

We think it's great whenever a foreign company is successful in Russia, but we just wish that it were true across all sectors. The positively successful experience of McDonald's, as well as many other retail and financial institutions operating in Russia, drives home the point that the country continues to operate as a "dual state" - whereby normative rules and regulations actually function in certain segmented business areas, and a prerogative state operates in the strategic sectors, giving the state the ability to seize property with impunity. The only problem is knowing the constantly changing definition of what constitutes a "strategic" sector (hint: even media is included), and the constant risk that if you do become embroiled in a business dispute, the courts are of little help. Thankfully the restaurant giant has penetrated the market with great care, local intelligence and management, and strong corporate foreign policy - but few others can boast this level coordination.

RA is quoted in the Francis piece after the cut...

Bill Powell at Fortune magazine has a very interesting piece running about the methods and tactics used by Vladimir Putin's inner circle of former KGB officers to seize control of the economy. With the markets in free fall after the diplomatic blunders surrounding the war in Georgia, it finally seems to be becoming apparent that managing security and spies really doesn't translate well into managing an economy.

Yet for all the talk of prosperity and stability under Putin & Co., foreign companies operating in today's Russia - especially those in Russia's valuable energy and natural-gas sectors - have suddenly started getting nervous. Stories of Russian power plays have grown too numerous to dismiss: of business leaders thrown in jail on bogus charges, assets taken by dubious lawsuits, partnerships with Russian companies suddenly turning into struggles over control. Aggravated by the invasion of Georgia, those concerns have sent the Russian stock market plunging more than 30% since May. Unless Russia can moderate its growing reputation as a strong-armed economic regime, its appeal as an emerging market may be coming to a close. Says Renaissance's Nash: "There's no question the outside investment community is watching this now very, very closely." Lately the PR has been disastrous. Consider the case of BP (BP), which thought its partnership with a group of Russian billionaires, TNK-BP, was a textbook joint venture. Instead, the British oil company finds itself under attack: Its Russia-based employees have been hit with dubious charges of industrial espionage, the CFO of the venture recently stepped down, and the CEO has publicly complained of "sustained harassment of the company and myself" by Russian authorities. Industry analysts believe they've seen this scenario before - last year Royal Dutch Shell (RDS-B) was forced to cede control over its Sakhalin oilfield to Russian companies (see "Shell Shakedown") - and predict BP will eventually pull out in frustration, followed by a state-controlled energy giant taking over the business.

What is the future looking like for the Nabucco gas pipeline, designed to bypass Russia? The head of Transneft says that Russia’s new $14 billion oil pipeline to China secures Moscow’s exports against potential EU hostility. German Chancellor Angela Merkel insists that her country’s gas relationship with Russia is based on mutual interests. Opec’s attempt to boost oil prices by cutting back supplies has failed. Its secretary general will travel to Moscow next month to foster the organization’s cooperation with Russia. Finance Minister Alexei Kudrin is considering further tax cuts for the oil sector. Chevron has extended an agreement that allows it to drill for oil and natural gas in the Neutral Zone shared by Saudi Arabia and Kuwait.

Read a factfile on Russia’s raising of its wood tariffs, which will double costs for Nordic paper mills. Some mills, including Stora Enso, are pre-emptively outlining job cuts in anticipation of higher costs. President Dmitry Medvedev is blaming the US for the state of the Russian stock market, saying “they have let us all down”. Russia’s central bank has injected more than $10 billion into the banking system in an attempt to ease the credit shortage. Medvedev is "playing down" the current lull, but the flight of capital continues. Using the example of Mechel in its defense, the Kremlin will give its Federal Anti-Monopoly Service “sweeping” new powers, making it one of the government’s most powerful agencies. Mikhailovsky GOK, a unit of Metalloinvest, has won an auction for the Udokan copper deposit with a bid of $585 million. Read a transcript of Mikhail Khodorkovsky’s Moscow Times interview on investment.

TODAY: International law society condemns Russia’s treatment of lawyers; Federation wants Georgia’s UN case thrown out; EU and US increasingly wary of growing Russia; Lavrov says peace deals are out of sync; young art collectors being encouraged; Russia discovers a glacial lake.

The International Bar Association has spoken out against Russia’s “state-sponsored intimidation of lawyers” after lawyers working for Hermitage Capital had their offices raided. “When government agents interfere with the work of lawyers, it is not only the legal profession that is threatened, but the overall legal order in the state.” The Russian Federation is requesting that the International Court of Justice throw out the case being brought against it by Georgia over human rights violations. A survey carried out in Europe and the US reveals concern over Russia’s increasing power, and the first show of support for Nato as a safeguard of security since 2002.

Sergei Lavrov’s temperature is rising over the new EU-Georgian peace deal because, he says, it contradicts the EU-Russian one. Two Russian strategic bombers have landed in Venezuela for training flights. Russia is intensifying rhetoric with Ukraine over the latter's potential Nato membership. “We will never accept this.”

As investors worry amidst a near-global economic recession, the Russian government needs to be forthcoming about its actions in order to boost confidence in their market, imprisoned businessman Mikhail Khodorkovsky told The Moscow Times today.

