Getting Russia into proportion

By Paul Taylor
December 8, 2008

Paul Taylor Great Debate– Paul Taylor is a Reuters columnist. The opinions expressed are his own –It’s time to get Russia back into proportion.Moscow’s resurgence as a major power, determined to be treated with respect and to stamp its influence on its neighborhood, has been one of the big stories of 2008.The sight of Russian tanks rolling into Georgia in August, coupled with a Kremlin drive to extend its control over energy supply routes to Europe, sent shivers through former Soviet satellite countries and drew loud condemnation from Washington.President Dmitry Medvedev’s threat to site short-range missiles in Kaliningrad aimed at Poland if Warsaw deploys part of a planned U.S. missile shield raised the rhetorical stakes.Yet the global financial crisis, the collapse of oil prices, the aftermath of the Georgia war and U.S. President-elect Barack Obama‘s victory have all cast doubt on Russia’s real weight.The credit crunch has hit Russia harder than other emerging economies, hammering confidence in its stocks, bonds and the rouble and forcing the central bank to spend some of its huge foreign currency reserves to stabilize the financial system.Foreign portfolio investors have fled and many Russian investors have parked more of their money in foreign currency abroad, at least partly due to heightened political risk since the military action in Georgia.State gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz), feared in many parts of Europe as a predator seeking a stranglehold on the continent’s gas supply, has lost more than two-thirds of its market capitalization since May.SHRINKING POPULATIONWith oil prices down from a peak of $147 a barrel in July to below $50 now, the heavily oil-and-gas-dependent economy looks more vulnerable, especially since Russia needs Western technology to boost its energy extraction.Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, says that after a 10-year boom, growth will fall to between 0 and 3 percent next year.Russia remains a lucrative market for Western consumer goods, but concerns about state meddling in business, widespread corruption and shortcomings in the rule of law have contributed to its failure to diversify away from hydrocarbons and minerals.Compounding the weakness of its non-energy economy, Russia’s demographics are among the worst in the world, with a life expectancy of just 67 (60 for men) and the combination of a low birth-rate, an aging population and a public health crisis.The Organization for Economic Cooperation and Development (OECD) projects the population could shrink by nearly one-third by 2050 to 100 million from 143 million.Diplomatically, Russia overreached itself after its lightning military victory in Georgia by recognizing the breakaway regions of South Ossetia and Abkhazia as independent.Only Nicaragua followed suit. Major allies such as China and India, fearing the precedent, pointedly declined.The European Union, the main customer for Russian gas, has responded by accelerating efforts to reduce its dependency, planning an alternative supply corridor through Turkey and seeking new suppliers in Africa, the Middle East and Central Asia.Other former Soviet republics, including Azerbaijan, Belarus and Turkmenistan, have sought closer ties with the West.True, the U.S.-led NATO alliance has gone no further toward giving Georgia and Ukraine a roadmap to membership — the issue is off the agenda for now — and it has now resumed some frozen contacts with Russia, as has the EU.But Moscow’s efforts to reshape the security architecture of Europe, sidelining the role of the United States and of the Organization for Security and Cooperation in Europe, loathed by Moscow for its election monitoring, have gained little traction.STATUS QUO POWER?Russian analysts insist the Georgia war was a defensive action responding to pro-Western Georgian President Mikheil Saakashvili’s bid to retake control of South Ossetia by force.”Russia is a status quo power, not a recidivist aggressor on the prowl,” says Dmitry Trenin, head of the Moscow office of Carnegie Endowment for International Peace.Moscow has taken a number of steps recently to suggest it wants peaceful solutions to other “frozen conflicts” in its neighborhood, brokering the first summit talks between Armenia and Azerbaijan over Nagorno-Karabakh, and seeking a deal between Moldova and its breakaway region of Transdniestria.In Ukraine, the biggest former Soviet republic where a democratic “Orange Revolution” in 2004 infuriated the Kremlin, Russia has other political and economic levers it can pull to maintain influence without having to use force.Getting Russia into proportion does not mean ignoring Moscow or its security interests. Its location and the fact it supplies 40 percent of Europe’s gas imports mean it cannot be neglected.The United States and the EU have an interest in binding Moscow rapidly into rule-based international bodies such as the World Trade Organization and the OECD, although they put both processes on hold in reprisal for the Georgia war.Some Western analysts believe a weak Russia could be more dangerous, if mishandled, than a strong one.In NATO circles, some see a risk of the “Weimarisation” of Russia, comparing it to Germany’s economically enfeebled Weimar Republic that was swept away by the rise of Hitler’s Nazi party.Political humiliation and economic instability could lead to a surge of aggressive nationalism.After the collapse of the Soviet Union in 1991, wags branded Boris Yeltsin’s rump Russian Federation “Upper Volta with nukes,” capturing the paradox of a failed state with a ruined economy sitting on a huge arsenal of atomic weapons.When Vladimir Putin succeeded Yeltsin in 2000, he was determined to restore Russia’s power and pride after a decade in which many Russians felt the West ignored their interests by expanding NATO in ex-communist eastern Europe.Today, it sometimes seems that Russophiles and Russophobes in Europe and the United States have become objective allies in exaggerating the importance of or the threat from Moscow.A more self-confident Europe and a less unilateralist America need to find a way of engaging with Russia according to its true weight, without treating it as a giant.


