Russia, politics and power: internal & external(new title)

**kaur** · 01-23-2009

Couple links about book "Gazprom: new Russian weapon"

http://www.robertamsterdam.com/2008/...russias_ne.htm

http://www.kommersant.com/p845604/Gazprom_Business_Gas/

**kaur** · 01-25-2009

I think that Brzezinski's article is ok for this topic

These words also underline the significant distinction between China’s and Russia’s conduct on the international scene. Russia, like China, is a revisionist power in that it wishes to revise the existing international patterns; but in pursuit of this end it tends towards impatience, frustration and sometimes even posturing in a threatening fashion. Nonetheless, it is in the interest of the United States and of Europe to engage Russia, with regard to the larger strategic issues as well as more specifically European geopolitical dilemmas.

Unfortunately, the current generation of Russian leaders, notably Putin, are still unable to come to terms with Russia’s diminished global status and its regional realities. It is unreconciled to the loss of its empire. It is unwilling to come to terms with its totalitarian and specifically its Stalinist experience. The Foreign Minister of Russia recently declared that to equate Nazism and Stalinism is ‘a blasphemy’. Yet there are millions of people in Europe who recall that the two were profoundly similar and equally inhuman to their victims. The difficult process of self-recognition will take time until a new Russian elite emerges.

http://www3.interscience.wiley.com/c...37300/PDFSTART

**Stan** · 01-26-2009

"Gas trade is one of the principal tools that Russia uses to increase its leverage on the Ukrainian leadership, seeking to change the country's geopolitical direction."

Under the current circumstances, Gazprom is interested in escalating the gas price, seeking to earn top dollar from Ukraine while it is still possible, while Naftohaz, Gazprom's Ukrainian counterpart, appears to be in no position to pay it. In the "dual monopoly" situation, the pricing dispute inevitably leads to a perfect deadlock: one side cuts off the gas while the other shuts down the transit pipe. This happened many times before; the only difference is that now Moscow and Kyiv are acting with particular abandon, being engaged in what appears to be a "struggle to the death."

**kaur** · 01-27-2009

If you consider the fact that a lot of heavy and mining industry (that are dependent on cheap energy) are located in the east of Ukraine, where most of population are Russians, then I smell problems

This is only one demonstration of Russia's dictate. Using the small presence of European capital in the Eastern region, Russian businessmen invest in the Ukrainian economy in a peculiar way: they buy controlling stakes of strategic enterprises. Russia is interested in oil processing, aluminum, the power industry and ports on the Black Sea coast. Russia isn't against buying the Crimean peninsula - the whole of it, up to "the waves on the coast".

On the other hand, Russia is indifferent to Eastern Ukrainian coal and its metallurgical industry. First of all, the chain "coal - coke - iron ore - rolling - pipes" is the main income of all the self-sufficient local businessmen. There are oligarchs in Donbass who possess not only metals. Hotels and the beer industry, newspapers and machinery construction, banks and soccer clubs, many agricultural companies all are in their hands. Actually, Donbass is a "joint-stock company" of "The Party of Regions" members.

Further, the Ukrainian metallurgical industry is a competitor of the same sector of the Russian economy. As a rule, no one invests in competitors. But Ukrainians are more distressed by another thing - the weak investment between the Ukrainian regions, especially between the East and the West.

http://www.ukraine-observer.com/articles/192/300

Russians in Ukraine

http://en.wikipedia.org/wiki/File:Ru...raine_2001.PNG

**Beelzebubalicious** · 01-27-2009

I've heard that the Russians are pretty much buying up as much of Crimea as they can. Akhmetov, Taruta and other oligarchs do own a lot of business interests in the East. the former is very much associated with the Party of Regions, but they play many sides.

Taruta, for example, was a key player in an award winning public private partnership with USAID in the city of Alchevsk and his Alchevsk Iron and Steel Works was awarded a loan from the EBRD for something like $190 million for upgrading the iron works for energy efficiency. On the other side, Russia's Gazmetall and Taruta's Industrial Union of Donbass (IUD) have concluded a landmark merger deal to create quite possibly the largest steel-making company in the CIS, with an annual output of around 20 million tonnes.

All's fair in business and war and everybody is in bed with each other.

**kaur** · 01-28-2009

This morning Russian business daily "Vedomosti" is writing that Putin's collegue from East German Stasi, Matthias Warning, will become one of the directors of Gazprom. Last week there was announcement that Gerhard Schröder will become one of the VIP's in TNK-BP. Both Germans are working in North Stream project etc

**Stan** · 01-28-2009

And to keep those pesky Scandinavians and Baltic States at bay...

Originally Posted by Stan

Nordstream not only has Gerhard Schroeder at the helm, they've gone and found yet another former PM to force the Sierra through Scandinavia and the Baltic Seabed -- ex-Finnish PM Paavo Lipponen.

