UKRAINE. On the 11th Medvedev sent a sort of open letter to Ukrainian President Yushchenko complaining about relations and enumerating Russia’s complaints (for the majority of which Yushchenko would be most responsible). Reactions are appearing: some mocking, some thoughtful. I don’t understand the point of this. Yushchenko will not be the next President of Ukraine and whoever replaces him will have a more reasonable relationship with Russia. According to Gallup, approval of their government by Ukrainians is “the lowest in the world”. Surely the best thing for Moscow to do, if it wants a Ukrainian government interested in more than the “colour revolution package” of irritating Moscow and joining NATO, is to keep its mouth shut and wait for the Ukrainian people themselves to toss Yushchenko out. They need no encouragement from Medvedev: the “Orange Revolution” was based on false premises. As to the Ukrainian arms deliveries to Georgia (and I’d still like to know who paid for them), that’s percolating away in the background in Ukraine and needs no help from Medvedev either. It will likely re-surface with the new President in January, whether Tymoshenko or Yanukovych. So, altogether unnecessary, silly and rather whiney.

ECONOMY. Some numbers that aren’t as bad as previously. Unemployment is reported to have slightly declined (from 6.7 million to 6.3 million or 8.3% of the economically active population). GDP is reported to have grown 7.5% in the 2nd quarter over the 1st (but, year-on-year, is down 10.9%). Has it bottomed out?

THE MIGHTY RUSSIAN ARMS BUILDUP. Deputy PM Sergey Ivanov announced that the Russian Armed Forces would receive about US$15 billion nest year. To put this number in perspective, Canada’s defence budget this year was about the same. I know there is a big difference in purchasing power parity, and the Russian money will go much farther, but 15 billion is hardly an apocalyptical sum.

PIPELINES. The South Stream pipeline comes a little closer with a Turkish-Russian agreement last week. The two also agreed on construction of a Russian-built nuclear power plant, Turkey’s first.

STATE CORPORATIONS. Over the years Medvedev has mused that state ownership may have outlived its usefulness and I have been watching to see whether this would lead anywhere. He has ordered the Prosecutor General and the Director of the Presidential Control Directorate – interesting choices indeed! – to review and report on “the expediency of the future use of such business structures”.

CORRUPTION. A Moscow court has sentenced Andrey Taranov, the former head of Mandatory Health Insurance Fund, to 7 years in prison on corruption charges.

USE OF FORCE ABOARD. Medvedev has submitted to the Duma a draft law establishing authorisation to use Russian Armed Forces abroad. The reasons given are: to counter attacks on deployed troops; to counter or prevent an aggression against another country; to protect Russian citizens abroad; to combat piracy and ensure safe passage of shipping. No doubt other countries have similar legislation.

ANOTHER MURDER. The bodies of Zarema Sadulayeva (head of Let’s Save the Generation) and her husband, who were kidnapped in the 10th, were found the next day in Groznyy. Investigators wonder whether the target may have been her husband, Alik Jabrailov, who was formerly a fighter against the government. Interestingly, Akhmed Zakayev does not blame Kadyrov for the murders. A discussion of various theories here. Personally I have no clue: I can imagine jihadists and other interested parties wanting to embarrass Moscow and Kadyrev; I can imagine score-settling; I can imagine Kadyrov “cleaning house”. The murders will not be solved, although, like those in Novy Itagi in 1996, we may learn more years later. But there will always be problems with the credibility of sources.

CHECHNYA. To no one’s surprise, the authorities have announced a big increase in kidnappings and murders in Chechnya: the former are up from 4 to 23, and murders from 52 to 78. Crimes of “a terrorist nature” are down. But how can one separate jihadist activity, rebel activity, score-settling and “normal” “bizness”?

MOLDOVA. The four main opposition parties in Moldova have announced a coalition; 61 votes, of which they have 53, are required to name the next President; therefore they need support from some of the 48 Communists. If they fail, there will have to be another election.

