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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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: 353  (26/05/10)

Remembering history
Two of the traumatic moments of modern Russia's existence as a state are a pair of invasions it successfully withstood. The first was by Napoleon; the second by Hitler. The third was an invasion that led to a war collapse and a pair of revolutions, the downfall of Tsardom and the Bolshevik Revolution.

In the case of Napoleon and Hitler they got bogged down in a Russian winter. Their geography teachers had evidently failed to tell them that it gets very cold indeed in Russia in that particular season!

Even in the case of the invader who pulled it off, the Kaiser, he only achieved a Pyrrhic victory. The Treaty of Brest-Litovsk in late 1917 involved him in retaining one million troops in the east to hold down the vast areas conceded thereby, which would have been much better deployed in the west, as millions of Americans came on the scene.

He had not realised that the First World War had become a war of continents.

The astonishing fact is that Hitler didn't realise that any resumption of the same would be a Second World War, encompassing all the continents. Fortunately, the UK had a man in charge up to the job, Winston Churchill, who did. He, being half American himself, always banked on US intervention to transform the situation. It did.

He didn't just win the war. Afterwards at Fulton, Missouri in March 1946 he made his most important speech of all. He declared that a new iron curtain is descending on Europe, dividing it into two. He in effect declared a new, utterly necessary war, the ultimate war of all time, the Cold War, the better for being virtually bloodless, excepting the Korean and Vietnamese conflicts. This was a war, not just between continents, but whole social systems. A war of ideas was afoot, not just between alliances of nations.

Troops from four Nato countries for the first time took part in Russia's annual parade to mark victory in WWII.

Soldiers from Britain, France, Poland and the US marched alongside Russian troops through Moscow's Red Square on May 9th, the anniversary of the surrender of the Nazis. German Chancellor Angela Merkel was among some two dozen world leaders attending the 65th anniversary.

Along with 10,000 Russian troops, the parade also included tanks, ballistic missiles and a fly-past of 127 aircraft. It was the largest ever display of Russia's military hardware in a peaceful context.

And the presence of foreign troops in Red Square - once the heart of the Soviet Union - is a highly symbolic gesture, demonstrating how far the rivalry of the Cold War has been pushed aside.

Russian-US showdown
Obama is being forced by events in Afghanistan, Iraq, Iran and Israel to come to terms with unpleasant realities. This has huge repercussions for what remains by far his most important geopolitical relationship - with Russia.

Russia accepted the invasions of Afghanistan and Iraq in the heat of the post-9/11 frenzy, but will not accept further NATO encroachment or a US invasion of Iran. At the moment - but for how much longer? - it allows NATO supplies to pour through its territory on their way to Afghanistan, and has grudgingly allowed the US base in Kyrgyzstan a year’s grace period. But its red lines have been clearly drawn.

The irony in current relations between Russia and America is that the US has been far more ideological, perversely so, in the past two decades than Soviet foreign policy ever was. Russia is now expanding its economic and political relations with its former comrades both in the “near abroad” and in the Middle East without any of the scheming subtexts of Washington’s manoeuvring in the recent past.

One of the many signs of this is the rapid realignment of Ukraine since the election of President Viktor Yanukovich. Russian Prime Minister Vladimir Putin not long ago floated the idea of merging Ukraine’s national energy company Naftogaz Ukrainiy with the Russian gas giant Gazprom -- a move that would put Ukraine’s strategic network of gas pipelines effectively under Moscow’s control.

Gazprom Chairman Alexei Miller said Gazprom is considering asset swaps with Naftogaz that would provide Gazprom with access to control over the transit pipelines and underground gas storage facilities in exchange for Naftogaz’s access to production assets inside Russia as well as the development of new gas fields.

Ukrainian pipelines carry about 80 percent of Russian natural gas exports to Europe. If the deals go ahead, this would mean the end of the Nabucco pipeline, and Gazprom would probably abandon or scale back the South Stream pipeline.

An interim- or not so interim - measure
Putin and Ukrainian Prime Minister Mykola Azarov have agreed to create a joint holding company, which would in effect give Russia control over the nuclear power industry in Ukraine and provide Russian access to Uranium ore deposits. Russia and Ukraine would build a nuclear fuel enrichment facility in Ukraine and provide a $5 billion credit to build two nuclear power generators at the Khmelnitsk nuclear power plant.

