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Thursday, September 18, 2008

Russia's Ekho Moskvy Under Mounting Pressure

September 18, 2008 - RFE/RL by Daisy Sindelar - Compared to the many press and media outlets created in the wake of the Soviet collapse, Ekho Moskvy has enjoyed a relatively long life. The radio station, which broadcasts a mixture of news, commentary, and public call-in shows, first went on the air in 1990. Since then, it has made and maintained a reputation as one of the most respected news outlets in a country where impartial information has become an increasingly rare commodity. (Russia's ranking in global press-freedom surveys has steadily declined in recent years; Freedom House's 2008 report ranks it on par with Kazakhstan, Sudan, and Yemen.) But Ekho Moskvy's coverage of the recent war in Georgia has brought it unwelcome attention from both the Kremlin and the public. In August, the station -- which employs a wide spectrum of political commentators and relied on reporters in the field, rather than state media reports, for much of its Georgia coverage -- was singled out for criticism by Prime Minister Vladimir Putin. During an August 16 gathering in Sochi of some 30 the country's top media professionals, Putin singled out Ekho Moskvy's chief editor, Aleksei Venediktov, berating him for a series of alleged errors in the station's reporting on the war. And on September 16, members of two nationalist groups, the Eurasian Youth Union and the Union of Orthodox Standard-Bearers, staged a demonstration in Moscow accusing Ekho Moskvy of threatening national interests by hosting Georgian officials on the air. The motley gathering of young nationalists and bearded Orthodox faithful began the protest with a prayer before accusing the station of inciting racial hatred and insulting the honor of Russian federal troops. They called for Ekho Moskvy to be closed and for Venediktov to be jailed. Chilling Effect - Such protests -- which typically feature no more than 50 people and appear to stir little public sentiment -- are nonetheless becoming a frequent feature of grassroots political life in Russia. The Eurasian Youth Union, whose followers support calls for the creation of a new empire centered around Russia, recently staged protests outside the Georgian Embassy in Moscow. The group, which is seen as having the tacit support of the Kremlin, has been banned in Ukraine following a series of cyberattacks on government websites and incidents of vandalism targeting Ukrainian national monuments. Ekho Moskvy did not cover the September 16 protest, and neither Venediktov nor his deputy, Sergei Buntman, could be reached for an interview. But Venediktov -- who is featured in a lengthy profile of the station in the September 22 issue of "The New Yorker" magazine -- has made no secret of his difficulties at the hands of the regime. According to Oleg Panfilov, who directs the Center for Journalists in Extreme Situations, Putin's scolding in August has already had a chilling effect on the station's coverage. "I think it's a very serious warning, and I see that the station has already sharply altered its news policy. At least, I feel this as far as I'm concerned," Panfilov says. "I was in Georgia in August, through August 30. Before August 16, [Ekho Moskvy] would call me several times a day in Tbilisi for commentary; I would talk about what was going on in Georgia. After August 16 they stopped calling me, and since then I haven't received a single call from the station." Free, Fair, And Insignificant - Ekho Moskvy, which has a reputation for being free and fair despite being partially owned by the state gas giant Gazprom, joins newspapers like "Novaya gazeta" and "Kommersant," as well as the Internet, to form the last bastion of independent information in Russia. Such outlets, as a whole, are estimated to reach just 5-6 percent of the population in Russia, with the vast majority of people receiving information via television -- the Kremlin's sleek and entirely state-controlled medium of choice. These independent media outlets' relative insignificance, in fact, may prove to be their saving grace. Panfilov says news outlets like Ekho Moskvy may be permitted to continue functioning as long as their influence remains small and their clean reputations are useful for the Kremlin. "These alternative sources of information can't influence the population and public opinion," Panfilov says. "There is also the fact that Putin -- and now [President Dmitry] Medvedev -- is always able to say that Russia has freedom of speech because there are things like Ekho Moskvy, and even a couple of newspapers," he adds. "After all, the people from the Kremlin are buying villas and apartments in Europe, and they want to be able to use them, so they have to preserve their ties with the West."