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

PUTIN POPULARITY. At last a reasonably intelligent piece on Putin’s popularity. But, while it makes the important point strongly, it is still has some of the clichés that clutter up Western reporting. The important point is that Putin’s popularity has held up despite the fall in oil prices. However, it is a cliché that his popularity suffered with the Kursk sinking (presumably the feeling is that Western leader would in a similar case), the piece claims a “significant drop”, but the chart shows only about one point lost and soon regained. Someone is quoted dragging out the hoariest cliché of all: Russians’ alleged “lasting desire for strongman leadership”. No, it’s much simpler than that. Compare Russia’s prospects in 1999 with today’s. Russians give Putin’s team credit for the improvement across the board: higher standard of living, greater stability and cohesion, increased position in the world and all the rest. There’s nothing mysteriously Russian about it: people like effective leaders everywhere. Another point to reflect on is that many observers assume that they can measure political freedom by the level of opposition they perceive. They see opposition in Georgia or Ukraine but little in Russia. But, as the piece shows, since 2000 about seven out of ten Russians have approved of Putin; an observer will have to look much harder there to find an opponent than in the other two countries where the government structure is much less popular. There it’s easy to find opponents of the government: in Ukraine more than nine out of ten disapprove and in Georgia eight out of ten. And, I suspect, they are much more passionate about their disapproval.

POLITKOVSKAYA TRIAL. Has re-opened after the Supreme Court declared a mistrial in the last attempt. It was adjourned today to consider defence objections. Another case of Russia being damned if it does and damned if it doesn’t. It’s condemned because the case is still not resolved; it’s not congratulated that the government’s case failed to convince a jury.

SUBMARINES. Russian submarines off the US coast “raised concerns”, “assertive stance” “echoes of the cold war era” etc etc. But, according to the Russian Navy, such patrols never stopped. So why mention them now? And in the usual context which doesn’t even wonder whether the US makes similar patrols (it does)? As Stalin used to say: “the struggle intensifies”: many people want to undermine Obama’s “reset”.

SOUTH OSSETIA WAR. Saturday will be the first anniversary of the start of the fighting and there will be, no doubt, many think pieces written. Check them, dear readers, with these points in mind: any serious discussion ought to at least mention most of them. Background should start in 1918 when the Democratic Republic of Georgia attempted to add South Ossetia by force; then carry through Stalin-Jughashvili’s decision to cut Ossetia in two and give the southern half to the Georgian SSR; it should mention Ossetian demands to retain the rights they had had in the Soviet system (as an “Autonomous Oblast”); Tbilisi’s rejection of that; then the Georgian attack in 1991. Extra bonus points if anyone mentions the “hosts and guest theory” prevalent in Georgia in the late 1980s. All this left a legacy of mistrust and constant shooting back and forth. These think pieces should get the immediate chronology right too. On 7 August, Saakashvili gave a speech announcing a ceasefire and saying “I love Ossetians as a President and as an ordinary citizen of this country”. A few hours later, Georgian forces opened fire. Expecting a quick seizure of the bridge at Didi-Gupta and believing he had support from Washington, on the 8th Saakashvili gave a “victory speech”. But Georgian forces were stopped by Ossetian militia and collapsed and ran when Russian soldiers arrived, abandoning their cities and their weapons. Since then Saakashvili has changed his story several times; in particular he is now saying that the Russians moved first. There should be some understanding that Saakashvili’s former Defence Minister has admitted that an attack on South Ossetia was always part of the plan. There should be recognition of the truth that the Ossetians are actors, not Moscow puppets and that they have shown, by plebiscites and by fighting, that they do not want to be part of Georgia (at least as it has been constituted since Gamsakhurdia). All of these points should be considered. If they are not, you are reading a whitewash. Perhaps paid for by Saakashvili.

MOLDOVA ELECTION. In parliamentary elections, the Communists won a plurality but not a controlling majority.

UKRAINE GAS. The IMF has approved the third tranche of its US$16 billion stabilisation loan to Ukraine (about US$10 billion received so far). Gazprom has been paid in full for the gas pumped into Ukraine storage facilities in July. Perhaps we will have a quiet winter for once: the winter gas is getting there; it’s paid for.

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

RESPECT AND INFLUENCE. Two centuries ago John Jay wrote: “If they [foreign powers] see that our national government is efficient and well administered, our trade prudently regulated, our militia properly organized and disciplined, our resources and finances discreetly managed, our credit re-established, our people free, contented, and united, they will be much more disposed to cultivate our friendship than provoke our resentment.” True then and true now. A Medvedev interview touches on many of these points: “Just as our foreign policy has a direct impact on living standards here at home, so does our success at home have a direct impact on how others perceive us.” He knows Russia has some distance to go: “So long as others see Russia as a country with an unacceptably high level of corruption we will be treated accordingly.” If you want to know what the Russians think about things, read what they say; not what other people want you to think they said.

CORRUPTION. Medvedev has called on people “not to be afraid to use [the new anti corruption laws]”. In the interview cited above, he admits that so far his efforts have had “very modest results”.

