MEDVEDEV. Faithful readers will know that, for some years, I have been saying that Putin over centralised power; perhaps understandably, given his fears in 2000 that Russia could altogether collapse. I believe that his concentration of all decisions in the offices next to his strangles initiative (in this connection I am amused to see some in the Rightosphere picking up on his warning that the Soviet experience shows the folly of state control). I expected that his successor would have to take steps to change course. That is what I believe Medvedev is doing: witness his discussion with Novaya Gazeta, his re-activation of the human rights group, his remarks on the “information society”, his “fireside chats”, his list of leading personnel and others. It would be quite wrong, I believe, to search here for disagreements with Putin – they are a team and have been for some time and there is every sign that they are cooperating in their division of labour.

POLITKOVSKAYA TRIAL. The jury acquitted all defendants today. So where does this leave us? Another in a long series of bungled prosecutions.

UNEMPLOYMENT. RosStat announced that unemployment in January, using ILO methodology, was 6.1 million or 8.1% of “the economically active population”, up 5.2% from December. 1.7 million of these are officially registered and 1.4 million are receiving benefits.

OIL FOR CHINA. Yesterday Moscow and Beijing signed an agreement by which Russia will supply oil for 20 years in return for a loan.

LNG. Yesterday Russia’s first LNG plant was officially opened in Sakhalin. Capacity is said to be 9.6 million tonnes a year and most of it has already been sold to Japan, South Korea and the USA. Gazprom owns half plus one share and Royal Dutch Shell, Mitsui and Mitsubishi most of the rest.

POLICE. Levada has completed a poll on how Russians feel about the police. I was rather surprised that as many as 9% expressed “complete trust” and 46% were “inclined to trust”. That’s a lot higher than I would have guessed considering how poorly the police do in polls on corruption.

SLEDGEHAMMERS AND NUTS. The Piotr Velikiy, which is a very large ship, passing by, detained some pirates off Somalia. But other Russian ships are cooperating with EU’s ATALANTA operation.

MANAS. Today the Kyrgyz Republic parliament voted 78-1 to close the base. Perhaps Washington could have upped its offer, but it didn’t seem to try very hard and is apparently looking at Uzbekistan. I’ll bet Tashkent drives a harder bargain than Bishkek ever would have.

TRANSIT. A train carrying supplies to US forces in Afghanistan left Riga today to pass through Russia.

CAUCASIAN RUMOURS OF WARS. The slow background of violence continues in Ingushetia with a shootout last week and a car bomb this. The change of governor does not seem to have made any difference.

GENEVA TALKS. Yesterday the participants in the talks on South Ossetia and Abkhazia agreed to a modest set of provisions designed to reduce violence. A start. Tbilisi still seems, under present management unwillingly to solemnly declare that it won’t try another war. As Burjanadze observed on Tuesday, the August attack gives much ammunition to those who consider Georgia to be Georgia as “an unstable and unpredictable state”. Meanwhile a Georgian general has joined the opposition and Alasania, who is emerging as one of it principal leaders, laid out his program.

GAS WARS – UKRAINE. Some polls: 1) a majority of Ukrainians find the gas deal acceptable; 2) 70% think President Yushchenko should quit right now; 3) 54% blame him for the gas crisis and 44% blame Tymoshenko. Not a happy place: those “coloured revolutions”, based on fantasy narratives and raising unrealistic expectations, were disasters. And no one speaks of the “Tulip Revolution” any more.

© Patrick Armstrong Analysis, Ottawa, Canada (see http://www.russiaotherpointsofview.com/)

ECONOMY. Last month the Finance Minister gave the prognosis: growth likely “close to zero”; budgetary revenues down, Reserve Fund (now US$215 billion) will be needed (that’s what it’s there for). RosStat says last year’s GDP grew 5.6%, down from 8.1% in 2007.

POPULARITY. There has been a great deal of flapdoodle about the declining popularity of the Duumvirate. Here are Levada’s latest numbers: Medvedev 75%, Putin 83%, government 58%. By contrast, Obama is in the 40s.

NOVAYA GAZETA. This newspaper has had another reporter murdered. Medvedev met with the editor and Gorbachev (a co-owner); he expressed his “deepest sorrow and compassion” and defended the right of the paper to criticise the authorities: “Thank God the newspaper exists”. Report by editor here.

HUMAN RIGHTS COUNCIL. Medvedev has revived a human rights advisory council and met with Chair Ella Pamfilova. Members include representatives from Memorial, Soldiers’ Mothers and Helsinki Group.

THE MIGHTY RUSSIAN ARMS BUILDUP. The operation in South Ossetia betrayed many deficiencies in the Armed Forces (JRL/2008/229/35). To fill some of them, it was announced last month that they would receive 3 (3!) UAVs over the next three years. Meanwhile it was reported that 70% of MiG-29s were too old to operate.

