Wednesday Night #1327 – Lyda from Russia & Nino from Georgia

Lyda Letacq has recently returned from Russia and has agreed to debrief at Wednesday Night on the highly topical subject of that country and the often inscrutable actions of the government.
The Economist Intelligence Unit on June 18 trumpets the news that Russia’s economy is booming: “Russian economic growth hit a six-year high of 7.9% year on year in the first quarter, propelled by strong growth in construction, manufacturing and trade. The result is particularly impressive in light of the small contribution made by oil and gas.”
There is a hardening of Russia’s diplomatic stance on a number of issues, a situation described by the BBC’s Paul Reynolds as one in which “Russia is not an enemy but cannot be described as a close friend. It is a competitor, playing by some international rules and by some it has made up itself”
The recent suspension of Russia’s participation in the Conventional Forces in Europe, or CFE, treaty is seen by many observers as a potent political signal, particularly in the light of critical issues (Iran’s nuclear capability, Darfur) that will soon come before the UN.
The July Lobster Summit with the Bush family & friends doesn’t seem to have produced any lasting warm and fuzzy vibes – Pravda provides an interesting analysis of the outcomes which hardly seems like a White House-approved communiqué despite the somewhat encouraging headline.
Relations with the UK are strained over Russia’s refusal to extradite Andrei Lugovoi the main suspect in the murder in London of Alexander Litvinenko
Relations with Georgia continue to worsen as Georgia’s president Saakashvili accuses Russia of firing a missile from an aircraft at a Georgian village on Monday.
Closer to home is the flurry of activity that has greeted the (as Peter MacKay would have it) 15th century-style land grab in the Arctic , which has aroused the new government of Canada from its torpor (on this subject) to such an extent that the Canadian military (600 strong) has just begun a 10-day “sovereignty operation” NANOOK 07 in the Arctic.
Stephen Harper’s trip this week to NWT and Nunavut has become a timely and newsworthy event [arrangements have even been made for a small media entourage to accompany him] with speculation that there will be announcements of “fresh spending and building initiatives to bolster Canada’s territorial claims in the Arctic as he hopscotches across the North” [Harper to bolster Canada’s territorial claims during Arctic visit”]
Finally, for some irrelevant spice, we would add the controversial piece in the New York Times Magazine by Canada’s best-known politician of Russian descent, Michael Ignatieff, and the devastating commentary (Michael Ignatieff’s failed mea culpa) by Jonathan Kay.

The Report

Prologue:
It was not only From Russia with Love and Information, but thanks to Udo Studner, we were joined by Nino Marshania, a Rotary Club Ambassadorial Scholar. Nino has been studying Communications at Université de Montréal where her thesis topic is the Reconstruction of Georgia, and its national identity. She brought an intimate knowledge of her home country, The Republic of Georgia and the on-going conflict between the two countries.

We live in a world of nations therefore it is important to have a national identity

A national identity is shapeless, constantly evolving, more emotional than real, often hybrid and not always easy to create. Some view it as something to be constructed, while others look on it as virtually inherent. It is suggested that the principal unifying factors are common history, unique language and traditions, literature and, in some cases such as Georgia, which is Christian Orthodox, religion will also play a part. Others suggest that common cultural values – rather than shared heritage – are more important than ethnicity.
On the other hand, promotion of national identity by governments has more often been used as a propaganda tool asserting to their people a special or unique quality that leads to wars and foreign aggression.
At a time when many nations are seeking to clarify and even exalt cultural identity, others, like France are reconsidering the exclusive nature of an identity that has been long-established. Zinédine Zidane, Captain of the French national team – French icon or hyphenated national?
Finally, among Wednesday Nighters, globalization is a strong influence. Many have multiple citizenships along with identities and prefer to think of themselves as citizens of the world.