MAIL. Law enforcement agencies are now empowered to inspect private mail. With a court order. Which, in the realities of Russia, is a flimsy safeguard.

NGOs. Medvedev has approved a simplification of the registration rules for Russian NGOs.

POLITKOVSKAYA. It is announced that a new murder trial is to begin 5 Aug. I think that the prosecutors got it right (and the editors of Novaya Gazeta seem to agree) but the last trial was completely bungled. As so many prosecutions have been: the best lawyers are working somewhere else; mob hits are notoriously difficult to prove thanks to cutouts, intimidated witnesses and the expendable triggermen; the police are incompetent and corrupt (one policeman acted as the spotter for the murderers it is said). Very few prosecutions do the job in modern Russia.

RELIGION. In a meeting with leaders of Russia’s four “traditional” religions (Orthodoxy, Islam, Judaism and Buddhism), Medvedev expressed support for voluntary religious instruction in schools and chaplains in the Armed Forces. It will be interesting to see how the kommentariat spins this one.

CHECHNYA. An effort is underway to bring back into the fold the last remaining independence fighters so as to gain their cooperation against the jihadists. Talks with Akhmed Zakayev in particular.

BASES. A Russian admiral says the Black Sea Fleet should have at least two main bases: one in Sevastopol and Novorossiysk. I think it should have as many bases as it wants. But they should all be in Russia.

GEORGIA. Just before Biden’s visit Saakashvili promised reforms: the opposition is scornful. What are his promises worth anyway? A few hours before Georgian forces opened fire on Tskhinvali last year, he said “I have been proposing and I am proposing Russia act as a guarantor of South Ossetian autonomy within Georgia”. The opposition has suspended its regular Tbilisi street protests but promises to keep working to get rid of Saakashvili. Not a failure: Biden seems to have taken to heart Burjanadze’s appeal to support Georgia not Saakashvili. In the Wall Street Journal interview (which has been spun, in my opinion, as far more hostile to Russia than it really was) Biden was asked about Saakashvili’s reform promises: “I’m not concerned, but I’m not taking any chances. The opposition believes the only reason he said it was because I was coming. The opposition said to me the only reason he did some of the stuff he did in terms of backing off the demonstrations was because I told him…” Saakashvili wanted weapons; he has been refused. The Daily Telegraph reports that the EU report on the war has been delayed. This leads me to suppose that it will not support Saakashvili’s various stories. Pretending that the fact that Georgian forces opened fire on Tskhinvali at midnight doesn’t matter is absurd: does anyone seriously think that Russia would have “invaded” anyway if Saakashvili had actually meant what he said? Extracting what he can from Biden’s visit, Saakashvili says “Putin’s plan to completely occupy and to destroy Georgia: has now been foiled”. Perhaps this will put an end to all the op-eds predicting that Moscow is about to do what it could have done last year but didn’t.

BIDEN IN UKRAINE. He appears to understand that the gas problem is not just Moscow: he is reported to have observed that allowing local consumers pay fractional rates for gas means that Naftohaz is always short of money to pay Gazprom.

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

JUST WHAT RUSSIA NEEDS. Another liberal/social democrat opposition party. But it has been announced that Gorbachev’s Independent Democratic Party of Russia will hold its founding congress in early September. I would estimate that 10 to 15% to the electorate would be sympathetic to something like this (although the “pedestal parties” long since stole the economic platforms) but for some reason Russian liberals absolutely refuse to cooperate with each other and there doesn’t appear to be much sign that they ever will. Each is prepared to unite – but only under his leadership.

KARABAKH. At a side meeting of the G8, Russia, France and the USA announced they would submit a revised set of proposals to resolve the Karabakh problem to Yerevan and Baku. Like South Ossetia, Abkhazia, Chechnya and Transdnestr, this particular attempt to revise Stalin’s cartography started up in the dying days of the USSR in an. After quite serious fighting over several years, the Karabakhians secured their independence and occupied a swath of Azerbaijan territory linking themselves to Armenia. Like the other issues (except Chechnya for some reason) the “international community” generally ignores the secessionists, regarding them as the finger puppets of recognised states. External attempts to mediate the issue have foundered on the assumption that it’s only a Baku-Yerevan issue. But that is folly: the Karabakhians won their independence and they will not allow it to be traded away by somebody else. Any solution must return a substantial amount of territory to Baku and assure Stepanakert that it will not be governed from Baku and offer veterans of the fighting enough to satisfy them. Not an easy thing to achieve. Over the years, however, the rough form of a settlement has emerged: Karabakh remains nominally in Azerbaijan but in reality controls its own destiny; some access to Armenia is secured, the other land is returned to full Azerbaijan control. Naturally, there would have to be some strong peacekeeping force in place (and who would volunteer for that?). Nonetheless it is encouraging that Washington-Moscow and Paris are getting involved: the combination may be able to deliver. The preliminary meeting of the Armenian and Azerbaijanian presidents will be held in Moscow this weekend.