MUNICH CONFERENCE. US VP Biden made some openings and Moscow has generally responded with equal openness. But, all I can say was that Biden’s remarks were unimaginative. They were things that Moscow can do to help Washington and did not address the two principal irritants of endless NATO expansion and the missile bases in Europe. However, it’s early days yet and this is a welcome start. Merkel and Sarkozy also showed themselves more open. Can we see the “Saakashvili effect” slowly working its way through minds?

TRANSIT. Moscow and Astana will allow transit of non-lethal supplies for US troops in Afghanistan.

CFE. The Ambassador to NATO said Moscow would lift its embargo on the CFE Treaty if new NATO members ratified it. He claimed this was a well-known position but I don’t think I’ve heard it before.

CHECHNYA. The representative of the “Chechen Republic-Ichkeria”, Akhmed Zakayev, who actually represents neither many Chechens nor the jihadists still operating there, has said he is open for dialogue with Chechnya’s government and president. I doubt Groznyy is interested in “dialogue” but the amnesty offer remains open. It’s over.

GAS WARS, BELARUS. On Tuesday Lukashenka said there were no plans for Belarus to use the Russian ruble. While there is nothing new in this position – the currency question has been blocking the so-called Union State for at least a decade: Moscow doesn’t want to pay the “sticker price” for Belarus’s economy and Minsk doesn’t want to become a province – when Belarus’s gas contract comes up for renewal and the price goes up I’ll bet the Kommentariat (again) twists this into Moscow punishing Minsk.

MANAS. Kyrgyz Republic President Bakiyev in Moscow secured some economic benefits and, while there, said that he would not renew the US lease on the Manas airbase. Naturally many connected the two. And, while there may be some connection, Bakiyev’s reasons should be heard: he said that Bishkek had repeatedly asked Washington for more rent “but the suggestion was ignored” and referred to the killing of a civilian by a US serviceman – “violations of law by U.S. military personnel”. But it’s always easier to write about big bad Putin than do a little research. The base has become quite a contentious issue in the Kyrgyz Republic.

GAS WARS, UKRAINE. Gazprom gave some numbers: in 2009 it expects to sell Ukraine US$9.5 billion worth of gas and pay about US$2.3 billion for transit. President Yushchenko’s spokesman says that Kiev will not revoke the gas agreement (although he is quoted as saying it was a threat to Ukraine’s independence). On the other hand, PM Tymoshenko continues to blame him for the problem in the first place. Meanwhile it is reported that Kiev is seeking a loan from Moscow.

AND ANOTHER DESERTION. On Tuesday Georgia’s former Ambassador to the OSCE announced that he was joining the opposition: “I cannot continue working under the leadership of a president and a government I do not believe in.” Soon all of Saakashvili’s supporters will be in the US State Department.

© Patrick Armstrong Analysis, Ottawa, Canada (see http://www.russiaotherpointsofview.com/)

GAS WARS. On Saturday, Prime Ministers Tymoshenko and Putin met in Moscow and fairly quickly came to agreement. For this year, Naftohaz will pay European prices less 20% with the transit fees remaining as previously agreed. For next and subsequent years it will be full European prices and full European transit fees. In short, an agreement not hugely different from what President Yushchenko walked out on last month and fully in line with the Tymoshenko-Putin agreement of three months ago. There is one significant difference – but always implied by Gazprom – which is that the “European price” is linked to the price of oil. Previously the contracts had been for a fixed price (attractive to Ukraine at a time when oil prices were rising). No doubt Belarus will be given the same deal when its contract comes up. So what took so long and why did all those customers have to get cold? It looks to me very much as if the whole thing was connected to the bitter political struggle in Ukraine and Tymoshenko is now able to position herself as the person who can solve the problems Yushchenko causes. Certainly she is blaming “corruption at the highest political level [in Ukraine]”. This should stand her in good stead in the presidential elections in a year. (Or sooner, maybe: both Yanukovych and Tymoshenko say he should resign and between them they control about 70% of the seats in parliament. But they don’t like each other either.) Stay tuned.

BUT. Ukraine has continually been in arrears: how will it, with a failing economy, pay the higher price? And what happens when it fails behind? Will Kiev, locked in its political war, keep the agreement?

SIGNS OF THE TIMES. I am interested that The Economist, which I regard as only useful on Russia because it gives the “mean sea level” of conventional opinion at the moment of publishing, doesn’t seem to be quite able to make up its mind whom to blame for the gas cutoff. (JRL/2008/11/22). August and January have been learning experiences for many in the West and coverage has been much more balanced.

MARKELOV. On Tuesday Stanislav Markelov was murdered in central Moscow in an obvious mob hit. Given that he had been acting for the family of Elsa Kungayeva, murdered in 2000 by Yuriy Budanov, given that Budanov had just been granted parole and that Markelov had just finished a press conference protesting the parole, almost everyone decided that the two were connected. I’m not convinced: after all Budanov had won his parole, after several earlier refusals, and it is unlikely that Markelov’s activities would have put him back in jail. So I suspect that the cause is something else. In November the editor of a newspaper in Khimki was almost beaten to death: he had been running a campaign to prevent developers from destroying a forest and Markelov had begun an investigation into that case. And he had other dangerous enemies. Yesterday the case was passed over the Investigative Committee of the PGO which is supposed to be Russia’s top investigation group.