The Russian economy has lost billions of dollars on the war in Georgia, and the continued political instability in the affected former Soviet regions doesn't calm the minds of investors outside of Russia. Foreign investment fell by approximately $20 billion in August, while the stock market has lost billions more - events Khodorkovsky has been closely following in the dozens of publications he receives in his prison cell in the Chita region.

"Investors worry most about uncertainty. From my own experience, I know that people will make the worst assumptions if you fail to explain what is happening. That is why restoring trust has to begin with regular, detailed explanations of [the government's] position", Khodorkovsky stated in a five-page written response to questions submitted through his lawyers.

Although this blog is commonly regarded as a source of information and opinion about Russia, anyone who regularly reads us understands that my work interests include everything from Asia to Africa to Latin America. As such, I wanted to briefly take the opportunity to attempt to raise some awareness about the latest developments in one of my other main cases: the Caso Gutiérrez of Guatemala.

As many friends and colleagues are aware, for more than a decade I have served as counsel to the family of Juan Arturo Gutiérrez, and his son, Juan Guillermo Gutiérrez, who are engaged in a long-running multi-jurisdictional series of tax fraud lawsuits against two of Latin America's most powerful and wealthy men: Juan Luis Bosch and Dionisio Gutiérrez Mayorga, owners of the famous Pollo Campero chicken restaurant empire.

It is a case of historic significance which has extended far beyond the courts into Guatemalan politics and society, and just last week received a major ruling from a court in Bermuda (press release after the jump).

A reader forwarded us an article from the German press, recommending that it could be interesting for translation. Below is the full text of this recent piece on the propaganda war between Georgia and Russia from the Süddeutsche Zeitung (original article here).

Dividing Line
War in the Caucasus
Propaganda 2.0

The fight for the right of interpretation between Russia and Georgia has broken into a full-fledged battle. It is taking place parallel to the fights on all channels - on television, in newspapers and especially in the Internet.

By Matthias Kolb, Süddeutsche Zeitung

A familiar, almost hackneyed, quote: “When war breaks out the first victim is the truth”. Yet this insight from US Senator Hiram Johnson of 91 years ago applies for 2008 as well: For five days there was fighting in Georgia and the situation was unclear, more than anything. It is difficult for journalists to confirm statements made by the warring parties and have them verified by independent positions. The hardliners in Russia and Georgia are fighting to influence the opinions in the rest of the world.

An example: Russia’s ambassador in Georgia spread the message that 1500 people died as a result of the Georgian attacks on Tskhinvali in the first night of the war. It took days for aid organizations to gain an overview. A representative from the human rights organization Human Rights Watch mentioned around 200 wounded in the area of Tskhinvali in the Frankfurter Rundschau. No one knows the actual number of deaths, but it is most likely significantly lower than what the Russian side has been saying. The objective was reached; the numbers made their rounds for days, were reported and, so they hope, are now fixed in people’s minds.

"Saakashvili is a puppet, while Europe is dependent on us…"

What Russian people think about the Georgian-Russian conflict

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

Ivan Mikhailovich, age 52, MVD retiree: "Russia acted correctly. Everything was started by the USA, this was to their benefit. Saakashvili – this is a puppet of the USA. Of course it’s bad that very few supported Russia. Even Byelorussia kept silent… And the countries of the former CIS are silent too. Apparently they’re watching and waiting for the USA, or they’re afraid of it…"

Ivan Mikhailovich, pensioner (photo by Grigory Pasko)

Yevgeny, age 35, shopping center security guard: "The Americans trained Georgia to attack the Ossetians. Russia was forced to intervene …"

Speaking as a guy who plows through hundreds of news stories about Russia every week, it was refreshing to see this interesting New York Times piece about Russia's tobacco culture (a staggering 50% of Russians are smokers) and the difficulties the government faces in addressing it as a public health issue. Though the war is immensely important, it's good to see that some editors remember that other events continue to take place outside the narrow view of a single narrative about Russia per month.

Yulia Latynina has a brilliantly sarcastic column in the Moscow Times today, which highlights the incongruity of Russia's fervent anti-Westernism combined with deep appreciation for its material goods, services, banks, and institutions. I guess if North Korea were manufacturing ridiculously expensive luxury watches or Venezuela pumping out gold-plated cell phones, the politics of consumerism might be a little less complicated for the Kremlin-aires.

Anthropologists have written a great deal about the 20th-century "cargo cults" that arose in Melanesia. Adherents of those primitive faiths believed that all the amazing Western goods (or cargo) such as automobiles, guns and clothing were originally created by spiritual means by their ancestors. These modern goods had been intended for the Melanesian people, but the cursed white people stole everything before the goods could be delivered to the Melanesians. After seeing real airplanes for the first time, the Melanesians built one from sand, thinking it would fly.

The Kremlin has taken a page from cargo cults. It is trying to build democracy, a market economy, and it is attempting to enforce peace. But the only problem is that all of these institutions are also made of sand. Like the Melanesian airplane, none of them can fly very well.

That's what David Ignatius of the Washington Post thinks:

The Georgia strategy is premised on working jointly with European allies and on avoiding the sort of unilateral U.S. military threats that would scare them off. It is also tempered by the administration's earlier mistakes in dealing with mercurial Georgian President Mikheil Saakashvili, which set the stage for his unwise Aug. 7 attack on South Ossetia that provoked the punishing Russian reaction.