BLACK SEA FLEET. The Black Sea Fleet in the Soviet days was based in Crimea. When the USSR broke up, the Russia portion of the fleet negotiated a lease to stay there. The current lease expires in 2017. On Tuesday Medvedev visited Novorossiysk and announced that construction of a new base was underway and should be complete by 2020. What appeared to be a strong intimation that the fleet would finally leave Ukraine was immediately muddied when the Chief of the General Staff announced that Moscow hoped to extend the lease. Moscow should bite the bullet, finish the base and move the fleet to it as soon as possible. Perhaps Medvedev will issue a clarification.

AIRCRAFT LOSSES IN SOUTH OSSETIA. Moscow Defense Brief says that Russia actually lost 6 aircraft in the fighting (Moscow admits to 4), three of them to Russian fire because the lack of cooperation between Army and Air force “led them to conduct completely separate campaigns”. The General Staff has denied the report.

ANOTHER MURDER. Natalya Estemirova was kidnapped in Chechnya yesterday and her body was found in Ingushetia. The Interior Minister Rashid Nurgaliyev has pledged action. While it is possible that the murder will be quickly solved, it is more likely that it won’t and the usual rumours will replace fact.

GEORGIA. The opposition has announced that it will spread protests throughout Georgia. Meanwhile Burjanadze was in France presenting evidence of government repression. Saakashvili continues to tighten control with a new law on protest rallies and a stronger grip on the news media. He assured the Georgian people that the new presidential palace a-building cost a “trifle”.

BEREZOVSKIY. It is reported that Ukrainian investigators interviewed Berezovskiy about the alleged poisoning of President Yushchenko in 2004. If true, that’s a new and curious twist to this long unsolved mystery.

NABUCCO. The gas pipeline moved a step forward with Turkey, Austria, Hungary, Bulgaria and Romania signing an intergovernmental agreement on the line (Caspian to Europe via Turkey). Naturally, in the zero-sum thinking that infests the subject of pipelines, some hailed it as a way to cut Russia out. But, for what it’s worth the Turkish PM invited Russia and Iran to join the project.

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

RUSSIA-US SUMMIT. To my mind, Obama said a number of things that deserve being said, particularly: “America wants a strong, peaceful, and prosperous Russia… we also recognize the future benefit that will come from a strong and vibrant Russia.” For too long, the prevailing impression has been that Washington would prefer a weak, turbulent and poverty-stricken Russia. He also intimated that the end of the Cold War was not simply a result of US action. On the two burning concerns for Moscow, he showed openness. He hinted at the possibility of Russian involvement in missile defence and, on NATO expansion, rather than the usual wooden language, listed the things Ukraine and Georgia must do to qualify for membership (one of them, “a majority of its people must choose to”, effectively rules out Ukraine); he also stated: “NATO should be seeking collaboration with Russia, not confrontation”. The only jarring note, probably understandably, I saw was “I reiterated my firm belief that Georgia’s sovereignty and territorial integrity must be respected”. If only it were that simple: but Tbilisi ought not to have done things in the late 1980s and 1990s that persuaded Ossetians and Abkhazians they had no future in an independent Georgia. The two roughed out a nuclear weapons agreement and US transit through Russia to Afghanistan was extended. Overall, the “reset” seems to be off to a good start. But we’ve been here before: Clinton-Yeltsin and Bush-Putin also started well. Things happen and each government has long-entrenched interests that work against these beginnings.

RUSSIA INC. The Central Bank says net capital inflow was US$7.2 billion in the second quarter (first net inflow since second quarter 2008). But net outflow in the first quarter was US$34.8 billion. Meanwhile, Russia’s total foreign debt is down US$8.4 billion to US$475.1 billion in the first half of the year. In this number the government’s debt is down US$1.8 billion to US$27.7 billion. International reserves are US$409.1 billion.