It's All About Oil

16 September 2008 - The Moscow Times by Clifford G. Gaddy - It's great fun to explain a sudden boom or bust in the stock markets after the fact by alluding to some unique event that happened to occur at just that time. Anyone can do it, and no one can refute you, since the experiment cannot be repeated. Normally, it's also an innocent exercise. In recent days and weeks, however, some people have carried this game into a more serious arena, that of geopolitics, and are using it to draw wrong policy conclusions. It by now seems to be an article of faith for many people that Russia's invasion of Georgia on Aug. 8 caused a massive fall in the Russian stock market, as well as a crash of the currency and outflow of foreign capital. The serious misstep is when some people take this as evidence that Western governments don't have to worry about making tough decisions as to whether and how to react to Russia's actions in Georgia because "the markets are punishing it." Implicit in such thinking is that Prime Minister Vladimir Putin obviously did not realize what a penalty he would pay. Now that he does, Putin -- or the oligarchs who back him -- will be deterred in the future. Is this at all credible? Let us look at some facts. Yes, the ruble has lost 6.9 percent against the dollar since Aug. 7. Then again, nearly all currencies have lost against the dollar recently. Maybe it would be better to ask how the ruble has fared against the euro. The answer is that the ruble now is stronger against the euro than it was on Aug. 7. And the foreign exchange impact? Again, there's some reality here. In the week following the invasion, the country's foreign exchange reserves dropped by $16.4 billion. But that is still less than 3 percent of the total of nearly $600 billion. Since then, the reserves have held more or less steady. So neither the currency nor the foreign exchange situation seems particularly dire after the Georgia events. The Russian stock market is a different story. The fact that it is collapsing is indisputable. The market value of the country's main exchange, the RTS, is now down to barely half of what it was earlier this year. A lot of value has been lost, although commentators disagree on just how much. Anders Бslund wrote in The Moscow Times on Sept. 3: "Aug. 8 ... marks Prime Minister Vladimir Putin's greatest strategic blunder. In one blow, he wiped out half a trillion dollars of stock market value." Gideon Rachman adhered to the same figure in his Sept. 8 column in the Financial Times. But David Ignatius in The Washington Post on Sept. 10 wrote more cautiously that the RTS index lost "about $290 billion in value since Aug. 7." To be precise, between Aug. 7 and Sept. 9, the RTS lost $183 billion. What is true, however, is that since its peak on May 19, the RTS has lost about $600 billion, or around 43 percent. The issue is when it lost that value, and why? Did it really happen, as Бslund wrote, "in one blow"? Most important, was it because of Georgia? Consider this: In the four weeks before the invasion, the RTS lost more value than in the four weeks after -- $192 billion before and $167 billion after. In fact, the Russian market has been declining since early July. So if the Georgia events did not cause the decline, what did? One alternative explanation is the worldwide decline in stock markets, which has had an especially strong impact on emerging markets like Russia. Another suggestion is that the Russian market has suffered from a general climate of distrust that has been growing over a longer period, highlighted first by the acrimonious dispute among the owners of TNK-BP and then by Putin's July 24 attack on the mining company Mechel and its CEO. It may well be that all of these various factors, including the Georgia factor, have played into the market's fall. But if we are looking for a main cause, the best bet is to turn one's attention to the main driver of economic events in Russia since the 1970s -- namely global oil markets. After peaking in mid-summer at over $140 a barrel, the world oil price has steadily declined. From its high on July 14 to Sept. 8, the oil price dropped by 29.8 percent. Over that same period, the value of the Russian stock market fell by 29.3 percent. The extreme closeness of those two numbers is certainly a coincidence. But the stock market's general dependence on oil prices should not be a surprise. I suspect that Putin and his advisers are smarter than the Western analysts on this one and are well aware of the oil factor. If so, the lesson for Putin and Co. will be that since the markets have imposed little penalty for the military action in Georgia, there is no reason to be deterred for fear of further such "punishment" in the future. Meanwhile, Western policymakers would be wise to realize that spurious post hoc, ergo propter hoc explanations for stock market behavior do not take them off the hook. They still need to decide about how to react to Russia with real policy.

Ex-Ambassador in U.S. Senate Hearings

Sep. 18, 2008 - Kommersant - William Burns, former U.S. ambassador to Russia and current under secretary of state for political affairs, appeared before a U.S. Senate hearing on Wednesday. He told the hearing that the Russian political leadership is highly unified and the Kremlin and government have a firm consensus on issues of national interest. He added that the Russian political system is complex and does not lend itself to easy analysis. Burns noted that any Russian president has considerable authority, particularly in issues of national security and foreign policy, and that applies to Russian president Dmitry Medvedev, regardless of the influence and former president and current Prime Minister Vladimir Putin retains. Burns characterized the two leaders’ relations as “shared power” in many aspects. The former ambassador recommended maintaining close relations with both leaders, noting that Putin’s economic role will also play a part in the relations between the two countries. In spite of the unity of the Russian political leadership about Georgia, Burns opined that internal dissent occurs in Russia. He noted that such debates are practically undetectable from the outside. He thought it possible that Russian leaders will begin to “rethink” some of their recent political moves with time, especially after the consequences of their actions become more apparent. "In many ways the most damaging consequences thus far for Russia have been self-inflicted economic and political wounds," he noted. Nonetheless, he acknowledged that the Russian political leadership is enjoying high popularity at home at the moment.