It's a policy, in short, that distills some of the foreign policy lessons learned at the shank end of the Bush presidency. And its contours, interestingly enough, arguably are closer to the thrust of Barack Obama's initial, cautious reaction to the Georgia crisis than to the more confrontational approach of John McCain.

OK, that doesn't make very much sense, especially pushing the argument that Russia had a right to invade Georgia. But the conclusion makes more sense ... that is if we were still in early summer:

The administration wants to keep Putin from driving Russia off a cliff. They view his successor, President Dmitry Medvedev, as a man who understands that Russia's future is as a 21st-century power. They want to avoid a strategy that unintentionally undermines Medvedev and bolsters the Putin camp.

The Los Angeles Times has an interesting piece about the testimony before the Senate Armed Services Committee by Daniel Fried and Eric Edelman, debating the U.S. response to the Russian invasion of Georgia. While Democratic Senators are criticizing the government's weak response, there are indications that the Pentagon is willing to allow Russia de facto control over Abkhazia and South Ossetia. Russia Today has already produced a gleeful propaganda piece declaring that Washington is "divided" over Georgia ... yes, the inconveniences of democracy are not well known in Russian foreign policy circles, but it would be a mistake to believe that there isn't consensus on the basic opposition to this war.

Fried dismissed charges that condemnation of Russia's action was too modest a response, saying the Kremlin was facing diplomatic isolation.

"You're quite right that a couple of communiques that use the word 'condemn,' by themselves, if this is all there is, does not constitute a lasting lesson," Fried said. "But it is a pretty good beginning."

Still, Fried and Edelman remained vague about how the administration might attempt to get tougher, sidestepping several questions from the committee's Democratic chairman, Sen. Carl Levin of Michigan, about what measures the administration was actively considering.

Fried went so far as to suggest that, though the administration adamantly opposed any Russian move to annex Abkhazia and South Ossetia, it was willing to allow de facto Russian control of the regions.

He said that it was a prime American goal to prevent Georgia's sovereignty from being "crushed."

Deputy Prime Minister Igor Sechin has called for greater cooperation between Russia and Opec, which would increase Opec’s market power. Opec will make a “symbolic” reduction in oil output because it views the market as oversupplied. TNK-BP intends to hold an initial public offering in 2010 or later. Igor Sechin says that conflict at the company is now over.

The exodus of an estimated $20 billion worth of foreign capital is forcing Russian banks to cut down on lending. "Russia is open for business,” says the Kremlin’s Chief Economic Aide. There may be worries about the EU’s energy dependence on Russia, but look at the volume of commodities traveling the other way. Prime Minister Vladimir Putin wants Russia to step up production levels in the aircraft manufacturing industry. Russia’s S7 Airline is seeking a partnership with Austrian Airlines. Analysts see government officials’ plans to transform Russia into the world's leading grain exporter within five years as realistic.

TODAY: EU backs away from promising Ukraine EU membership as speculation increases that it is next on Russia’s list. Russia moves to prevent US from re-arming Georgia; doubles troop numbers in breakaway regions. Lavrov’s four-letter-words. Oleg Mitvol dismissed from environmental watchdog. Scandal of magic trick.

The EU, apparently wary of antagonizing Russia, has edged away from making any promises to Ukraine on EU membership. “For the EU to let in a new member is a much more complicated decision than for Nato to do so.” A number of columnists have been turning their attentions to Russian relations with Ukraine, with one speculating whether Russia might try to provoke the country into attacking. Ukraine is to shut down an early warning attack station based in Sevastopol that is currently being used by Russia.

Russia has moved to block US attempts to rebuild Georgia's military. Russia has suggested holding an informal UN Security Council meeting with representatives of Abkhazia and South Ossetia next month. What of Russia’s own separatists? Russia’s plan to station more than double the number of troops in the regions that were there prior to the war may alarm the West.

I've long argued that Paolo Scaroni of ENI and Fulvio Conti of Enel were both in the Kremlin's pocket ever since agreeing to be the first foreign companies to buy stolen Yukos assets in an auction, then subsequently help Gazprom launder these assets via a call option. Of course, what is much more valuable than recruiting some high-level accomplices to assist in state theft is the powerful service they can provide to change the foreign policy of Italy, be it under Il Professore Romano Prodi (who nearly took a job with Gazprom like Schröder) or the inimitable Silvio Berlusconi, who finds it difficult to get through a meeting with the Russians without proposing a wife swap.

So really it should have come as no surprise to Vice President Dick Cheney's delegation that visiting Rome to talk about a united front on Russia's invasion of Georgia would expose many serious divisions in that happy relationship (Berlusconi is gleefully right-wing when it comes to Iraq). However, the Cheney delegation did have one successful meeting which may provide optimism that not all of Italy has acquiesced to Moscow's authoritarian energy empire. Meet Umberto Quadrino (photo), CEO of Edison, and the potential saviour of Italian and European energy security. The Financial Times includes an interesting footnote to their article about meetings held between the delegation and Mr. Quadrino, who is enthusiastically interested in helping bring Azeri gas to Italy via the Nabucco ... call him the "anti-Scaroni." Let's keep our eyes on the progress of this project.

