The Putin Pendulum: Anti-White House – Pro American Investment

Posted June 21st, 2012 at 8:33 pm (UTC+0)

On Monday in Mexico, Vladimir Putin and Barrack Obama appeared together before the press. The Russian President leaned diagonally away from the American President, as if Mr. Obama had a contagious disease.

'Let's not get too close,' Russian President Putin seems to be thinking Monday in Mexico as he has his first substantive meeting with President Obama in three years. Photo: Reuters/Jason Reed

At a press conference the next day, Mr. Putin belittled American Treasury bonds as untrustworthy, derided US-Russian trade as “peanuts,” and then threatened to limit visas issued to Americans if the US Congress passes legislation to deny entry to Russians suspected of human rights violations.

On Thursday in St. Petersburg, Mr. Putin leaned the other way. Speaking at the annual St. Petersburg International Economic Forum, he extended a warm welcome to American and European company executives, saying Russia wants to dramatically increase foreign investment.

Mr. Putin has declared a goal of doubling Russia’s economy in this decade. And he says he wants foreign smarts and foreign dollars to play key roles.

This is not a new approach. In June 2007, when I was Bloomberg bureau chief for Russia, the Kremlin gave special badge access to Bloomberg reporters on the assumption they would flash economic news bulletins to investors — not political criticism. Indeed, dollar signs prevailed in the reports.

But this time, the Putin Pendulum neatly fits within the brackets of a single work week. It sounds like a sanitized and far milder outgrowth of Bolshevik think: “The capitalists will sell us the rope with which we will hang them.”

Will it work in 2012?

Will American investors march into Russia, resigned to a wide disconnect between the Kremlin’s foreign policy and its foreign investment policy?

In today’s arid economic landscape, Russia is a juicy and tempting fruit.

It now enjoys “The Four Fives” – five percent unemployment, five percent inflation, a five percent current account surplus, and a five percent economic growth forecast for 2012,

In addition, it enjoys foreign currency reserves of $500 billion. (These may have shrink a bit in value after Russia’s President trash-talked a key component: US Treasuries.)

Compared to last year, real incomes for Russians are up 11 percent and retail sales are up 7 percent.

Viewed from the financial flatlands of the European Union, Moscow looks like a shining city on a hill. No longer “the sick BRIC” – Russia will probably grow more this year than Brazil and India. Russia’s growth could approach that of China.

Now here's a friend! President Putin shakes hands with Chinese President Hu Jintao during a signing ceremony at the Great Hall of the People in Beijing on June 5. Photo: Reuters/ Mark Ralston

And that may be Russia’s Achilles heel. Russia fortunes are increasingly tied to the fortunes of China, now its largest trading partner. If China catches a cold, Russia could catch pneumonia.

A Chinese slowdown could keep pulling oil prices down into Russia’s red zone. Setting aside Mr. Putin’s lavish pre-election spending promises, Russia’s budget balances at an oil sales price of $120 a barrel. After one year over $100 a barrel, oil prices dipped this month into the low $90s.

And then, American investors should consider the political risk.

It ratchets up the discomfort level to know that you are investing in a country ruled by a former KGB officer proud of his service in East Germany, who, like a Moscow mirror of Mitt Romney, seems to consider the United States his “number one geopolitical foe.”

President Putin’s May 7 inauguration to a third term has released his real foreign policy from the closet.

The tone was set from the start when the Russian President said he was too busy to attend the G-8, held outside of Washington at Camp David.

This decision was interesting for two reasons.

First, it was a clear whack at the US President.

President Putin shakes hands with Chinese parliamentary Chairman Wu Bangguo at the Great Hall of the People in Beijing on June 6, prior to the start of a summit of the Shanghai Cooperation Organization, a loose military grouping sometimes called 'the anti-NATO.' Photo: AP/Mark Ralston

Originally, the G-8 was to be in Chicago, Obama’s home town. Mr. Obama faces reelection in November. Hosting a G-8 in your home town puts a feather in your cap. Vladimir Putin knows this well. He invested millions of dollars in sprucing up his hometown, St. Petersburg, prior to hosting the G-8 there in 2006.

Three months ago, the White House decided to get relations off on the right foot with Vladimir Putin, who had not had a substantive meeting with President Obama in three years. As a gesture to the President-elect of Russia, the White House separated the G-8 from a NATO meeting in Chicago, and then moved the G-8 to Camp David. There, in a controlled setting, Mr. Putin would not have to face two forces he dislikes: NATO and street protesters.

