The Associated Press December 30, 2008, 6:25PM ET

Russia's Woes Spell Trouble for the U.S.

Obama shouldn't reward dictatorial Kremlin with goodwill overtures.

By LEON ARON

The first will be a growing dissatisfaction with the government, which may lead to a political crisis. The second will be a reactionary retrenchment: increased internal repression and more of its already troubling foreign policy. Managing the relationship with Moscow in the face of these trends is something President-elect Barack Obama and his administration should start thinking about now.

The size and depth of Russia's economic problems -- and thus the amount of political turbulence -- will depend primarily on two variables. The first is the ruble decline. The national currency is steadily depreciating and has reached an all-time low against the euro despite the central bank's having spent $161 billion on its defense since mid-September. The ruble's losing at least 25% to 30% of its value is a given; the key political issue is whether the weakening can be managed into a gradual decline, or whether the depreciation turns into a panicky flight from the currency. (Already last September Russians dumped around 160 billion rubles to buy $6 billion -- the highest demand for dollars since the aftermath of the 1998 financial crisis.)

The second factor is oil prices. Last year, oil revenues accounted for at least one-fifth of Russia's GDP and half of state revenues. At $40 a barrel, the state budget goes into a 3%-4% deficit. In the past eight years, the national economy has mirrored fluctuating oil prices. So the 7%-8% growth projected for 2008 will have to be cut at best to 1%-2% for 2009. Zero growth or contraction are distinct possibilities.

Such a predicament is most dangerous politically for a country whose population has become used to incomes increasing 8%-10% every year since 2000. Growing disappointment is sure to follow, first among the elites and then people at large.

Despite the reduction of the poverty rate to 14% from 20% in the last five years, tens of millions of Russians continue to live precariously: A recent poll found that 37% of all families have money enough only to cover food. Unemployment and inflation (already 14%, year-on-year, in November) may well push these people over the edge and into the streets.

Perilous for any regime, such disenchantment would be especially worrisome in a country where the legitimacy of the entire political structure appears to rest on the popularity of one man, Vladimir Putin, whose astronomic ratings stemmed largely from the relative economic prosperity he has presided over. This dangerously narrow legitimacy will be sorely tried in the coming months.

Forestalling or at least containing inevitable political consequences of the economic crisis is likely to be at the root of the other political tendency: an attempt by the Putin-led elite, coalesced around Gazprom, Rosneft, state corporations and the loyal industrial "oligarchs," to pre-empt challenges by beefing up the authoritarian "vertical of power." The rewriting of the constitution to give the president 12 consecutive years in office signals the implementation of this strategy. The amendment was overwhelmingly passed by both houses of the Federal Assembly within three weeks in November, ratified by all 83 regional parliaments in less than a month. President Dmitry Medvedev signed it into law yesterday.

One scenario bruited about in Moscow has Mr. Medvedev taking full responsibility for the crisis and resigning to free the Kremlin for the caretaker prime minister (Mr. Putin), soon to be re-elected president.

A bill introduced in the Duma on Dec. 12 expands the definition of treason, punishable by up to 20 years in prison, to "taking action aimed at endangering the constitutional order, sovereignty and territorial integrity" of Russia. That same day the parliament approved the elimination of the right to jury trials for defendants charged with treason. The ruthlessness with which the riot police troops, the OMON, attacked protesters, journalists and bystanders in Vladivostok over the weekend of Dec. 20 may be a preview of things to come.

A reactionary crackdown will also mean the continuation and intensification of the already incessant and deafening propaganda portraying Russia as a "besieged fortress," surrounded by the U.S.-led enemies on the outside and undermined by the "fifth column" of the democratic political opposition within. In the words of one of the most astute independent columnists, the courageous Yulia Latyinina, the rabid anti-Americanism, which has become a linchpin of the regime's domestic political strategy, is likely to turn into a full-blown "hysteria."

The key lesson of George W. Bush's dealings with Russia is that the Kremlin's foreign policy priorities are determined by the changing ideology and the domestic political agenda of Russia's rulers to a far greater degree than by anything the U.S. does or does not do. (Which is why the U.S. exit from the antiballistic missile treaty was accepted with equanimity in 2002, while the intent to install a rudimentary antimissile system provoked Moscow's fury in 2007.) If reaction advances at home, the Kremlin will continue a truculent or outright aggressive foreign policy of resurgence and retribution, intended, among other things, to distract from and justify domestic repression. The recovery of geostrategic assets lost in the Soviet collapse will remain Moscow's overarching objective, especially in the territory of the former Soviet Union.