Monday, September 15, 2008

The true price of war in Georgia

South Ossetia09-13-2008 - Rzeczpospolita by Wojciech Szpocinski - Damages in civil infrastructure estimated at 1.5 to 2 billion dollars. Western countries pledging aid to Georgia – 3.5-4 billion USD - writes Wojtek Szpociński, Institute of Eastern Studies/Economic Forum, School of Commerce and Law The war in Georgia has not demolished the country’s economy, although losses are substantial. But Europe’s energy security depends on whether an upheaval may be averted. The conflict in Georgia has resulted in a serious undermining of the supply route for energy resources from the Caspian basin. This is evident from the recent actions of neighbouring countries, which have suddenly undertaken intensive negotiations with Gazprom. Governments of Turkmenistan and Uzbekistan recently signed agreements with Gazprom on intermediation in sale of natural gas to external markets. On the other side of the Caspian Sea, the very same Gazprom is holding negotiations with Azerbaijan. The threat of a lack of supplies is real enough for Azeri Socar to stop the expansion of a gas storage facility outside of Tbilisi, which had been planned for a year. With regards to oil, the Kazakh company KazMunajGaz is giving up on its plans to build a new refinery in its oil terminal in Batumi. This is no surprise, however. After all, it was Kazakh oil, burning on the train, which had been blown up near Gori. Images of this fire made the news all over the world. Bombs also fell mere metres away from the BTC oil pipeline. The Russians missed, but the threat was a clear one. In these circumstances, the trans-Caspian project may only be saved by giving the Georgia conflict a genuine international dimension, together with bringing effective peacekeeping forces, into so-called buffer zones.This is not all, however. The fate of the Georgian economy is no less important to the trans-Caspian project. An economically stable Georgia will by default be an independent and pro-West state. Although the headlines of newspapers are very worrying, so far one can hardly talk of a breakdown of the Georgian economy. Optimistic forecasts made already after the war point to GDP growth of 5 percent at the end of the year. This means a reduction by more than half, as before the outbreak of the conflict, growth was expected to reach 10 percent. Tax revenues have not began to disappear – they are 3 percent lower than in the respective half of the previous year. However, a turn for the worse is possible: with the borders becoming more difficult to control, trafficking would increase and excise revenues diminish. The decline in customs revenues is precisely what hit the Georgian economy the hardest. In the first week of war, they were 20 percent lower than forecast. This is not surprising, given the collapse in exports and transit of goods through the country. The comforting news is that the situation is gradually coming back to normal. Paradoxically, privatization proceeds are not declining, even though all privatization auctions concerning plants located in areas controlled by the Russian army resulted in failure. Luckily, the large privatizations planned for this year were completed already before the outbreak of the conflict. This includes the port of Poti, still occupied by the Russians.The intervention in defence of lari, the Georgian currency, was successful, although it cost the Georgian central bank 300 million dollars. This is a very high amount relative to the country’s small reserves, reaching barely 1.5 billion dollars. By comparison, Russia has spent 16 billion dollars to defend the rouble, which in spite of the incomparable magnitude of the market and reserves, is a significant amount. In the most critical moment of the conflict, the Georgian central bank salvaged itself by lowering interest rates, increasing the money supply, but at the same time increasing the risk of rising inflation. The fight over the exchange rate of the lari was a key issue. To an average Georgian, the stability of the domestic currency is a testament to the effectiveness of the state. Over the past 2-3 years the value of both deposits, as well as loans in lari has been rising at a fast pace.During the first days of the crisis, around 10 percent of deposits were withdrawn from the two largest commercial banks – Bank of Georgia and TBC. In spite of this, the banking sector, in large part foreign-owned, managed to maintain liquidity and the banking system did not break down. After a week or two the money returned to the banks. However, it was not possible to avoid completely any consequences of the war: banks are currently very cautious about granting new loans. This is probably due to the losses of insurance companies linked to them, which have not been assessed as yet. Georgia’s banking system, efficient to an extent unseen in the post-Soviet region, has been fuelling consumption and the construction boom. After the outbreak of the war, the value of transactions made in the real estate market declined by 60 percent. And while lower economic growth is unlikely to be avoided, such a cold shower could have a positive impact on restoring a balance in the Georgian economy. Before the conflict, consumption in Georgia had been too high relative to investment. In order for such a positive scenario to materialise, however, it is necessary to resolve other economic problems, not to mention the issue of rebuilding the country. Damages in civil infrastructure are estimated at 1.5 to 2 billion dollars. The conflict also has a negative impact on Georgia’s image. It has been downgraded by Fitch and Standard & Poor’s agencies. This led to a drop in ratings of local banks. Turnover on the Georgian stock exchange also weakened. There is no sector, which depends more on reputation, than tourism. Fires in the Kharagauli National Park, source of the Borjomi water or the oil contamination from demolished fishing boats in Kolkhida Park have resulted in losses of at least half a billion dollars and immeasurable damage to the environment. It was here, that luxury hotels were being built and new skiing facilities planned. War will definitely hit this group of investors hard. Losses will be substantial – tourists have left right in the middle of the tourist season and they will certainly not return this year. The situation may return to norm already next year. Three quarters of the visitors come from neighbouring countries: Armenia, Azerbaijan or Turkey. For them, such a trip will still have its advantages – price and proximity. Meanwhile, people from the West usually come to Georgia in search of an adventure; there are still few mass tourists. They are still likely to continue coming, because outside of the direct conflict areas, there are no major threats to safety. There is also no news of nervous decisions of foreign investors, of course other than those from the fuel and energy sector. Political risk is taken into account when investing in this region. Exporters probably suffered the biggest losses, both large companies, as well as smaller family businesses. Losses arising from export difficulties may be estimated at 200 million dollars. They could become higher, because the damages have not been fully assessed and the situation is not yet stable. Western countries are pledging substantial aid to Georgia – as much as 3.5-4 billion dollars in grants and loans. These amounts are entirely sufficient, provided that they are sensibly spent. They need to be devoted to reconstruction of infrastructure, but also to reducing the disproportions in the growth potential of Tbilisi and the rest of the country. This is the prerequisite for genuine stability of this country, which is what the West should care about.

