March 4, 2008
Column: Medvedev will not declare cold war
Nikita Krushchev, the leader of the Soviet Union in 1956, told the western world: “We will bury you.” Now Dmitry Medvedev, the newly elected president of Russia, has come back with a revised offer: “We will buy you.”
In a speech this year, Mr Medvedev urged Russian businesses to emulate the Chinese and to go on a global buying spree to secure new technology and markets. “This is a very important task,” he insisted.
Russia certainly has lots of money to spend. Its currency reserves of $464bn (€305bn, £234bn) are the third largest in the world. It has set up a $127bn stabilisation fund with a licence to invest overseas. Gazprom, the state-run gas monopoly that Mr Medvedev chaired until recently, is keen to buy assets in western Europe.
I read your column last night and agree with its conclusion. Unlike many observers in the “West”, I’ve not shared so much concern about this predictable outcome and regard its placement at the top of the news to raise other questions.
If I was a 25 year-old, with professional accreditation and good job prospects, and considering where to party best while also thinking about starting a family, I would choose Moscow 2008 over Chicago 2008.
It would be an easy decision.
I know a 32 year-old German financial specialist who just quit a fine job in Boston to join an investment firm in Moscow. The reasons are clear.
The political transparency/democracy debate is really irrelevant for a growing number of practically minded young people. These are issues for us who make up the over-educated chattering classes and those who would likely be on the margin in any society.
Biting smart-ass cynicism that would merit a smack from my otherwise gentle American grandfather. On the other hand, I think were he alive today, he would be even more cynical. Afterall, France was his love.
I suspect Warren Buffett would concur with those who believe Russia, Inc. is a better investment than USA, Inc.
Posted by: WCM | March 4th, 2008 at 11:19 am | Report this commentThe point I tried to make above is that Moscow has more buzz in the current Zeitgeist, and this leads many to dismiss serious, if not immediate concerns.
Putin has never been a man I’ve been comfortable with on the world stage, but his achievements are a contemporary legend. I knew Moscow in the late 1990s, was often there during his transition and during the Kursck crisis, and since.
I have read Yegor Gaidar’s latest book (reviewed at the Weekend) and concur that it is a good analysis. Having travelled extensively in the Communist Satellites in the 1980s, I never credited Reagan with the system’s downfall. As Gaidar notes, the food and supply chains failed.
You can tell I felt a slight slap on my wrist after my last post!
Posted by: WCM | March 4th, 2008 at 12:35 pm | Report this commentI remember how one of Hathaway’s Investments top executives, close to Warren Buffett, was aksed a couple of years ago whether they plan to invest in Russia. His reponse was very brief: “We do not invest in countries run by cleptocratic regimes”. If they change this position that would tell a lot about the state of the US economy.
Pity the article is accessible only to subscribers and the rest of us poor bloggers can only guess what those conclusions WCM agrees with are like…
Posted by: Russian | March 4th, 2008 at 1:35 pm | Report this commentHi russia,
See if this link works for you?
http://www.euro2day.gr/articlesfna/60106648/
Best,
P
Posted by: Pacifist | March 4th, 2008 at 2:02 pm | Report this commentHi P, thanks, it does! Long live Iranian-Russian cooperation in undermining unjustified western restrictions!
Posted by: Russian | March 4th, 2008 at 2:21 pm | Report this commentOf course Russian investmenst into Europe should not be viewed as a threat. They might actually give the Europeans more security and a powerful counter-leverage against the Russians. First, GR is right, through stronger interest of the Russian owners in the prosperity of their new assets and markets. Secondly, through teaching the new owners to follow the established rules of the game which will probably lead to spin-off effects back in Russia. Thirdly, and this is the most contentious part, through giving the Europeans a direct economic clout over the Russians. I doubt that British Council would have been all but closed in Russia if Chelsea had been threatened off the field for a season, say for violating fire safety regulations (a favourite one here)…
Posted by: Russian | March 4th, 2008 at 2:46 pm | Report this commentEnjoyed your “bury”-”buy” wordplay and the new meaning of the “cold war” remark.
Posted by: Dimitri Krechet | March 4th, 2008 at 4:27 pm | Report this commentI want to note though that making a claim of “Mr Medvedev’s career path from Gazprom to the presidency” might be inaccurate in the context of your column. Mr.Medvedev has chaired Gazprom, or to be precise, chaired its board of directors. We all remember that the Russian government still controls lots of businesses in its own country, and appoints government official (like Medvedev) to their boards to protect its interests. Mr.Medvedev never managed the gas giant (CEO is Alexei Miller) and one of the reasons he was chairman of Gazprom’s board of directors (while working for the government) is a 50+% stake in Gazprom the Russian government owns - there has to be someone from the government.
>>Russian: Here is the concluding bit I concur with:
“Resurgent nationalism in the Kremlin is a real worry. But people with international business interests tend not to be nationalists. They cannot afford to be.”
It is strange you can respond but not access his full posts. Let us hope that the FT gatekeepers don’t read this and decide to restrict your comments. They should let you read the full post.
Posted by: WCM | March 4th, 2008 at 5:46 pm | Report this commentHi WCM:
Resurgent nationalism…it seems that only Westerners (specifically Americans) are alowed to be nationalistic. The Yanks could wrap themselves in the flag (Bush senior was even visiting flag making factories during his campaign - I guess now that would entail a trip to China!), finish evey speech with “God Bless America”, blurt out about the superiority of the American Way and refer as “evil” to anybody who pursues their own interests rather, than drop their trousers and touch their toes in front of the Americans.