There are also acquisition deals in the works in aviation and shipbuilding and steel and pipe manufacturing.

In addition to the renewal of the lease of the Black Sea naval base at Sevastopol till 2042, Russia hopes to re-open a Soviet-era submarine base in the Crimea and establish naval bases at Nikolayev and Odessa on the Black Sea coast. “The planned expansion of the Black Sea Fleet is Russia’s response to the NATO expansion to the East,” said Admiral Vladimir Komoyedov, former Black Sea Fleet Commander, referring to the establishment of NATO bases in Romania and Bulgaria. Russian President Dmitri Medvedev signed an agreement on upgrading the Sevastopol base when he pays an official visit to Ukraine in late May.

Vladimir Belaeff, president of Global Society Institute in San Francisco, says, “The current rapprochement between Ukraine and the Russian Federation has been long coming.” Compounded by the Western financial meltdown, former Soviet states are now turning to Moscow to renew capital and business ties. Ukrainian-Canadian economist Vlad Ivanenko stated at Russian Profile.org that it is “inappropriate to say that Russia is trying to buy Ukraine because, economically, there are few Ukrainian assets worth buying at current market prices. The need to secure long-term loyalty partially explains why Russia is ready to pay an upfront premium for the right of exclusive use of Ukrainian assets.”

This is a “pragmatic, creative and opportunity-driven relationship” according to Belaeff. The two countries are much closer than, say, the US and Canada, which are now virtually an integrated market with the North America Free Trade Association. He sees the Gazprom and Naftogaz negotiations as “a rescue project for the Ukrainian gas pipeline network considering the general shortage of capital available”, and along with the other deals will help stave off collapse of the dysfunctional Ukrainian economy. This is a win-win situation for a Europe teetering on the brink of financial collapse, if not for Washington military strategists.
Russian President Dmitri Medvedev’s recent visit to Syria and Turkey further confirms that international relations are beginning to make sense again. Medvedev and Syrian President Bashar Al-Assad agreed economic deals including arms sales, and Russia will upgrade the former Soviet naval base in Tartus, which along with the Ukrainian naval bases will give Russia a much higher profile in the region.

From Damascus, Medvedev went to Istanbul, and signed deals on building gas and oil pipelines, transporting oil from the Black Sea via the Samsun-Ceyhan pipeline, and building Turkey’s first nuclear power station.

Ukraine, Syria, Turkey -- these rapid developments are a renewal of Soviet foreign policy, albeit in a very different form. As for relations between Russia and the West, there is a return to what was traditionally known as detente, most notably the signing of the renewed START treaty and the ongoing Nuclear Non-proliferation Treaty conference in New York, where the main agenda item is to make Israel join, with both the US and Russia in agreement. This is realpolitik at its best.

The Bush-Clinton-Bush leadership abandoned realpolitik to try to force the new, weaker Russia to accept a subservient role in the new world order and when this failed, tried to revive the Cold War. The Putin/Medvedev policy is to patiently push ahead with a European project, restructuring the economy along European lines, all the while maintaining an independent military force. The Gorbachev/Yeltsin white-flag period is now behind, though it will take decades for Russia to undo the damage they caused.

Obama is being forced by events in Afghanistan, Iraq, Iran and Israel to come to terms with this reality. Russia accepted the invasions of Afghanistan and Iraq in the heat of the post-9/11 frenzy, but will not accept further NATO encroachment or a US invasion of Iran. It allows NATO supplies to pour through its territory on their way to Afghanistan, and grudgingly allowed the US base in Kyrgyzstan a year’s grace period, but its red lines have been clearly drawn.

Russia could do little as NATO swallowed up Eastern Europe and bits of the ex-Soviet Union, and allowed Ukrainian ‘NATO-philes’ five years to wreak their havoc, as it sees it, until the Ukrainians came to their senses. But just as Napoleon and Hitler were destroyed by overstretch, so NATO and the US itself are living on borrowed time (and increasingly meaningless US dollars). What looks like “one step forward, two steps back” in Obama’s relations with Russia is really an indication that the NATO/US retreat has already begun.

Despite the inertia of the Bush legacy, the world is rediscovering traditional balance-of-power in international relations. The responsibility of Russia is to make sure of the retreat.

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