Umberto Quadrino, chief executive of Edison, Italy’s second-largest energy group, is lobbying the Bush administration to put its full weight first behind Edison’s ITGI Corridor project and, later, the more ambitious but still somewhat hypothetical Nabucco pipeline. Both would bypass Russia but transit Georgia.

Reuters reports Gazprom warned Canada that Russia could easily find an alternative market for its liquefied natural gas (LNG) if the Canadian authorities try to hinder a deal over the Rabaska LNG project. Canadian Prime Minister Stephen Harper said last month commercial natural gas deals with Russia could be put at risk because of Russia's military action in Georgia. Gazprom Deputy CEO Alexander Medvedev told the 2008 Reuters Russia Investment Summit on Monday those comments had surprised Gazprom. "If there is a nightmare scenario that for some reason this project will be out of reach of realization based on a Canadian political decision, then for us it will be easy to find an alternative destination for our LNG," Medvedev said.

Someone should let Gazprom's executives know that the spot market for LNG is much more competitive than the hostages held by pipelines. With Canadian LNG, Gazprom wants to have its cake and eat it too. Go ahead and let them.

It is interesting how the Russian press is portraying the Sarkozy approach as "conciliatory" (a face saving opportunity?) yet others report that he nearly had to storm out of the meetings with the Russians out of frustration.

It is interesting how previous and current agreements on nuclear assets between Russia and the United States plays very strongly into the level of protection for sovereignty of former USSR states. Jane Armstrong, for example, writes on her blog that Ukraine should enjoy a much stronger obligation to its security and sovereignty from the United States than Georgia did because of Leonid Kuchma's clever deal to guarantee the country's sovereignty in exchange for the surrender of nuclear arsenals. She writes "In essence, Washington is guarantor to Ukraine’s sovereignty, unlike Georgia's, which was punished by Russia for an incursion, invaded temporarily and two of its breakaway provinces acquired."

A civilian nuclear deal with Russia is also being scuppered by the Bush administration as an expression of its disapproval of Moscow's war conduct (never mind that the deal wasn't going to get passed by Congress anyways). The AP reports that the Kremlin "might not be much inclined to hear" to hear this warning, given that Russia "appears to feel it no longer has as much need for the potential billions in revenue the deal would have provided."

To us, this seems very, very ill-considered on Russia's behalf, especially as the markets there hit a new two-year low today.

Yesterday Bob blogged about disaggregating Russia by focusing on high ranking stakeholders in the Kremlin rather than broad sanctions which would punish average citizens. Today, Gideon Rachman (who back in April predicted the war) mentions the visa issue as well in the Financial Times. Doesn't anybody remember how kind Russia was with visas for British citizens for the Champion's League match? Ah, it seems that an invasion and occupation can very quickly erase such small gestures of goodwill.

The Russian government’s reluctance to occupy Tbilisi shows that there is still a debate going on in Moscow about how much international opprobrium the country can afford. Half a trillion dollars was wiped off the value of the Moscow stock exchange in the aftermath of the invasion of Georgia.

The wealthy, Kremlin-connected elite would like to retain the privilege of having bank accounts in Switzerland, houses in London and tanks in neighbouring countries. It should not be too hard to suggest that there is a choice to be made. A crackdown on visas for Russian businessmen would be a good signal.

There's some interesting views here on the Russian invasion of Georgia and the attempt to parlay these events into increased leverage in the Middle East. From Lebanon's Daily Star:

Russia has not only been threatening, blackmailing and - now in the case of Georgia - occupying neighboring countries, it has also been trying to reclaim its status as a great power beyond the borders of the infamous "near abroad." For three reasons, the area where Russian ambitions and local expectations appear most to coincide seems to be the Middle East.

First, Russia has been playing in the Middle East on old Cold War sympathies. It makes the Arab street and wide circles of uninformed but opinion-shaping actors believe that the past glory of the Soviet superpower is still alive. It actively plays on anti-Americanism, promoting the concept that the days of confrontation with the United States were in fact the good old days.

Gazprom insists that its gas monopoly is “mutually dependent” with Europe. Russia reportedly offered to cut out the middlemen and directly deliver oil to the Czech Republic. Atomstroiexport, the company building Iran's first nuclear plant, says that preparations for the reactor's launch have entered their final stage. The Estonian President is calling for a nuclear power plant to be built in order to reduce energy dependence on Russia. US Vice President Dick Cheney has failed to win Azerbaijan's support for the construction of a new gas pipeline that would bypass Russia.

The world's leading economies are too distracted with global financial problems to worry about punishing Russia over Georgia, according to Russia’s Deputy Finance Minister. Agribusiness company Razgulay plans to invest $690 million this year on expansion and development. On the potential gains to be made from the current volatility of the Russian stock market. Russian police have searched an office of News Outdoor Russia, a billboard advertising company controlled by Rupert Murdoch, and British American Tobacco is the latest UK company to be targeted. The US government's bailout of Fannie Mae and Freddie Mac has lifted Russian stocks, but the economy could take some time to recover, depending on who you believe. Federal reserves remain buoyant.

TODAY: Medvedev agrees troop pullout with Sarkozy, Russia to formally establish diplomatic relations with breakaway regions; Georgian conflict causes split in Ukraine’s government; what is the relationship between Nato and Russia? South Park deemed “extremist”.

