The attached graphs depict two recent critical facts regarding Russia and its economy. The first is the Dollar/Ruble exchange rate. It is exploding in the past few weeks. It has almost doubled and is exceeding certain currency reserves set by European markets.
The second is the Moscow Stock Exchange RSX index which also has exploded in the negative direction. It is just collapsing in front of the eyes of Russians.
Having spent ten years in Russia, 1994 to 2004, and having started a business there with Russian partners, many of some considerable repute, and understanding the Russians from the ground up, this presents a clear and present danger, to them, to the US and to the world. I lived through the 1998 saw the building of the Putin economy and the success of oil. I had argued in the early 1990s that the US and Russia should work jointly to move the oil eastward towards Alaska and then develop strong mutual dependency and stability. It did not go that way.
I have made many observations in my dealings with the Russians. One was when we spoke at length about the US attitude towards Chechnya. They saw the US defending the Muslim side in the Balkans while accusing the Russians of near genocide when the Russians defended themselves against Fundamentalist Muslim terrorist in their homeland. My Russian friends could not understand the US. This was under Clinton. Then on September 9th 2001 in a bar in Athens speaking with two Russians they warned me as an American to the Fundamentalist Muslim threat resulting from the ben Laden move in assassinating the head of the Northern Alliance. The nexus to them was clear and imminent. The Russians seem to have an uncanny sense of threats, real and current.
On the other hand, unlike the Chinese, the Russians have an extraction economy, despite their brilliance in technical matters and their innate ability to build and create highly technical products. They seem to lack the merchant mentality of the English and Chinese. This places them in a position of severe instability in times like these. We the United States must be sensitive to that fact, sensitive to the pride and greatness of the Russian people, and attempt to work with them in this time of crisis. The above charts we believe will only get worse. That may incite a great turning inward in Russia, something we would not desire.
Unfortunately the new Administration seems not to fully appreciate this challenge. The recent talk by Vice President Biden may be considered a threat to them, a swinging of a sword in their face at a time that close collaboration is required. For Biden has said in his speech:
" We also support the further strengthening of European defense, an increased role for the European Union in preserving peace and security, a fundamentally stronger NATO-EU partnership and deeper cooperation with countries outside the Alliance who share our common goals and principles. The United States rejects the notion that NATO’s gain is Russia’s loss, or that Russia’s strength is NATO’s weakness. The last few years have seen a dangerous drift in relations between Russia and the members of our Alliance."
He continued:
"We will not agree with Russia on everything. For example, the United States will not recognize Abkhazia and South Ossetia as independent states. We will not recognize a sphere of influence. It will remain our view that sovereign states have the right to make their own decisions and choose their own alliances. But the United States and Russia can disagree and still work together where our interests coincide."
There are two points here of concern. First, the push of NATO eastward is a threat to Russia built on centuries of historical precedent that Biden is unaware of. Russia has always sought to protect itself. The second is the threat in the telling Russia how to act in the Georgian situation which in many ways has two sides. Doing business outside of the US requires a deep understating the history of the head its peoples. Americans lack that to an extreme. Whether it is the 30 years war, Napoleon, the Huns, or the like, that is always in the he back of the cultural mind of the person on the other side of the negotiating table. Americans all too often are literally empty headed as regards to history, which plays such a powerful molding role.
It would have been better had Obama first met with Putin and Medvedev and developed a sense of mutual understanding, especially at a time when the Russian economy is in such a free fall, then there would have been some basis for a meting of the minds. Biden clearly is not the person to send out the message so close to Russian turf. His record stands by itself. The next question is how will Hillary Clinton do in this domain. This clearly is not one place for testing her metal.
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