So, the G-8 was moved to Camp David in March. Mr. Putin’s aides said he would attend. Then, 10 days before the G-8, the Russian leader pulled out. The timing made it too late to move the G-8 back to Chicago.

Aside for giving the Obama Administration a gratuitous poke with a sharp stick, Mr. Putin apparently had another reason for his pullout.

Russia’s new President firmly believes that in this decade the Kremlin will reemerge as a key pole in a new, multi-polar world.

It would send the world the wrong message if the images of first foreign policy foray of the Russian President showed him, flying to Washington, then sitting in a Western family photo, lost among the likes of the Prime Ministers of Canada and Italy.

Instead, Mr. Putin made his first trip to Minsk, capital of Belarus, Russia’s most economically and politically dependent ally. Then following Moscow’s longstanding divide and conquer approach to Europe, he flew to Berlin, and then to Paris, skipping Brussels, headquarters of the loathed European Union and NATO.

Then, he flew to China and back, with stopovers in Central Asia’s two most important nations: Uzbekistan and Kazakhstan. In Beijing, he enjoyed warm public meetings with leaders who privately are said to see Russia as a junior partner.

Although Russia accounts for only 2 percent of China’s foreign trade, Chinese leaders are far too diplomatic to describe their trade with Russia as ‘peanuts.’ Similarly, Chinese leaders largely leave blunt critiques of US Treasury policy to the opinion columns of The Financial Times.

This week, the quickie meeting with the American President came on the sidelines of Mr. Putin’s participation in the G-20 in Mexico. Next up: a trip to Israel, undoubtedly to discuss Syria and Iran.

Parallel to the Russian president’s six weeks of globetrotting, there have been threats to send warships to Syria, threats to bomb future NATO missile defense installations in Europe, and appeals to teach tolerance of Tehran’s leaders.

At the end of the day, the Western investors gathered in St. Petersburg this weekend will make their own risk assessments of the Putin pendulum.

Does a hot economic relationship outweigh a cold political relationship?

Come on in and invest! President Putin beckons Thursday to a hall full of American, European and Japanese company executives gathered for the opening of the annual St. Petersburg International Economic Forum. Photo: Reuters/Sergei Karpukhin

James Brooke
James Brooke is the Russia/CIS bureau chief for Voice of America. A lifelong journalist, he covered West Africa, Brazil, the American Rocky Mountain States, Canada, and Japan/Korea for The New York Times. A resident of Moscow since 2006, he was first Bloomberg bureau chief for the region. In 2010, he joined VOA. In addition to writing Russia Watch, his weekly blog, he also does video, radio and web reports from Russia and the former USSR.

10 responses to “The Putin Pendulum: Anti-White House – Pro American Investment”

  1. […] The Putin Pendulum: Anti-White House – Pro American InvestmentVoice of America (blog)On Monday in Mexico, Vladimir Putin and Barrack Obama appeared together before the press. The Russian President leaned diagonally away from the …Putin: Russia Open to Foreign Investment in EnergyRIA NovostiRDIF in Consortium To Buy in CompaniesThe Moscow Timesall 573 news articles » […]

  2. Gennady says:

    1. I absolutely agree with well argumented points in the article. Really, “Does a hot economic relationship outweigh a cold political relationship?

    2. The more convincing sounds the point as it exactly shows what has Mr.Putin, old J.Stalin’s sympathizer, thought : “Bolshevik think: “The capitalists will sell us the rope with which we will hang them.”

    3. With what diligence and submission Mr. Putin looks at Chinese President Hu Jintao on the photo. It’s more than that.
    Mr. Putin as a representative of the Soviet-style dogmatic communism seeks favors from Chinese pragmatic communism.
    Never ever J. Stalin would have done that. It had culminated decades-long debate whose version of communism is more viable with the defeat of Lenin-Stalin’s version. So, it perfectly shows that Mr. Putin has lost vectors for his strategy.

    4. I completely agree with the article. Why one should invest in the lawless country with rampant corruption, with huge political risks. Even now the flight of investments from Putin’s Russia is unprecedented. For investors to invest in Putin’s Russia is the same as to carry water in a sieve. Just remember Magnitsky murder.

  3. […] 27 Percent GDP Investment by 2018Daijiworld.comPutin Calls for 27 Percent GDP Investment by 2018.The Putin Pendulum: Anti-White House – Pro American InvestmentVoice of America (blog)Putin: Russia Open to Foreign Investment in EnergyRIA NovostiRussia open to […]

  4. Dmitri says:

    very objective view from abroad on first international Putin meeting with different national leaders especially with Obama who under pressure of president campaign in the US.