COURTS. Russian courts have just reversed two tax claims against foreign companies: Lufthansa on the 14th and PricewaterhouseCoopers on the 20th. And, it is reported that a judge has ruled the raid on Memorial’s offices last month to be “unlawful”. As always in Russia, one never knows whether this was the result of “telephone justice” with a new phone, or a sign of genuinely impartial legal procedures.

LENIN. Yesterday was the anniversary of Lenin’s death and time for the usual poll. According to VTsIOM, two-thirds now think the body should be taken out of the Mausoleum. Some people appeared on Red Square dressed as mummies. The police, lacking a sense of humour, but also prudently fearing a riot while communists were making their annual pilgrimage to their Holy of Holies, detained them.

GEORGIA OPPOSITION. Readers will know that I expected Saakashvili to be long gone. But I have come to the conclusion that three things have kept him in power so far: his near-total control of news outlets; the understandable desire to avoid the third extra-legal departure of a president in a row and the disunion of the opposition. The third is being repaired: almost all opposition parties have agreed on a three-point program. Salome Zurabishvili (yet another of Saakashvili’s former colleagues) appears to have taken a leading role; according to her the three are: Saakashvili’s resignation, electoral system reform and early presidential and parliamentary elections. Not all opposition parties agree on the first and consultations on tactics continue. The Europeans are starting to clue in: a €500 million aid package over 3 years is in the works. But there are conditions: there must be political improvements (media freedom and freedom of assembly were emphasised) and “We do not want to see any Euro spent on any military and I think that is the most important”.

© Patrick Armstrong Analysis, Ottawa, Canada (See http://www.russiaotherpointsofview.com/)

GAS WARS. The contract with Ukraine ended on 1 January and negotiations were stopped as Gazprom was offering $250tcm (about half what Germany pays). Gazprom shut off gas to Ukraine, Ukraine started siphoning Europe-bound gas and Gazprom then shut down the system altogether saying that no gas was getting through anyway. Negotiations ensued, agreements were made, Gazprom is trying to ship through Sudzha but Naftohaz comes up with new objections; no gas is presently flowing. Gazprom’s point of view here, Naftohaz’s here. At least Western coverage has been more balanced this time around – Gazprom has been using international monitors at all stages to document events. For readers of Russian, here’s Ukrainian PM Tymoshenko confirming that Gazprom offered $250tcm and her speculation that forces on the Ukrainian side are trying to keep the murky RosUkrEnergo alive for their own profit. (Let’s not forget theft as a motive (JRL/2009/8/24)).

JUDICIARY. Medvedev continues his activities against “legal nihilism”. Addressing the National Congress of Judges, he called for court records to be available on the Internet, attacked “telephone justice”, mentioned pilot projects on free legal aid for the poor and called for fewer prison sentences. Legislation to come, no doubt.

CORRUPTION. The Duma passed Medvedev’s anti-corruption bill (with the dates changed back) and he signed it on the 25th. He then signed a bill requiring Cabinet ministers to declare their income and property to tax authorities. Not the first time such a requirement has existed. Meanwhile an aide to the Ground Forces Commander was arrested on suspicion of accepting bribes and abuse of authority. A very uphill task.

RUSSIA INC. On the 25th the Central Bank of Russia said Russia gold and foreign currency reserves were US$450.8 billion; rumours of Russia’s bankruptcy are exaggerated.

ECONOMY. The government’s expectations, according to a Presidential aide, are 2% growth with 10-12% inflation in 2009. If that does come to pass, Russia may be one of the star economies of 2009.

PERISTALSIS. Medvedev has complained about how slowly the government works and Putin issued a directive designed to give deputy PMs more power to approve work. Another uphill task.

NAME OF RUSSIA. An Internet completion on The Name of Russia” had Nevskiy, Stolypin and Stalin close in the popular estimate, while the “experts” placed Nevskiy and Pushkin first followed by Suvorov. There was much flapdoodle in the West about Stalin’s high ranking. But Internet votes are easy to influence and I would argue that Stalin’s placing has much to do with older people resisting the devaluation of their youth. See, for example Putin’s remarks at the Butova Memorial or his description of communism as a “a road to a blind alley”; in short, was their youth wasted and their achievements hollow?

PEOPLE POWER. A court in Ulyanovsk region upheld Yuriy Budanov’s parole request; he is to be released 15 months early after 11 January. There have been several large protest rallies in Groznyy.

NOT COLOUR-FAST. Not a good time for those “democratic” “revolutions”, whether “Orange” “Rose” or “Tulip”. Unrealistic expectations, ignoring essential interests and expecting Washington to bail you out is not a recipe for domestic success.

