2006 Country Archive
PUBLISHERS OVERVIEW JULY
OPIATE OF THE PEOPLE
PUTIN'S IMMINENT RETIREMENT
This month's report on Russia addresses the question of Vladimir Putin's
intentions when his constitutional presidential period runs out in 2008. As
newnations (and the same editorial team in a previous existence through our
publication RUSSIA EXPRESS), we have been reporting RUSSIA and its USSR
predecessor every month since 1987. Whilst after 20 years we do not claim to
have unwrapped the riddle hidden in an enigma inside the puzzle that is RUSSIA,
let alone faultlessly navigated the byzantine corridors of Kremlin fixing and
matchmaking, nevertheless we have evolved some ideas and even insights over that
period. This month we take a reasoned view of what may come to pass. If we prove
to be right, then remember that you read it here first!
STEEL DEAL GOES ASTRAY
The massive steel company conglomeration is finally agreed of Arcelor and Mittal
which so nearly became the virtual takeover of Arcelor by Russian oligarch
Alexsei Mordashev, of Severstal, a major Russian company. He collects a
'break-fee' of 140 million euros, but not much more. The tail is still lashing
and perhaps some inclusion might still happen, but absent that or an all-cash
bid by him for the whole company, there has been a knee-jerk reaction from
RUSSIA that the reason for Severstal being outgunned was due to western
objections, simply because Mordashev is Russian. 'Russophobia,' they called it.
The Chairman of the Russian parliament said that an unprecedented 'propaganda'
campaign cost Mordashev the deal. It is clear that Russians have not understood
how their business world is regarded outside of RUSSIA. The answer is with deep
suspicion! How could it be otherwise seeing that there is widespread cynicism
about the standard of auditing and lack of transparency in their companies,
about business intertwined with organised crime and state intelligence agencies?
It is sometime unclear if the private management of a Russian company is in
reality just a government front. It seems obvious to westerners used to the
world of takeovers, mergers and buy-outs, that shareholders in a free market
would always seek the best deal for themselves. Since Severstal shares were the
currency that was being traded for his near controlling interest, it is there
that perceived value became snagged with the distrust of the Russian
marketplace. If he had offered cash he would probably have triumphed, because
cash conquers all.
THE SIBERIAN MESSAGE
The eventual fate of Khordakovsky, now languishing in a Siberian hell-hole,
realised some key objectives for President Putin understandably wishing to
prevent the sale of one of Russia's biggest assets, its Yukos oil company to the
US owned Exxon. As in China, the message also went out loud and clear to
oligarchs, that they could do pretty well what they wanted (other than sell
national treasures like Yukos), but they must keep out of politics; that they
must always remember that they owe everything to the Kremlin - who might well
call in its debts, whenever it so chooses. It has become obvious that every
successful business man in RUSSIA has a secret police file, detailing taxes
unpaid, involvement in one or another form of corruption, or of cutting legal
corners when they were getting started ten and fifteen years ago in an almost
lawless society. If they step out of line, that file contains information good
enough to provide a warrant for their arrest and imprisonment. If they conform,
then the deal is that the file stays closed. Therefore they are and remain in
essentials, creatures of the state and that is not a comfortable position for
western shareholders, who fortunately for them have no shortage of alternatives
worldwide, in where to place their funds.
GAZPROM the largest Russian company, is a perfect example of all of the
foregoing perceived weaknesses for western investors. Foreign investors seem
unable to get a seat on the board which the size of their holdings would appear
to entitle them to. Two hedge fund managers, concerned about the opaqueness of
this giant corporation have been trying unsuccessfully to get any of the nine
seats, currently filled by government nominees and company insiders. The head of
one of the hedge funds, William Browder of Hermitage, long an activist in this
matter, has incredibly had his visa removed and is not now allowed inside
RUSSIA. So much for transparency!
PAKISTAN: IS US POLICY OFF THE WALL?
As we report this month, the US government has shown its displeasure with the
government of General Musharraf, by cutting its foreign aid by $350 million,
explicitly citing as a reason Islamabad's failure to improve democracy and human
Sounds good - GWB doing his bit consistently for democracy?