**kaur** · 01-29-2009

Putin’s Grasp of Energy Drives Russian Agenda

“I would describe it as very much his personal project,” said Clifford G. Gaddy, a senior fellow at the Brookings Institution in Washington and an expert in Russia’s energy policy. “It is the heart of what he has done from the very beginning.”

http://www.nytimes.com/2009/01/29/wo..._r=1&ref=world

**Stan** · 01-30-2009

I received a tip to go here, albeit dated information.

10.34 am

Lord Truscott: My Lords, I declare my relevant energy and other interests, as stated in the Lords’ Register of Interests and recorded by the Advisory Committee on Business Appointments. I also declare an interest because I have a Russian wife, and as Vladimir Putin's biographer.

Incidentally, as Putin's biographer, I was never one of those who believed that the former president would

10 Oct 2008 : Column 419

quietly ride off into the sunset. Instead, what we now have is a political tandem, with Prime Minister Vladimir Putin firmly in the front seat and President Dmitry Medvedev holding up the rear.

The EU accounts for 81 per cent of Russia's pipeline gas exports and 60 per cent of its oil exports. As supplier and consumer, we are locked in a close mutual embrace. As the noble Lord, Lord Roper, said, production shortfalls and the falling price of oil, now under 85 dollars a barrel—incidentally, at under 70 dollars a barrel the Russian federal budget will be in difficulty—present a major threat, as do the production shortfalls themselves, to Russia's ability to meet its international and domestic commitments.

As a former energy Minister, I have a particular interest in energy matters, and I believe that the noble Lord, Lord Crickhowell, will expand on this theme in his speech. Despite the Government's response to our report, I still believe that we were right in the committee in arguing that pressing Russia for ratification of the energy charter treaty is a waste of time.

**Beelzebubalicious** · 01-30-2009

seems more like 1908. okay guys, enough with the wigs and lords...

Regardless of whether it was Ukraine's fault or not, the EU is fed up with Ukraine. They now turn their eyes to Turkey and away from Ukraine.

**kaur** · 02-14-2009

Comment to my first post on this page.

A former Stasi (East German secret police) officer and current Nord Stream general manager Matthias Warnig traveled around the world this week to promote that Russo-German gas transport project on the Baltic seabed. Warnig now also serves as an "independent member" of the board of Russia's state-owned VneshTorgBank (Foreign Trade Bank), the second-largest bank in Russia. He received $2.4 million in compensation for his service in the fourth quarter of 2008, according to the bank's fourth quarter report released yesterday (Interfax, February 12). As an executive for German banks prior to this, Warnig had been instrumental in arranging massive financing for Russian state energy companies.

http://www.jamestown.org/programs/ed...ash=8a549ea7bd

**kaur** · 03-02-2009

Commercial information.

Gazprom's European Web

In brief, the major findings of this paper are:

The existence of dozens of non-transparent “gas trading” companies established throughout Europe by the Russian state-controlled natural gas monopoly, OAO Gazprom, constitutes a serious threat to the energy security of the European Union.
Some of these middlemen companies have been linked to organized crime groups in Russia and in Europe while others are suspected of laundering millions of dollars into the accounts of high-level Russian, Ukrainian, and other officials. The huge sums involved have a corrupting influence on local government officials and deprive the citizens of their countries of the honest services they deserve and expect from their elected and appointed officials...

http://www.jamestown.org/programs/bo...ash=fdab12fee1

**Beelzebubalicious** · 03-02-2009

Funny, but I didn't think this was news. Is the European Union just figuring this out? C'mon.

**Surferbeetle** · 03-02-2009

From today's Washington Post by Craig Whitlock: E.U. Denies Request for Bailout of E. Europe

BERLIN, March 1 -- European leaders Sunday rejected a Hungarian plea for a $240 billion bailout of struggling Eastern European countries, as divisions continued to fester over how to prevent economic ills from spreading across the continent.

Hungary's prime minister, Ferenc Gyurcsany, had proposed the massive rescue fund for Eastern Europe last week. On Sunday, he warned that old conflicts could reemerge and that "large-scale defaults" would result if the E.U. did not come to the aid of its newest members, who have spent the past two decades trying to recover from communism.

From the Financial Times by Tony Barber: EU summit pledges aid for eastern states

European Union governments vowed on Sunday to conquer the financial crisis and recession gripping their economies by extending help to beleaguered eastern European states on a country-by-country basis and respecting the rules of the single European market.

The fragility of the financial systems in several eastern European countries dominated an emergency summit in Brussels, where leaders of the 27-nation bloc committed themselves to “getting the real economy back on track by making the maximum possible use of the single market, which is the engine for recovery”.

Banks in the eurozone have lent $1,250bn to eastern Europe, and Moody’s, the credit ratings agency, warned last month that it might downgrade certain western European banks because of their exposure.

From the WSJ by David Crawford: Austrian Bank Rushes Results

VIENNA -- Austria's Raiffeisen International Bank-Holding AG rushed out preliminary results to reassure investors over its exposure in Eastern Europe, where it is cutting back foreign-currency loans to consumers as well as all lending to some industries.

