COURTS. The Moscow Arbitration Council has ruled invalid most of the tax claims against the British Council. In other cases, several oil and gas companies were found to have violated anti-monopoly legislation and PWC’s appeal connected with its Yukos audits was successful. The difficulty with court decisions on subjects with political content is to decide whether they were made independently or under instruction.

GDP. The Economic Development Ministry has lowered its growth forecast to 7.3% from 7.8%. A government source reported that GDP had grown 7.7% in the first 9 months of the year. Still respectable.

FINANCIAL CRISIS. The stock market continues to follow world trends; on Friday the Duma approved bills allowing the government to spend more than $18.5 billion bailing out banks and supporting the stock market.

RUSSIAN JUSTICE. Slow, but eventually gets there. Russian Central Bank 1st Deputy Chairman Andrey Kozlov was murdered in September 2006; arrests were made in January 2007 and on Tuesday a jury found banker Aleksey Frenkel guilty of organising the assassination.

MOSKALENKO. On the 14th a lawyer in France, Karina Moskalenko, connected with the Politkovskaya case, complained of a mercury-like substance in her car. Naturally, some jumped to the conclusion that Putindunnit and, on the 22nd, the Washington Post effectively blamed him. Unfortunately for the editorialists of that paper, that very day the French police released the results of their investigation: the mercury had come from a barometer that broke while being transported by the car’s previous owner, an antiques dealer. No wonder so many Russians think there is an “information war” against Russia.

TRANSDNESTR. I have been wrong before on this one, but I have been detecting signs recently that this longstanding secessionist issue may be unthawing: nothing dramatic, but some openings visible.

CAUCASIAN RUMOURS OF WARS. More small scale activity across the North Caucasus. On the 18th a military convoy was attacked in Ingushetia; 2 bombs were defused in Makhachkala on the 20th; a car exploded in Vladikavkaz on the 22nd and on Tuesday 3 jihadists were killed in Groznyy.

GEORGIA. An opposition rally is being planned for 7 November, the anniversary of the rally that was crushed by the security apparatus last year. Nino Burjanadze, former member of the “Rose Revolution” triumvirate (the second, Zurab Zhvania is dead, murdered some say), and former speaker of Parliament, has now formally gone into the opposition, saying among other things: “Democratic principles have been ignored” and “The priority of today’s government is to keep its power” and calling for early elections but, this time “only under the conditions of an improved election code, a healthy electoral environment and free media.” She is also scornful about the latest government changes. She is someone to be taken very seriously. The Prime Minister has been just replaced; I wonder if he will join the many of Saakashvili’s former colleagues now in opposition.

TALKS. Tbilisi wants “the international community” to prevent South Ossetian and Abkhazian representatives attending the Geneva talks. It would be foolish to do so because the situation will never be resolved if the principals are excluded: the origin of the whole mess is that Ossetians and Abkhazians do not want to be in Georgia and if Stalin had drawn a different map, they wouldn’t be.

THE STORY KEEPS CHANGING. When he made his “victory” speech on 8 August, Saakashvili made no reference to Russian forces having entered South Ossetia. A few weeks later he claimed that the Georgians attacked late on the 7th because the Russians were then entering. In the Washington Post, his story changed again: there he claimed the Russians had entered early in the morning of the 7th. This third story seems to have been dropped: now it is stated that the Georgian Peacekeeping Force Commander’s statement late on the 7th that Georgian troops had began an operation to bring “constitutional order” to the Tskhinvali region was false. Hard to keep up. The BBC has partly redeemed its slavish relaying of Tbilisi’s talking points during the war in this report: Part 1, Part 2. Well worth watching for those who followed the war on the Western media and think they know what happened. No news, however, for those who watched Russia Today, available on your home computer .

RE-DRAWING THE MAP. Daniel Fried has now joined in this cartographical enterprise by accusing Moscow of violating the Medvedev-Sarkozy plan by remaining in Akhalgori (are there actually any Russian troops there?) According to my USSR Atlas (1984) this area was part of South Ossetia then.

