How Misha is still a president is beyond me. Well, not quite.

Whether this will change the determination of some NATO members to bring Georgia in at any cost remains to be seen.

“Seventy years on, the pact between Hitler and Stalin still casts a shadow over Europe. Its memory continues to divide.

For the Poles, Lithuanians, Latvians, Estonians and Bessarabians, the pact began the reign of terror, mass deportations, slavery and murder which both the Nazi and the Soviet armies brought along with them when they co-ordinated their invasions of these countries in line with the pact’s notorious secret protocols – by which Stalin and Hitler had agreed to divide Eastern Europe between their regimes.

For the Jews of all these lands, the pact was the licence for the Holocaust. For the European Left, the idea that the leader of the USSR could sign a pact with Hitler symbolised the moral bankruptcy of the Soviet regime.

…

The pact remains an embarrassment for those in Putin’s Russia who take pride from the Soviet achievement in the war.

…”

The purpose of this post is not to discuss the Molotov-Ribbentrop pact. It’s historical interpretation is indeed controversial, and I invite all readers of this blog to do your own reading and make up your mind. However, there are few statements which Figes makes which I simply can’t let slide.

Firstly, Figes writes that this “pact with Hitler” “was the licence for the Holocaust” and “symbolised the moral bankruptcy of the Soviet regime”. Perhaps Mr Figes should be reminded of an earlier “pact with Hitler” which the British Prime-Minister Neville Chamberlain signed with both Hitler and Mussolini. The 1938 Munich Agreement, signed by Britan and France above all gave Hitler the green light to annex parts of Czechoslovakia. Czechoslovak government was informed (by future allies) that it could either resist Nazi aggression alone or submit to annexing. Was that a lesser “licence for the Holocaust”? Following Figes’ logic, did the Munich Agreement symbolize the moral bankruptcy of the British and French regimes too? Doesn’t it also “continues to divide”? (The Czech still call it “Munic Bentrayal” or “Munich Dictate”). Perhaps a pice for the BBC by Orlando Figes on the Munich Agreement to commemorate 70 years since the beginning of WWII is also due?

Most pathetic is Figes’ assertion that “the pact remains an embarrassment for those in Putin’s Russia who take pride from the Soviet achievement in the war”. Next to everyone in Russia, Putin’s or not, takes just pride from Russian (Soviet) achievement in the war without a hint of embarrassment. Regardless of how you interpret the Molotov-Ribbentrop pact and the events after WWII, nothing can diminish the sacrifice that almost 30 million Russians who lost their lives made while fighting to defeat Nazism in Europe along with the British and American allies, and to save millions of same Jews that Figes is talking about from Nazi ovens and gas chambers. I find it next to criminal to put Nazi and Soviet armies in one basket (which Figes does when he talks about “slavery and murder which both the Nazi and the Soviet armies brought”). This suggests that, for example, over a million Russians who held off the Nazis and starved to death in the Blockade of Leningrad, or those Soviet soldiers who lost their lives in the Battle of Kursk, are reduced to accomplices to Holocaust, rather than being treated as war heroes. This suggestion is sickening.

Questionable high-level political dealings, either by Soviet or other allied governments, should never be used to cast shadow on the achievement of ordinary men and women who fought the Nazism in WWII.

P.S. I’m not a communist, never was and I sure hope never will be. Neither do I sympathize with the Soviets, or deny the many atrocities SU committed. I simly can’t make peace with selective history, double standards, and reflex logic, which too often make way into mainstream media.

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“The BBC’s Tom Esslemont in Tbilisi says that in hosting the exercises, Georgia has again demonstrated its wish to join Nato, though there is still no timetable for its eventual membership, he adds.”

Perhaps Mr Esslemont should be reminded of tens of thousands of protesters who rallied on the streets of Georgian capital Tbilisi for the past two months, demanding resignation of the president Mihail Saakashvili, and objecting virtually any decision he recently took, including Goergia’s involvement with NATO. I simply fail to see how war games which are held in a conflict zone, and which are solely organized by a leader who lacks virtually any popular support, show that “Georgia has again demonstrated its wish to join Nato”.