Following a meeting with French President Nicolas Sarkozy, President Dmitry Medvedev agreed to pull Russian troops from Georgian territory outside of Abkhazia and South Ossetia. Checkpoints around the port of Poti will also be dismantled. Georgian President Mikheil Saakashvili has “cautiously welcomed” the move. Meanwhile, Russia will formally establish diplomatic relations with the two breakaway regions today. This report says that Russia has been denying aid to Georgian villages. The lawyer representing Georgia in its human rights case against Russia in the International Court of Justice said a distinction should be drawn between destruction resulting from the fighting and a systematic campaign against ethnic Georgian civilians.

A dispute over Russia’s actions in Georgia has caused a split between Ukraine’s president and prime minister, with the former accusing the latter of treason.

As the West grapples with how to respond to the Georgian crisis, one policy most likely to yield results, as part of any strategy, is that of disaggregation. This means finding ways to punish those in Russia responsible for pushing the Kremlin into its current trajectory, while supporting those who have a contrary view of their country’s place and opportunities in the evolving world order. Believe it or not, there are many who believe that a strong and successful Russia is not mutually antagonistic to friendly, cooperative, and law abiding relations with the outside world (I count myself among them).

The war in Georgia is wildly popular among Russians today, but this support is thin and precarious for the long run. Russian people will not long support an isolationist gamble when it begins to jeopardize their newly comfortable lifestyle, monthly bottom line, or relative perceived stability. What may seem like a political masterstroke this fall may become Putin's Katrina, as evidenced by the slide in the markets, desperate efforts to shore up the rouble, and the catastrophic damage to the country's image.

More importantly, however, is that the approval or disapproval of the Russian people is virtually irrelevant in this governing model. This is not a country where any accountability exists or elections really matter; its leadership is one that manufactures public opinion rather than being responsive to it. With near total control over the press, the Kremlin will continue to determine poll results and have its own story told. But still we can learn from these expressed perspectives how the Kremlin hopes to get out of this crisis, and what levers may be available to disaggregate.

You've got to be kidding me. From the Telegraph:

Bad French prolongs Russia-Georgia conflict

The conflict between Russia and Georgia has been worsened by badly-translated French, France's foreign minister has admitted on the eve of crucial talks in Moscow between the European Union and the Kremlin.

By Peter Allen in Paris

Last month's ceasefire agreement centred around the creation of "buffer zones" between Russia and the Georgian breakaway regions of South Ossetia and Abkhazia which are now effectively controlled by the Kremlin. The agreement was brokered by Nicolas Sarkozy, the French president whose country currently holds the EU presidency. But the original diplomatic coup became an embarrassing failure as Russia failed to move its troops off the main body of Georgia.

Bernard Kouchner told a meeting of EU foreign ministers at the weekend that the ceasefire agreement was written in French before being translated into English and then Russian. Asked what problems surrounded the buffer zones, Mr Kouchner replied: "The translation, as always."

Ed Lucas thinks that the timing of Russia's move to seize control of its former spheres of influence was brilliantly timed, with Europe's leaders trapped in economic subservience and Washington constrained by war exhaustion among the public.

The West used to be deluded about the former KGB regime in Russia. Belatedly it has shed its illusions. But it is still fatally divided and distracted. Germany and Italy prize their economic ties with Russia far above the interests of nominal allies in Eastern Europe and the former Soviet Union. British Eurosceptics react with garlic and silver bullets when a common European foreign policy is discussed. America is far away, bogged down in two other wars. It is not going to fight harder for Europe than Europe itself will do. Russia knows this, and believes it has a green light to push ahead. Turn down the heating: this is going to be a long winter.

Let the tit-for-tat military deployments begin, as Moscow complains about the presence of NATO ships in the Black Sea, they unveil plans for joint naval exercises with Venezuela in the Caribbean. As we've reported before on this blog, both Chavez and Putin share a particularly ridiculous paranoia that they are on the brink of invasion by the United States, and must vigorously prepare defenses and militarize their borders. Escalation, it seems, isn't just a means but also an end. From the LA Times:

During his visit to Russia, Chavez said that the two nations had formed a strategic partnership and that he was buying a Russian missile defense system to thwart a potential U.S. air attack.

In recent months, Chavez advisors have said Venezuela is considering buying as many as five diesel-powered Russian submarines. The deal would make Venezuela the region's top naval force, said retired Gen. Alberto Muller Rojas, a Chavez confidant.

Venezuelan officials have justified arms purchases from Russia by noting the U.S. ban on all weapons sales by American companies to Venezuela, a mandate that extends to foreign manufacturers' arms that contain U.S. components. Deals with Israeli, Swedish and Spanish manufacturers were scrubbed because the weapons included U.S. parts.

"The U.S. . . . has done everything to motivate Venezuela to seek a strategic military rapprochement with Russia," said a former advisor to Venezuela's Foreign Ministry who requested anonymity.

The United States is confident that Georgia and Ukraine will become members of the NATO military alliance, a top US administration official stated earlier today.

Russia's recognition of Georgian breakaway regions South Ossetia and Abkhazia has increased backing for Georgia and Ukraine's admission to the 26-member NATO alliance, stated the official, who wished to remain anonymous. These statements were made as US Vice President Dick Cheney held talks with Italian leaders.

