Russia: Other Points of View

RUSSIAN FEDERATION WEEKLY SITREP

by Patrick Armstrong

Revolutions. The Arab Revolution is making a few people (Gorbachev for one) speculate about the possibility of a similar rising in Russia. Speculation about a Russian “Arab scenario” is little more than wishful thinking from a negligible opposition that agrees on almost nothing. The “Arab revolution” is sui generis: rulers-for-life enriching their circle while impoverishing everyone else and populations in which half are under 30 or 25 with little to hope for. And some outside advice. This is not Russia: simply stated, the necessary conditions are not there. The Duumvirate remains popular and for good reason: Russians can see and touch the improvement in their situation over the past decade. If in 15-20 years the same people were on top still taking about police reform, cooruption and modernisation that would be a different story. However, some of the other post Soviet states, especially those with rulers-for-life, could develop that way. One place to keep an eye on is Georgia: if Saakashvili contrives to stay in power (as he seems to be trying) and we have another few years of stagnation and blaming everything on Russia, it could happen there – at least some of the opposition says so.

PUTIN AND THE PEOPLE

REPRINTS

The Independent
February 22, 2011
Vladimir Putin and the people
By Mary Dejevsky
Chief editorial writer and columnist

Russia's Prime Minister is feared in the West  but adored at home, says Mary Dejevsky. Is the reason we don't trust him that we don't really understand him?

Later this week, the Russian Prime Minister will be in Brussels  to which you might well respond wearily, "Big Deal". EU-Russia meetings at this level take place every year and soon become non-events, even if they avoid descent into recriminations. This time, however, a real "Big Deal" might not be far off the mark. Russia has spent the past few months signalling that it would like to see relations with the EU shifting from the tetchy political arena to Russia's economic modernisation, and the Prime Minister will have with him a large delegation of ministers and business people to that end.

As always, there will be many obstacles to the sort of hi-tech investment Russia is after  not least the recent re-conviction of the country's erstwhile richest man, Mikhail Khodorkovsky, which, to put it mildly, dampens confidence in the business climate and Russian justice. But perhaps the biggest obstacle will remain unspoken. The outside world, but especially Europe  and within Europe especially Britain  has a problem with Russia's Prime Minister, Vladimir Putin.

THE DECLINE OF SILOVIKI AND THE RISE OF THE MEDVEDEV TANDEM

COMMENTARY

by Gordon M. Hahn

On Janaury 31st Russia’s Investigative Committee announced that all charges had been dropped against Deputy Finance Minister Sergei Storchak.  Investigator Anatolii Iskantsev informed Storchak of the move and said it was taken for lack of evidence that a crime was committed (“Sergeya Storchaka zrya presledovali tri goda,” Kommersant, 31 January 2011).  Why is this important?  It is one of many signs that the tandem of President Dmitrii Medvedev (and even Prime Minister Vladimir Putin) is moving away from a reliance on the ‘siloviki’ (power ministries or organs of coercion and law enforcement) for power and policy.

Storchak and others were supposedly suspected of having embezzled $43 million while helping a company receive payment for a fictitious debt owed by Russia.  In reality, Storchak was arrested on 15 November 2007 as part of a power struggle between several factions of the notorious Russian siloviki during the runup to the succession of Vladimir Putin and the presidential elections of March 2008.  Prior to the succession struggle, Putin was able to balance the interests of the siloviki factions, which began to more thoroughly dominate the Russian elite with Putin’s arrival to power.  By 2007 Putin’s imminent departure from the presidency was heating up the rivalry between the two factions, each of which sought to influence the selection of the ‘crown prince.’  Putin appeared to settle on Dmitrii Medvedev as his candidate in part as a compromise to separate the feuding factions (as noted in Gordon M. Hahn, “Is A Russian ‘Thaw’ Coming?,” Russia: Other Points of View, 18 April 2008).  