The Obama White House will have to navigate a difficult and narrow path in its relations with Moscow in 2009 between continuing to engage Moscow on the key issues of mutual concern (Iran, missile defense, nonproliferation, terrorism), on the one hand, and the broader strategic goal of assisting democratic stabilization in Russia.

But no matter what the Kremlin leaders and their propaganda stooges say in public, anything interpreted as approval or even a mere sign of respect by America, first and foremost by its president, is a huge boost to the government's domestic popularity and legitimacy. So the natural, almost protocol-dictated, inclination of the new administration to show good will must be balanced against firm support for the return to political and economic liberalization in Russia. Throwing diplomatic lifelines to a regime that refuses to choose such a path out of the crisis is not in America's -- and Russia's -- long-term interests.

British diplomat who knocked over a pedestrian in Moscow about a week

ago after all circumstances of the incident are studied, Russian Foreign

Ministry spokesman Andrei Nesterenko said.

"The relevant services are now analyzing details of the incident.

After all circumstances of the traffic accident have been fully studied,

a decision on further steps in relation to the British diplomat will be

made," Nesterenko told journalists on Tuesday.

Nesterenko pointed out that Andrew Sheridan, a high-ranking

diplomat from the British Embassy in Moscow, knocked over a Russian

citizen, a serviceman of the Border Guard Service, while driving a car

in Moscow on the evening of December 22. The victim was hospitalized.

MOSCOW, December 31 (Itar-Tass) -- Several amendments in the Russian Constitution on longer terms in office for the president and the State Duma and some supervisory powers of deputies over the government entered into force after their publication in the Rossiiskaya Gazeta newspaper on Wednesday.

President Dmitry Medvedev offered the foresaid amendments in the Constitution in his state-of-the-nation address on November 5, 2008. These amendments envisage longer terms in office for the president and the State Duma from four to six and five years, respectively. The government should also report annually to deputies, particularly on some issues raised by the State Duma.

The president emphasized that in this case “it is not a constitutional reform, but some amendments in the Constitution, really important, but specifying amendments all the same, which not change the political and legal essence of the current institutions” that would sooner give “a necessary additional resource for their stable functioning.”

In November, the State Duma and the Federation Council approved the amendments, after that they were submitted for approval in the legislative assemblies of the federal constituent territories. On December 22, the Federation Council approved the voting results for the amendments in regional parliaments, and a corresponding resolution was submitted to the president on the same day. After that, under the legislation, seven days were given to appeal the constitutional bills in the Constitutional Court.

On Tuesday, President Dmitry Medvedev signed the constitutional amendments into law.

The new laws do not embrace the incumbent president and deputies, a presidential aide and the chief of the state legal department, Larisa Brycheva, said earlier. In other words, the laws will concern only a president and deputies, which will be elected at the next elections, when the amendments in the Russian fundamental law will be enacted.

Medvedev signs law extending terms

http://www.upi.com/Top_News/2008/12/30/UPI_NewsTrack_TopNews/UPI-39631230674400/

MOSCOW, Dec. 30 (UPI) -- Russian President Dmitry Medvedev signed amendments to the Russian constitution Tuesday that extend the terms of president and parliament.

The president now holds office for six years and members of parliament five years, the Novosti news agency reported.

Medvedev proposed the change in November in his first state of the union address and they were approved by both houses of parliament within weeks. Regional parliaments ratified them unanimously..

The amendment also includes a requirement that the government submit annual reports to parliament.

The Yabloko Party a pro-democracy group, said this week that the speedy ratification of the amendments violated Russia's constitution, The Washington Post (NYSE:WPO) reported.

The term extension for the president is being widely interpreted as a move by Kremlin leaders to prepare for the return of Russian Prime Minister Vladimir Putin to the presidential suite, enabling him to take charge of the country during the economic crisis.

Yabloko leaders said that the constitution demands that regions must be given a year to consider proposed amendments, while another clause says the upper house should confirm the votes by the regions in its first meeting after that year has passed.

"They're completely ignoring the law," said Sergei Mitrokhin, chairman of Yabloko, who acknowledged that his party's objections would probably be ignored.

Space Adventures raises price for private spaceflight to ISSto $35 million-$45 million

http://www.interfax.com/3/459558/news.aspx
MOSCOW. Dec 31 (Interfax-AVN) - Space Adventures, a company

specializing in arranging private spaceflights, has raised the price for

a ten-day journey to the International Space Station (ISS) to $35

million-$45 million, which it announced on its website.

U.S. space tourist Richard Garriott, who traveled to the ISS in

October 2008, paid $30 million for his flight.