Jay ... about trading Russia as a flip-- I've been following your posts on the Russian situation since Mr. Co posted links to your missives on my thread at iHub. Anyway, personally, before going long I'd wait until there's some clarification from the Thursday's edition from Stratfor's Geopolitical Diary and its racial implications.
Here's an excerpt:
This was compounded by the fact that most oligarchs were Jewish. This means that the interests of the military-intelligence community intersected with Russian nationalist sentiment that considered the experiment in capitalism a disaster. In this view, the experiment not only lowered the living conditions of the masses outside of Moscow and St. Petersburg, but also transferred control of the economy to Jews -- regarded as an alien, cosmopolitan group with uncertain loyalties. The oligarch issue must be read against the reality of ethnic tension.
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That paragraph itself raise some ugly implications in regards to new US investments into Yukos and the Russian oilpatch and what this would means to the militants in the ME.
TRF Chart:
investorshub.com
...and here's the full version from Stratfor:
Geopolitical Diary: Thursday, Oct. 30, 2003
On Oct. 28, the economy interested us; on Oct. 29, it's Russia. Yet
this is the same day that "postwar" casualties in Iraq surpassed those during major hostilities. That Russia's events are more interesting offers a telling point: Iraq is passing out of crisis mode and into a routine. Not that this isn't important. Rather, things are happening, but nothing is really changing. Past a certain point, even unrelenting violence becomes routine. Perhaps the most we can say about Iraq today is that a good deal happened there, some people died -- just another day in a long war. It's significant that nothing outwardly significant happened.
This brings us to Russia, a country that once made the world tremble and the United States obsess. On the surface, the situation is quite simple. The richest man in Russia, Mikhail Khodorkovsky, was arrested Oct. 25 on a variety of charges, including fraud and tax evasion. Khodorkovsky is one member of the small oligarchy that effectively controls Russia's economy. Arresting a Russian oligarch on charges of fraud and income tax evasion is kind of like arresting Ronald McDonald on charges of being a clown. It's what he does. Russia President Vladimir Putin was apparently shocked -- shocked, I say -- at discovering that Khodorovsky didn't pay his taxes.
Obviously, since any oligarch is technically guilty, at any point, of several hundred years worth of crimes, new evidence against Khodorkovsky did not lead to his arrest -- some political movement in the Russian system did. Now, oligarchic maneuvering in Russia is hardly unheard of, and the fall of a single oligarch might cause problems for his mother and children, but it is of little significance to anyone else. Therefore, the question since the arrest was first revealed is simple: Is Putin simply pursuing one guy who got in his way, or is he going after the entire oligarchic system? If the latter were true, this would be significant.
An announcement on Oct. 29 stated that Putin has accepted the resignation of Alexander Voloshin, the No. 3 man in the Kremlin hierarchy. Voloshin reportedly resigned just hours after Khodorovsky's arrest. His resignation increases our interest in this affair substantially, because his fall, coupled with the arrest of Russia's richest man, combine to indicate that there is something significant happening in Russia.
Voloshin is an interesting fellow. Western observers -- such as professors and bankers -- regard him as an advocate for liberal reform. He has certainly been that. However, in the Russian context, that means that he has been a spokesman for the oligarchy's amazing appropriation of Russia's economy, a maneuver that might have impressed Adam Smith, but could hardly be associated with liberal capitalism. In fact, Voloshin's political role was to serve as a bridge between Putin and the oligarchs.
The oligarchy has posed an ongoing threat to Putin and his control of Russia. The president held the political reins, supported by the
intelligence and military communities. The oligarchs controlled the economy. That meant that any of Putin's desired economic reforms or programs would have to pass oligarchic muster. It also meant that Putin's hold on power needed their approval -- putting Putin in a difficult position.
However, the oligarchs' position was never really secure. Their economic power depended upon their political power. Their money could buy lots of political power, but in the end, they also survived by the sufferance of the military-intelligence complex -- comprising people who certainly could be bribed. The question was: Would they stay bribed? If not, and they decided to move against the oligarchs, then all the money in the world wouldn't save them.
This was compounded by the fact that most oligarchs were Jewish. This means that the interests of the military-intelligence community intersected with Russian nationalist sentiment that considered the experiment in capitalism a disaster. In this view, the experiment not only lowered the living conditions of the masses outside of Moscow and St. Petersburg, but also transferred control of the economy to Jews -- regarded as an alien, cosmopolitan group with uncertain loyalties. The oligarch issue must be read against the reality of ethnic tension.
Therefore, as we stated in several forecasts, a showdown between the
Two factions was inevitable, meaning that Putin, who tried to keep a foot in each camp, would need to decide at some point. The early returns -- and they are very early indeed -- indicate that Putin has decided and is moving against the oligarchs. He is trying to break their economic control and thereby secure his political power.
If he succeeds, the consequences will be significant. The Russian power structure has been fragmented since the fall of the Soviet Union. This has made consolidating the nation difficult. Creating a Russia whose power is felt in the world has been virtually impossible. The first step: Consolidate the state. At this point, this seems to be happening. The oligarchs are not exactly weak -- counteraction is altogether possible, and the outcome is far from clear. This, however, is certain: The events in Moscow over the next days and weeks could reshape the dynamics of global geopolitics. |