Raiffeisen International Chief Executive Herbert Stepic said the decision to halt lending in Swiss francs and to severely restrict loans in euros and U.S. dollars, which began in late 2008 but hadn't been formally announced, will free clients from the risk of fluctuating exchange rates. As Eastern European currencies have weakened, payments on those loans have become more expensive.

He also said the bank has halted local and foreign-currency lending to businesses in troubled East European industries, such as transportation and steel.

"It is another nail in the region's coffin," said Gabor Ambrus, a London-based Eastern Europe economic analyst with 4cast Ltd. He warned that other foreign banks are likely to withdraw credit as well. Eastern Europe is headed for a severe credit crunch that "will impact the real economy," he said.

Mr. Stepic said many rating agencies have misjudged Eastern Europe, whose good infrastructure, educated residents and low wages still mean it has good growth prospects. He said some Eastern European countries have strong economic fundamentals and predicted that those that do end up in financial straits and are members of the European Union can expect a bailout from Brussels.

Analysts tend to unjustly lump all of Eastern Europe in one basket, Mr. Stepic said. He singled out Slovakia, the Czech Republic, Poland, Albania and Kosovo as having bright futures.

**Beelzebubalicious** · 03-02-2009

This is a pretty good summary of the current situation. In situations like this, Ukrainians tend to return to the iron hand. Given that Yuschenko and Tymoshenko are bloodying themselves pretty badly, don' t be surprised to see a Yanukovych (pro-Russian) type step up. The Party of the Regions sort of fell apart, but the sentiment and power behind it is still there...

March 02, 2009
Ukraine Teeters as Citizens Blame Banks and Government
By CLIFFORD J. LEVY
Factories and services are faltering, the currency is wilting and a government default seems possible, posing a real threat to other European economies.

**Surferbeetle** · 03-02-2009

Eric,

Thanks for the NYT article, it's a interesting read.

Regards,

Steve

From today's Bloomberg by Emma O’Brien and Laura Cochrane: Russia Stock Gains Strengthen Putin as Ukraine Drops

March 2 (Bloomberg) -- Russia, the worst-performing major stock market in 2008, was Europe’s best last month as the ruble rose and reserves stabilized. Every neighboring market crumbled.

The Micex equity index climbed 6.6 percent in February as the world’s second-biggest oil producer stopped speculators from driving down the ruble and depleting its $382 billion of foreign exchange reserves. In Ukraine, the central bank’s holdings fell 24 percent since August and the benchmark PFTS Index lost 21 percent last month. Latvia’s OMX Riga Index dropped 8 percent.

While Russia’s government said the economy will contract for the first time in a decade and currency reserves are down 36 percent from August, the nation’s relative strength is raising Prime Minister Vladimir Putin’s influence over former Soviet states. Ukraine discussed borrowing $5 billion. Kazakhstan wants Russia to buy ailing BTA Bank. Belarus is asking for $3 billion in loans, on top of $2 billion granted last year.

“Russia isn’t looking at a straight-line deterioration into oblivion,” said Kieran Curtis, who helps manage $800 million in emerging-market fixed-income assets in London at Aviva Investors Ltd. “It has enough liquid assets to take stakes in all kinds of things in the former Soviet states.”

**Beelzebubalicious** · 03-03-2009

I like this line:

“Russia isn’t looking at a straight-line deterioration into oblivion,”

What I like to do is wait for my desperate relatives to come knocking on my door for a loan and then charge them a really high interest rate. What's better is that I know they can't pay it, so I can extract all kinds of valuable concessions from them.

**kaur** · 03-03-2009

Economic Catastrophe Propels Russia into an Identity Crisis

It answered perfectly the ambitions of the new elites and the needs of a disoriented populace and included three key elements: prosperity, pride, and paternalism-or more precisely, Putin himself. All three are now in shambles, and Russia has found itself lost in depression

http://www.jamestown.org/programs/ed...ash=5ee395b352

**kaur** · 03-11-2009

Chancellor Merkel Says Nein to Nabucco

Merkel has shifted tactical gears with this nein to Nabucco. Barely five weeks before she had written to European Commission president Jose Manuel Barroso and the EU's incumbent Czech presidency, urging EU support for three projects simultaneously: Gazprom's Nord Stream, Gazprom's South Stream, and Nabucco. Merkel's toughly-worded confidential letter found its way to the press (Financial Times Deutschland, January 29; Le Monde, February 3; see EDM, February 4). Concerned at the EU's move to single out Nabucco for support, Merkel's letter sought to elevate Nord Stream (of interest to Germany) and South Stream (lobbied by Gazprom and Italy) to an equal footing with Nabucco in terms of EU support.

The European Commission, however, takes the position that Nord Stream and South Stream are business projects whereas Nabucco is a strategic priority of the EU. Since Berlin could not elevate Nord Stream and South Stream to the same level as Nabucco in EU policy, Merkel's shift of gears seems designed to downgrade Nabucco to the same level as Gazprom's two projects, which do not qualify for EU support.

http://www.jamestown.org/single/?no_...ash=a6544468e3