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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 433,491 346,520 310,000 16
GNI per capita
 US $ 2,610 2,140 1,750 97
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 320  (03/09/07)

New Cold War
The Cold War between the vanquished Soviet Union and the United States was simple and straightforward. Military power was balanced by mutually assured destruction. The two sides argued, feared and created myths about each other. 

The world survived the showdown because we depended upon both Russia and America acting rationally. We feared accidents or miscommunication, but believed that survival would leave both sides to fight another day. Competition was relegated to military, ideology and symbolism. There were only two competitors, with other nations in supporting roles. It was somewhat like a medieval joust, with even a code of chivalry - the Brezhnev doctrine.

A form of Cold War continues today. Angry rhetoric, provocative acts and the questioning of deed and intent shape the discussion. The participants do not trust each other. Political shake-ups in Britain, France and Germany, with imminent change in Russia and the U.S, not to mention the addition of China and India as world powers, complicates the dialogue. 

But this new cold war is different. The U.S. proposes missile bases, which have more symbolic than military value. America holds onto the Jackson-Vanik legislation, and delays approval for Russia's membership in the World Trade Organization. New European leaders are replacing those who sought closer ties with Russia. 

Actions against new members of the EU - such as the Russian ban on meat from Poland, trade blockades, possible cyber attacks against Estonia, and the stoppage of Russian oil supplies to a Lithuania - become issues involving Europe and the U.S. 

Meanwhile, former members of the Soviet Union, such as Georgia and the Ukraine, are in line for membership in Western clubs, as indeed has already befallen the three Baltic states, formerly Soviet all-union republics. 

Europe remains dependent. Ironi­cally, their dependency upon U.S. military protection against the Soviet Union has been replaced by an increasing dependence upon the energy resources of their former enemy. 

With the growth of the European Union, the Euro, the strength of the German economy, European companies, and the London financial markets, Europe defines itself as a force to be respected. This new self-definition has become the European mental filter for action. 

Europe does not want to be dependent, but understands that their economic future is based upon Russian supplies. Germany now imports 40 percent of its gas and 30 percent of their oil from Russia, which will increase to 60 percent of gas by 2025. 

In reality, however, Russia needs European markets as much as Europe needs Russian oil and gas, but Russia has been able to shape the discussion. 

What bothers Europe most is the realization that no perfect short-term alternatives exist; they lack the political will for developing joint energy policies or defence systems. 

For the U.S., the new Cold War finds them less capable of leadership than in the past. Americans are perceived as isolated and a power that is in the early stages of decline. The limits of American military power have been exposed in Iraq and Afghanistan. 

It was always better to be perceived as invincible, without having to act, than actually to act, and then be shown as lacking the ability to achieve your goals. The U.S. faces new and growing dependencies upon imported oil, increased debt, foreign trade deficits, but mostly perhaps, a lack of political will to maintain their status as the sole world superpower. 

What has not changed is the American lack of ability to anticipate the actions of others. For many years, this reflected an American belief that other nations reacted to U.S. policies, not shaped them. 

U.S. policy makers appeared truly surprised by Putin's February Munich speech, followed by his May 9th implied comparison of the U.S. to the Third Reich. Americans had become used to such rhetoric from people like Hugo Chavez, and Iranian President Mahmoud Ahmadinejad, but not the president of Russia. 

The other major change is the role and self-identity of Russia as a global dynamic. Russia's growing assertiveness reflects a new confidence: the era of victimhood is over, and its role as a global leader can be achieved. 

The feeling of the Russian 'Idea,' that Russia is neither Eastern nor Western, but unique, has once again taken root. A recent EU-Russia Center poll reveals that Russians now define themselves as distinct from Europe. Over half of those surveyed said they view the EU as a potential threat, while 71 percent said they did not regard themselves as Europeans. 

What frightens the West is the 'economic and resource nationalism' behind Russia's actions. In sync with the world's growing dependency on Russian gas and oil, increasing Kremlin control of Central Asian reserves, changes in political rhetoric between the E.U; the U.S. and the Kremlin, have hampered the West's ability to control and predict Russian actions. 

During the old Cold war, a realization was achieved that differences required a form of resolution. The new Cold war has not yet reached that level of understanding. With growing nationalism in Russia, changing leadership in the West, and the increasing level of vitriolic rhetoric, the likelihood of finding solutions increasingly becomes more difficult. 

There is in 2008 due to be a change at the top in both Russia and the USA. New leaders with new agendas may allow for new beginnings, in a relationship, which if it were good, could have enormously beneficial results for the world as a whole. Under Putin, it has become clear that Russians were no longer prepared to be patronised, as they undoubtedly were under Yeltsin. Even Putin must have felt he was being compared to the family labrador after his first meeting with Bush in Ljubljana, soon after they were first both elected. Then Bush famously waxed lyrical about looking into Putin's eyes and seeing his soul. The message that needs to be taken onboard is that Russia is an EQUAL, not a client, nor yet a pensioner, only marginally an ally, and will only ever become a friend, if that precondition is well understood. 

