The Great Debate

By Ian Bremmer
The opinions expressed are his own.

After a week full of anti-government and pro-government protests, Russians woke up on Monday to big news. Mikhail Prokhorov, a political novice with billions of dollars—and the New Jersey Nets— to his name, announced his Presidential bid.  Alexei Kudrin, a longtime bureaucratic infighter, also declared his plans to re-enter the political arena. These developments were even more significant considering both were ousted in rather public quarrels with the powers that be just months ago. Kudrin said he would support and aid a pro-reform liberal party that would stand as a counterweight to the incumbent United Russia. Prokhorov intends to challenge Putin for the presidency in March 2012 on a platform that would appeal to Russia’s “disenchanted middle class.”

No matter what Kudrin and Prokhorov say in public, they both represent the same thing to Russia and the world: Vladimir Putin’s iron grip on power. As I’ve written before, Putin is the most powerful individual on the planet. To think that either man would risk his freedom or his fortune to oppose Putin’s Kremlin, no matter what their stated reasons are, is just wrong. That said, there are reasons to watch this “race” as it will give some insight into Putin’s inevitable third term as president.

Putin has had to deal with a growing sense of dissatisfaction in Russia as of late.  Growth and living standards are stagnating, while economic inequality persists. It is unclear whose pockets are being lined with the wealth generated by Russia’s massive natural resources. The lack of freedom of the press, centralized control over economic opportunity, and pervasive corruption that makes a mockery of the justice and security systems and other institutions, are Putin’s levers of power-- and also the focal points for protesters. The protestors’ complaints crystallized last week over United Russia, Putin’s party, winning a smaller but still strong majority in the parliamentary elections. Accusations of election fraud were widespread and tens of thousands took to the streets in protest over the course of last week. Putin has not been in a position to crack down on these protests -- they’re too visible and too widespread -- but be sure that the oligarchs and ruling classes in Russia are on Putin’s side. While his tactics for retaining power have had to change, the outcome is the same.

Monday, a pro-United Russia rally in Moscow had the distinct air of a made-for-media event, with the college kids in attendance complaining their classes had been cancelled in order to compel them to turn out to show their “support” for the current regime. But the numbers, even if not to the extent that the state television claims, were there. Though Prokhorov and Kudrin will deny it endlessly, their candidacies are without a doubt sanctioned by the Kremlin. Just this year, Prokhorov was the leader of a pro-business liberal party that was created by and quite obviously aligned with the Kremlin. He quit because of a falling out with one of Putin’s Kremlin advisors -- but it was not a falling out so great that Prokhorov became persona non grata. Quite the opposite, Prokhorov’s political resurrection may prove too useful for either Putin or the Kremlin middlemen to pass up.

Prokhorov has not forgotten that he owes his fortune and therefore his allegiance to Putin. As he already stated in his press conference, he doesn’t plan to dwell on attacking Putin (no more than 10% of his platform will be anti-Putin), but rather would like to talk about his plans for Russia. Kudrin has all but ignored Putin in laying out his case for a new party. Imagine if Newt Gingrich or Mitt Romney came out tomorrow and said they were done attacking President Obama and wanted to focus solely on their plans for the U.S. Both Kudrin and Prokhorov represent ‘acceptable opposition’ to Moscow. That’s a recipe for a gracious but certain defeat. Kudrin owes his allegiance to Putin for slightly different reasons, but the result is the same: both candidates exist to draw off votes and appease the intellectual classes who are disenchanted with Putin’s leadership. But they will do nothing to keep Putin from a third term as President.

By John Lloyd
The opinions expressed are his own.

Vladimir Putin, Prime Minister of Russia, claimed the Presidency, the supreme leadership of his country, once more last week with – at least in public – an assurance which amounted to nonchalance. The man whom he had made current President of Russia, Dmitri Medvedev, proposed to the party he had created, United Russia, that he be its candidate for the next presidential elections, to be held next year.

He told the party congress that, should he be elected, he would appoint Mr. Medvedev as Prime Minister. A straight switch, requiring only the imprimatur of the people – who, grateful for stability, rising prices and an increase in the status of their country – are expected to give it.

