>This is the heart of this week’s Stratfor analysis:
>
>“To avoid going the way of Yeltsin, Russia's leader faces a fairly
>seamless web of choices. He has to get the country's economy going
>and to do that he must get control of the oligarchs. To get control
>of the oligarchs, he must both entice them and frighten them. To
>frighten them, he must create a sense of national embattlement that
>strengthens his regime and puts them at risk. To create that sense
>of embattlement, Putin needs an international crisis. If missile
>defenses won't do, he will find something else. For this Putin needs
>a foreign enemy and the United States is the obvious choice.”
>
>We’ll see if Putin is any more successful at bringing Russia’s
>oligarchs to heel than Clinton was at showing Wall St. who’s boss.
Meanwhile, there's this from the World Bank's daily clipping service:
RUSSIA HOPES TO UNFREEZE RELATIONS WITH IMF, PUTIN WINS RACE. Interfax reports that with EBRD President Horst Köhler elected managing director of the IMF, Russia can at least hope to unfreeze its relations with the Fund if not to warm them up seriously. The first step in the IMF's Russia policy after the election of Köhler, who has a good knowledge of Russia's problems, will be a visit to Moscow early next month by the IMF Deputy Managing Director Stanley Fischer.
Fischer will be coming for a brainstorming session on April 5-7 during which the IMF, the World Bank, the Russian Higher School of Economics, and Russia's government will be thrashing out a long-term strategy for the international financial bodies' Russian policy for the period after Russia's March 26 presidential election.
Separately, the World Bank decided to release the first $100 million privatization tranche of a second coal loan to Russia after the country met all the conditions for its disbursement, Interfax reports the Bank's office in Moscow said in a statement on Friday. Russia met the main condition for the release of the loan by privatizing coal companies that produce 35 percent of the country's coal according to 1996 figures, the statement said.
Meanwhile, international news media report widely on yesterday's presidential election in Russia. Vladimir Putin won the race¾and avoided an April runoff election. With 94.27 percent of the vote counted, the nation's Central Election Commission gave Putin 52.52 percent of the vote¾above the absolute majority he needed to clinch victory, CNN notes.
The New York Times (3/26, Sec, 1, p. 6) comments that complex tests await Putin. Among those are corruption, notes the article. Putin has said he seeks a "dictatorship of law." If he is to attain it, he will have to attack the corruption that pervades the Russian economy from top to bottom. Russia's economy will not get back on its feet without money, the story continues, adding that Putin must instill trust in Russia's financial sector. To do that, he must construct a national banking system that works.
Another challenge in the economic sphere is tax collection. Billions of dollars in capital flee Russia every year, in large measure to avoid taxes, since Russian tax laws are often more confiscatory than progressive. And Russians who make money horde it in dollars at home and report as little of their income as they can. So there is an enormous potential for taxation and for investment in rebuilding the country.
Yet another test is public health, the article says. Russia is a sick country, its social safety net in tatters. A million more Russians are dying every year than are being born. Rates of illness, reflecting poor nutrition and reduced immunity to disease are rising alarmingly. With an impoverished national treasury, finding some way to rescue of Russia's health establishment may be among the hardest test for Putin.
Separately, the Washington Times (3/27, p. A13) notes that the challenge awaiting Putin is enormous. Russia's economy has made only a fragile recovery from the 1998 financial crisis and is attracting less investment than much smaller countries in Eastern Europe. But Putin has made reassuring noises, as far as foreign investors are concerned. No major foreign policy crises loom to distract him. One exception is economic aid, the story says. An IMF loan package to Russia remains in limbo, and Putin admitted Friday that his long-term hopes to restore Russia's place in the world rely heavily on economic renewal.
The New York Times (3/27, p. A1) adds that U.S. administration officials are already discussing steps the West might take to demonstrate its support if Putin does undertake serious [economic] reforms. They include expanding assistance by the IMF and the World Bank, rescheduling Russian debt and having the US Export-Import bank step up its efforts to encourage investment in Russia.
The news comes as David Hearst of the Guardian (UK, p.18) writes that for the past eight years, the great and the good arriving by the planeload from the IMF, the World Bank, the LSE, and Harvard spent more time counting the bottles of cabernet sauvignon on the shelves of Moscow's shops as an indicator of progress than they did thinking about what life was actually like in Russia. Now a man like President-elect Vladimir Putin has arrived to remind the IMF just how far the continent has slipped back into the Tsarist 19th century. The West in general and the champions of human rights in particular have little cause to complain about the crackdown Putin is planning.
Today the great and the good are blaming each other for having "lost Russia", says Hearst. Some say the theories were right, it was just that the money was not there to back it. Others say the policy should have been to support principles rather than people, institutions rather than events. But lost Russia they have. When the Soviet Union imploded, the streets of Moscow were filled with pro-Western euphoria. Today the West is seen, even by intellectuals, as venal, self-serving and hypocritical. Re-engaging Russia would take need a major U-turn in Western policy.