Wednesday, September 10, 2008

Overplaying the ‘Blame America’ Card

09-09-2008 - The St.Petersburg Times by Alexei Bayer - Last month’s blitzkrieg against Georgia unleashed a stunning wave of anti-Americanism in Russia. Russians obviously like to think that their country not only roughed up a small, poor neighbor but, more important, dealt a blow to U.S. efforts to encircle Russia with military bases. Superpower rivalry is back and, by extension, Russia is once more a superpower. What is happening in Russia may indeed be Washington’s fault, but not in the way Russians believe. Back in the early 1990s, when U.S. President George H.W. Bush declared an end of the Cold War and proclaimed a “new world order,” many people hoped that the international system would henceforth be based on the Western principles of democracy, freedom, decency, international cooperation and the rule of law. Indeed, over the past two decades the world has enjoyed a broadly based economic success. Many long-emerging economies have finally emerged, millions of people have been able to escape poverty, and many previously poor nations, including Russia and China, have become bankers to the world. But the political picture has been far less bright. Over the past eight years — and especially since Sept.11, 2001 — the United States has been increasingly flouting the very principles it encouraged the world to adapt. As Russia slid toward authoritarianism under President Vladimir Putin, the United States under President George W. Bush effectively squandered its moral authority to judge other nations. How can Washington criticize abolition of gubernatorial elections in Russia if the U.S. president was himself appointed by the Supreme Court? Or complain about human rights abuses when it kidnaps, tortures and indefinitely holds terror suspects in legal limbo? Or encourage Russia to open up if it is building a 3,200-kilometer fence on its Mexican border? U.S. officials can declare that actions such as the Russian invasion of Georgia have no place in the 21st century only if they forget their own unprovoked attack on Iraq. And, of course, Russia’s recognition of breakaway South Ossetia and Abkhazia bring to mind the U.S.-inspired recognition of Kosovo. An ascendant, angry and anti-U.S. Russia is likely to be a major headache for the next U.S. president, whoever he is. Perhaps when Republican candidate John McCain solemnly declared in August that “we’re now all Georgians,” he meant that the world would have to deal with George Bush’s disastrous legacy for a long time to come. But blaming the United States can also be overdone. It is, after all, Russia’s future that is at stake. Russia may be overly reliant on oil and gas exports and its wealth extremely top-heavy, but the country is enjoying the kind of prosperity that was never seen under communism. Its free enterprise is flourishing and its economy is vibrant, with most people able to afford a variety of goods and services that only the elites could get access to in Soviet times. Similarly, Russia may no longer be as free as a decade ago, but its citizens can still travel, access information, express their opinions and practice whatever religion they choose. None of this came about by happenstance. It was the result of the country opening to the world after the Soviet collapse and its desire to adopt Western values. Conversely, whenever in its history Russia chose to isolate itself, it invariably suffered poverty, oppression and, worse, bloody state terror. The current burst of jingoism has already shown an ominous side. On state television, the “liberal intelligentsia” has been excoriated as unpatriotic and pro-Western — the fifth column in a looming struggle with foreign enemies. Mark Twain remarked that history may not repeat itself, but it rhymes a lot. If so, recent events in Russia are starting to rhyme with some of the worst pages of the country’s history.