1. Ukraine. President Yushchenko has abandoned his call for early parliamentary elections; he ordered his people out of the “orange coalition” in parliament so there is now no majority. Tymoshenko says he should resign and accuses him of weakening the economy on purpose. Not surprisingly a poll this week shows 83.7% of respondents thinking Ukraine has taken a wrong turn and over 90% believing the situation “tense” or “explosive”). No doubt the gas war is connected with the political struggle there.

2. Georgia. As expected, the former Ambassador to the UN has gone into opposition and calls for early elections. The Public Defender says he has proof that senior officials deliberately planned to break up the November 2007 demonstrations with excessive force. (REF). Another opposition member accuses Saakashvili’s family of embezzling money designed to provide insurance for poor people. (REF). The opposition says it will launch a series of demonstrations; and reiterated its demand for Saakashvili’s resignation. Meanwhile Freedom House has re-classified it as “a non-electoral democracy” (whatever that is).

3. Kyrgyz Republic. The main opposition parties have signed an agreement to form an alliance and demand the resignation of President Bakiyev. Not that anyone remembers this any more.

© Patrick Armstrong Analysis, Ottawa, Canada (See http://www.russiaotherpointsofview.com/)

MEMORIAL RAID. On the 4th, in their customary heavy-handed and secretive way, police raided the St Petersburg offices of Memorial and took some documents. As usual, there are many more theories than facts: this blog entry summarises the various theories. The official line is that the raid was conducted pursuant to hate-crime laws (a notoriously broad category that can justify almost anything in Russia and elsewhere), although it seems improbable that Memorial is connected to an anti-Semitic film. Like so much else in Russia, the few known facts will be used as a peg on which to hang one’s pet theory.

DEMOS. The authorised nationalist march on the 12th attracted a few hundred people and passed off without incident. Other Russia, typically refusing the sites it was offered, tried to hold its protest at Triumfalnaya Square (which has to be one of Moscow’s busiest intersections) but few showed up.

PEOPLE POWER. There were, however, real demonstrations on Sunday. A number (thousands say some, a negligible number say police) in several cities in the Far East protested the large tax increase on imported cars that is due to come into effect next month. Many people east of Baykal drive second-hand cars from Japan (with right-side driver’s position, which adds a certain frisson to traffic conditions).

JURY TRIALS. On the 12th the Duma passed amendments to the Criminal Code eliminating jury trials for cases involving crimes like terrorism, treason, sabotage; the Federation Council passed it yesterday. Such cases will be heard by a panel of three judges. The stated reason is that, because so many of these sorts of crimes occur in the North Caucasus and there is such a network of family and clan there, objective juries cannot be found and, when found, jurors are easily threatened.

RUSSIA INC. The government’s official line remains optimistic: Russia will make it through. Moody’s has reduced Russia’s rating from “positive” to “stable” (Baa) and Standard and Poors to BBB in the wake of a drop in the ruble’s value and the fall in oil prices. According to the Finance Ministry, the federal budget surplus was about 6.3% of GDP in the 1st 11 months of the year. Meanwhile, RosStat reports that industrial production declined 8.7% this year compared with last. An official stated that foreign reserves were US$435.4 billion last week: down nearly $150 billion since the crisis began. He was hopeful that reserves will stay above $300 billion. We shall see: certainly the world-wide crisis has not yet bottomed.

CORRUPTION. Some fairly high-profile arrests lately. A criminal case on abuse of office has been opened against the former Russian Pension Fund head, the Investigative Committee arrested a Moscow deputy prosecutor for soliciting a bribe and today an aide to the Ground Forces Commander was arrested for taking a bribe. However, the Duma has delayed, by a year, the date of coming into force for Medvedev’s package of bills; Medvedev is said to be very angry.

GEORGIA. US Senator John Kerry, visiting Georgia, was told by opposition members that Saakashvili was a threat to Georgia and the world, Matthew Bryza (can we call him Tbilisi’s man in Washington?) was told by another leader that the opposition would attempt to force early elections and hoped the next US administration would “respect the choice of the Georgian people”. Zurab Noghaideli (PM Feb 2005-Nov 2007) stated that Saakashvili was incapable of governing Georgia: “The time of children playing in the sandbox is over in Georgia”. There must be more Saakashvili-era ministers in opposition today than in his cabinet. And, the rumour is that Georgia’s Ambassador to the UN is about to declare his opposition.

GAS WARS. Negotiations between Gazprom and Naftohaz continue without resolution despite the framework agreement between PMs Tymoshenko and Putin of October; the present contract expires in January. In the meantime, it is reported that local gas suppliers in Ukraine are beginning to cut off customers for non-payment. President Yushchenko just announced that Ukraine had paid US$800 million with another $200 million coming soon. This will still leave a debt of about one billion.

CAUCASIAN RUMOURS OF WARS. I have been noticing an increase in jihadist attacks in the North Caucasus over the past summer: Gordon Hahn’s essay on new tactics (JRL/2008/22740) puts this into context.