© Patrick Armstrong Analysis, Ottawa, Canada


FINANCIAL CRISIS. According to Standard & Poor’s, Russia’s stock exchange has fallen 53% this year to 3 Oct (and there have been more declines since). This is the worst of the “emerging markets” that it watches. On Monday Medvedev signed a package of laws designed to stabilise Russia’s financial market. We shall see.

MILITARY REFORM. The Defence Minister has announced that Armed Forces strength will be down to one million by 2012 (original date had been 2016) and officers reduced from today’s 355,000 (!) to 150,000.

LAW CASES. The Director of the Investigative Committee of the Prosecutor General’s Office has filled us in on some on-going investigations. Its finding is that Magomed Yevloyev was accidentally killed and the police officer responsible has been charged with “reckless manslaughter”. Meanwhile the Litvinenko investigation has come to a halt because of lack of cooperation: specifically the British have not provided the autopsy report and the Germans have given no details on the alleged traces of polonium found in Hamburg. A cynic would suggest that the whole Berezovskiy-created story is collapsing. The Politkovskaya murder case will go to trial. Her former editor is satisfied with the investigation but has reiterated that because neither the person who ordered the murder nor the actual killer has been arrested (they are believed to be in a European country) the case can hardly be considered to be “closed”.

TECHNOLOGY. As a reminder that Russia is not a country of string and wood, two ICBMs were successfully launched (one from a submarine) on the 12th and two days later a Russian spacecraft docked with the ISS.

JUST WHAT WE NEED. A group of opposition leaders are talking about creating a new movement perhaps to be called “Solidarity”. Most of the people in the group are leaders of personal groupuscules, fractions of other parties or the now-dissolved SPS. Just what Russia needs: more opposition groups arguing with each other and (dare I say it?) living off foreign NGOs (one of them, Lev Ponomaryov, has recently been quoted as saying that Russian human rights organisations live on foreign grants).

NORTH CAUCASUS. The Director of the FSB gave some figures on “bandit” activity in the North Caucasus. He said 170 fighters had been “neutralised”, more than 350 arrested and 15 turned themselves in. About 200 arms caches were found. The situation seems to be growing slowly worse.

GAS WARS. While Ukrainian PM Tymoshenko and Putin signed an agreement that gas prices will go to world levels over the next 3 years, Putin has called for the end of cheap gas for Russian consumers as well.

NEW SECURITY PLAN. Medvedev is calling for a new European security treaty: “It needs to follow three ‘don’t-do-it’ principles – do not ensure one’s own security at the expense of other’s security, do not allow measures that would weaken the unity of the common security space, and, thirdly, do not allow military unions to develop at the expense of the security of other signatories to the treaty”. This reminds me of an idea from the early Gorbachev years: you will never be truly secure if your measures make the other feel less secure.

STRANGER THAN YOU CAN IMAGINE. There is a proposal to remove the statue of Stalin in Gori to the Stalin Museum and re-name it the Museum of the Russian Occupation of Georgia. Stalin becomes a Russian!

GEORGIA ETC. Russian forces left the buffer zones slightly ahead of schedule. As usual, there were attempts to re-write the deal with complaints that they remain in areas in South Ossetia (Akhalgori) and Abkhazia (Kodori). But these areas have been clearly within the borders of Abkhazia and South Ossetia since the Soviet days. I speculate that Paris says these things to placate Washington while the actual agreement goes ahead. Meanwhile there have been several car bombs in South Ossetia (one on the 3rd killed 11). Tbilisi claims they are Moscow’s doing, but no rational observer could believe that. German Chancellor Merkel has evidently vetoed Ukraine’s and Georgia’s accession to a NATO MAP anytime soon. An Israeli official has flatly denied that Israel ever sold offensive weapons to Georgia and, in doing so, revealed “There is a covert agreement with Russia that it would not sell offensive armaments to Iran and Syria either”.

UKRAINE. The political crisis continues as President Yushchenko dissolves parliament and courts that disagree with him: more of a Lemon Revolution, I say. Meanwhile the question of arms supplies to Georgia is percolating in the background with a Ukrainian parliament member saying Kiev supplied ammunition, disguised as humanitarian aid, while the war was on. A Ukrainian government commission denies this.