OIL AND GAS. Russia’s energy exports have suffered with the world-wide economic difficulties. We are told that the average price of Russian oil was $US105.31 per barrel in the first half of last year but only $50.82 per barrel in the first half of this year. Natural gas exports to Western countries are about half over the same periods. As for Russia’s immediate neighbours, Ukraine has bought about a third of the gas that it contracted to buy but Gazprom’s CEO says that it will be forgiven the penalties the contract requires. It has paid in full for June’s deliveries but there is concern that it’s having problems doing so (gas has to be bought to fill storage tanks so as to prepare for winter’s higher demands). The EU may lend Ukraine the money. (Parenthetically, the EU seems to now understand that the gas delivery problem is more than just Russia’s “energy weapon” as conventional wisdom had it the first time around). Putin stated that Russia will continue to sell gas to Belarus at reduced prices (Ukraine is not paying the full European rate either).

KHODORKOVSKIY. Like some others, I thought it possible that Medvedev might pardon him. He has just issued his first (I think) statement on the subject: “Concerning the possibility of a pardon for someone, Khodorkovsky or anyone else, the procedure has to be carried out in accordance with our country’s rules. In other words, a person must appeal to the President, plead guilty to having committed a crime and seek the appropriate resolution. So at this point there is nothing to discuss”.

GOVERNORS. A recent Levada poll finds majority of Russians supporting direct election for governors. Russia has run through a number of variations: from direct appointment in Yeltsin’s time, to direct elections, to nominations by the President with agreement by the legislatures. There may be more changes to come.

CAUCASIAN RUMOURS OF WARS. Another two weeks of violence in the North Caucasus. But it’s not one-sided: for example, a police convoy was ambushed in Chechnya on the 4th but the authorities ran the attackers to ground quickly with some success. Last week security forces killed an “emir” and, it is claimed, prevented an assassination attempt on Kadyrov. While there are resemblances to the situation before the first Chechen war of 1994, there are very important differences. Then the central and local governments were helpless and ineffective; today the authorities are altogether stronger and better organised. They have much more support from the populations as well: all the suffering, and the terrible result of the death or glory rhetoric so common then, has inoculated many against such romanticism. (I’ve heard that the movie Braveheart was a huge hit all over the Caucasus at the time – after a short struggle the heroic little guys win their freedom: see.)

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

FREEDOM OF OPINION. We hear a great deal about how Russia’s media is not free, but because the discussion is usually only about the “old media” and not about the “new media”, a distorted picture is given about citizen access to information. Which is the really important thing. But the “old media” is dying everywhere for a variety of reasons. A recent poll (JRL/2009/21) gives some numbers on Russian access to the Internet: daily use is claimed by 22% of the population; naturally Moscow (49%) and St Petersburg (40%) are the highest. This site suggests Russian “Internet penetration” is about half the European average and about one-third of the North American average. But the main point is that the Internet is free – there is no government control and once you’re on it, you’re on it, whether you’re in Ottawa or Omsk. So assessments of Russians’ access to different opinions ought to take into account the fact that about a third of Russians say they use the Net at least once a week and that number is, of course, growing all the time and more wide-spread among young than old.

PR. The Presidential Administration head Sergey Naryshkin will head up a commission to improve Russia’s international image. In his copious spare time. The piling of new duties on a few key players is rather Putinesque and not particularly effective.

FOR YOUR DELECTATION. Volcano in the Kuriles from the ISS.

CAUCASIAN RUMOURS OF WARS. Another two weeks of bombs, assassinations and counter moves culminating in the attempted assassination of the President of Ingushetia. There’s no doubt in my mind that one of Putin’s biggest mistakes in the region was replacing Ruslan Aushev.

THE GREAT RUSSIAN MILITARY BUILDUP. The plan to build aircraft carriers has been dropped. Meanwhile this year the Russian Armed Forces added 10 tanks and 20 fighters to its roster. And 12 UAVs bought from Israel.

CSTO. The CSTO agreed to form a joint rapid reaction force involving troops from Kazakhstan, the Kyrgyz Republic, Russia, Uzbekistan and Tajikistan. Before we have the usual comments, there are two things to bear in mind. First, this was tried before in the 1990s and nothing much came of it and second, the threat in that part of the world is from jihadism which is supposed to be a major role for NATO.

DAIRY WARS. These appear to be over; I have no idea what was going on; here’s some speculation and summary of theories. Certainly, if Moscow was trying to bully Minsk, it doesn’t seem to have succeeded.

DEMOGRAPHICS. A reminder that not just Russia has a demographic problem: the population of Ukraine has dropped from 52 million in 1990 to 46 million. Population loss is a widespread post-communist phenomenon.