For a country which has been turbulent for a quarter of a century, this promises the smoothest of transitions. Mr. Putin was president – succeeding Boris Yeltsin – for two terms, from 2000 to 2008. Mr. Medvedev kept the seat warm for a further four years: and if re-elected, Mr. Putin can expect two more presidential terms, till 2020 (when he will be 68) – a longer tenure of power than any other major elected leader since the war. This, of course, assumes he remains popular: but while both his own and his party’s ratings have fallen, both easily outstrip every other individual or party in the state.

By Ian Bremmer
The opinions expressed are his own.

Long live the king? You can't hold it against the Russian people for wondering just how long Vladimir Putin intends to remain in power with the recent announcement that he plans to return himself to the presidency and swap his partner Dmitri Medvedev into the prime minister slot. The electoral game Putin is playing is being compared to "castling" in chess-- a rook and a king swapping places, in order to shore up the defense.

There might be defense at the heart of the strategy, but Putin's ruling party, United Russia, despite some recent murmurings, is still the only game in Moscow. Which is to say that Vladimir Putin is by all reckoning the most powerful man in the world. What other leader, leaving aside third-world strongmen, has so completely consolidated his rule over a country, as Putin has? His success is all the more venerable when one considers that Putin is leader of a country of nearly 150 million people -- and at the helm of the one of the world's most important economies. Attention must be paid to him. Sure, other leaders around the world may have more people or even larger economies, but they don't have as full a grip on the reins of power as Putin. (And few have ever been reverently photographed riding horseback shirtless, petting a tiger, or playing piano in tux and tails.)

Even with this switcheroo, little will change about Russia's, which is to say Putin's, stance on foreign or domestic affairs. Despite years of inspired reformist speechifying from President Medvedev, little has changed in the ossified Russian bureaucracy. That speaks to his true, limited, authority. The civil service system he declaims remain inefficient and antiquated, and presents ample opportunity for the kind of low-level corruption that greases the wheels of local politics across the world. Medvedev has been a friendly face for the Western world, someone who says the right things on its grand stages; but he has had little influence, as president, over the country's true direction. As the prime minister in waiting, look for that trend to continue.

Could the dreaded R word come back to haunt the developing world? A study by Goldman Sachs shows how differently financial markets and surveys are assessing the possibility of a recession in emerging markets.
One part of the Goldman study comprising survey-based leading indicators saw the probability of recession as very low across central and eastern Europe, Middle East and Africa. These give a picture of where each economy currently stands in the cycle. This model found risks to be highest in Turkey and South Africa, with a 38-40 percent possibility of recession in these countries.
On the other hand, financial markets, which have sold off sharply over the past month, signalled a more pessimistic outcome. Goldman says these indicators forecast a 67 percent probability of recession in the Czech Republic and 58 percent in Israel, followed by Poland and Turkey. Unlike the survey, financial data were more positive on South Africa than the others, seeing a relatively low 32 percent recession risk.
Goldman analysts say the recession probabilities signalled by the survey-based indicator jell with its own forecasts of a soft patch followed by a broad sustained recovery for CEEMEA economies.
"The slowdown signalled by the financial indicators appears to go beyond the ‘soft patch’ that we are currently forecasting," Goldman says, adding: "The key question now is whether or not the market has gone too far in pricing in a more serious economic downturn."

By John Bolton
The opinions expressed are his own.

With President Obama’s Libya policy staggering from one embarrassment to another, last week he and Secretary of State Clinton outdid themselves. They publicly welcomed Russia’s effort to insert itself as a mediator, an act of such strategic myopia that it must leave even Moscow’s leadership speechless.

Permanent Security Council members Russia and China abstained on the initial resolution authorizing force to create a Libya no-fly zone and to protect innocent civilians. By not casting a veto, Russia thereby tacitly allowed military action to proceed. As they did, Russia repeatedly second-guessed and harshly criticized NATO’s operations. Now, as a mediator, Russia will, in effect, have the chance to rewrite the Council’s resolution according to its own lights.