© Patrick Armstrong Analysis, Ottawa, Canada (See http://www.russiaotherpointsofview.com/)

PATRIARCH. Patriarch Aleksey II died on Friday and more than 80,000 people came to his lying-in-state at the Cathedral of Christ the Saviour. He presided over a spectacular rebirth of the Russian Church – when I was stationed there 1993-1996 I never saw a church that wasn’t being repaired and I saw many full.

CAPITAL OUTFLOW. For what it’s worth, the Central Bank of Russia Chairman said last week that capital outflow from banks in November was much smaller than in previous months and expressed his confidence that it has stabilised. Of course, so much has left that there probably isn’t much more to go. Here are some essays on the financial crisis on Russia that people who know more about it than I do have praised.

SOMETHING NEW. To me at any rate. I was reading Putin’s interview session and one of the people complained about the Unified State Examination of which I had not heard. Putin defended it as a means of reducing corruption in enrolment for higher education and said that statistical evidence showed it was working in that enrolment on the top universities from remote areas had increased by 10%. Polls on corruption regularly place the education system high (but not as high as the police). This is another example to show that developments in Russia are much more complicated than any one watcher – let alone the Kommentariat, obsessed as it is with neo-Kremlinology and stereotype – can follow. Russia is still very a very “top-down” country, but there are enough initiatives, developing and interacting with each other, to “thicken” the mix.

CORRUPTION. Sergey Stepashin, the head of the Audit Chamber, has just said “Unlike previous decades, budget funds are not stolen in Russia today. We can now speak about instances of their ineffective use”. The Audit Chamber has for some years been looking at whether the money is effectively spent by the agency as opposed to being merely spent on the budget item. He may be over-sanguine but certainly we don’t have the outright disappearance of large amounts of money the way we did in the 1990s.

HERE WE GO AGAIN. Once again Other Russia demanded approval to hold a demo on Tverskaya Street on 14 December and once again the Moscow authorities refused and offered an alternative location. (In St Petersburg they asked for the equivalent – Nevskiy Prospekt). This game is played constantly: Other Russia demands a venue it knows it will not get – no one gets Tverskaya which is Moscow’s main street – so that it can force a stunt that the Western media will cover. Will the Western media be suckered again? Will it report this time that the bulk of the protesters are from the rather un-democratic National Bolsheviks?

MEDVEDEV’S TRAVELS. Back from his Latin American trip, Medvedev has been to India and Italy.

ROMANOVS. US and Russian scientists again confirmed that the Yekaterinburg remains were those of Nikolay II and his family. The Church still holds off on agreeing – presumably because it wants to be absolutely certain.

ROSES AND DANDELIONS. The Georgian opposition continues to grow: former Foreign Minister Zurabishvili’s party has called for immediate elections; two opposition parties have announced an alliance. Rumour has it that the former Ambassador to the UN is about to join the opposition. There has been another government shuffle: opposition there too? I was wrong to expect Saakashvili’s overthrow to be soon: the process is slow. While the opposition suffers from too many leaders, it is coalescing around a platform of early elections to replace Saakashvili and his parliamentary myrmidons but, given his near-total control of news outlets, it is moving slowly. It is also likely that the opposition does not want Saakashvili to be the third President in a row replaced by coup. But it’s coming: as Saakashvili’s support in the West wanes, almost all of his former allies now want him gone. Meanwhile the Georgian Patriarch attended Aleksey’s funeral and had a meeting with Medvedev; he called for better relations but did not openly criticise Saakashvili.

ORANGES AND LEMONS. Ukraine has been hit hard by the financial crisis and bitter in-fighting by former political allies but a new “Orange coalition” in Parliament has just been formed. Given that Yushchenko has been virtually calling PM Tymoshenko a Kremlin stooge, I cannot think that this one will last much longer than the others. The NATO question just intensifies east-west strains. Meanwhile it has to pay its gas bills; although the IMF, which has granted a loan, believes there is enough money on hand to do so, Ukraine is currently a couple of months behind. Yushchenko has promised that it will not siphon off Europe-bound gas, as it did in 2006 when Gazprom cut supply because of unpaid bills (Moscow was blamed of course).

© Patrick Armstrong Analysis, Ottawa, Canada (See http://www.russiaotherpointsofview.com/)

PUTIN Q&A SESSION. Putin answered questions on Russian media today. Most of what he spoke about was connected with the economy – he remains reasonably optimistic – and the financial crisis – ditto – and other “money” issues.

NATO EXPANSION. At its meeting in Brussels NATO did not offer MAPs to Georgia or Ukraine. It also began a retreat from its decision not to deal with Russia. Typically, this was covered up by waffle language but that is the bottom line. As someone wisely observed, NATO is “becoming the problem that it had been trying to solve”. No one can doubt that the Ossetia war was a by-product of NATO expansion which was sold as a means of creating stability, not reducing it. We will see whether this marks the end of this foolish project, or “tragic mistake”, as George Kennan put it in 1998. The latest poll from Ukraine shows what a divisive issue it is there: over 80% want a referendum before joining and only 30% said they would vote to join. 16% in eastern Ukraine supported NATO membership, 28% in the central region and 68% in western Ukraine.

