Publication: Eurasia Daily Monitor Volume: 4 Issue: 129

It has never been clear during the last few weeks whether there is a point to the informal July 1-2 meeting between Presidents George W. Bush and Vladimir Putin at Kennebunkport, Maine. U.S.-Russian relations have certainly deteriorated since the start of this year, and the rhetoric, particularly from the Kremlin, has turned bitter and even hostile, so a relaxed conversation could help in clearing the atmosphere (Vremya novostei, July 2). There is nothing personal, however, in the antagonistic trend, which is driven by deepening political incompatibility. The two leaders have managed to remain on reasonably friendly terms since their first meeting in Ljubljana in June 2001, when Bush described Putin as “straightforward and trustworthy.” Much accumulated political evidence has shown since that these two qualities are not among Putin’s political talents and skills, but Bush is understandably reluctant to give up on rescuing diplomacy from self-propelling mutual accusations and other “misunderstandings.”

Traditional hard-security issues shape the present-day tensions, and both presidents appear eager to discuss missiles, radars, and other “strategic assets.” Putin, in particular, wanted to add spin to his initiative on joint use of the Gabala early warning radar station in Azerbaijan, and he was much emboldened by the successful test of Bulava sea-launched ballistic missiles on the eve of the meeting (RIA-Novosti, June 28; Nezavisimaya gazeta, July 2). Washington has not shown a shadow of concern about the Russian missile tests, since every assessment shows that their deployment timetable lags far behind the retirement of ageing Soviet-era strategic delivery systems. Bush’s position of strength in these debates is based not on the eagerness of many “new Europeans” to host U.S. forces but on the simple “I-know-that-you-know” argument, since only shameless propaganda could present the ten interceptor missiles planned for deployment in Poland as a threat to Russia’s deterrent capabilities.

What makes the arms control problems so convenient for top-level discussions is their mostly virtual nature: hypothetical threats can be escalated at will, and symbolic “moratoriums” can be lifted as political expediency dictates. There are, however, far deeper problems that were barely touched upon during the “lobster summit,” as Russian Foreign Minister Sergei Lavrov labeled the rather unusual format of the Kennebunkport meeting (, July 2). For that matter, it is impossible not to notice how little attention was paid to economic matters. While the economy has not had a priority place at any of the previous summits, there were always some issues to tackle — from Russia’s accession to the WTO to the Jackson-Vanik amendment and from the Yukos “affair” to the Sakhalin-2 hostile takeover. This time there appeared to be nothing to discuss, which is related only partly to the small volume of U.S.-Russia trade but mostly reflects a peculiar discrepancy between Moscow’s increasingly self-assertive anti-Western political posture and the undiminished enthusiasm of Western companies about doing business with Russia (Vedomosti, June 28).

It is not just the strong growth of the Russian economy that makes it so attractive for “adventurous” smaller firms and well-established transnational giants; it is primarily the colossal inflow of “petro-rubles” and the enormous hydrocarbon wealth of the country. Hypnotized by these treasures, Shell, after being expelled from the Sakhalin-2 project, expressed deep satisfaction of Russia’s investment climate at the recent St. Petersburg economic forum, and BP appreciated Gazprom’s kindness after being bought out of the stalled Kovykta project rather cheaply (Nezavisimaya gazeta, June 25). An extraordinary example of the readiness to sidestep business ethics and reputation damage has been provided by PricewaterhouseCoopers, which withdrew all its audits on Yukos for 1995-2004 (Kommersant, June 25). Tony Blair, in his last weeks as U.K. prime minister, tried to put Russia on notice that retreat from democracy would inevitably have economic consequences, but British business showed no support for this “idealistic” position (Vedomosti, June 8).

Bush refrained from pressing this unwinnable point at Kennebunkport, but he had another topic to explore with his counterpart. Both presidents are now “lame ducks,” but Putin’s departure is scheduled to happen on Bush’s watch (, June 30). Putin may have in mind some high-profile international job after his “retirement,” but for that he would need U.S. consent. Even if Putin has no such ideas, he still expects to preserve his international respectability, and the short boat trip along Maine’s coast demonstrated that it was entirely possible to remain on friendly terms with the leader of the world’s “indispensable power,” even one day after embracing Venezuela’s President Hugo Chavez, who never misses an opportunity to excoriate Bush (Vremya novostei, June 29). The only condition for keeping the status of persona grata is to step down from the Kremlin throne on time and for real, but that remains a hugely complicated “special operation” — and Putin was hardly able to offer Bush anything more than verbal reassurances.

One part of Putin’s problem is that the key bureaucratic clans have gained access to breath-taking wealth, but they cannot convert it into property, as this basic institution has been fundamentally delegitimized. That makes it nearly impossible for the top courtiers and senior lieutenants to agree on a successor who would resist the temptation to enrich one clan at the expense of others (, June 28). Another and no less acute part of the succession problem is that all political expectations and economic forecasts in Russia are oriented on the “more-of-the-same” guideline, but the amount of postponed problems reaches a critical mass while reforms become both unthinkable and unavoidable. Nothing captures this dilemma better than the reappointment of Moscow’s mayor Yuri Luzhkov for yet another term: Putin understands perfectly well that the economy of the megapolis has become an impossible mess but cannot find any way out of it and so has opted for avoiding any changes (, June 25). There are no such options for the pivotal top place, however, so the coveted stability might suddenly unravel, proving yet again that business instincts are blind to gathering storms.