Given the uncertain trumpet sounded by both Obama and NATO, and the still-inconclusive outcome of the “kinetic military action,” the reputation and credibility of U.S. and NATO, militarily and politically, have been gravely impaired. The President likely doesn’t appreciate these wounds as he leans over backwards not to be seen as the regime-changing unilateralist he imagined his predecessor to be.

By Masha Gessen
The author is a guest contributor to Reuters.com. The views expressed are her own and not those of Thomson Reuters.

“Are you scared?” someone asked me during a talk in New York last Friday night.

I always get that question. I am a journalist working in Russia, where 19 murders of journalists remain unsolved. Russia ranks eighth in the Impunity Index compiled by the Committee to Protect Journalists — the only European country on the list, it is wedged between Nepal and Mexico.

The following article by Silvia Marchetti first appeared in GlobalPost.

ROME, Italy — Ischia and Capri, two tiny islands in the Gulf of Naples, are fighting over big money. That is, Russian money.

Ischia, a thermal baths and spa destination, complains that its Russian clients prefer shopping on the neighboring isle because it has a wider choice of luxury boutiques. On both islands, nearly all hotels and restaurants have menus written in Cyrillic and employ waiters whose mother tongue is Russian, while shops display price-tags in both euros and dollars.

It’s indeed worth the trouble. Luring tourists from Russia is a lucrative pursuit in Italy. Many of the most breathtaking and expensive locations have been virtually colonized by them.

Russia’s decision to ban grain exports will be welcomed by some physical grain traders because it allows them to declare “force majeure”, walking away from wheat supply contracts that had become increasingly uneconomic to perform.

Force majeure was originally developed as a doctrine under civil law systems. There is no automatic or general right to invoke force majeure in the common laws of England and New York that govern most international commodity supply contracts.

The common law equivalent is “frustration”. Lawyers have spent many happy and profitable hours arguing what does and does not constitute frustration. It is a narrower definition than force majeure — and much harder to prove.

America’s spy agencies are spending more money on obtaining intelligence than the rest of the world put together. Considerably more. To what extent they are providing value for money is an open question.

“Sometimes we are getting our money’s worth,” says John Pike, director of GlobalSecurity.org, a Washington think tank. “Sometimes I think it would be better to truck the money we spend to a large parking lot and set fire to it.”

The biggest post-Cold War miss of the sprawling intelligence community was its failure to connect the dots of separate warnings about the impending attack on New York and Washington on September 11, 2001. It also laid bare a persistent flaw in a system swamped by a tsunami of data collected through high-tech electronic means: not enough linguists to analyse information.

In the wake of President Obama's decision to scrap the U.S. missile defence shield in eastern Europe, many are pondering Russia's response. The relationship will remain in the spotlight this week, when President Medvedev heads to the U.S. for the G20 summit. Although the precise nature of Russia's reaction remains to be seen, it has a big incentive to improve relations. It badly needs American investment and co-operation to help solve serious economic problems at home.

Critics of Obama's decision worry that it will "embolden" Russia, causing more aggressive behaviour abroad. Yet they forget that the Bush administration's antagonistic policies failed to provide security to Russia's neighbours. These policies didn't prevent Russia's war with Georgia, the repeated gas disputes with Ukraine, and a serious cooling of relations with countries such as Poland. Far from being restrained, Russia's confrontational attitude had a lot to do with its perception that the U.S. was busy encircling the country with missile bases and alliances.

The critics also imply that Russia is preoccupied with external expansion, but that hardly seems appropriate today. Russia's GDP is set to plummet by 8 percent this year. Russian analysts estimate that the country needs up to $2 trillion to renovate its dangerously clapped-out infrastructure. In major industrial cities, Russia's dilapidated factories are mulling huge job losses. For the foreseeable future, Russia's leaders are likely to be preoccupied with thorny domestic problems.

Faced with such daunting challenges, it's entirely logical that both Medvedev and Putin say they are keen to kick-start American trade and investment. Responding to Obama's decision -- which he described as "brave and correct" -- Putin immediately linked it to economic issues. He called for the U.S. to back Russia's entry into the World Trade Organisation (WTO), and scrap Soviet-era trade restrictions against Russian companies, especially those that regulate technology transfer to Russia.