MILAN, Italy, Oct. 15 (UPI) -- When the American secretaries of state and defense went to Moscow to see Russian President Vladimir Putin last week, they did not talk about the one topic on the minds of most ordinary Russians: the soaring cost of food.
Condoleezza Rice and Robert Gates talked about Iran’s nuclear ambitions and the prospects of persuading Russia to join the United States and its European allies in imposing much tougher sanctions against Iran through the United Nations. Putin replied coolly that he had seen “no evidence” that Iran was trying to develop a nuclear weapon.
They talked about U.S. plans to build an advanced early-warning radar system and a base for missiles that could shoot down Iranian missiles in the future, and Putin made it clear he was against it. His counteroffer, of the use of an existing Russian radar base much closer to Iran in the former Soviet republic of Azerbaijan, has already been examined and dismissed by U.S. military experts as inadequate and unsuitable.
They talked about Russia’s plan to withdraw from the 1989 Conventional Forces in Europe Treaty, one of the keystone agreements that ended the Cold War with its strict limits on the number of troops and weapons that could be stationed in the states along the old border between NATO and the Warsaw Pact.
They touched on the issue of Putin’s political future and on human rights. Rice held a meeting with Russian human-rights activists, and she later commented she thought too much power was being centralized inside the Kremlin.
In short, with the exception of some brief exchanges on cooperation in anti-terrorist measures, it was very much like a summit in the grim old days of the Soviet Union. The air was thick with mutual suspicion and mistrust, with Russian generals muttering darkly offstage about U.S. policies “bringing nuclear war closer.”
Clearly, despite President Bush’s claim after their first meting in Ljubljana, Slovenia, in 2001 that he had “looked into Putin’s soul” and found a fellow believer and a diplomatic partner, the Bush administration has not handled the Russian relationship at all well.
Perhaps it was impossible all along, given Putin’s KGB background, his deep Russian patriotism and his determination to return Russia to its old great-power status. And Putin never made any secret of his firm opposition to a unipolar world dominated by the sole U.S. superpower. He also made it clear from the beginning that he wanted to restore order to Boris Yeltsin’s anarchic Russia in the traditional way, by re-establishing a strong state system based in the Kremlin and pursuing the Kremlin’s vision of the national interest.
This meant, as Putin quickly demonstrated, ruthlessly asserting state control over the new rich oligarchs who had profited hugely from the privatization of Russia’s natural resources in the Yeltsin years. It also meant Russia’s firm opposition to key Bush policies like walking out of the 1972 Anti-Ballistic Missile Treaty and enlarging NATO to include the old Warsaw Pact states and former Soviet republics like Estonia, Latvia and Lithuania.
None of this was going to be easy for the Bush administration to swallow. And the surging growth of China and India sent demand for oil soaring, just as Bush’s war on Iraq drove up the oil price and the botched post-war occupation provoked an insurgency that crippled Iraq’s oil production. To Putin’s benefit, the oil price kept rising ever higher and Russia became steadily richer, and able to afford to pay the pensions and wage increases that kept Putin popular, and also to afford to modernize the strategic missiles and weaponry and keep the generals happy.
The Russian defense budget has grown at double-digit rates for the last five years, albeit from a very low base. New investment has gone into the development of new strategic weapons, specifically the Topol-M, designed to defeat U.S. strategic defense systems, and the S-400 anti-missile system. Defense outlays for 2007 are at a post-Soviet high of $32.4 billion, rising 23 percent in the past year and four times expenditures of 2001.
This year’s Russian budget spread the bonanza. The minimum wage was raised 15 percent along with salaries for state employees and military pay and pensions. Another $6.4 billion extra spending was devoted to health and to encouraging a higher birth-rate policies, and there was $3 billion extra for education (up 66 percent), for innovative schools and teacher bonuses. Internet connections were promised for all schools. Housing got an extra $17 billion, up 30 percent, with loans for new construction, a state agency to provide mortgages and subsidies for young families. There was an extra $1.7 billion for a new Agricultural Bank and subsidies for loan repayments to farmers, and still $100 billion left over to be put into a national investment fund.
But now, with all the foreign investment money and petrodollars flowing in, Russians are noticing the first signs of a worm in this apple. What ordinary Russians are talking about is inflation, which the state agencies now fear will top 10 percent this year. Some food prices are up 30 percent, and a new poll by the Public Opinion group found 68 percent of Russians saying there were more and more foods they could not afford to buy.
Sadly, that was not an issue that came up in the American talks with Putin. It should have done, not because this suggests a coming weakness in Russia’s hitherto strong negotiating position, but because this is the direct result of the U.S. subprime mortgage crisis. The Russian central bank is pouring liquidity into the market daily to fend off a credit crunch that would really jeopardize the Russian economy and Putin’s legacy.
And remember the crash of the ruble in 1998, which sent tremors around the global financial system. Another ruble crisis, when the world is already grappling with liquidity problems and a plunging dollar, is the last thing the global economy now needs.
Since the U.S. secretaries of state and defense got so little from their meetings with Putin, perhaps it is time to send Treasury Secretary Henry Paulson, who understands that one key way in which the Cold War is over is that Russia is now an integral part of the global economic system. And in safeguarding that, Bush and Putin have almost everything in common.