Gaddafi impressed but not suppressed by Rice

09-08-2008 - MOSCOW - RIA Novosti by Maria Appakova - U.S. Secretary of State Condoleezza Rice has completed her tour of North African nations. Her visit to Libya was its focal point, and Rice herself called it historic. For the first time in 55 years, the head of U.S. diplomacy arrived in that country. Moreover, for the first time, a high-ranking U.S. politician met with Libyan leader Muammar Gaddafi, whom U.S. President Ronald Reagan called the “mad dog” of the Middle East. Rice also visited Tunisia, Algeria, and Morocco. This was her first visit to these countries as secretary of state, although at the beginning of his term U.S. President George W. Bush paid much attention to these countries. Tunisia, for example, took an active part in carrying out the Washington-initiated partnership between the United States and these countries. The West cited Tunisia as an example of successful democracy in the region. But later on, Washington turned its attention to Iraq, Palestine, and Afghanistan, which took all of its time. Besides, the experiments with democracy in these countries were too dubious to continue with the plan of developing democracy in the Greater Middle East. Now Washington wants to prevent northern Africa from turning into Al-Qaeda’s new base. How is it possible to combine democracy with radical Islamism? How can the countries engulfed in regional conflicts be united into a single front of struggle against terror? These difficult tasks are not likely to be resolved by the outgoing U.S. administration. In this context, Rice’s visit is belated. Libya, however, is another matter. Restoration of diplomatic relations with that country is Washington’s only achievement in the Middle East during the Bush presidency. Washington started this process in 2004, after Libya renounced the development of weapons of mass destruction and condemned terrorism. Rice said that the restoration of diplomatic relations “demonstrates that the U.S. doesn't have permanent enemies. It demonstrates that when countries are prepared to make strategic changes in direction, the United States is prepared to respond.” This is a clear hint to Iran and North Korea, as well as Hamas and Hezbollah, but they are not likely to accept it, primarily because of Washington’s lecturing tone, which it never allowed itself in the dialogue with Gaddafi. Tripoli has done everything in its power to present the restoration of diplomatic relations and Rice’s visit as a favor to Washington rather than a concession. She was met with much reserve, and all her attempts to talk about the favorite subject of democracy were nipped in the bud. Thus, at a joint news conference, Libyan Foreign Minister Abd al-Rahman Shalgam pointed out that his country does not need any pressure or lectures on human rights. Ironically, Gaddafi invited Rice to his residence, which was bombed by the Americans in 1986 and where his adopted daughter was killed. In fact, every delegation to Libya has to visit it to honor the “victims of U.S. aggression” and sign the memorial book. But the media did not show Rice signing the book. Judging by this, Gaddafi decided not to finish off his guests, and parted with this page of the past, although he invited Rice to this palace rather than his favorite Bedouin tent where he met with Putin last April. However, Rice did not look insulted. TV channels demonstrated her radiant smile during her meetings with both Gaddafi and Shalgam. She merely said that Washington and Tripoli had certain differences, and that they may have them in the future but this was not a hindrance to the resumed relations between the two countries. This was surprising restraint on the part of the United States. Even when its relations with Russia were at the prime, and U.S. politicians emphasized its successes on the road to democracy, they never forgot to tell Moscow what it still had to do, and what mistakes it had made. There was always a fly in the ointment, and Russia got used to explain it by Washington’s desire to impress its domestic audience. Relations with Libya are essentially the same game. Tripoli’s renunciation of the weapons of mass destruction is too important a gain in Washington’s political piggy-bank to overshadow it by reproaches or lectures. Apparently, Washington wants to postpone lecturing for the future. As long as Col. Gaddafi is alive, Libya will conduct dialogue with America as an equal, if not as its superior. Speaking on the Al Jazeera network, Gaddafi said about Rice: “I support my darling black African woman. I admire and am very proud of the way she leans back and gives orders to the Arab leaders.” These words show that he sincerely admires Rice, and despises leaders who are toadying to the United States. But they also hint that Tripoli cannot be broken, and that an alliance with it may be beneficial. Libya is too important a player in Africa. Moreover, intelligence sources maintain that Libya is fifth in the world in oil deposits. It is and a major supplier of energy resources on a par with Persian Gulf monarchies and Iraq, which traditionally export them to the United States. But the political situation in the Gulf is too unstable, and it would be wise for Washington to play it safe, especially now that relations with Russia, another supplier, have become much worse. However, Rice said that Libyan-U.S. relations are not limited to energy, and extend beyond U.S. demand for oil. This may be so, but it is energy resources that prompted Washington to restore diplomatic relations with Tripoli. The next U.S. administration will receive good legacy.