LATIN AMERICA. Medvedev has been visiting countries in Latin America that Washington does not like. Part of this I suspect is the perennial attempt to get customers for something other than oil and gas and part of it is an attempt to irritate Washington and show that Russia is a force to be taken seriously.

KARABAKH. The optimism of last month’s agreement signed by the Presidents of Russia, Armenia and Azerbaijan is fading. There was a protest in Yerevan a few weeks later by war veterans calling “the liberated territories” “an integral part of our Motherland” and any cession “treachery”. On the other side, Azerbaijan President Aliyev told RAI International that the agreement did not rule out the use of force. Karabakh is another of Stalin’s cartographical jokes and should never have been included in the Azerbaijan SSR in the first place. As a result of the war, the Karabakh-Armenian forces have occupied a good piece of territory to the west of Karabakh which are, typically in the Caucasus where history and historical myth are so strong, already being considered part of the “Motherland” by some. Just as many Georgians consider the Empire of David to be the “true” extent of Georgia, there are Armenians who consider the Empire of Tigranes to be the “true” Armenia. And so it goes, with a lot of blood shed to intensify feelings.

UKRAINE-RUSSIA. President Yushchenko’s party, People’s Union “Our Ukraine”, held its conference and declared that Russia was a threat to Ukraine and that many politicians ignored this reality to the detriment of Ukraine’s independence. As far as I know the word “Tymoshenko” did not appear in the statement. On the other hand, it is reported that Yushchenko has set up a group to improve ties with Russian Federation in face of the financial crisis. Kiev’s Ambassador to Moscow pointed out that Russia, Ukraine’s largest trade partner with turnover of about $30 billion, must be Ukraine’s partner in finding a way out. The National Security Council Secretary said, in reference to the party’s statement: “It is unacceptable when our partner is branded a national security threat”. Reality bites. Meanwhile it is announced that Naftohaz Ukrainy has been able to pay for September’s gas imports. Leaving, I suppose, October and November still to be paid for.

GEORGIA. I highly recommend that people watch this interview with Erosi Kitsmarishvili, the former Ambassador to Moscow and quondam ally of Saakashvili. In essence he says that: Saakashvili has betrayed the “Rose Revolution” (in which Kitsmarishvili was an important ally); Washington was stupid not to see what manner of man he was; Saakashvili started the war because he wanted to be another David; there is more than a hint that he believes Saakashvili, or someone close to him, had Zurab Zhvania murdered; all news outlets in Georgia are government-controlled and the population has few other sources of information and therefore the opposition must move slowly and carefully. Finally Georgia cannot exist without good relations with Russia. He says he will sue the government to regain control of the TV station he helped start (Rustavi-2), no doubt as a first step in breaking the government’s control. That’s a lot of former allies of Saakashvili now in open opposition: including now the PM from February 2005 to November 2007, who set up his opposition party yesterday. Hard to keep up with them, in fact.

© Patrick Armstrong Analysis, Ottawa, Canada (See http://www.russiaotherpointsofview.com/)

TERM LIMITS. The Duma has approved the Constitutional amendments on term increases for itself and the President. When two-thirds of the regional legislatures approve (and not much doubt that they will) the new rules will take effect at the next election cycle. A reminder, for those who are still obsessed with the idea that Putin wants to be President forever, of how easy it would have been for Putin to have abolished or modified Art 81.3 had he wanted to.

POLITKOVSKAYA TRIAL. After much back and forth, the trial re-opened yesterday. The prosecution’s attempt to remove the judge has failed and the trial is open now to reporters and they are reporting.

DEMOGRAPHICS. More signs of an improvement: RosStat says the Russian population decreased by 116,600 to 141.9 million in the first 9 months of the year; last year’s equivalent decrease being 199,900. Births are up to 1.27 million from 1.18 million. Deaths are up slightly to 1.57 million from 1.56 million. Too early to make long-term conclusions, but the various programs are evidently having an effect. Not unconnected with the death rate is the Interior Minister’s statement that Russia has the highest rate of traffic accident mortality in Europe.

CORRUPTION. An Interior Ministry official tells us that, so far this year, police in Russia have committed over 60,000 violations and more than 3000 crimes. Public surveys typically rank police near the top of corrupt institutions.

UNITED RUSSIA CONGRESS. The ruling party held its annual meeting last week. Putin’s address concentrated on the financial crisis and his confidence that Russia would weather it. (For what it’s worth, the Finance Minister says banks’ liquidity has improved and they are lending more to the real sector). Putin also spoke of the social programs designed to reduce poverty and improve mortality numbers. These seem to be his current priorities.