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Billy Hirst,Regarding your comment of December 9th, at 8:05am GMT;Please quantify your assertions that my argument is erroneous.”…shame his facts are so wrong, even the history he quotes is very subjective…”What argument do you posit to challenge what I have written?Which “facts” are “so wrong”?In the grown up world, we offer a counter argument in an attempt to expose the other point of view to fallacy, and lack of credibility. We don’t sit there with our thumbs in our armpits and spits across the room at our opponent.That being said, I will address the one assertion you did make.Billy Hirst writes:”Ossetia has always been Georgian, yes the USSR intervened but it has always been recognised as Georgian even today by international standards.”Actually, up until 1922, Ossetia was a part of the Russian “empire”. In 1922, it was divided into North and South Ossetia, with the southern region being absorbed into Georgia SSR. After the fall of the USSR, Georgia declared independence, as did South Ossetia (from being a part of either Russia, or Georgia) on November 28,1991. Also declaring independence at this time was Transnistria, and Abkhazia.The second referendum held for independence on November 12, 2006 in South Ossetia (as a result of the lack of international recognition) showed that 95% of the population voted, and of that 95%, 99% voted YES for independence. This vote was observed by 34 int’l observers from Germany, Austria, Poland, and Sweden.As of today, only the Russian Federation and Nicaragua officially recognize South Ossetia as an independent state.For Georgia to not only not recognize the independence of South Ossetia, when itself declared independence is the height of hypocracy. Not only that, but to unleash a full rocket artillery barrage in conjunction with armoured vehicles accompanied by infantry against a civilian population, and killing 12 CIS peacekeepers and injuring 150 is beyond reprehensible.It is worth noting that Erosi Kitsmarishvili, Georgia’s former ambassador to Moscow and a confidant of Georgian President M. Saakashvili, testified to the Parliament of Georgia that Georgian officials told him in April 2008 that they planned to start a war in Abkhazia, one of two breakaway regions at issue in the war, and had received a green light from the United States government to do so.I am sure that an American can readily identify with what constitutes fighting for one’s independence, and getting other nations to recognize such independence.South Ossetia has a flag, an anthem, a President and a Prime Minister.For the record, I do not have any lineage with either the Russian Federation, Georgia, or South ot North Ossetia, which would interfere with an objective analysis on my part concerning this topic.

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From Foreign Policy:In September, the United States pledged $1 billion in aid to Georgia to help the country recover from its August war with Russia. The money was intended to “help Georgia sustain itself,” Secretary of State Condoleezza Rice said. With several Georgian towns badly damaged by Russian bombing and 20,000 refugees from South Ossetia still unable to return home, there were seemingly many worthy causes for all that cash. So why was $176 million of the aid money earmarked for loans to businesses—including $30 million to a real estate developer for a luxury hotel: the 127,000-square-meter Park Hyatt in downtown Tbilisi, an area that was not at all damaged in the war? The 183-room, five-star hotel will include 70 luxury condominiums, a fine-dining restaurant, conference facilities, and a health spa with juice bar.The Overseas Private Investment Corporation (OPIC), the U.S. government agency facilitating the loan, is also financing a $40 million office building across the street from the Georgian Parliament building and a $10 million renovation of a historic building into a convention center. The loans, OPIC President Robert Mosbacher told Eurasianet, were “a clear, unequivocal signal about the confidence we [the U.S. government] have in the future of this country.”Georgian President Mikheil Saakashvili’s ill-advised military operation in South Ossetia might have been a disaster for many of his people, but thanks to Uncle Sam, it seems to have turned out just fine for Tbilisi’s real estate developers

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Mr. Taylor,You must be a russophile. Otherwise you would not publish things on Russia. Sort of sadistic love of a favorite prey. Get over it. Take some medicine.Jen

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Mr Taylor:Travel budgets are tight in all the news organizations but I recommend you ask your bosses for funds for a two or three-week to Russia. That might cure you of some of your preconceptions. And perhaps you should have a look at an internal memo circulating in the U.S. Department of State urging foreign service officers to “listen more closely.” You obviously listened to your NATO and Washington sources but not to any Russians. If any country has a reason to feel paranoid, it surely is Russia. What exactly is a good reason for NATO to extend its reach to Georgia?As to the soundbite below, have you been to Upper Volta? Maybe your bosses could spring you some additional money for a visit? The comparison is absolutely absurd.”After the collapse of the Soviet Union in 1991, wags branded Boris Yeltsin’s rump Russian Federation “Upper Volta with nukes,” capturing the paradox of a failed state with a ruined economy sitting on a huge arsenal of atomic weapons.

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