Saturday, September 06, 2008

Cheney to shoot Caucasian troubles

09/03/2008 - MOSCOW. (RIA Novosti political commentator Andrei Fedyashin) - U.S. Vice President Dick Cheney started a Caucasian-Ukrainian tour yesterday. His challenging task is to promise weapons to Georgia and NATO membership to Ukraine, and to convince Azerbaijan to accept the Nabucco pipeline project. He will talk with the Azerbaijani president in Baku on September 2 and 3, reaffirm American support for the Georgian president on September 4, and later in the day go to Ukraine. The weeklong trip was planned long ago. In fact, Cheney intended to stop over in Tbilisi and Baku on his way to the Ambrosetti Forum, Italy's own annual mini-Davos set next to Lake Como. Kiev was added to his itinerary at the last moment. Although visits to Azerbaijan and Georgia were planned long before the conflict over South Ossetia erupted, they have since acquired special meaning. Cheney's trip to the Caucasus and Ukraine is possibly the last attempt by the Bush Administration to set up a Black Sea-Caucasian cordon on Russia's southern border as a gift to the next administration. Cheney seldom goes abroad without a bulky portfolio of proposals and/or warnings to U.S. allies, potential allies, or countries unenlightened about the benefits of friendship with Washington. Richard Bruce Cheney, 67, is a politician with terrific punch and the main author of the current U.S. foreign and military policies (perhaps better described as military policy with a minor diplomatic slant). Cheney is a man in his own league and the main ideologist of the neoconservative policy of the Republican administration and the country as a whole. He is the epitome of American conservatism, having served as chief of staff under President Gerald Ford, defense minister for President George Bush Sr. and vice president of President George Bush Jr. In 1997, Cheney teamed up with Donald Rumsfeld, William Kristol and others to establish the Project for the New American Century, a neoconservative U.S. think tank whose self-stated goal is to "promote American global leadership." The project's ideas have been implanted in all the foreign policy programs of the Bush Administration. Cheney says his foreign policy teacher Bradford Wesferfield, a Yale political scientist, helped to shape his hard-line approach to foreign policy, but an article in The Nation in 2004 reported that Dr. Westerfield came to regret the hard-nosed lessons Mr. Cheney said he had learned. Dr. Westerfield characterized the current Bush Administration as overly confrontational, calling that "precisely the wrong approach." Cheney orchestrated the U.S. invasion of Panama, Operation Desert Storm in the Middle East, the anti-Iraqi policy and, some say, the molding of Mikheil Saakashvili, described as the United States' main ally in the Caucasus. Wherever Cheney goes, he always makes clear what the U.S. wants and how best to fulfill its wishes and, by implication, avoid the unpleasant consequences of non-compliance. In Tbilisi, he will offer "friend Michael" U.S. support and rearmament of the Georgian army with U.S.-made weapons. In Kiev, he will assure President Viktor Yushchenko that Ukraine will definitely enter NATO, which is not quite true, of course, but will help Cheney, who has always seen military ties as the main instrument of U.S. foreign policy, to promote military cooperation with Ukraine. His task in Baku will be more difficult. He must cajole President Ilkham Aliyev into approving the Nabucco gas pipeline, which Baku, along with much of Europe, is coming to view with growing mistrust. The nearly 2,000-mile pipeline, which the United States has been advocating, would connect Azerbaijan with Central Europe. It will run across Georgia (bypassing Armenia and Russia) towards Erzurum in Turkey and on to Austria's Baumgarten via Bulgaria, Romania and Hungary. In fact, there are plans to add a trans-Caspian extension to Nabucco, to pump gas from Turkmenistan to Europe. Nabucco has already had its share of problems. The geopolitical rationale for the project - to bypass Russia - has increased spending from $3 billion to $4.9 billion, and the cost now stands at $7.9 billion. Construction should begin in 2010 and the pipeline is to come on stream in 2013. To turn a profit, the pipeline should annually pump 30 billion cubic meters (1.06 trillion cu f) of gas. Azerbaijan can supply only 8 billion, and that only after it commissions the second phase of the Shah Deniz deposit in the Caspian Sea. So, there is not enough gas for the pipe, which will make its gas very expensive indeed. The Caucasian conflict has scared the European gas and energy block, which thinks in cubic meters or feet. The European and Azerbaijani energy and gas processing companies are alarmed at the prospect of the pipe being controlled by such an unbalanced politician as Saakashvili. The State Oil Company of Azerbaijan Republic (SOCAR) has started sending oil to Europe bypassing Georgia. This year, it will pump between 300,000 tons (2.2 million bbl) and 400,000 tons (2.9 million bbl) of crude, initially delivered along the Baku-Tbilisi-Ceyhan pipeline, through the Baku-Novorossiisk pipe. It made the decision on August 7, when Georgia started bombing South Ossetia's capital, Tskhinvali. Azerbaijan is also negotiating the transit of additional gas to Europe via Russia. "Baku's new interest [in Russia] may stem from a desire to protect the relationship with Moscow, or a sense that Nabucco is less likely than ever to materialize," writes the Eurasia Group, British energy consultants who offer analysis on developments in Russia and the CIS, Central Asia and the Caspian. Europeans have started talking about the need to involve Russia in the Nabucco project to make it viable. Russia alone can provide enough gas to make the pipeline profitable by rerouting its gas from Blue Stream. Interestingly, Russian energy giant Gazprom holds a 50% stake in Austria's Baumgarten, the terminal for the Nabucco pipeline. "This goes against the whole concept of Nabucco, that it would not be either Russian or Russian-controlled gas," says Zeyno Baran, an energy and Central Asian expert at the conservative Hudson Institute in Washington and the wife of Matthew Bryza, U.S. Deputy Assistant Secretary of State for European and Eurasian Affairs. Mr. Bryza covers the Caucasian region and has been actively lobbying for Saakashvili. Some even say he was his direct political mentor.