Cheney last week vowed Washington's backing for Baku, Tbilisi and Kiev during a tour of the region, and urged NATO to unite in order to ward off a return of "line-drawing" in Europe.

He held weekend meetings with political and business leaders at a conference in Italy, including many of the top world oil executives.

The official went on to state that the crisis in the former Soviet regions are "not just a US problem; all of Europe has a stake in how this is handled and whether or not these sovereign independent states remain free and independently sovereign states".

Can BP recover from losing Robert Dudley? In a move thought to be an attempt to punish Russia for its actions in Georgia, the US is pulling out of a civilian nuclear cooperation deal with Russia. Meanwhile the US’ potential civil nuclear deal with India is continuing to garner support. Should we be more concerned about energy consolidation in former Soviet states and countries bordering the Caspian? Gazprom is likely to receive licenses for the development of seven new gas fields in Russia. US oil and gas producers in the Gulf of Mexico are bracing themselves for a hit from Hurricane Ike. On Opec’s struggle to keep oil over $100 a barrel.

The MICEX Index has fallen to its lowest level in two years amid a speedy flight of capital. Despite Yevroset’s offices being raided by authorities last week, Mobile Telesystems is considering buying a stake in the mobile phone retailer. Russia will create a state-controlled airline holding company to rescue the AiRUnion alliance from its crippling debts. An economic forum on Russia’s “Mega Projects” ran over the weekend in Yakutsk. Read a comparison of the British and Russian economies. President Dmitry Medvedev will attend the Asia Pacific Economic Cooperation organization summit in Peru later this year.

TODAY: Sarkozy in Moscow seeking adherence to ceasefire agreement; Cheney takes new angle of attack, Medvedev ups rhetoric; International Court of Justice to hear Georgian appeal; Russia colluding with Iran and Venezuela; Happy Birthday Moscow.

French president Nicolas Sarkozy is in Moscow today, aiming to get Russian troops finally out of Georgia and discuss the role of the international community regarding security. German Chancellor Angela Merkel is optimistic about the meeting. Did the ceasefire agreement suffer from translation problems?

US Vice President Dick Cheney is taking a new angle in his attack on Russia: “Russia's actions are an affront to civilized standards”. The British government has made a “wrong headed” decision to sever connections between military music bands in Russia and the UK, apparently as a demonstrative move over the Georgian conflict. The International Court of Justice will today hear Georgia’s appeal to halt what it calls human rights violations.

The leaders of the Russian government are asking that we believe that 1) the U.S. started the war in order to get a certain candidate elected, and 2) that American operatives were actively involved in the fighting, as proven by a found passport of a U.S. national.

An editorial at the Boston Herald argues that these claims are an illustration of just how far away from reality the Kremlin is drifting...

It’s absurd. Covert operatives never carry passports in the field; when they do carry passports, they support whatever identity the operative has assumed. Far more likely is that Russian authorities simply added White’s old passport to the stash they keep for their own dirty tricks.

Don’t the Russians have an embassy in Washington that reports on American opinion? Any candidate suspected of ginning up a war for the sake of popularity would lose votes by the ton and face questions about his sanity.

Today the Guardian has a good piece on William Browder of Hermitage Capital, who along with HSBC is suing the Russian government, is alleging that high-placed officials within the Interior Ministry participated in corporate identity theft and a conspiracy to defraud $230 million in tax revenues meant for the Russian public. Here Browder presents his strong belief that Mikhail Khodorkovsky should be freed from his unlawful imprisonment.

'I was critical of Mikhail Khodorkovsky [the jailed Russian oligarch] because he mistreated minority shareholders when he controlled Yukos and we were a shareholder in his subsidiaries. I now have a lot of sympathy for him. I was a target of his behaviour. Now I'm a victim in this absurd situation. I sympathise with him. I think he has had a bum deal. He has paid any dues he could ever possibly pay for anything that he did a long time ago. I think he should be let out and I very much hope he is.'

For a long time I had been hoping against hope that somehow relations with Russia would finally earn a spot on the list of debate topics for U.S. politics (it is quite difficult to contend with Iraq and Afghanistan in the exceptionally narrow bandwidth American media reserves for foreign policy). But now that the question of how Washington should respond to the "resurgence of Russia," or whichever narrative we want to use here, is most certainly going to be the foreign policy topic du jour in the presidential debates, I am reminded that I should always be careful what I wish for.

Case in point, this ruminative column by James Traub in the New York Times reminds us of all the Cold War hangovers, memories of passive vs. active anti-communism, and basically of how Russia continues to have the unique ability to be nearly incomprehensible in the context of left vs. right U.S. partisan politics. Traub writes about experiencing the déjà vu effect of his one-time position on U.S. policy toward the Soviet Union, both in periods of harmless decline and other moments of renewed aggression (Afghanistan).

Having once been an anti-anti-communist myself in my previous life, I understand why so many liberal-leaning people in the West are having trouble reconciling and understanding the Russia problem in the context of the invasion of Georgia.

BP has finally agreed to a peace deal with its Russian partners over the future of their joint venture, TNK-BP. The oil firm announced yesterday that embattled chief executive Robert Dudley will leave TNK-BP by the end of the year, as part of an agreement hammered out with the four Russian billionaires who also own the business. Not surprisingly, the deal appeared to have been closely coordinated with the Kremlin. It follows an unprecedented campaign by state agencies against TNK-BP that left Dudley no choice but to flee Russia, citing harassment.

