Putin's path will not build prosperity, FDI will
■"Potential Putin Rival Spurring Speculation: President's Intentions Remain in Question," by Peter Finn, Washington Post, 4 March 2005, p. A14.■"Moldova's Ruling Communists Are Leading a Swing to the West," by Marc Champion and Alan Cullison, Wall Street Journal, 4 March 2005, p. A14.
■"A Passage to Prosperity," op-ed by P. Chidambaram, Wall Street Journal, 4 March 2005, p. A14.
■"Mexican Oil Chief Seeks Expansion: The Possibility of Foreign Investment Draws Criticism," by Elisabeth Malkin, New York Times, 3 March 2005, p. C8.
After Viktor Yushchenko prevailed in Ukraine, Putin and his people started targeting potential Yushchenkos in his own government, like Mikhail Kasyanov, his former PM who's a focus of speculation as a possible reformist candidate against whomever Putin pushes to run in his place in 2008 (assuming he doesn't try to rewrite the constitution in the meantime, which would be enough to reclassify Russia as Gap if he pulls it off). Kasyanov is scared enough that allies say he's considering a run for the presidency simply to shield himself against potential arrest (two other candidates have formally announced they're running: one an ultranationalist and the other the former speaker of the lower house of the State Duma).
In short, the gaming regarding the end of Putin's reign has begun in earnest, and it's starting now in 2005 because the past year has been a horrible one for the current regime (Beslan, Yukos, the proposed pension cuts, and the Ukrainian election fiasco where it backed the losing side). Putin's approval rating is low at 42%, but the Duma's is inconceivably low at 3% (yes, 3%!), so the Russian desire for a strong leader hasn't gone away. But Putin's biggest problem, as the article points out, is that he's grabbed for lots of power recently, and it hasn't improved his government's efficiency on anything.
If anything, every time Putin grabs for more power, former Soviet republics tend to lean ever more westward (now it's Moldova, a place dominated by communists!). If Putin rewrites the constitution to pretend he hasn't served two terms, this trend will become a landslide, and Russia will be greatly isolated as a result. Money will simply stay away, and no matter how much the Kremlin controls the energy sector, it will starve for adequate funding, and that will curtail Russian power internationally far more than "losing" Moldova to the West.
[I am actually a rare person who can read Moldovan, which is Romanian in Cyrillic. Kinda trippy to translate a foreign language in another language's script. I studied Russian as an undergrad and grad, and took Romanian for my Ph.D. research on Ceaucescu.]
If Russia wants to remain in the Core, it can't do so only on energy. It needs to do what India's done: boost manufacturing and attract investment. In fact, Russia can't even be a major Core power on energy unless it attracts foreign investment. This is where Mexico is at with state-owned Pemex. As its own CEO forecasts, if Pemex keeps investing $10 billion a year, it can make enough discoveries to keep exporting. Anything less and Mexico will soon be importing! But if Pemex doubles that investment level, he predicts it can become one of the world's biggest suppliers of oil. Where is Mexico going to locate an additional $10 billion in money each year? Not at home, but only from abroad. What stands in the way? Idiotic national pride and small-minded legislators who would rather control all of a much smaller pie than lose some control over a much bigger one.
Putin should take note of Mexico, especially if his model of political control is like what the PRI did there for decades (a vigorous "democratic" process within a single ruling party). Mexico is not a serious great power, and it could be. That's where Russia is headed unless Putin and Co. wise up some.