RUSSIA: TOWARDS GREATER PRAGMATISM

FINANCIAL ANALYSIS

by Chris Weafer

Below, in PDF format, is a general Russia presentation that looks at the issues driving the country’s need to modernize and to raise the level of investment spending. 

“Russia: Towards Greater Pragmatism” looks at the reasons why we are now seeing this greater level of pragmatism in the government’s approach, for example more substantive efforts to conclude WTO entry talks in 2011, and what industry’s and projects are being particularly targeted. 

Download the report here  Download Russia_Towards Greater Pragmatism

ISLAM, ISLAMISM AND POLITICS IN EURASIA REPORT NO.35, FEB 18 2011

by Gordon Hahn

Monterey Institute of International Studies

CONTENTS:

RUSSIA

• DOMODEDOVO AIRPORT SUICIDE BOMBING UPDATE
• TWO MORE SUICIDE BOMBINGS
• LEADING DAGESTAN AMIR KILLED
• HUMAN RIGHTS ORGANIZATION’S FIGURES FOR JIHAD-RELATED VIOLENCE AND CASUALTIES IN 2010

CENTRAL ASIA by Yelena Altman (unless otherwise indicated)

• KYRGYZSTAN BEGINS COUNTER INSURGENCY OPERATIONS
• UZBEK AND TAJIK JIHAD FIGHTERS IN PAKISTAN
• TAJIKISTAN TIGHTENS SECURITY
• TAJIK AMIR ALI BEDAKI’S DEATH REEXAMINED

COMMENTARY

Anita Rai, Posture for a Democratic Egypt

To access the full report, please click here  Download KAVKAZJIHAD_MonTREP_IIPER_35_FEB_2011

RUSSIAN FEDERATION WEEKLY SITREP

by Patrick Armstrong

Kuriles. I’m mystified why this issue has suddenly boiled up. Perhaps Medvedev’s visit last November has driven the two capitals into the inevitable rhetorical exchanges. Attempts are being made to calm things down: the two foreign ministers have promised to talk calmly and the chief of Antiaircraft and Missile Troops, responding to a suggestion that S-400 SAMs be deployed there, dismissed the idea as excessive and dangerous. The principal Japanese opposition leader has criticised his government for its language. At present each claims the islands and it is not easy to see how a compromise can appear. But there is at least one international example that might serve as a model – the Åland Islands.

Khodorkovskiy. An aide to the judge who sentenced Khodorkovskiy and Lebedev to another prison term has said: “Higher echelons didn't like the verdict, so it was replaced by another one”. The judge denies it, and, although the aide fully expects to be fired, the court says “it has no plans” to do so. Apart from any other considerations, there has always been a strong political content to the prosecutions because Khodorkovskiy was trying to gain control of the Duma and thence the government.

RUSSIA’S MVD REFORM: THE NEW LAW ‘ON THE POLICE’

COMMENTARY

by Gordon M. Hahn

In January of 2010 ROPV readers were informed of the scale and scope of President Dmitrii Medvedev’s plans for overhauling the massively corrupt Ministry of Internal Affairs (MVD) (see Gordon M. Hahn, “Medvedev’s Thaw Hits at Russia’s Lack of Rule of Law,” Russia Other Points of View: Russia Media Watch, 12 January 2010). 

The first stage of that process is now well underway.  Russia’s new law “On the Police,” the first step of the MVD reform, was signed by President Medvedev earlier this month and comes into force on March 1st.  Other stages of the reform will include the reform of the police training and education system which also includes training on human rights.  There will be a complete ‘attestation’ or ‘recertification’ of all MVD personnel with the goal to reduce the most corrupt and incompetent MVD policeman and officials; a procedure codified in this law as well (Article 54.3-5).  Also, President Medvedev is to issue a “Decree on Issues Concerning the Assessment of the Work of Russia's Interior Ministry Agencies,” which will apparently be a performance review of departments and other aspects of the MVD system.  Below we assess the new law in terms of its value as the new fundamental law governing the MVD, and as an indicator of progress in the overall reform process begun by President Medvedev and Prime Minister Vladimir Putin. 