Don't Cry for Russia

Do not cry
//The world's unlikeliest "victim."
09/01/2008 The Weekly Standard by Cathy Young -
As Russian tanks rumble through Georgia, and Western pundits talk of the "new Cold War," one trope keeps reappearing in their discourse. Russia's newly aggressive stance, we are told, is partly our fault: After the fall of Communism, the West went out of its way to humiliate and trample Russia instead of treating it as a partner--and now, an oil-powered Russia is striking back.
"Russia's litany of indignities dates to the early 1990s when the Soviet empire collapsed," Samantha Power, a professor at Harvard's Kennedy School of Government and former Barack Obama adviser, wrote in Time. "A bipolar universe gave way to a world in which the 'sole superpower' boasted about how it had 'won' the Cold War. Russia was forced to swallow the news that NATO would grant membership to former client states in Eastern Europe, along with former Soviet republics." This theme, particularly NATO expansion as an affront to Russia, has been echoed by many others, from Tom Friedman in the New York Times to Pat Buchanan in his syndicated column.
By contrast, few of the Russians who lament their country's slide into belligerent authoritarianism under Vladimir Putin blame it on "humiliation" by the West. "Russia humiliated itself," says human rights grande dame Elena Bonner, widow of the dissident and scientist Andrei Sakharov. "It spent 70-plus years building Communism, and reaped the results."
Victor Davidoff, an independent Moscow journalist and former Soviet political prisoner who became a U.S. citizen but returned to Russia in 1992, told me in an email exchange that he was "nauseated" by talk of Russia's humiliation. "How did the West humiliate Russia? Gave it money--much of which was pilfered? Sent humanitarian aid? Paid for the dismantling of missiles? Invested in Russian businesses? The Germans don't consider the Marshall Plan a humiliation; why is aid to Russia humiliating?"
Davidoff's mention of the Marshall Plan is fitting, since Samantha Power explicitly contrasts the West's treatment of post-Cold War Russia with that of post-World War II Germany: "On occasion, Western countries have consciously avoided humiliating militant powers.  .  .  . Having neutered Germany following World War I, the Allies showed West Germany respect after World War II, investing heavily in its economy and absorbing the country into NATO."
This is a breathtaking inversion of reality. If ever a defeated power was "humiliated," it was postwar Germany--forced to endure several years of occupation, de-Nazification, a massive education campaign promoting the idea of collective German guilt for Nazi crimes, reparations to countries affected by the war, and loss of territories accompanied by the expulsion of millions of Germans. There was also the small matter of the country being split in half.
The contrast with the West's treatment of post-Communist Russia is stark indeed. After the dissolution of the Soviet Union in 1991, the United States and Europe eagerly embraced Russia's young democracy. Western economic aid to Russia totaled $55 billion from 1992 to 1997 (not counting private charity). While some aid was conditioned on the continuation of market-oriented economic reforms, none of it was tied to political demands for a formal condemnation of the Soviet legacy. Russia was not required to dump the Lenin mummy from the mausoleum in Moscow, to put former party apparatchiks or KGB goons on trial, or to restrict their ability to hold government posts and run for public office. Nor was it forced to pay reparations to victims of Soviet aggression, or surrender territories such as the Kuril Islands, seized from Japan after World War II.
What about the much-maligned NATO expansion? Friedman asserts that it was particularly galling to Russians since Russia itself was disinvited from joining NATO, sending a message that it was still seen as an adversary. Ira Straus, founder of the Committee on Eastern Europe and Russia in NATO, tells a more complex story in a paper for a 1997 George Washington University conference on Russia and NATO.
Russia first expressed cautious interest in NATO membership in 1991, when NATO was not prepared to admit any Eastern Bloc countries. By the time the admission of former Communist states was seriously considered, Boris Yeltsin's administration was already backing away from its embrace of the West, mainly as a result of pressure from the neo-Communists and nationalists who scored victories in the 1993 and 1995 Duma elections. In 1995, pro-Western foreign minister Andrei Kozyrev was replaced by Evgeny Primakov, who, Straus writes, emphasized "multipolarism" and (foreshadowing the leitmotif of the Putin-era Russian political elite) criticized "American attempts at unipolar domination of the world through NATO."