SUBMARINE ACCIDENT. A sailor from the SSN Nerpa has been charged with negligence in connection with the fatal accident on the 8th.

UKRAINIAN ARMS SUPPLIES. Georgia received a lot of offensive weapons from Ukraine and the issue is causing a slow-burning scandal there. A summary of the situation can be found at JRL/2008/213/29. Certainly, it is hard to imagine how Georgia could have paid for what it received (or from the Czech Republic where, to my knowledge, there has been silence). So who did?

GEORGIA. On the 23rd Saakashvili claimed that shots were fired at him and Polish President Kaczynski near the border with South Ossetia. This report was picked up by a few Western news outlets but seems to have been generally treated with the derision it deserved and it is now reported that the Polish security forces are calling it a “Georgian provocation”. He has lost his credibility: the Civil Georgia report of the incident is remarkable for its lightly veiled disbelief. Meanwhile, Nino Burjanadze seems to be playing a careful game; keeping away from street demonstrations, she has created a new opposition party and described its immediate program: “We must get elections held and a new democratic leadership brought to power in a constitutional way”. Saakashvili has said he will not run again: do we see the shape of a palace coup developing? The Georgia parliamentary commission on the war is starting to run out of control. The testimony of the Georgian Ambassador to Russia has been especially devastating to Saakashvili’s version of events and his claims of endless Russian hostility. He stated there was a plan to attack Abkhazia in May that was called off (in late July Moscow sent some aircraft over Georgia that it thought, wrongly as it turned out, “dampened the zeal of hotheads in Tbilisi”). He also reported that “our leadership was saying that they had US support to carry out the military operation”. Personally, while I do not believe that Washington actually approved the invasion, I do regard it as culpable for not recognising what sort of person Saakashvili really is: in dealing with “hotheads” or “volatile” people, diplomatic language is rarely blunt enough. Tbilisi certainly thought it had Washington’s approval and it is understandable that it would: the training, the courtship, the rhetorical support. And all those weapons that flowed in while Washington said nothing.

© Patrick Armstrong Analysis, Ottawa, Canada (See http://www.russiaotherpointsofview.com/)

POLITKOVSKAYA TRIAL. Indictments were handed down and, having first agreed to have the trial open, the judge closed it at the request of the jury. Given that the prosecution’s contention is that she was murdered in a mob hit, that both the actual killer and the boss who ordered it are in Europe and that the plot was assisted by members of the security forces, I can’t blame them for feeling insecure. However, one juror, who has resigned, said the jury only objected to live video and TV. The trial has been recessed until 1 December.

RUSSIA’S PROSPECTS. The World Bank has produced a report. The prognosis is not so bad: growth this year is estimated at 6% but will fall to 3% next year (which, the way things are going, may make Russia a star); inflation will remain in the 12%-14% range. As it says, the impact of the global crisis in Russia is cushioned by its large cash reserves and “prudent fiscal policy”.

BALANCE SHEET. The Duma heard reports on Russia’s reserves. The Reserve Fund is US$131.26 billion ($129.32 billion in June) and the National Welfare Fund US$61.16 billion ($32.60 billion in June). Some money is invested outside Russia; the Central Bank reduced its investments in Fannie Mae and Freddie Mac bonds from US$65.6 billion to US$20.9 billion over the year (everybody thought they were solid investments it seems!). The Bank has spent $57.5 billion between September and October supporting the ruble exchange rate. So, still money in the kitty although it is being spent and energy prices mean it is not arriving at the old rate.

DEMOGRAPHICS. The Health Ministry reported the highest birthrate in 16 years: up 100,000 in the first 9 months to 1.2 million. Reasons were a combination of the encouragement program and better medical care.

NEW PARTY. SPS, Civil Force and the Democratic Party have disbanded and re-formed as Pravoye Delo.

FIRST FRUITS? The Ingushetia Supreme Court has overturned the “accidental death” ruling in the case of Magomed Yevloyev and ordered a new investigation. New President, new telephone? Or shutting off the old?

PIRACY. A Russian warship, Neustrashimyy, is escorting ships in the Horn of Africa and claims to have prevented the seizure of a Saudi Arabian ship on Sunday. An issue that offers the possibility of real international cooperation and there have been meetings between French and Russian sea officers in the area.

OSCE. The former OSCE official, Ryan Grist, insists that the observers in Tskhinvali warned Vienna of Georgian preparations to attack saying it was an “absolute failure” that the warnings were not passed on. Not for the first time I wonder what they do in the OSCE headquarters. (See Ruslan Gelayev’s attack on Abkhazia in 2001 right under the noses of observers).

EU-US. I have long suspected that a fallout of the war will be a rift between the EU and Washington. Sarkozy is quoted as saying that Washington did not want him to go to Moscow in the first place. I remain stunned, given the resources it is supposed to have, by how ill-informed the White House was (I prefer that to the other possibility). When Daniel Fried testifies “the Georgians told us” as his source for key events, all I can say is !!!.