© Patrick Armstrong Analysis, Ottawa, Canada


CORRUPTION. Medvedev has sent the first elements of his anti-corruption legislation to the Duma. At the first meeting of the Council for Corruption Prevention on Tuesday, introducing the effort, he said “Corruption in our country has become rampant. It has become commonplace and it characterises the life of Russian society… In effect, the solution of this strategic task is connected to most of the tasks we have set ourselves”. I believe he is correct in seeing corruption, at every level, as the principal problem in Russia. It has deep roots in the Soviet system (blat and na levo) and was greatly intensified (with Western help; see Wedel’s book) in the 1990s.

SOCIAL AND ECONOMIC. The government has produced a draft social and economic program to cover the period up to 2020. The principal points are said to be raising life expectancy to 72-75 and at least doubling real incomes.

DUUMVIRATE. These two programs show, I believe, how the division of labour between Medvedev and Putin is settling out. Anti-corruption is a “presidential” program: it’s strategic and it affects everything. The social program is “nuts and bolts” and is a continuation of what the government has been trying to do for some years. Likewise, during the August war, Medvedev basically handled the “outside” duties and Putin the “inside” duties.

MILITARY. Putin has announced that an additional 80 billion rubles (about US$3 billion) will be allocated to buy new military hardware and armaments. The August war showed some deficiencies. And, had something similar happened anywhere else, the Russian forces could not have reacted as quickly as they did.

TNK-BP. Last month the two sides signed an MoU by which CEO Robert Dudley will leave by the end of 2008 and BP will propose a replacement to be approved unanimously by the TNK-BP Ltd board.

HISTORY. After some legal action, the Main Military Prosecutor’s Office has granted the relatives of the Polish officers murdered at Katyn in 1943 access to some classified documents.

GAS WARS. Ukrainian PM Tymoshenko is in Moscow and a principal purpose of her trip will be to negotiate new gas prices. She will not have a happy time. The old agreement, by which Ukraine paid much less than the going rate, was in large part a consequence of Turkmenistan’s willingness to sell its gas (about 60% of what Ukraine burns) at a low price. But it is not willing to do so any more. Meanwhile Gazprom is getting nearly US$500 tcm in Germany. She says that there will be no intermediaries this time (the earlier agreement had a number of very opaque middlemen) and hoped that the “world price” could be phased in “within a period of several years”. She and Putin announced an agreement today which, said Putin, “could later serve as a basis for a future gas treaty between Gazprom and Naftohaz Ukrainy”.

TRANSDNESTR. A Moldovan minister told the OSCE that Chisinau was ready to continue direct contacts with Transdnestr without any preconditions and President Voronin has made an important statement. He said there was no question of Moldova ever joining NATO and that reunification with Transdnestr would “strengthen the country’s constitutional neutrality”. Russian troops in Transdnestr were guarding warehouses with weapons “that were hastily withdrawn from Germany and other members of the Warsaw Pact after the break-up of the Soviet Union”. The statement may be designed to clear the way for a settlement.

GEORGIA. Erosi Kitsmarishvili, a former close ally of Saakashvili, has broken with Georgia’s “discredited authorities” and calls the death of former PM Zurab Zhvania murder. The Public Defender says Georgia is not “ruled correctly” and that it is necessary to replace the existing “authoritarianism” with real democracy in order to save the country; he lists 13 demands. It seems that the only people still calling Georgia a “democracy” without any qualifier are Saakashvili himself and his supporters in the USA. Nino Burjanadze has presented a list of 43 questions for the authorities to answer. Generally they are of the theme how could the government have been so stupid and irresponsible as to have started the war? She has made a common error; the proper question is: what war did the authorities think they were starting? Certainly not the catastrophic defeat that happened. Meanwhile the EU observers have arrived and the Russian forces are withdrawing from the buffer zones on schedule. And, just to show that the situation is more complicated than most Western coverage describes, Georgia resumed export of power to Russia from one of its HEP stations – there is a long-standing agreement under which Georgia sends power north in the summer and receives it back from Russia in the winter.

© Patrick Armstrong Analysis, Ottawa, Canada