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Friday, March 27, 2009

G20: Russia to play peripheral role at summit

Russian president Dmitry Medvedev poised to replace officials loyal to Vladimir Putin 26 Mar 2009 - Telegraph.co.uk - Russia's ambitions of resurrecting its superpower status have received a jolt after Dmitry Medvedev, the country's president, was effectively told he would only play a peripheral role at next week's G-20 summit in London.
Just months after holding Europe to ransom during a gas dispute with Ukraine, Russia has discovered that continental energy dominance does not translate into commensurate influence in the debate over how to tackle the global economic crisis. Russian officials were said to be angered after the leak of a British government document that appeared to divide G20 members into two lists of descending importance. While three of the world's four largest emerging economies, Brazil, India and China, found themselves on "List A", the fourth - Russia - was relegated to second division status, alongside much smaller economies like Mexico. Britain has denied dividing the summit into two tiers, but Russian officials are allegedly upset nonetheless. "There is frustration over these lists," said an official close to Russia's finance ministry. "There is a belief that Britain is trying to trivialise Russia's contribution at the G20 for political reasons as a time when the two countries have found much common ground on economic issues." Russia's apparent relegation may well have a political undertone, although Western European countries might argue that the fault for that lies with the Kremlin itself. Theoretically, Russia should have powerful European allies at the summit. On paper at least, it has aligned itself with France and Germany on some of the most important issues that G20 leaders will discuss. Like Berlin and Paris, Moscow has rejected American calls to pour more money into the global economy through a second wave of stimulus and is instead backing new financial regulation to avoid a repeat of the crisis. But at the same time Russia has also alienated potential European allies by using the summit to push through what many see as an anti-US agenda. Since the beginning of the crisis, the Kremlin has persistently accused the United States of "economic egotism" and called for a new international financial architecture that would minimize American influence on the global economy. While Russia's calls for an overhaul of international financial institutions has won backing even from the United States, world leaders have baulked at Moscow's G20 proposals to scrap the US dollar as the world's main reserve currency and drastically reduce Washington's influence in general. Russia wants to see the dollar either replaced with an IMF currency unit -- a proposal one Moscow-based strategist called as mad as returning to the gold standard -- or, failing that, is demanding that world central banks start holding roubles in their reserves. Despite cautious Chinese backing for a similar proposal, Gordon Brown has given short shrift to the Russian idea. The European Union also appeared irritated that while the world was looking for ways to solve the economic crisis, Russia seemed more interested in using the summit to boost its political power at the expense of the United States. "It is unhelpful," said one European diplomat. Russia has also caused dismay ahead of the summit after Vladimir Putin, the country's prime minister, threatened to review relations with the EU after Ukraine made a deal with European partners to overhaul its energy pipeline infrastructure. Russia fears the move would undermine its ambitions to controlling energy in Europe from source to delivery point. Analysts in Moscow said that Russia's geopolitical ambitions had over-reached themselves because the country lacked the economic clout outside the field of energy to make the world pay it the attention it wants. "Russia is on the periphery of the debate on how to end the financial crisis because of the relatively small size of its economy and its limited share of international trade," said Mikhail Rogozhnikov, an economic analysts at the institute of Public Projects in Moscow.

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