Initially, supporters of NATO expansion envisioned Russia's eventual inclusion, and Yeltsin seemed receptive to the idea. But NATO enlargement soon became a bone of contention. Straus writes that in the mid-1990s, the United States often misinterpreted Russia's opposition to the fast-track admission of smaller states into a Russia-less NATO as opposition to expansion per se. Russia in turn sent many conflicting signals. Above all, it was clearly unwilling to commit to a broad acceptance of NATO strategic policy, one of the main criteria
for membership set in the organization's 1995 "Study on NATO Enlargement." This was a serious hurdle, since NATO operates by consensus, giving every member country a de facto veto over the alliance's policies.
Samantha Power dismisses Russia's inclusion in NATO's 1994 "Partnership for Peace" as "largely symbolic." Yet the partnership's framework document not only provided for extensive military cooperation but gave each member guarantees that it would be consulted by NATO about any perceived threats to its security. Straus wrote, in 1997, that Russia "held back from full participation" in the Partnership "due to domestic pressures [and] to suspicions of NATO." This was followed by the creation of the NATO-Russia Council in 2002. Its work included not only joint anti-terrorism efforts but programs that provided job training and other assistance to discharged military personnel in Russia.
Bonner believes that, far from treating Russia as an enemy out of habit, Western politicians and pundits have been too prone to "wishful thinking" in treating it as an ally in the war on terror. Says Bonner, "Russia wasn't even treated as an equal partner but a favored child who was petted and given treats."
One such treat was an invitation to join the G7 group of industrial democracies in 1998. Despite Russia's dubious qualifications for membership in a club based on such criteria as economic performance, political stability, and low level of corruption, the group became the G8. In January 2006, after Putin had crushed his independent media and political opposition, Russia actually assumed chairmanship of the G8--just as its Freedom House ranking slipped from "partly free" to "not free." (According to a December 2005 National Public Radio report, some eternal optimists hoped that giving Russia G8 leadership would encourage liberal tendencies.)
Much Western hand-wringing over Russia's wounded pride seems to accept the premise that Russia is entitled to dominate its smaller neighbors and to have its ego coddled as no other former empire has had. Such entitlement is also deeply entrenched in the mindset of many Russians. "At least they used to be afraid of us" is a sentiment I heard repeatedly on my trips to Russia in the early 1990s. Another popular phrase in those days, "za derzhavu obidno," can be roughly translated as "makes you feel bad for the country," but really means much more: derzhava has overtones of "great power" and "autocratic state"; obidno conveys shame, hurt and resentment. With such a mentality, Putin's bully rhetoric--"Russia can rise from its knees and sock it to you good and hard," he remarked in 1999--found an eager audience.
The painful humiliation of Germany after World War II had one major positive aspect: The Nazi virus was purged from the nation's system. Russia never truly confronted or rejected the evil of its Communist past. Yeltsin, to his credit, sought to do just that. He outlawed the Communist party (which successfully challenged the ban in court) and spoke of the Soviet Union as "the evil empire." This changed under Putin, whose idea of resurgent Russian pride includes celebrating Soviet-era "accomplishments" while treating the crimes as deplorable, but fundamentally no worse than the blots on any other nation's history.
The new Russia bristles at any effort to account for those crimes, be it Ukraine's attempt to have the state-engineered famine of 1932-33 recognized as genocide by the United Nations or Estonia's prosecution of veteran Communist Arnold Meri for his role in the deportation of Estonian "undesirables" in 1949. In July, the Russian foreign ministry issued a peevish protest against President Bush's Captive Nations Week proclamation that mentioned "the evils of Soviet Communism and Nazi fascism," decrying it as an attempt to "continue the Cold War." "But how can it not continue," asked Soviet-era dissident Alexander Podrabinek in an article on the EJ.ru website, "when those in charge of Russia's foreign policy openly try to whitewash Communist ideology?"
National humiliation is not a thing to wish on anyone. But perhaps, after Russia's 20th-century history, a few lessons in humility would have been useful--and well deserved.


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