  5. Julie says:

    “Does a hot economic relationship outweigh a cold political relationship?”
    well in putins other addressess he has repeatedly called us out, stating hes more than willing to have open dialogue on the political issues. but he clearly has stated over and over and over again it is never an open dialogue. The united states keep strong arming, bullying nations to our will. mmm Along with the united states keep interfering in everyones business. Russia wants self sustainability. I dont blame them. But the us keeps interfering. Russia isnt the only one that has said our banking system is corrupt. Just recently at the imf europe called us out on that. These articles are never fully truthful or “transparent”. Their all screened to ensure only the parts that our government wants released is published. A few keystrokes on a keyboard and full videos pop up to show the true full length interviews and meetings. majority arent even aired. Gee I wonder why. interviews stating our government has mastered “biased news”, and how they question why our government feels the need to hide the truth from our people. mmmm dont comment unless you know the full truth. which you will never get from articles like these or from the so called “news”.

  6. Gennady says:

    To Julie:
    Thank you for your thoughtful insights. Reality is never easy to comprehend.
    1.Putin time & again calls the world to invest in Russia … but on his terms.
    His investing is heavily dependent on his proStalin’s nostalgia, his revering of Lenin’s mummy in the Mausoleum.
    Just imagine the ancient relics as a State symbol in the main square of the greatly centralized country in the XXI century.
    All over Russia V.Lenin’s monuments dominate cities’ and towns’ landscape.
    All Putin’s country is turned into a huge museum of the failed Lenin-Stalin’s utopian version of the totalitarian ideology.
    Never V.Lenin & J.Stalin kept manners with capitalists and always disrespected them.

    2. Always V.Lenin & J.Stalin and their blind followers couldn’t manage light, consumer-oriented industry. Agricultural policy always was a disaster. Logistics was in a mediaeval state.
    From Putin’s backyard I’d reiterate that to invest in Russia under his iron fist and on his terms is absolutely hopeless and impossible mission. His country lacks in essentials: rule of law, respect to property rights. Racketeers and raiders are at ease.

  7. Ardelle Favieri says:

    This really is the information I needed. Many thanks writing this posting.

  8. david says:

    Everyone conveniently ignores how Putin and the Russian people feel about being encircled with America-cum NATO’s missile defense shield.

    Don’t you think Georgia and Ukraine were on NATO’s list of location, location, location before Russia applied conventional tactics?

    A couple of months ago, Russia said something that annoyed the Senate and People of America and Secretary Clinton responded by inviting Kosovo to consider applying membership in NATO. (read host NATO’s missiles.)

  9. Andrey says:

    I live in Russia and I’m a strong antagonist of Mr.Putin but there are a lot of arguable points in this article from my point of view.
    Nowadays, US are no longer a country of freedom .Americans have a lot restrictions on their movements, free speeches etc. (no doubts, Russians have them too).

    Almost all politicians across the world are tricky with us from time to time. Do you think Muslim brothers are the right party to run such country as Syria? The rebels don’t commit a crime? They don’t kill families of soldiers? It is impossible. The truth is somewhere in between. And why Eastern countries support the rebels and Russian austerity for Assad? No difference between them.
    Why do you think Mr.Putin should visit US if Russia has union with Belarus and Germany was a strong supporter of Russia during 90s – our worst time .What is Brussels for Mr. Putin. It’s only the capital of Belgium and nothing more (there aren’t allies there).

  10. I believe everything published was very reasonable. However, think on this, what if you were to create a awesome headline? I mean, I don’t want to tell you how to run your website, but what if you added a headline to maybe get a person’s attention? I mean The Putin Pendulum: Anti-White House – Pro American Investment Russia Watch is a little plain. You ought to peek at Yahoo’s home page and watch how they write post titles to get people to open the links. You might add a related video or a pic or two to grab people interested about everything’ve written. In my opinion, it would bring your posts a little livelier.



James Brooke is VOA Moscow bureau chief, covering Russia and the former USSR. With The New York Times, he worked as a foreign correspondent in Africa, Latin America, Canada and Japan/Koreas. He studied Russian in college during the Brezhnev years, first visited Moscow as a reporter during the final months of Gorbachev, and then came back for reporting forays during the Yeltsin and early Putin years. In 2006, he moved to Moscow to report for Bloomberg. He joined VOA in Moscow in 2010. Follow Jim on Twitter @VOA_Moscow.



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