In May, just before this was announced, opposition leaders Benazir Bhutto and
Nawaz Sharif announced an important conjunction - that they would fight together
in an electoral alliance. This is not to say that these two can win. In their
time, they separately presided over PAKISTAN when it was widely regarded as
being probably the most corrupt nation on earth, the clan and
regional politics they represented, means that the mark that they left on their
nation was not uplifting, nor indeed taking PAKISTAN anywhere. Whether they can
beat the military man remains to be seen. He has impressed many with a long
overdue rapprochement with India. The two nuclear powers who have fought several
wars over fifty years past, now at least talk sensibly, look for solutions, and
can even play cricket together without communal murder. He took a courageous
decision after the 9/11 shock to actively support Washington, when other Moslem
leaders sat on their hands. He proved it with the delivery of some of the really
important top echelon al Qaeda prisoners, definitely of 'rendition quality'
heading for the waterboard with real information, rather than the relatively
low-level sweepings of the Afghan battlefields, who mostly inhabit Guantanamo.
He is not a religious freak - those fanatics have attempted three times to kill
him - the price of supporting the USA. He is not a populist. He is not as far as
is known, infected with corruption, that awful disease of power in so very many
third world countries, as certainly were his predecessors in office in PAKISTAN.
In fact he looks to many at a time when the world is cowering under the threat
of irrational religious terrorism, like rather a good man to have on your side.
To us, having displayed a stature which puts him above and apart from his
country's traditional politicians, he has the potential to perhaps be something
of a Kemal Ataturk to his nation, perhaps big enough to take his country, like
TURKEY, on an objective secular path towards the future, and away from the
cloying and drag-anchor influence of his nation's religion.
Given that Pakistan is the only Islamic state to have the nuclear weapon and is
at least as badly affected by jihadism as any other moslem nation, then any
change in the ruler here should be a most weighty matter of the gravest concern.
We ask why, in all of these circumstances, is Washington now setting out to
EVERYTHING IN PLACE FOR EUROPES NEXT GAS CRISIS
The final agreement on the coalition in UKRAINE has gone right to the wire but
apart from how the sharing of ministerial seats was made, it was eminently
predictable. The Orange coalition has held together (its leaders were not quite
ready to self-destruct). The new PM is Yulia Timoshenko; President Yushchenko
can now get on with …presiding - because he has surrendered some key powers to
the parliament (Yulia) - the largest bloc of votes went to the pro-Russian party
of Victor Yanukovich who nevertheless got less than he did in the presidential
election, and now will drive the opposition.
But Europe, let alone UKRAINE must brace itself for another potential gas
crisis, as GAZPROM expects in July to increase its price to UKRAINE which
had doubled earlier this year, and the Timoshenko government is pledged to
renegotiate the whole deal. Since most of Russia's exported gas flows to western
Europe through pipelines in UKRAINE, as we saw in January, if agreement isn't
reached, supplies not only to UKRAINE but flowing through the country to the
west, may be reduced or halted.
SHANGHAI CO-OPERATION ORGANISATION
In both KYRGYZSTAN and UZBEKISTAN this month, we separately describe something
of the SCO, the vehicle set up by RUSSIA and China as a counterweight to US
hegemony worldwide, which has grown and is still growing in significance
throughout Asia. KYRGYZSTAN will host next years SCO summit, and is a lowly
member together with TAJIKISTAN, KAZAKSTAN, UZBEKISTAN, alongside the two
Eurasian giants. Their joint territory is 60 % of the Eurasian landmass and
their combined populations are a quarter of mankind. In addition INDIA,
PAKISTAN, IRAN and Mongolia have observer status. Whether any of these will
become full members remains to be seen. One can see the hiatus if IRAN were to
be so invited.
This month's INDIA report, tells the SCO story from their viewpoint and
describes what appears to be an intelligent approach to the question of how
deeply to get involved.
The SCO partner countries are spinning off such economic limbs as the SCO
Business Council and Forum of Industrialists and Businessmen; and the SCO
Inter-Bank Association. Undoubtedly there will be more to come. They earlier
this year, made a political pronouncement, calling on the US to remove its bases
from Central Asia, partly to put pressure on the two 'stans in membership -
Kyrgyz and Tajik - that have American bases, and partly signaling the position
of RUSSIA and China that the US is horning in on 'their' sphere of influence.
In every sense, except the most critical one, they are recreating a bi-polar
world, the key exception being that it is not (so far) a military association.
That being the case does not preclude members co-operating on a bi-lateral basis
as China and RUSSIA recently did in conducting joint military exercises,
purportedly and unconvincingly aimed at "anti-terrorist co-operation".
Since it took the form of a combined-forces invasion from the sea, it was rather
obviously from China's point of view intended to be fully taken on-board in
neighbouring TAIWAN. From RUSSIA's position it could be taken to mean that
whilst the EAST may no longer be RED, it is certainly not Stars and Stripes.
Every nation has its quota of illiberal racist bigots and that includes POLAND.