Putin has restored his nation's self- respect, greatly assisted by the fabulous windfall of oil and gas reserves at a time when the middle-east was politically 'on fire'. Leadership in Washington has been about as bad as human memory can recall. Traditional freedoms, that once marked out the American way of life, have been greatly circumscribed and threatened in the wake of foreign terrorism impinging on the US homeland. In Russia, the traditional lack of freedoms, which slightly alleviated under Gorbachev and Yeltsin, have now reverted to something close to the totalitarian model of Russia's entire history (curiously, the political 'gulag' was revived by the US, not Russia).

But in a new world order, possible because of the coming leadership changes, there is no objective reason why these two great nations should not be friends. Indeed with Russia, the owner of vast unknown quantities of hydrocarbons and many other raw materials, and with the US having the world's most developed economy they should be natural trading partners. 

It is to be hoped that the next US president will have taken the lesson from the two terms of Bush/ Cheney that whilst the US is the most successful nation on earth, it can lead and in many areas its leadership will be welcome, but it cannot expect to dominate. 'Domination' is unacceptable in the world of the 21st century. Superior military force surely can safeguard the defence of the US homeland, but it cannot successfully be used to project America's will onto an unwilling target nation or nations, without dire results. 

Russia through its external actions can be seen to react in order to make such a point - like the recent resumption of long distance air patrols, which they had discontinued at the close of the cold war but the US had not. Much of Putin's ire these days, when reported or seen on the TV screens, is by way of reaction to some perceived slight or casual assumption by the US (like the proposed rockets in Poland). 

Providing that the US leaders can accept that is not tolerable for them to treat Russia as a wayward client, but with the real respect owing to a sovereign power, even if they disapprove of its shortcomings. That it is not necessary to pursue the idea of a global girdle of military bases, unless they wish to use threats as their chosen way of doing international business. That war is no longer an option between nations and given that reality, that the alternative - peace, should be a positive state full of constructive possibilities. The alternative of a continually deteriorating relationship between these two nuclear powers is altogether too dangerous. 

Russia for its part, has nothing to gain by confrontation. Newly self-confident, when confronted by genuinely friendly gestures the Kremlin should stop being so spikey, respond in kind, stay loose, join in and employ its new authority in a mature way. 

The new Putin, in the words of his adviser Gen. Gennady Troshev, former commander of the Russian Army in Chechnya, is "a different person-tough, stern, harsh with those who dare to doubt his orders."

And he doesn't mince words. In Munich last February, Putin railed against America the "hyperpower" that flouted international law. Later, he compared Washington's hegemony to the Third Reich's and threatened to redirect Russian nukes at Europe. At Crawford, Bush praised Putin as someone "who is going to [help] make the world more peaceful by working closely with the United States." Instead, Putin is fast becoming the self-styled architect of an "alternative pole of power" to the United States. Abroad, he has forged alliances with pariah states. At home, he has become something very close to an autocrat, creating puppet opposition parties, cracking down on dissidents and strangling media freedom.

What changed? How did Putin go from Bush's friend and ally to being an assertive nationalist, befriending and arming America's enemies? To hear the Russians tell it, it's the United States's fault. Putin's trust was betrayed by Washington, says Georgy Arbatov, former head of the Duma's Defense Committee. First, the United States ignored Russian objections to invading Iraq, then it encroached on Russia's traditional sphere of influence in the Baltics, Central Asia, the Caucasus and Ukraine. "Instead of respecting Russia's views, the West supported Putin's opponents," argues Arbatov. "Putin became deeply disappointed, and bitter." The real turning point came when Washington-backed "color" revolutions toppled Moscow-friendly regimes in Georgia and Ukraine in 2003-04.

Suddenly, the enemy was at the gate, installing pro-Western governments in Russia's backyard. "Putin's world tilted on its axis," says Kremlin-connected analyst Stanislav Belkovsky, head of the Moscow-based Institute of National Strategy. "It was a profound shock; Putin's circle became convinced that they could be the next regime to fall." Putin had begun reining in Russia's independent media as soon as he came to power, but in the color revolutions' aftermath, the Kremlin immediately ordered a far tougher crackdown on any groups that could foment regime change. Loyal businessmen and state companies such as Gazprom were encouraged by the Kremlin to buy up Russia's remaining dissident media, and strict controls were brought in on broadcasters' editorial line. Nongovernmental organizations were banned from accepting foreign funding, forcing dozens to close. Most sinister of all, new laws were passed criminalizing "extremism"-defined as "defaming the state"-as well as allowing Russian spooks to covertly assassinate "enemies" abroad.

Moscow also began a root-and-branch rethink of Russia's relationship to the United States. "Putin's illusions about America were shattered," says political scientist Vyacheslav Nikonov, a regular Kremlin adviser, recalling the policy review following the color revolutions. "No matter how much Russia supported the U.S., [Washington] still retained the same, essentially hostile, attitude." Since then, fears of Western encirclement have only increased as NATO makes overtures to Georgia and Ukraine and plans to station antimissile batteries in Poland and the Czech Republic.