SOUTH CAUCASUS SECURITY. The Geneva meeting on Tuesday produced some progress and delegations from South Ossetia and Abkhazia attended. Given that the root cause of the situation is their refusal to be part of Georgia, nothing can be decided without their presence. Meanwhile Moscow says its bases in Abkhazia (Gudauta) and South Ossetia (Java) are fully manned with 3700 troops each.

GAS WARS. Ukraine is – again – behind in payments. Will we have another orgy of “Russian gas weapon” stories? Or will the West, having been so readily manipulated in the Ossetian war, have learned scepticism? Why shouldn’t Ukraine, and the others, pay the going rate?

UKRAINE AND NATO. Another poll in Ukraine in which 45.6% of respondents say NATO membership would be destabilising. I cannot think of any issue better calculated to split Ukraine than NATO membership – so much so that one wonders whether Washington wants to break up the country.

CAUCASIAN RUMOURS OF WARS. More events. In Ingushetia attacks on military convoys on the 13th and 18th and a bomb on the 16th ; in Dagestan 4 jihadists were killed on the 17th and there was an assassination attempt on a cleric on the 18th.

© Patrick Armstrong Analysis, Ottawa, Canada (See http://www.russiaotherpointsofview.com/)

POLITICAL CHANGES. Medvedev has sent his first changes in the political system to the Duma. He wants the President’s term to be 6 and the Duma’s to be 5 years. It appears, from what the Speaker said, that the Federation Council will return to being elective (the method of choosing “senators” has gone through several iterations). In his speech Medvedev also spoke of loosening the (in my opinion) over-strict requirements for parties to qualify for Duma elections. Naturally the Western press is fitting this and that into their preconceptions. Especially worthless was this piece. Let it be repeated again: if Putin had wanted to stay on as President, he could have. He had the power and the popularity to have the Constitution amended; there was no need for some later elaborate scheme. But logic should never get in the way of the anti-Russia meme.

MILITARY REFORM. We move another (long-awaited) step; at least in planning. The Soviet Army was structured to fight a very big war with the basic building blocks being divisions organised into armies and fronts. The actual decisions were made at front level (as they had been in the Second World War). The formations were designed to be filled out by conscription. Thus an army of many divisions, many officers, much weaponry, huge reserves but fully manned only in front-line formations. This is obsolete today, and has been for some time. For several years there has been an intention to move towards brigades (in Commonwealth military terms: “brigade groups”) and a number of steps have been taken in this direction. Eight years ago Putin called for “a smaller, better-equipped, technically perfect army” but there is a powerful vested interest for the old way in the Russian Armed Forces, especially in a context where so many in the West are doing their best to create a new cold war. These interests have fought hard: they have been losing, but they have dragged the process out for many years. The latest plans to restructure formations have been announced: starting next year and finishing in 2012, all divisions will be disbanded (23) and be replaced by 12 brigade groups. In the process the Armed Forces will shrink by 270,000 soldiers and officers (160,000 of them!). The program is quite correct: Russia’s real threats require smaller and more flexible formations that can operate independently but we will see if the reform succeeds this time.

MISSILES. Foreign Minister Lavrov has made it clear that the deployment of Iskander missiles to Kaliningrad would only take place if Washington were to emplace its missiles.

SUBMARINE. On the 8th there was an accident in the Russian SSN Nerpa in the Sea of Japan while on sea trials. Apparently the Freon fire suppressant system was accidentally triggered and 20 people, most of them civilian workers, suffocated. The boat is said to be undamaged and will be taken into Russian Navy service (and not leased to India as some reports have it).

OLD STORIES NEVER DIE. The US Defense Secretary congratulated Estonia with beating off mass-scale Russian cyber attacks. The Moscow cyber attack story is rubbish – read this: “These were simply hackers whose fathers and grandfathers had made huge sacrifices for Russia during World War II.”

CHECHNYA. It has been announced that the Vostok and Zapad battalions will be disbanded and re-constituted as companies in an MR division in Chechnya. The Russian Prosecution Service has ordered the Chechen Interior Ministry to bring former Vostok commander Sulim Yamadayev to interrogators by force. This could lead to trouble: this photo of a captured Georgian BMP shows a certain loyalty to Yamadayev in the Vostok battalion; he created it.

GEORGIA. The opposition held a one-day protest in Tbilisi attracting several thousand people; one notable slogan was “Stop Russia-Stop Misha!”. It passed off without incident. The opposition has developed a plan to hold protests with the goal of holding parliamentary and presidential elections in the spring. Saakashvili’s version of the start of the war is collapsing rapidly with testimony from OSCE observers and the like. I am amused that a US State Department spokesman was quoted as saying: “We may or may never get to the bottom of who was actually responsible for what went on there”, which is quite a change from the earlier line. Actually, it’s not such a mystery as all that. See this.

© Patrick Armstrong Analysis, Ottawa, Canada