The difference is that in this formerly oppressed country, for so long under the
heel of Moscow, in POLAND the bullies seem to be in or sharing, the seats of
power. One would have thought that living for so many years within a rigid,
conformist, intolerant, regime, that to escape from that might have led towards
a reactive tolerance of social minorities, of other ethnicities, and harmless
oddballs, as is the norm in fully democratic countries. It brings back the
unfortunate reminder that pre-1939 Poland flirted with fascism, and even older
and horrific memories of pogroms against Poles of Jewish ethnicity, a part of
the folk-memory of the Jewish diaspora, worldwide. Immediately after the
collapse of the communist regimes in east and central Europe, the worry at that
time for the democratic west was Poland's southern neighbour SLOVAKIA, which had
got itself a government led by a populist politician Vladimir Meciar, displaying
the same kind of racial arrogance and social prejudice that is now on display in
Warsaw. He was, as a result, bracketed along with SERBIA's Milosevic, and
BELARUS's Lushenka as the three bad men of Europe.
In SLOVAKIA, Meciar and his party were thrown out by virtually all of the
opposition parties burying their differences and forming a coalition whose main
policy for eight years was to keep him out. He remains in politics - there has
just been an election as we report - but not in power. A great success as it
turned out, as that country has turned around to become a highly favoured place
POLAND with its large workforce and EU membership has also attracted much DFI,
but like all members it was allowed to join the EU, the source of this success,
because it accepted the rules enshrined in the Copenhagen accords, dealing with
the principles of full democracy. Whilst the actions and ugly attitudes we
report are not necessarily those of the leading political party, two political
groupings that are members of the governing coalition, The League of Polish
Families and Self-Defence, are responsible for the outcry. Because they are in
the government coalition their senior coalition partners are now being badged
with prejudices to which the outside world is indeed sensitive, and they should
warn these small groupings that if they do not cease, that the coalition
including them will be dissolved.
It is said that the parliament now contains many of the opinion that POLAND
would be better off outside the EU. If these disgraceful reactionary trends were
to continue, it might provoke a back-lash movement within the rest of the EU to
facilitate POLAND's withdrawal. The problem is illustrated in this month's
report, specifying the language of a parliamentary member, seeking to 'bash
deviants with a big club,' and the like.
In our MOLDOVA piece this month we report a gathering in the Black Sea resort of
Sukhumi where met the 'presidents' of three unrecognized statelets, all of which
exist only because it suits Moscow that they should. South Ossetia and Abkhazia
as well as Transnistria have been addressed by us very recently in 'Stateless
States' where fuller descriptions can be found. The first two are
agencies of Russia's strategic leverage on GEORGIA, whose provinces they are.
Transnistria is a criminal state, possibly the only one now in Europe and is
'protected' by the Russian army and government though unrecognized by them, or
indeed by anyone else. Apart from a wide range of illegal trafficking (you name
it they do it), they are infamous for bigtime illegal arms sales, one has to
presume mostly of Russian and Ukrainian manufacture, to less than respectable
Russian clients (but apparently bespoke is also possible). This strip of land,
basically the site of a major Soviet arsenal with a Russian garrison, broke away
from Europe's poorest nation, MOLDOVA at the time of the ending of the Soviet
Union. They in turn have now enlisted support from the new democratic regime in
UKRAINE in seeking to regularize the position, which has taken the primary form
of taxing exports leaving Transnistria across the UKRAINIAN border. As a
consequence and as we describe, MOLDOVA is newly subject to vengeful economic
sanctions by RUSSIA, some top people of which have long protected this cash-cow,
and now feel the pinch in their pockets. They are powerful enough to use
RUSSIA's state institutions to retaliate.
HOW DOES A STATELET BECOME INDEPENDENT?
Our SERBIA article this month covers the independence of MONTENEGRO which we
will shortly be reporting separately. Here there was an independence referendum
overseen by the EU, (with the acceptance hurdle set at 55%), agreed to by both
of these, the last two republics left out of six from the former Yugoslav
federation. It was conducted democratically and all parties have recognised the
result. Independence is now a fait accompli. The 'president' and master of
ceremonies of Transnistria, Igor Smirnoff, at the Sukhumi meeting referred to
above, cited the MONTENEGRO referendum and asked why self-determination was
possible for some, but not for others. Space here does not permit a lengthy
exposition, but it is a topic that more respectable politicians will be raising
over the coming months and years, particularly in relation to the Balkans.
Before the end of this year an outcome is expected for the future of Kosovo.
Watching this like hawks are the politicians of Republika Srbska, the Serb
segment of BOSNIA-HERZEGOVINA of whose ambitions we tell in our July report.