However, if Russian, Chinese or Iranians want to assert their own national interets, that is painted as extraordinary and harmful…
best,
P
Posted by: Pacifist | March 4th, 2008 at 6:41 pm | Report this commentRussian,
….having said that, i hope Putin manages to stay in power as long as possible. The world needs at least one strong leader capable of flipping the finger at America when they start acting like a thug. My only suggestion to Mr Putin would be to hurry up and float your currency and sell all your USD assets, otherwise you are still a virtual prisoner of the US and its real nuclear bomb….control over world banking
Posted by: Reza | March 5th, 2008 at 9:12 am | Report this commentYOur part is really not doing its part to help undermine the unjust US imperialism. Thanks for the sanctions
Putin standing up against US imperialism - sounds nice, but can you give any examples? By examples I mean actions, not words. Empty sabre-rattling over Kosovo, Iran or anti-missile defense are not actions.
Many people in this country are positive that Kremlin gets orders on marco-economic issues from Washington, which makes sense given where it keeps its money, both public and private.
For your information, in February Russia’s CB has revealed that part of its reserves had been invested in the US Fannie Mae и Freddie Mac. Also, on 3 March Putin told the government to start investing 30 bn of the sovereign investment fund into (mostly western) corporate equity.
Posted by: Russian | March 5th, 2008 at 12:17 pm | Report this commentHi Russian,
Are you physically sitting in Russia?
I thought you were in England.
Best,
P
Posted by: Pacifist | March 5th, 2008 at 1:13 pm | Report this commentI will deal with two misconceptions concerning power:
Putin-Medvedev are some sort of Tsars: In fact modern states are run by technostructures (embedded, permanent specialists in the state machine) who determine the course of a given country). Read Galbraith. If the the US were actually run by Bush and his clan it would now
be in the toilet.
To the extend that this true state gets impeded, cut down etc you get various pathologies: economic. health, educational standards etc.
Example: If the NIH in the US were abolished the population would be getting dodgy medications etc.
The crime of the crew that destroyed Russia in the ’90s was the abolition of these sections of the Government. You had the collapse of the health system. You had the destruction of the Academy. Anybody who knows anything about russian and soviet science knows that what passes for the
same institutions today is not comparable. For those who know mathematics and its productions:
What is the status of the Steklov Institute?
Can Akadengorodok of to day compare with the previous institution?
It was easy to do this: You fired the experts and
you stopped funding universities, hospitls, army stc.
You abolished the,in other words the state and you substituted it by buffoon/drunkard politcian
who stole the elections of 1996 with the help of Gusinsky and Berezovski, staged a coup aqainst the parliament (bombed it) and gave 80% of the national wealth to people like Potanin and Khodorkovski.
Gorbatchov calculated that these thieves absconded with about on trillion dollars.
Russia suffered a destruction worse than that imposed by the Nazis. In the final analysis it amounted to genocide. All ancient childhood diseases reappered with deadly effect. Infant mortality rates quadrupled.
Read C Freeland of the FT or Stiglitz and you will see Stiglitz saying: Either confiscate the fortunes of these 30 or so mafia families or tax them and get your money back.
The current group is still weak because the oligachs still contol about 30% of wealth.
So they still have a ways to go.
I will return
Posted by: MP | March 5th, 2008 at 8:25 pm | Report this commentI just read in le Nouvel Observateur that Putin’s personal wealth is now estimated at USD44 billion. If this is so, Arabian governance is replacing US-style democracy.
Bill Clinton lunches with some of the same financial advisors as Mr Putin, no?
So much for civilian democracy.
Posted by: WCM | March 5th, 2008 at 8:55 pm | Report this commentI am continuing the previous post:
In summary i am saying that P/M simply express the
will of the state machine and authoritarian personalities have nothing to do with it.
It is understood that they had to rebuilt huge sections of this structure after the shambolic mess
Yeltsin created. Not all of it has been mended and they are still faced with problems which are legacy problems from the SU and the results of the shock therapy.
Consider just one problem: The depletion of human
resources that are required to rebuild manufacturing. I read a report that there is a huge gap for personnel who could work the mechanical engineering industry because the apprentice programs were abondoned during the Yeltsin years and because the oil industry is offering much more attractive salaries.
The greatest infrastructure program on the planet is now being undertaken in Russia: one trillion dollars are to be spent: Building a fast railway connection between Moscow and St Petersburg, Power Stations etc.
European companies such Siemens and Enel are involved as is a huge number of Scandinavians.
This means that the idea that the russians will be interested in some form of confrontation with europe is not credible.
They want europe neutral vis a vis the us and themselves. The continent will probably go along.
This is a form of structural power: it depends on what these two groups can offer each other.
Similar arguments can be made about China. They offer cheap consumer goods they get energy.
Posted by: MP | March 6th, 2008 at 3:11 am | Report this commentHello again. To the first response - I am 23, just moved back to Moscow from San Francisco. Had a very good job there, but no regrets whatsoever. It’s a lot of fun here - much more than in the U.S.
Totally correct about people not paying ANY attention whatsoever to the political process - I do not know a single peson who went to vote in either elections in the last three months. Overall, for the lack of better options, people I know (well-educated, smart individuals) absolutely support Putin (and thus Medvedev). Also, most people are well aware that it is good while the oil prices are high. It is not like someone doesn’t understand it.
As for the buying spree - it is really a paranoidal sense that Russians are out to harm. Same story as Dubai ports - I wonder if congress will not raise hell over Evraz deal. Having said that, I must say that Russian paranoidal feelings of the U.S. trying to take over Russia can also be clearly seen in the media - what’s worst is that people believe this crap (even my well-educated, smart friends).
In the end I should say that integration is a great thing - people with business ties and vested interests will be less likely to harm their business partners because ultimately it harms them. Russia should stop feeding bs on TV - just take a look at how much coca cola is consumed by Russian teenagers; US should practice what it preaches - free market with equal opportunities.
Posted by: MYV | March 16th, 2008 at 9:25 pm | Report this comment