HISTORY. Latvia is reported to have suspended its commission calculating the cost of the Soviet occupation; saving money was the reason given.

MANAS. Washington and Bishkek have come to an agreement on the use of the base. Bishkek had three principal concerns: the money, the possibility of the base’s use in US operations other than Afghanistan and alleged crimes. The rent has tripled and there is about $100 million for other things; the base is now supposed to be only for “the transport of non-military goods of a commercial nature”. As to extraterritorial issues, nothing has been said. So, it appears that Bishkek has got most of what it wanted. Medvedev approves.

EU REPORT ON SOUTH OSSETIA WAR. Der Spiegel has a piece purporting to be based on leaks from the uncompleted EU report on South Ossetia war, It will not give any comfort to Tbilisi; especially to Saakashvili’s (postwar) claim that Russian forces entered South Ossetia before Georgian forces did. Meanwhile Russia’s CGS has said the number of troops in South Ossetia and Abkhazia will be reduced. Further indications of a disconnect between the EU and Washington on views of Georgia as is the PACE report below.

GEORGIA. Open violence began on the 15th in front of the Interior Ministry. The police claim they were trying to arrest some people and the protesters fought back. Perhaps, but reporters were beaten and so was an identified member of Georgia’s Public Defender’s office. Readers are invited to scroll through this site to see other actions by the authorities of intimidation, kompromat at al. My guess is that it will get more violent, not least of all because of the way the protesters feel that they are being ignored by the West. Although PACE has noticed “the growing number of attacks by unknown assailants on opposition activists and peaceful demonstrators”.

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

NORTH CAUCASUS. Medvedev visited Makhachkala, Dagestan yesterday for a Security Council meeting and stated that “Overall, 308 crimes of a terrorist nature have been committed so far in the North Caucasus in 2009”. His solution was a combination of security activity and amelioration of “root causes” among which he named “low living standards, high unemployment and massive, horrifyingly widespread corruption”. A plan was apparently evolved at the meeting: we shall see. The question is: to what extent are the attacks on police and officials (8 in the last week!) a product of desperation and a habit of killing after all the warfare there; “normal” (in the Russian context) “bizness” disputes; or the operations of jihadists? Whatever the cause may be, and it’s likely a combination, the situation is growing slowly worse. It is a very explosive place: quick roundup at JRL/2009/109/12. Another reason, by the way, to try and keep a rein on Saakashvili’s military ambitions: the last time Georgia tried forcibly to incorporate the unwilling people of Abkhazia and South Ossetia, fighters from the North Caucasus, seeking the re-creation of their “Mountaineer Republic”, fought there. They brought their fight home and, especially, to Chechnya. Chechnya attracted a professional jihadist named Khattab who was instrumental in causing the second war. Moscow does not want a repeat performance.

PIKALYOVO. The transcript of Putin’s meeting in the town is worth reading as an illustration of many of Russia’s problems “in the weeds”: a Soviet-era unified plant complex was broken up in the privatisations; maybe there was some ripping off; as the sole employer, it had large responsibilities for the town’s social welfare system; the world economy reduced demand for its products; the workers exhausted normal channels and only got attention after blocking the highway; the issue required the personal intervention of A Boss. It is also an example of Putin’s style and authority. By the way, he did not call Deripaska a “cockroach” as has been sloppily reported (see the end of the transcript). This is not the first time Putin has been wilfully misquoted – see, for example “greatest geopolitical catastrophe” which is endlessly recycled to prove his evil.

RUSSIA INC. Putin reported that foreign investment totalled US$12 billion in the first quarter, down 30% on the previous year. The federal budget deficit so far this year is US$16.3 billion or nearly 4% of GDP. International reserves are up to nearly US$410 billion.

CHECHNYA. Kadyrov says Doku Umarov, the current “Amir of the Caucasus Emirate”, has been seriously wounded, possibly killed. But this has been said before and we await confirmation.

GAS WARS. After all Moscow’s huffing and puffing, Naftohaz paid Gazprom in full for May’s gas deliveries.

HISTORY. A film discusses the Lenin statues still standing in Kiev. Some think they should be removed (totalitarian reminders have no place in a democracy) others that they should stay (part of our history). A reminder that the issue is not just a Russian one and still attracts passions all over the post-Soviet space.