RUSSIA IN GLOBAL MARKETS

FINANCIAL ANALYSIS

The Cook, the Thief, His Wife, His Lover

by Chris Weafer

         Love is an ocean of emotions entirely surrounded by expenses

                                                                        Lord Dewar

The big question in global equity markets currently is whether the recent switch from emerging markets to developed markets is cyclical or structural and whether Russian equities can continue to out-perform. Year to date, the S&P 500 is up 5.7% while the MSCI GEM Index is down 5.2%. Russia’s RTS is up 6.3% and the IOB Index of GDRs is up 7.2%.

Two years after a seemingly solid marriage between investors and emerging market equities, that relationship is in trouble. Since mid January, investors have been flirting with their old partner, developed markets. That raises the question for emerging markets “is the marriage over or is this simply a blip in the romance”?

And what of Russia? While investors have cooled to the attractions of the other major emerging markets, the flirtation with Russia has been picking up. But, is this just an infatuation, ultimately doomed, or can investors sustain a longer affair with Russian equities while still rebuilding a relationship with developed market equities?

The answer lies in the cooking pot where the cook has to choose between spicy ingredients, such as rising inflation, political risk in the Middle East and potentially higher growth, or, to stick with traditional ingredients such as improving earnings and the relative safety of developed markets.

If Peter Greenaway were to remake his classic movie and set it in global investment markets, investors would be cast as the Cook, i.e. having to decide on their choice of cuisine; developed markets, especially US equities, would be the Thief, i.e. trying to seduce the cook; emerging markets would be the Wife, i.e. possibly looking less appealing to the cook after two solid years of marriage; and the Lover is Russia.

Btw, apologies for the male-female bias…it’s simply less complicated in order to make use of the movie reference. Nothing else is implied or intended.

The full note, with supprting tables of statistics, illustrative graphs and the case for each of the headings (Cook, Thief, Wide and Lover), can be downloaded here Download Cook,_Thief,_Wife,_Lover_-_Case_for_EM_&_Russia_in_Global_Markets 

RUSSIAN FEDERATION WEEKLY SITREP

by Patrick Armstrong

Police reform. The Police Reform Bill has been passed and signed into law; a simple summary of it by RIA/Novosti is here. Symbolically they will now be called “Police” rather than the revolutionary-sounding “Militia” and will get new uniforms resembling, we’re told, the Tsarist ones. Perhaps the most important part of the reform is that presently serving police will interviewed for their jobs, so to speak, and 20% will be let go. This last strikes at the heart of the problem, which is that too many serving police are corrupt and incompetent. But, as a former bureaucrat myself, I doubt that the process will thin them out much. This is undeniably another step but it takes a long time to change.

Arms treaties. With the new START out of the way – Medvedev signed on the 28^th and Obama on the 3^rd – there is talk of new arms control discussions between Washington and Moscow. Obama said Washington intended to initiate talks on tactical nuclear weapons, of which Russia is believed to hold many more than the US. At the Munich security conference the Russian Foreign Minister called for re-animation of the CFE Treaty which Moscow finally denounced after NATO kept piling conditions on ratification. This was a particularly useful treaty: it was one of the few disarmament treaties that actually destroyed weapons and the inspection regime and data exchanges were great confidence and transparency builders. At the same conference the US Secretary of State called for cooperation on missile defence and talks at NATO began today on that subject.

ISLAM, ISLAMISM AND POLITICS IN EURASIA REPORT NO.34, FEB 7 2011

by Gordon Hahn

Monterey Institute of International Studies

CONTENTS:

• THE FAILED MOSCOW NEW YEAR’S EVE SUICIDE BOMBING PLOT
• DOMODEDOVO AIRPORT SUICIDE BOMBING

To access the full report, please click here  Download KAVKAZJIHAD_MonTREP_IIPER_34_Feb_2011