Putin's response to these threats has been radical: he wants no less than "to change the rules of the world," says Sergei Karaganov, a foreign-policy adviser to the Kremlin. "The world should be ready to deal with a strong Russia." In practice, Putin means not only to restore Russia's lost might, but also to make Russia the principal counterbalance to U.S. power on the world stage. In a 2005 speech, Putin called the collapse of the Soviet Union "the greatest geopolitical catastrophe of the 20th century," and fondly recalled the old "bipolar" world where two superpowers checked each other's ambitions.

Luckily for Putin, the fortunes of the world economy are behind him. Sky-high energy prices have boosted Russia's economy by 40 percent in five years.

A large chunk of the cash has gone into rebuilding the beleaguered Russian Army. Putin has pledged the military $189 billion over five years, commissioning a new generation of ICBMs specifically designed to evade a U.S. missile defense shield and ordering up six new carrier battle groups, which-if they are actually built according to plan-will make the Russian Navy even mightier than its Soviet predecessor within 20 years.

More worrying for Washington, Putin has taken advantage of the surge in anti-Americanism that followed the U.S. occupation of Iraq. Like his Soviet predecessors, Putin has made friends with many of the world's malcontents, selling arms and missile systems to Venezuela, Syria and Iran, and offering nuclear reactors to Burma and Saudi Arabia. Before his visit to Kennebunkport last month, Putin hosted Bush-baiting Venezuelan President Hugo Chávez in Moscow, where they signed a $3 billion arms deal. In February Putin toured the Middle East, scorning American efforts to democratize the region and making a play for the loyalty of U.S. allies like Saudi Arabia and Jordan. "Putin is a Soviet politician with a Soviet mind-set," says Olga Kryshtanovskaya, a leading sociologist at Russia's Academy of Sciences. "Like the Soviets, he sees the world in terms of opposing camps. His plan is to march around the world with an anti-American flag in his hands."

Does all this mean that Putin wants to start a new cold war? Not necessarily. Rather, says former deputy prime minister Irina Khakamada, Putin desperately wants to be treated as Bush's equal. "When I spoke to Putin about relations with the U.S., his eyes lit up," recalls Khakamada. "It's a very personal thing for him. He wants to prove that America should not treat us like simpletons."

Equality, to Putin, means no more patronizing lectures from the West on Russia's history-or its dismal human-rights record. Russia, he believes, has nothing to be ashamed of. As he told a group of visiting teachers last month, foreigners "must not be allowed to impose a feeling of guilt on us - after all, we did not use nuclear weapons against a civilian population [like the United States in Nagasaki]." Equality means the right to squash Russia's enemies as fiercely as America has attacked its own witness the recent liquidation by Russian assassins of former Chechen president Zelimkhan Yandarbiyev who had been hiding out in Qatar. But above all, equality means respecting the Kremlin's voice. "It's about drawing a line in the sand," says a senior Western diplomat in Moscow not authorized to speak on the record. "It's about saying, 'We're back, you can't push us around anymore'."

At base, then, the new Putin wants respect and to stake out a Russian sphere of influence in which the West won't interfere, even if Moscow bullies its neighbors (as it did with Georgia last November over a spying row) or fixes their elections (as in Ukraine in 2004). For the time being, there's precious little the United States can do to check Russia's new imperial mood, since it needs Putin's continued support on the U.N. Security Council for sanctions on Iran.

Fortunately, Putin's bullishness, for all its rhetorical flourish, doesn't necessarily have to lead to serious confrontation. Putin's offer to Bush at last month's G8 summit in Germany to make the Gabala radar listening station in Azerbaijan part of an alternative missile shield (obviating, Putin hopes, the proposed outposts in Poland and the Czech Republic) was an important olive branch. So was Putin's assurance at Kennebunkport that he shared "many of America's concerns" about Iran's nuclear program. Putin, perhaps, is conscious that luck won't hold forever-and that his imperial dreams are underpinned by little more than a freak high in the world's energy markets. Europe, for its part, is seeking alternative energy supplies, specifically to reduce its strategic reliance on Russia. And the U.S. will eventually extract itself from the quagmire in Iraq. In time Putin, or more likely his hand-picked successor, will come to see that true greatness means more than just saying "nyet" to the West.

Energy Pipeline Giants to Form Corporate Armies 
Lawmakers voted Wednesday to give Russia's natural-gas and oil pipeline monopolies the right to set up armed security units to protect the country's energy infrastructure. 

One lawmaker said the move could lead to "a multitude of corporate armies." 

Instead of hiring private security firms, state-controlled gas giant OAO Gazprom and oil pipeline monopoly OAO Transneft would be able to directly arm and recruit their own security forces, under a bill passed by the lower parliament house, the State Duma. 

To become law it must be approved by the upper house, the Federation Council, and signed by President Vladimir Putin. 

Gazprom, the world's biggest gas producer, controls Russia's main gas pipelines and is the only company allowed to handle exports. Transneft, which is also state-run, has the monopoly on oil pipelines. 

Lawmaker Gennady Gudkov, who opposed the bill, warned that it could open a "Pandora's Box." 

State-controlled giants like savings bank Sberbank, electricity utility UES and the railways monopoly could all seek the same right, he said. 

"As a result there will soon be a multitude of corporate armies in the country," Gudkov said. 

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