The American Spectator : Dimi and Vlad Compete

Dimi and Vlad Compete

By George H. Wittman on 6.12.09 @ 6:06AM

The relationship between Dmitry Medvedev and Vladimir Putin has taken a back seat to Russia's current economic and political problems. Both men are being judged by their public quite differently than if there hadn't been such an avalanche of negative events.

The economic downturn appeared to be something Medvedev was more qualified to handle, but his portfolio as president doesn't not require him to be in that role. It is Putin as prime minister who has had to lead the government response in complicated eco-political matters -- often with mixed results. A good example has been his reaction, or non-reaction, to the emergency appeal to the European Union and the United States by the president of Ukraine, Viktor Yushchenko.

The pro-western Yushchenko called for help in keeping legitimate democracy alive in his country by countering what he characterized as a "constitutional coup" plotted by his political rivals, the ambitious PM Yulia Tymoshenko and the pro-Russian opposition leader (and former PM) Viktor Yanukovych. Hovering above all this maneuvering is the ever-present threat of destabilization of the Ukrainian pipeline umbilical cord with Russia that is so important to both countries.

At another time one could have expected Putin to jump in as deus ex machina to solve the problem and show his and Russia's friendly importance to their neighbor. Instead Putin so far has stayed clear of the Ukrainian tar pool and concentrated on Russia's domestic scene. Medvedev, no fool himself, also found it more appropriate to focus his attention on the murder of two law enforcement officials in Dagestan.

Vladimir Putin, playing to his Leningrad home region, however, decided to assume the role of the stern father figure (aka old-time Soviet commissar) and react sternly to the shutdown of three industries in the community of Pikalyovo. He stomped into town, called a meeting with the industry owners, brought in the media, and proceeded to "make them an offer they couldn't refuse."

The result was that the good people of Pikalyovo were instantly reemployed, another economic problem was solved, and Vladimir showed once again he was the guy who could get the job done.

Putin's sometimes coarse language and tough guy image played well when he first arranged for his young heir, Dimi, to take over as president. It was accepted that Vlad would be able to run the country with Medvedev fronting the show. But Little Dimi has shown he's not the simple toady he was thought to be.

Dmitry Medvedev has displayed an excellent grasp of world politics, and for that reason has impressed the Russian media with his acceptability on the global scene. Medvedev's softer language and more urbane manner have received high marks from the better-educated segments of the Russian public, who also favor his grasp of the academic aspects of Russia's economy.

The Russian GDP has been down approximately 9.5% in the past twelve months (as opposed to less than half that amount in the European Union overall). No amount of intelligence and good manners, however, makes up for that financial shortfall. The political blame game appears in full play. Differing approaches to solving Russia's economic problems have appeared to cause some dissension between Putin and Medvedev -- fed by rivalry between their economic advisors.

Recently Putin staffers reportedly have placed the blame at Medvedev's door for Russia losing a billion dollar refueling aircraft contract with India to France's Airbus A330MRTT. The PM's aides said that high-level diplomatic connections with India on large-scale defense matters fell squarely into President Medvedev's corner, yet he was too busy with other things to properly follow up. This sort of backbiting has become de rigeur among the competing presidential and prime ministerial staffs.

On the geo-political front involving the former Soviet Union (FSU) countries of Central Asia, Medvedev clearly has sought the lead. Last year Medvedev announced Russia had "privileged interests" in neighboring countries. In the subsequent months it became clear that the strategic and mineral-rich nations of Central Asia were a priority. Kyrgyzstan moved quickly in February to evict the Americans from their base at Manas and Medvedev was credited in Moscow with a behind-the-scenes role.

Just this week Putin has sought to regain the international commerce spotlight from Medvedev by announcing Russia would join the World Trade Organization only as part of a trade bloc with Kazakhstan and Belarus. And so it goes.

The scorecard shows that in spite of his continuing special relation with the security services, Putin appears to have lost a degree of popular political appeal. Dimi stepping aside for Vlad in the future is no longer a given.

Letter to the Editor

topics:
Vladimir Putin, Russia, Ukraine

Aaron| 6.12.09 @ 7:55AM

Good article MR Wittman, my perception however is that PM Putin still seems to be the one pulling the strings. If it really came down to brass tacks, I fully believe that the Russians (particuallary the military) would quickly get in step with the alpha dog Putin. President Medvedev has not become the leader of "mother Russia". He needs to start peeing on every tree, bark louder than Putin and (god forbid we have to see the shirtless pictures) go fishing.

Russia Dumps the Dollar| 6.13.09 @ 7:33AM

Russia dumps the dollar, commodities surge
Today's Financial News - Posted June 10, 2009

The figures are in and America’s trade deficit is soaring, even in the face of a nasty recession. The news is making Russia and China even more nervous than before. It has created a fantastic opportunity for commodity traders.

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): It appears to be the world’s quietest emergency. The backbone of the American financial system, its rock-solid currency, is quickly eroding yet the only folks that seem to acknowledge the problem are bankers in Russia and China.

While Obama is working overtime to make video appearances with Conan and Colbert, Beijing and Moscow are making moves that seriously undermine the health of the American Treasury. I have written about China’s threats ad nauseam… read it here and here.

Today, it is Russia that is making waves and rocking the overloaded Treasury barge.

Pulling the plug and sinking fast

As I write, Russia holds about $404 billion in its foreign exchange reserves. As a major exporter, the stability of those funds is direly important. If the value of the dollar moves by just a few percentage points, billions of dollars in buying power will be erased.

Russia cannot afford to take any chances. That is why it is unloading a chunk of its dollars and exchanging them for IMF bonds, which are diverse enough to eliminate most of the political risk. In other words, the American dollar is no longer as safe as it once was.

The move is bad news for fans of the greenback.

While the Dollar Index is barely moved today, you can be assured the recent weakening trend will continue. As more and more countries sell their debt in the secondary market, the greenback’s value will drop lower and lower. The interest rate Uncle Sam has to promise investors will climb higher and higher.

Today’s trade deficit figures show that relief is nowhere in sight. Overall, the nation imported $29.2 billion more than it exported in April, up 2.2% from the previous month. The country is on pace to record an annual deficit of some $361 billion.

More importantly, our deficit with China grew by 7.3% in the last month to reach $16.8 billion.

While Japan has not made too many currency headlines, its deficit figures are well worth noting. In April, America’s imbalance surged by 23.5% to $3.2 billion as the country demanded fewer American-made goods. As another one of the largest owners of American debt, Japan’s trade balance is one worth watching.

For investors, this is scary stuff, even if the mainstream media doesn’t get it.

Up 200% and only getting started

There are numerous ways to play the situation. While I could go over the tactics again, the easiest way to see what is worth your money is to look at the markets over the past few weeks. Commodities are on fire.

As one of the few assets not dependent on some government-derived currency, commodities are one of the safest investments in a growing global economy.

TFN Strategic Traders that took my advice and made one simple investment are sitting on profits of over 230%. It is all thanks to China’s reluctance to buy more American debt.

Now that Russia is getting in on the action, prices are only going to go higher.

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