Sunday, August 31, 2008

Putin's 40 billion plus

Writing in the Jerusalem Post, Caroline Glick has some clear-headed insights into the nature of Russia’s unstable and venal power structure, which is now analogous to those of North Korea and Iran: Excerpt:

…as Pavel Felgenhauer noted on the Jamestown Foundation’s Eurasia Daily Monitor Web publication, Russia’s government-controlled media is engaged in Soviet-like frenzied demonization of US leaders. In one prominent example this week, the government-mouthpiece Izvestia launched an obscene broadside against US Secretary of State Condoleezza Rice. The newspaper referred to her as “insane,” and then crudely demeaned her as “a skinny old single lady who likes to display her underwear during talks with Russian Foreign Minister Sergei Ivanov.”

As the West scrambles to build a strategy for contending with Russia, many writers and policy-makers have pointed out that Russia is fundamentally weak. As my former Jerusalem Post colleague Bret Stephens noted Tuesday in The Wall Street Journal, Russia’s demographic projection, like its oil and gas production, forecasts, is dim. The CIA has pointed out through demographic attrition, Russia’s population will decline more than 20 percent over the next 40 years. And due to “underinvestment, incompetence, corruption, political interference and crude profiteering,” Russia’s oil production will decline this year for the first time. Its production rates are expected to drop precipitously next year and in the coming years as well.

Cognizant of these negative trends, US and European leaders are hoping that Russia’s bleak prospects will convince its leaders to step back from the precipice of war with the West to which they are now hurtling. On Wednesday, US Assistant Secretary of State for European and Eurasian Affairs Daniel Fried warned, “Russia is going to have to come to terms with the reality that it can either integrate with the world or it can be a self-isolated bully. But it can’t have both.”

WHILE IT remains to be seen if the West will agree to isolate the Russian bully, it is certainly the case that Russia’s leaders are not blind to their country’s weaknesses. This is so because to a large degree, Russia’s dim long-term prognosis has been caused by the domestic policies of Prime Minister Vladimir Putin and his cronies. And in light of this, it can be safely assumed that far from causing them to avoid confrontation with the West, their cognizance of Russia’s problems is what caused them to adopt their belligerent posture.

In December, Russian political insider Stanislav Belkovsky told the German media that during his two terms as Russia’s president, Putin amassed a fortune in excess of $40 billion, making him the wealthiest man in Europe. Putin’s wealth has been built through his ownership of vast holdings in three Russian oil and gas companies.

Were Putin invested in the long-term prosperity and strength of his country, he would have invested that money in Russia. Instead he has squirreled it away in bank accounts in Switzerland and Liechtenstein. And of course, Putin is not alone in betting his wealth against his country’s future. Like him, his cronies in the Kremlin and the FSB (Federal Security Service) have accrued their wealth through their ownership in Russian companies that Putin has nationalized. And like him, they have taken their loot out of the country.

The behavior of Russia’s rulers makes clear that they do not concern themselves with the long-term health of their country as they construct their policies. And their concentration on short-term gains makes their decision to confront the US and Europe inevitable. It is now, when Russia’s oil wealth is at its peak, that they are most powerful. And with their current power they seek to maximize their personal gains while justifying their actions in the name of Russian glory.

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