Serbian government officials earlier today insisted that an energy deal with Russia is of the utmost national interest, but the opposition Liberals described it as humiliating. Well, it's not humiliating yet...

Russian stocks plummeted and the cost to protect government bonds from default jumped to the highest in nearly four years as the central bank shored up its currency pummeled by the ongoing conflict in Georgia and tumbling commodity prices. In Moscow, the ruble-denominated RTS benchmark was down 6.51 percent in late afternoon trading, sinking to the 1,400-point level which hasn't been seen since June 2006. Moscow-based analysts say they predict the market going further down to 1,300 points this year. Russia's U.S. dollar-denominated MICEX was down 5.54 percent. Bayerische Motoren Werke AG, the world's largest maker of luxury cars, said sales rose 2 percent last month, boosted by economic growth in China and Russia. Top executives and policy makers will examine Russian investment in a series of exclusive interviews at the second Reuters Russia Investment Summit to be held Sept. 8-10. Russia's huge resources and a consumer products boom may offer growth for another decade, but recent events signal political risks to its financial markets.

TODAY: U.S. Dignitaries (McCain, Rice, Cheney) issue warnings Russia is deepening its international isolation and threatening U.S. security. Lavrov rejects Cheney's attack on Russia. Russia accuses the United States of encouraging Georgian aggression. Former Soviet leader Mikhail Gorbachev to receive Liberty Medal in 2008 for his role in ending the Cold War.

Russian aggression in Georgia hasn't exactly been met with a charm offensive. At the Republican National Convention last night, U.S. Presidential candidate John McCain promised against a return to the days of the Cold War, however stating without doubt that Russia's actions posed a direct threat to U.S. security. Using the "straight-talk express", consisting of language that the Bush Administration has largely shied away from over the past eight years in relation to Russia, McCain declared that "we can't turn a blind eye to aggression and international lawlessness that threatens the peace and stability of the world and the security of the American people."

It seems it has become very popular in many parts of the world to form broad political alliances based upon not much more than mutual distrust and distaste of Washington's policies. Hugo Chavez should probably sent the Russian nationalist Aleksander Dugin a cease and desist letter for IP infringement...

Megan Stack writing in the Los Angeles Times:

Writer, political activist and father figure for contemporary Russian nationalism, Aleksandr Dugin is the founder of Russia's International Eurasian Movement and a popular theorist among Russia's hard-line elite. He envisions a strategic bloc comprising the former Soviet Union and the Middle East to rival the U.S.-dominated Atlantic alliance. The Times interviewed Dugin this week at his Moscow office, a room draped with flags bearing the slogan "Pax Russica." The following are excerpts.

What is your assessment of Russia's place in the world now, and how should Russia be behaving with respect to the West?

First of all, I advocate strongly a multipolar construction of the world. I think that the pretension of the United States to be the unique pole of the world . . . is completely wrong, immoral and unacceptable by the other great centers of power.

We support the creation of great space, a few great spaces, instead of only one point of decision, the United States' decision. We think Russia should be in the vanguard of this process.

We consider -- not only myself, not only I, but our political chiefs -- we consider that in Georgia, [President Mikheil] Saakashvili has committed not only a moral crime, but also he tested what is behind the Russian words, behind the Russian protests against American domination. They wanted to test up to which point is this only words, and what Russia could oppose directly, in concrete acts.

This one is pretty entertaining from Dominic Lawson at the Independent:

I found the following memo – as you do – under a half-finished cup of coffee on the train to Waterloo. Coffee stains made it difficult to read, but it seemed to have come from a person with the single initial, C.

"Prime Minister, you asked us to come up with 'the cheapest possible way to nobble Putin, which will not involve speeches or public acts of any sort by that bastard Miliband'. While we were slightly surprised by this reference to the Secretary of State, we share your view that another of his speeches on the naughtiness of the Russians, and how the EU is really, really serious about it this time, will not do.

You will have observed from today's newspapers how a systematic campaign of financial and legal harassment has caused BP to blink in its battle with the Russian oligarchs. We propose a similar policy.

First of all, we should ask our friends in Switzerland to investigate the affairs of the Gunvor Group. You will recall from an earlier memo that Mr Putin has a very special interest in this company, which now takes commission on about a third of Russia's seaborne crude oil exports. We might not even need help from the Swiss for this, as our most recent investigations have revealed that Gunvor's ultimate holding company is domiciled in the British Virgin Islands.

Today's Financial Times features some great reporting and graphic displays of Europe's dependence on Russian energy. Ed Crooks is not exactly rosy about the EU's prospects for diversification: "Geography and economics dictate that the EU is dependent on Russia for gas, whether politicians like it or not."

Who says the Associated Press doesn't produce hard hitting reports from Russia anymore? Wow, Putin is having a rough couple of months here...

In its September "Sexy Rating" list, the glamor magazine ranks who it considers the 20 sexiest Russian politicians. At the top is Boris Nemtsov, a former leader of opposition party Union of the Right Forces now viewed by many as a spent force.