Image Credit: S. Perez, Reuters

 Obama allegedly offered a deal to Russia in a letter to Russian president last month, suggesting that the U.S. may halt the deployment of interceptor missiles and a high-tech radar in Eastern Europe, which Russia bitterly opposes, if Russia helps prevent Iran from developing long-range weapons, the New York Times reports. According to an unnamed U.S. administration official, the U.S. is prepared to make such concession only if the threat of Iran’s long-range and nuclear weapons “goes away”. “It’s almost saying to them, put up, or shut up”, said the NYT source.

The Russian President Dmitry Medvedev acknowledged his exchange with Pres. Obama today and said that the Kremlin was “working very closely with the U.S. colleagues on the issue of the Iran’s nuclear program” (NYT report). Interestingly, Medvedev stressed that “the issue is not treated as [some kind of] a deal or exchange, as this would be counterproductive” (see article by Kommersant Daily or report by Vesti (in Russian)). Neither American nor Russian sources give any details of the “offer”.

Such offer, if indeed made by the U.S., seems not only “counterproductive”, but vacuous, in that even if it is accepted, it makes it hardly possible for Russia to meet its end of the bargain.

While the U.S. is certainly able to put an end to its own missile defence plans in Europe, it is unclear how Russia, which opposed Iranian WMD’s from the start, can force Iran to cease work on military projects which it so keenly pursued over the past years.

It is possible that the offer could help legitimzie future deployment of U.S. interceptor missiles in Europe, should future talks with Russia fail, as it would seem that Russia was offered another way out, which it declined.

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The current decision is likely a response to a promise of  ”warmer ties” with Russia by U.S. Pres. Obama, made during his election campaign.  Interestingly, warmer ties are yet to come. The Obama administration is preoccupied with the plan to bailout the U.S. economy, which was signed into law today, and so far did not respond to Russian concessions in any way. The U.S. Secretary of State Hillary Clinton, who is currently on her first official trip abroad, has also not given Russia much attention. Russia is not among countries to be visited during the trip.

Either way, the new U.S. administration should take advantage of high expectations and positively engage Russia on issues such as the missile defence in Europe and Afghanistan. Otherwise it risks seeing some of the recent concessions taken away.

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The Rouble Trouble

Fears of global recession and tumbling commodity prices did their job in bringing the Russian currency down. In less than a year the rouble has depreciated by more than 40% against the U.S. dollar, despite the best effort by the Bank of Russia, Russia’s central bank, to defend its peg. Official inflation figures are expected to remain moderately high in 2009, which means that a dollar goes a much longer way towards investing into Russian assets.

The Stock Market Dip

The Russian Trading System Index (RTSI), which tracks the value of many leading Russian companies, lost over 75% of its value since reaching its high in May 2008, and reached a five year low last week. The drop follows a large capital flight out of Russia, which was triggered by the global liquidity crunch and flight to safety in 2008, and reinforced by Russia’s August war with Georgia and a recent gas dispute with Ukraine. Despite that, investing in Russian stocks can carry a very moderate risk, which can be reduced through diversification. Russian index funds may prove to be an especially good buy. (see chart).

Russian Stock Market Index, 2008-2009

Fair “fundamentals”

With the U.S. and large parts of Western Europe officially in recession (experiencing consecutive contractions of the GDP), Russian macroeconomic performance remains and is expected to stay above average. Amid financial turmoil, Russian economy grew by 6% in 2008 (vs. 0.9% for the U.S.), and is expected to grow by 1% in 2009 (the U.S. economy is expected to shrink by 1% in 2009). Official unemployment is moderate, at 7.7% (7.2% for the U.S.) (see table). 

Russian Economy in 2008-2009 (Source: The Economist, 29 Jan. 2009)

The Russian stock market decline appears exaggerated, perhaps due to investor caution and confidence shift. In light of fair fundamentals, there is a good chance that the confidence will return, and the markets will recover over the next year or two.

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Putin cautioned against using domestic protectionism to soften the effects of the global demand slump; against reversion of globalization, state intervention and deterioration of international trade.

(For more analysis, see article by Kommersant Daily (in Russian)).

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