(Republic of) Georgia
Legend has it that when God was distributing portions of the world to all the peoples of the Earth, the Georgians were having a party and doing some serious drinking. As a result they arrived late and were told by God that all the land had already been distributed. When they replied that they were late only because they had been lifting their glasses in praise of Him, God was pleased and gave the Georgians that part of Earth he had been reserving for himself.
Georgia has many of the qualities inherent in the definition of national identity, including unique ethnic origins and language remain a mystery, but have been linked by some to the Basque. The language, which has two sub languages, has a unique alphabet, not related to Cyrillic.
The history of Georgia is colourful and mentions of the country are found in Greek and Roman annals. It reached the state of nascent empire in the latter part of the 18th century. However, following a disappointing alliance with Russia forged under Catherine the Great, Georgia was annexed by Russia and within a year, the Tsar had abolished the Georgian Kingdom of Kartli-Kakheti. Since then, with very brief interludes, Russia has regarded Georgia as an integral part of Russia.
and relations have deteriorated particularly since the 2003 resignation of President Eduard Shevardnadze following the Rose Revolution, and the accession to power of a new pro-western generation. The new government has applied for membership in NATO.
The country’s location between Russia and Turkey with a 300km border on the Black Sea makes it a highly strategic and desirable asset to its northern neighbour. Today Russia exerts pressure on Georgia through control of flows of electricity and oil and its support of the two pro-Russian breakaway regions of Abkhazia and South Ossetia. However the new pipeline carrying oil from the vast reserves from Azerbaijan goes through Georgia and will reduce the Russian threat.

Russia
There is a very educated population; young people in scientific/technical fields are well paid by previous standards (NOT in teaching), but still often work at 2 or 3 jobs. The younger generation believes that the country can function differently from the past, through flexing economic rather than military power (as has been the case with the oil exports through Ukraine and western Europe. In St Petersburg, one senses that money is not flowing, but Moscow is a pulsating, very expensive world capital. The rest of Russia is a black hole.
The major concern is what happens after Putin. He is immensely popular, but does not have another mandate without changing the Constitution and it appears to observers that it is more likely that he will identify a successor who will follow his policies, and come back after 4 years.
The Kremlin is anxious to do business with the former states of the Soviet Union, but at the same time the atmosphere is increasingly xenophobic, making for greater distrust of the move of countries like Ukraine, Poland or Georgia to open up to the West. Under the autocratic Putin, the economy has improved greatly and he has managed to instill a sense of order, people are working hard. Russian pride has been restored. The economy is booming. Gas & Oil are have been the economic engines, but now heavy industry is being rebuilt

[Editor’s note: State statistics agency RosStat released full first-quarter GDP data on June 14th. The main factors behind the 7.9% headline growth figure were a 23.2% rise in construction, an 11.8% expansion in manufacturing and a 9.1% increase in trade. Large gains were also registered for hotels and restaurants (13.9%), the wholesale and retail trade (9.1%), financial intermediation (9.9%) and transport and communication (7.9%). In the year-earlier period, GDP growth was 5% and in the fourth quarter of 2006 it was 7.8%.]

Investment climate in Russia
For smaller investors, it is essential to have large foreign partners, along with the necessary Russian ones, and the right people. Some large American and British institutional investors are ideal partners; they have the knowledge and the right contacts. Real estate is currently a good business in which to invest. There is still fear that highly successful projects part-operated by foreign investors suffer from Kremlin pressure tactics leading to confiscation. BP’s experience is often cited, but not unique. There are two sides to the story – in cases like BP’s, the Russians moved partly to ensure that foreign companies do not remove all the profits from the country.
Russia desperately needs money to build and to repair the infrastructure and for this vast undertaking there is a requirement for not only foreign infrastructure investors, but also foreign expertise, especially new technologies. Europe is the most likely source of partners, especially in light of Russia’s exports of gas & oil, however, as the economy improves in Russia, there will be more domestic consumption, leading to less export capacity, particularly without improved pipeline infrastructure.
Which explains in part the recent emphasis on Russian sovereignty in the Arctic