MANAS. Perhaps the US-led coalition will get Manas airbase back: Afghan President Karzai sent President Bakiyev a letter requesting an extension to the lease. Bakiyev had numerous grievances about the previous deal that will have to be met but signs from Bishkek seem promising. But Bishkek appears to have two principal issues: the fee and the worry that the base may be used for other things than supply to Afghanistan.

BELARUS. The Russian consumer rights organisation has banned almost all dairy products from Belarus; its story is that producers failed to comply with new legislation.

GEORGIA. In a speech attempting to explain why so many of his former allies were calling for his resignation, Saakashvili essentially said they were all corrupt; at other times he has accused them of being Moscow’s stooges. Meanwhile his former Ambassador to Moscow and his former Foreign Minister appealed to the West to pay more and better attention to Georgia and the actual nature of Saakashvili’s rule. Yesterday one of the opposition leaders, Levan Gachechiladze, and Saakashvili met. According to the former, “I could not see in him even a bit of sign that he is ready for changes. So I think and I firmly believe that our struggle should continue and become more radical”. About 20,000 marched in Tbilisi yesterday to commemorate 2 months of protests. As the stalemate grows, violence is becoming more possible (there were some explosions today in Zugdidi). Quiet repression is reported in the background: the sort of things, indeed, that would be headlines were they said to be happening in Russia).

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

THE DUUMVIRATE. A thoughtful piece by Igor Yurgens discusses the political power situation. “It is very unusual that there are two very respected and influential people who are friendly and share a single ideology, but occupy two different, powerful positions. For the first time, our country literally reflects our coat of arms, with the two-headed eagle. Some people get confused, especially political experts. In business, there is more common sense, though.” I have come to believe that Putin’s decision to become PM was a step towards political pluralism and that he and Medvedev operate as heads of a team (and have done so for some years). I agree that many political commentators are confused. One of the bigger problems in Russia coverage is what I call neo-Kremlinology: the assumption that Russia only has a dozen or so actors and the story is their interaction and (presumed) power struggles. For my money, this is usually wrong-headed and a waste of time. I have also been struck for some years how differently businessmen see things, probably because they spend so much time away from the hothouse atmosphere in Moscow. The duumvirate is a peculiar situation, quite new to Russia and uncommon elsewhere: it deserves careful thought and observation rather than the Procrustean approach. Yurgens also points out that it is misleading to focus on the principals: “there is no duumvirate, there is a collective of people who have decided to deal with this situation as a team”.

CORRUPTION. Another small step: the Interior Minister has announced that police will be wearing name badges by the end of the year. Permanently attached to their uniforms, it is said.

PIKALYOVO. This town has lost all its employers and residents have been protesting. Putin visited today, ordered wage arrears to be paid immediately and promised to re-start production is the owners could not agree. Good, I suppose, but is this really in his job description?

CARS. A Russian (GAZ)-Canadian (Magna) consortium has bought a controlling interest in Opel, General Motor’s European arm. GAZ says it can begin production of Opel cars in 9 months. Meanwhile Nissan has officially opened its plant in St Petersburg. There is a large market for cars in Russia.

TUSK GIVES THE GAME AWAY. Interfax carries an interview with Donald Tusk, the Polish PM, in which he speaks of the need for US missiles there. Readers may recall that the ostensible reason for them had to do with Iran. But Tusk says nothing about Iran: “We need to strengthen our defense, especially that against missiles… We would like to see that NATO does not only confine itself to words about solidarity, but we would like to see that this can be tangible in case of a strike” Strike from where if not Russia?

GAS AND UKRAINE. Putin gave a rather pessimistic assessment of Ukraine’s ability to buy the gas to keep the system operating and that it was “unlikely” that Gazprom would pay 5-7 years in advance for transit payments (it has already paid one year in advance) and that the EU appeared “unable” to lend it the money. Gazprom’s CEO said there was “no possibility” of a cut-off under the present agreement. But Naftohaz has to pay somebody something and the next payment for May’s domestic consumption and gas to fill reservoirs is due 7 June. The Europeans will be sending a commission to Moscow and Kiev to assess the potentially dangerous situation. Meanwhile the political struggle continues with Tymoshenko and Yanukovych now in coalition talks.

GEORGIA. As Saakashvili stonewalls, the opposition is re-considering its tactics although protest demonstrations continue in Tbilisi. There do not appear to have been many protests elsewhere – the government’s total control of the news media means that its standing is higher in the countryside. Most of the opposition parties have signed a “Charter of Commitments” pledging themselves to support democracy and a “balanced” foreign policy of “Closer ties with our western partners and strengthening of course towards EU and NATO. Normalization of relations with Russia based on Georgia state interests and launch of new stage of relations with Russia based on mutual respect”. I recommend Nino Burjanadze’s piece “Support Georgia not Saakashvili”. It is encouraging to find some coverage of the other point of view in the Western media (especially the USA’s). She is the other of the two survivors of the “Rose Revolution” triumvirate and to be taken seriously. (I am amused to see that The Economist’s view does not convince many readers).