It is rare that Putin loses out at home. A winner abroad — selected as Time's person of the year in 2007, and Vanity Fair's most powerful and influential figure of the year this month — Putin courts widespread popularity at home, having restored a sense of national pride and stability after the difficult post-Soviet years of Boris Yeltsin's rule.

"This is good news ... but I don't take it too seriously," said Nemtsov, who is pictured sitting on a bed, barefoot and dressed in a grey silk shirt and chinos. Although greying at the temples, that doesn't seem to put the voters off.

Rossiyskaya gazeta is the official organ of the government of the Russian Federation, so you can safely assume that anything printed in it represents the official party line. Below we offer our exclusive translation of a recent opinion piece, in which a retired senior Russian Supreme Court judge discusses the social ramifications of the fact that one quarter of Russian males have been through the prison system, and offers solutions that sound suspiciously liberal, although he quickly backtracks and insists that they are actually quite the opposite. Our translator has intentionally tried to preserve the heavy-handed Soviet linguistic style of the original. Of particular interest is the introduction, which may very well have been added recently, after the rest of the article was written, since it reeks so heavily of the current party line. What are the most important reasons why a large number of prisoners and ex-cons is bad for the "social structure" of the motherland? The surprising answer is that lots of prisoners mean a lower birthrate, since people are prevented from reproducing while behind bars, while persons with criminal records are prohibited from serving in the Russian military, so the more ex-cons you've got, the smaller your pool of cannon fodder for your latest expansionist adventure. Josef Stalin didn't have such qualms - he simply sent zeks straight to the front during the Great Patriotic War (1941-1945).

Sitting pretty

Nearly a quarter of the male population has already gone through prison universities point of view

Photo: Vladimir Radchenko, first deputy chairman of the Supreme Court (ret.), head of the center of the Institute of legislation and comparative legal science attached to the government of the RF

Our “prison population” had come to a critical mark. Over the last 16 years - from 1992 through the year 2007 - in excess of 15 million persons have been convicted in the country. More than every tenth [person] out of a population of 140 million. Almost a million people per year. Of these 5 million and then some have been deprived of liberty.

Let us think about these numbers. Their consequences manifest themselves on the social structure of society, demographics and even on the defense capacity of the country. An excessive “prison population” does not stimulate the birthrate, a criminal record narrows the circle of people subject to callup for military service.

Daniel Ortega, left, shakes hands with Russian Deputy Foreign Minister Sergei Kisliak during a meeting in Managua, Friday, May 18, 2007. (AP)

Not long ago I somewhat jokingly predicted that the foreign desk at the Kremlin was having a really tough time choosing which surrogate state they should nudge into joining them as the second government to recognize the independence of Georgian territories Abkhazia and South Ossetia. Well it seems that the clumsy footrace back to the Soviet past was won yesterday, as the dark horse Daniel Ortega, the Sandinista president of Nicaragua, beat out his good friends Hugo Chavez and Mahmoud Ahmadinejad.

Isn't it a little problematic for Mr. Ortega, as a former guerrilla fighter and leader of a country which was occupied by the Marines from 1912 to 1933 and torn to shreds by brutal Contra militias funded by Washington, to endorse the invasion and occupation of Georgia? One would think Tbilisi and Managua would be natural allies for the defense of sovereignty and non-intervention for small democracies.

These days, authoritarian populism in Russia requires a certain street cred and swagger in the orotorical style ... even if it comes out rather unconvincingly from a dimunitive lawyer.

On Tuesday, he used some of his harshest rhetoric to date, calling Georgian President Mikhail Saakashvili a "political corpse" and suggesting the U.S. somehow instigated the war in Georgia to bolster Sen. John McCain's presidential campaign. (...)

Squaring his shoulders, looking grim and punctuating his speeches with uncharacteristically blunt language, the 42-year-old Medvedev has in recent months sounded like Putin, his predecessor and mentor. On Aug. 11, he used the words "lunatic" and "bastard" in talking about Saakashvili.

A few days old now, but still an interesting one from Slate.com:

These days, the news from Georgia is all bombing campaigns and Russian occupation, but for an odd and magical week in the summer of 2006, I was part of Mikheil Saakashvili's great and tragic fantasy of an independent, America-loving Georgia.

My boyfriend at the time was a sometimes travel writer who had wangled a magazine assignment to write a shopping guide to Tblisi, and he brought me along. We were two Americans without credentials, connections, or, quite honestly, value. There was no reason for anyone to notice us, much less the president of a small nation.

We spent the first few days, Fodor's in hand, cooing at early Christian churches and Ottoman baths. And then one night, during the intermission of a puppet show about the Battle of Stalingrad, we got a panicked call. The president had heard the American media was in town—us. Although I hadn't known that Georgia was a country until the travel writer told me he'd gotten us a free trip there, I was suddenly at the Chancellery Building in Tblisi meeting President Saakashvilli—call him Misha, he implored.

The Wall Street Journal is carrying a story on VP Dick Cheney's trip to the Black Sea to express support for Georgia and push for alternative pipeline projects such as Nabucco.

"The Russians have demonstrated they can close that corridor through Georgia any time they want," said John Bolton, President Bush's former U.N. ambassador.

U.S. officials reject that. "The Georgian energy corridor is safe," Deputy Assistant Secretary of State Matthew J. Bryza, one of Nabucco's majo