It doesn't stop there. As we tell in MACEDONIA, questions have also arisen about
the possible ambitions of their ethnic Albanian community. Added to the question
of independence is the fundamental matter of whether Europe's borders and
specifically those of the Balkan states, can be considered as settled? Disputed
borders have historically been costly in terms of human life and suffering,
which makes this a serious and important matter for all European nations.
One intriguing thought is whether MOLDOVA and ROMANIA sharing ethnicity,
language and a history, should revisit the question raised yet not pursued
fifteen years ago, and perhaps seek to unite. With ROMANIA slated to enter the
EU, and with RUSSIA set to continue persecuting MOLDOVA (which previously as a
component of the USSR had looked to RUSSIA as their main market), Moldovans
might opt for union. The people of Transnistria could have a referendum run by
the EU or the OSCE, as to whether they wished to also rejoin ROMANIA in such an
enterprise, or join their giant neighbour UKRAINE, upon whom in their legitimate
economic activities, they depend.
NORTH KOREA SAYS : "LOOK AT ME!"
A profound exposition this month on the overall position of NORTH KOREA and a
survey of the possible motives of the dear leader for the brandishing (if such a
description may be used of the grounded, initially unfuelled, 110 feet long
piece of aviation hardware), of a Taepodong-2 ICBM. Of course since this rocket
is of interest to certain nations unsuccessful in building their own, it could
be a very cheap and effective form of export advertising, but we are tempted to
think that IRAN had been getting too much of the world headlines, and that
PyongYang considered it was time to once again wind up the west, with a
TEMPERATURE ON IRAN LOWERED ALL AROUND
Good to see that perhaps moderation is finding its way back in international
dealings. Perhaps this reflects Condaleeza Rice's good work in rowing US foreign
policy back a notch or two, from the former aggressive style emanating from the
Vice- presidents office. Not to say that this is definitely the way things are
going to be. Perhaps if Karl Rove says so, the exigencies of electioneering will
bring back confrontation, but as we report in this month's IRAN, one can see
that all parties are apparently turning to a more mature style of negotiation
and even the dread word compromise is creeping into polite conversation again.
Bad for the headlines, but maybe good for humanity.
LIBYA RENEGES ON LOCKERBIE COMPENSATION PAYMENTS
Supposedly 'in-from-the-cold' LIBYA is in confrontational mode, with its lawyers
now seeking to avoid further payments agreed with victim's families. We
review the situation.
SYRIA AT RECEIVING END OF ISRAELI MILITARY DEMO
In its understandable effort to recover its hi-jacked soldier, Israel has taken
the opportunity to go further than just Gaza and 'mixed-in' with some rather
crude geopolitics. In 'spoiling-for-a-fight' mode, two F-16's flew all the
way up to Northern Syria to 'buzz' at low level the holiday home of President
Asad, returning at low-level over Damascus, in case anybody missed the point.
Thus the middle -east is once more in a highly excitable state with such Arab
states as Egypt threatening to abrogate their treaty with Israel, and even the
anti-Syrian Prime Minister of Lebanon joining in the protest. We give the detail
of this rather brash demonstration of raw power.
REFLECTIONS ON THE MIGHTY
Two of the nations that we report on, TAIWAN and SOUTH AFRICA, illustrate the
changes that have taken place amongst emerging nations where top-flight
political leaderships are concerned. The president of Taiwan has barely survived
a recall vote in the parliament, not for his own sins but for those of his
son-in-law, his wife and his daughter. His future in politics looks extremely
tenuous. The vice-president of SOUTH AFRICA, expected by many to become the next
president, was charged with rape and has just been acquitted after what was
regarded as a fair trial. He is shortly to go back into the criminal court to
answer to charges of corruption. The point is that what is happening in SOUTH
AFRICA would have been unthinkable only a few years ago and is still amazing to
citizens of perhaps most African countries. In Africa 'Big Men' in any state
just did not get charged with crimes. It is impressive and most encouraging to
democrats everywhere, that guilty or innocent, such a political giant should be
arraigned and have to defend himself against the charges brought, just as would
any ordinary citizen. A strong Taiwanese president finds himself knowingly or
unwittingly involved in the alleged crimes of his nearest and dearest, who it is
alleged, used to the hilt the influence and knowledge only available to them as
insiders, for their personal gain. Again like African 'Big Men,' the president
or ruling politicians of many Asian nations would not believe that their
relatives could possibly be the subject of any police investigation, which could
ever rebound onto them. One wonders about so many other equivalent officials in
more opaque regimes and how long it will be before justice is truly even-handed,
but it is not a bad test to judge whether or not a nation is truly 'getting
there,' in terms of democracy.
Publisher - Clive Lindley
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