MOLDOVA. After the latest election the ruling Communist Party fell one short of being able to name the new President. Two of their candidates have been rejected: parliament faces dissolution and a new election.

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

BUDGET PRIORITIES. On Monday Medvedev outlined the budget priorities for 2010-2012 to the government. He listed ten: maintain social spending: reduce budget deficit; cut costs; support the industrial and financial sectors; improve the quality of public services; improve the public procurement system; set an “economically justified tax burden”; make authorities responsible for effective spending; establish a “reliable and balanced pension system”; put in place “a barrier-free environment for people with disabilities”. Nothing on defence.

RUSSIA-EU SUMMIT. The summit was held in Khabarovsk (Moscow wanted to show the Europeans just how big Russia is) last week. As is normal with such meetings, the results will only become clear after time. It seems to me that Europe is more open to Russia – I still maintain that the August war was a reality check for most Europeans about the nature of Saakashvili’s regime and the way events were drifting. Perhaps a first sign is the Italian Foreign Minister’s saying that the EU should “enhance strategic relations” with Russia. The summit discussed security (with at least rhetorical openness to Medvedev’s proposals about a new security structure), energy (see Ukraine entry below – another reality check for Europe that perhaps the gas supply problem does not begin and end in Moscow). Press conference here.

RUSSIA INC. As of 25 May Russia’s international reserves were US$402 billion; this is down from the US$450 billion or so at the start of the year but up from the US$385 billion of about six weeks ago.

ENTREPRENEURS. On Tuesday Medvedev addressed representatives of the business community. He reiterated that a large part of Russia’s economic problems stemmed from the fact that “we have such a one-sided economy” and that “diversifying our economy is an absolute priority”. And “The creation of an economy based on innovation in Russia must be our number one priority [this requires] a strong culture of entrepreneurship… Such an economy cannot be government-owned.” He then proceeded to mention some things the government was doing to help this develop, particularly a new law “banning the unscheduled inspection of small and medium-sized businesses.” Such inspections are a well-known means of pressuring or reiving money from young businesses. But, as Medvedev admitted, “we know that once something in Russia is forbidden, people often find a way of getting around it”.

NORTH KOREA. Does Moscow have any influence there? I doubt it. Does anyone? Certainly the Six-Party talks don’t seem to have done anything.

CAUCASIAN RUMOURS OF WARS. Low level activity continues: in the last week an arms cache was discovered in Chechnya, a bomb at gas pipeline in Dagestan was disarmed, a “gunman” was killed in Ingushetia and four “militants” were killed in the Kabardin-Balkar Republic.

TROUBLE IN PARADISE. The Abkhaz Vice-President has resigned in protest about the President’s policies.

GAS AND UKRAINE. Ukraine has been very hard hit by the financial crisis and concern is increasing that it may not have enough money to buy the gas that is necessary to make the transit system to Europe work. Gazprom has already pre-paid this year’s transit fees and Putin suggested last week, after a meeting with Tymoshenko, that it might pay five years in advance. Meanwhile, Medvedev proposed that Europe lend money to Ukraine.

HISTORY. The Ukrainian security service has opened criminal proceedings in connection with Holodomor. It continues to insist, in defiance of historical reality, that the famine was specially targeted at Ukrainians: “Through its unlawful activities the regime’s objectives were wholly directed towards the wiping out, through famine, of the Ukrainian national entity”. Many of the former communist countries are airbrushing their history to create a picture of blamelessness in the communist catastrophe.

GEORGIA. The protests continue with about 60,000 gathering at a stadium in Tbilisi. The regime has not taken overt steps to move against the protesters but it is reacting: Burjanadze appealed to diplomats in Georgia to pay attention to what was happening under the covers. Certainly the Western MSM has been keeping pretty quiet. The opposition is planning its next moves but there are reports of disagreement on what to do next. The Patriarch has called for compromise and negotiations. Meanwhile, Russian border guards will start patrolling the Abkhazian and South Ossetian borders: at a time when Georgia night fall apart and the “volatile” Saakashvili accuses the opposition of being in Moscow’s pay, this is prudent.

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