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Putin Blinked
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Friedman says Putin acted emotionally by letting impulsive reaction to the anti-Russian feelings in western Ukraine determine Russian policy following the collapse of the Yakunovych government. The months long Russian response in Crimea and eastern Ukraine may have secured Russian pride at a large cost. This includes the damage to the relationship with Germany, seting the EU on a path to look for other sources of energy to reduce dependence on Russian gas, a natural gas deal with China in which the price was kept "a secret" and may have provided China with a bargaining edge considering the timing of the negotiations. The most severe impact is in the loss of confidence within Russia, reminding the Putin administration that though the economy has grown in the Putin years it is still fragile and connected to the global economy. The capital outflows of the magnitude of $160 billion at a time of high inflation and sharply slowing growth actually put at risk the gains Putin and Russia made in the last decade, and risk the future agenda to improve the standard of living of the Russian people eyond the major cities. Putin's own assessment would eventually be closer to that of Alexei Kudrin. Kudrin, finance minister in Putin's previous term, correctly saw the dangers of impulsive policy concentrated in one figure, and the suppression of other voices including the opposition needed for Russia to be governed in a manner similiar to western Europe, to attain a similiar level of economic progress and standards of living. In today's global economy even the U.S., France, UK and states inside Germany need foreign investment for jobs, new ideas and technology, and the opinion expressed on media television and internet shapes investor sentiment to a larger degree than fully understood.
The 2014 St. Petersburg International Economic Forum
05/22/2014
After the Russian takeover of Crimea and increase in tensions on the border with Ukraine the mood at the 2014 St. Petersburg Economic Forum is different. Many western companies stayed away. Of German companies Metro, a German retailer, was the prominent one present and that too because of its 22,000 Russian employees, said its CEO. Former British cabinet minister Mandelson, described the situation as Putin's "self-inflicted wound." The Russian economy now faces three choices, each difficult and risky- to move closer to Asia, to depend on its own state banks and finances for development, or to continue attracting foreign investment even with western sanctions. Growth is slowing to 0.2% for 2014. At the same time Indian elections have led to a absolute majority for a foreign investment friendly government with experience in attracting foreign investment in western India. Foreign investment could shift in coming years from China, Russia, Turkey to India, Indonesia, Vietnam, Africa, and other investment friendly countries. In that situation China's tensions with Japan and Russia's tensions with U.S. and Europe may become counterproductive policies. Some foreign investment may even return to home regions with the yen's new level in Japan and lower energy/labor/transport costs in North America, and lower labor costs in Southern Europe.
Grouped Articles
Competing Visions for Russia’s Economic Future
New York Times 05/22/2014
New York Times 05/27/2014
Russia and Markets: The Power of Weakness
Wall Street Journal 08/12/2014
Russian Companies Clamor for Dollars to Repay Debt
Wall Street Journal 10/10/2014
Russia Introduces Measures to Calm Economic Jitters
New York Times 12/17/2014
Myers NYT account of how the Russian policy to take Crimea evolved in Putin's inner circle a few days after the collapse of the Ukraine government on Feb 21, 2014
03/07/2014
Myers documents how the Russian policy changed within a few days from working with the EU to military intervention in the Crimea.
Grouped Articles
Russia’s Move Into Ukraine Said to Be Born in Shadows
New York Times 03/07/2014
Russia Moves Closer to Absorbing Crimea, Despite Sanctions
Wall Street Journal 03/18/2014
New York Times 05/27/2014
Efforts for a calming down of tensions in Ukraine by June 2014 with the election of Poroshenko as president and no increase in sanctions on Russia
05/26/2014
Russia says it will talk with Poroshenko. Ukraine will make a payment of $2 billion for past gas purchases from Russia.
Grouped Articles
Despite Fighting, Hopes Rise In Ukraine
Wall Street Journal 05/27/2014
Ukraine’s Next President Vows to Restore Order and Mend Russia Ties
New York Times 05/26/2014
New York Times 05/27/2014
Poroshenko Takes Ukraine Helm With Tough Words for Russia
New York Times 06/07/2014
Fighting Intensifies After Ukraine's Poroshenko Ends Cease-Fire
Wall Street Journal 07/02/2014
Tensions Are Writ Large Before Ukraine Showdown
Wall Street Journal 07/07/2014
Friedman on why Putin blinked when he realized the costs of impulsive emotional policy making for Russia's economy and his legacy of economic progress
05/27/2014
Putin's early reactions to Yakunovych, corruption and poor leadership in Ukraine, and anti-Russian feeling in western Ukraine, were emotional and impulsive. The Crimean takeover was perceived very differently and gained Putin poor media coverage in Germany after decades of effort in building German-Russian relations, surely not worth what was gained in Crimea. The capital outflows estimated to reach $160 billion at one point and the damage to foreign investment sentiment at a time of sharp economic slowdown must rate as one of the poorest displays of policy making, when Russian speaking Ukrainians could be protected without damaging Russia's image and relations with western partners. Relationships needed for modernization of what is still an emerging market in a global economy. Even in a multipolar economic world with China, Russia playing a bigger role, other competing players Japan and India, would dilute any influence gained by China, and by Russia, and no change in the global economy. A more serious effort would be for Putin to have pushed to give Russia a more effective economic role by diversifying to a tech based economy, away from oil, something that still awaits Russia under some future leadership and party.
Grouped Articles
New York Times 05/27/2014
This Is Just a Date, Not a Marriage
Wall Street Journal 06/03/2014
Tensions Are Writ Large Before Ukraine Showdown
Wall Street Journal 07/07/2014
Seeing Cost of Saber Rattling in Ukraine, Putin Alters Course
New York Times 07/11/2014
Raising Stakes on Russia, U.S. Adds Sanctions
New York Times 07/16/2014
Wall Street Journal 07/22/2014
Clemens Wergin of the Die Welt newspaper group in Germany on German public opinion in the Ukraine crisis and views of Russia
05/05/2014
Wergin reflects on German views of Russia in the twentieth century and today. Intertwined in how German public opinion views Russia is the economc relationship built since the 1990's with Russia, similiar to the relationship between the U.S. and China, designed to mutually benefit both sides in a global economy.
Grouped Articles
New York Times 05/05/2014
Former German Chancellor Schröder Defends Birthday Bash With Putin
Wall Street Journal 05/12/2014
Germany's Wolfgang Schäuble: Prepared to Raise Pressure on Russia
Wall Street Journal 05/24/2014
Ukraine’s Next President Vows to Restore Order and Mend Russia Ties
New York Times 05/26/2014
New York Times 05/27/2014
German Leader Emerges as Key Figure in Ukraine Talks
New York Times 08/19/2014
How the West sees Russian intervention in Ukraine and the takeover of the Crimea
01/05/2009
The views of former Defense Secretary Gates, president Obama, and others.
Grouped Articles
Wall Street Journal 03/26/2014
Pride, Prejudice and Putin's Predation
Wall Street Journal 03/26/2014
Russia Plotting for Ukrainian Influence, Not Invasion, Analysts Say
New York Times 04/09/2014
Pentagon Chief Sees Opportunities In Russia and the War on Terrorism
Washington Post 01/05/2009
New York Times 05/27/2014
‘America Must Always Lead,’ Obama Tells West Point Graduates
New York Times 05/28/2014
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