Voice

Why the Putin re-coronation has left me confused

Travel and the associated jet lag from the travel have left me a bit befuddled and confused about the foreign policy discourse of the last week. I keep having to re-watch or re-read things just to make sure I'm understanding them correctly. I mean, did Rick Perry actually give the answer he gave on the Pakistani nukes question? Did John Mearsheimer seriously claim that a self-hating Jew can provide an accurate analysis about the state of modern Judaism?

My biggest confusion, however, is over the announced Putin-Medvedev switcheroo over the weekend. Indeed, my confusion operates at many levels. First, I was flummoxed that, well, any Russia-watcher was surprised by this move. Second, I was at a loss as to explain why any Washington-watcher would be fretting about the effect of this move on the "reset" of Russian-American relations. As Walter Russell Mead correctly observed today, "There is a good case for a businesslike US-Russian relationship no matter who runs Russia."

What has really confused me, however, is the possibility that this planned transition might hit a few bumps in the road.... like the actual departure of a powerful cabinet official:

Dmitry Medvedev, Russian president, sacked the country's finance minister on Monday, in the clearest sign yet that a deal between Mr Medvedev and prime minister Vladimir Putin to swap jobs next year is provoking a furious backlash in Moscow political circles.

Alexei Kudrin, the finance minister, had said at the weekend he would refuse to serve under Mr Medvedev if he became prime minister next year. In dismissing the mutinous minister, Mr Medvedev sought to demonstrate that he still has authority, analysts said - despite the humiliation of voluntarily standing down as president in favour of Mr Putin.

Mr Kudrin, a fiscal conservative, is respected by investors and widely credited with seeing Russia through the 2008-09 financial crisis. His dismissal came after Russian financial markets closed but the rouble earlier lost more than 1 per cent against the dollar, partly due to apprehension about the conflict with Mr Medvedev....

At a meeting of a government commission in the town of Dmitrovgrad on Monday, the two men faced off when Mr Medvedev told Mr Kudrin that his statement on Saturday "appears improper ... and can in no way be justified. Nobody has revoked discipline and subordination."

"If, Alexei Leonidovich, you disagree with the course of the president, there is only one course of action and you know it: to resign."

Mr Kudrin responded with a jibe: "I will take a decision only after having consulted the prime minister."

"You can get advice from whoever you want, with the prime minister if you want," snapped back Mr Medvedev. "But as long as I am president, these decisions I will take myself."

A few hours later Mr Medvdev's spokesperson announced Mr Kudrin's departure for reasons "that were laid out clearly in the commission meeting".

The humiliating public swipe from Mr Kudrin is a measure of how far Mr Medvedev's authority has eroded since he announced at the annual congress of the ruling United Russia party on Saturday that he would stand down next year to make way for a return of Mr Putin for a third term as president, assuming the role of prime minister under Mr Putin.

Could this kind of elite discord lead to even greater political discord in Russia? Reading Joshua Tucker's collection of expert commentary, as well as Julia Ioffe's FP observations, my initial answer would be no. Kudrin quit because he wanted to be the next prime minister and was therefore the odd man out of the Putin-Medvedev exchange. That would not seem to be a great foundation for a mass backlash against this move.

On the other hand.... in the case of Russia, mass backlash might be less important than elite backlash, and Kudrin is hardly the only member of the elite to be on the outside of the Putin-Medvedev axis. The self-interested reasons for the backlash matter less than the very public signal that the leadership transition is not playing out so smoothly after all.

In the short term, the most likely outcome is that this contretemps will blow over, and the worst-case scenario for Putin is that he decides to ditch Medvedev for someone a Kudrin clone/deputy. In the longer term, however, I do wonder if this move will push the Russian regime towards greater instability.

So, as I said, I'm pretty confused right now. What do you think?

Daniel W. Drezner

The G-20 tries to stay relevant

I'm in Shanghai to discuss how the G-20 has been doing as the world's "premier economic forum." As fate would have it, the G-20 actually opened its collective mouth in response to the market convulsions of this week:

The Group of 20 leading economies pledged a “strong and co-ordinated” effort to stabilise the global economy in an attempt to calm tumbling equities markets spooked by fears of recession in the eurozone and a gloomy economic outlook in the US.

Bowing to pressure from investors to take action, finance ministers from the G20 economies said in a communiqué issued late on Thursday that they would stop the European debt crisis from deluging banks and financial markets, and take the necessary steps to bolster the eurozone’s rescue fund and assist banks to boost capital reserves in line with new global regulations. The statement followed a day in which the equity markets suffered some of the biggest falls since the collapse of Lehman Brothers in 2008, as investors rushed to safety in a widespread sell-off.

“We commit to take all necessary actions to preserve the stability of banking systems and financial markets as required,” the group said in a statement. “We will ensure that banks are adequately capitalised and have sufficient access to funding to deal with current risks and that they fully implement Basel III along the agreed timelines.”

The G-20's near-total muteness in the face of European sovereign debt convulsions had begun to raise some eyebrows -- particularly as it was the G-7 economies rather than the G-20 that pledged to provide dollar liquidity to European financial institutions.

Unfortunately, if you read the actual communique, you discover... well.... let's describe the statement as very optimistic about what the G-20 countries have done to promote both growth and fiscal rectitude.

One of the takeaways from my conversations so far in Shanghai has been a sense of disappointment about what the next G-20 summit in Cannes will accomplish. The Financial Times' Chris Giles provides some background on the demise of the France's grand ambitious for that summit:

In mid-February, G20 finance ministers gathered in Paris for what turned out to be a harbinger of the challenges that have beset the French G20 presidency ever since. The meeting was supposed to be routine, with finance ministers agreeing a set of indicators that might be used to assess whether their economies and policies fostered balanced global economic growth.

Far from France undermining the meeting with excessive ambitions, countries struggled to agree even the most basic steps to a more stable world economy.

A country’s current account surplus or deficit is the accepted measure of balance in its relations with other countries, but the Chinese arrived in Paris in intransigent mood. Their negotiators refused to let the G20 use the current account as an indicator of balance. After an all-night session, the absurd compromise China accepted was that countries were allowed to assess every component part of a country’s current account, but the term “current account” was banned.

That ended the French presidency’s lofty plans. From then on, limited goals became the order of the day, a shift that has been reinforced as the year has progressed.

I'd quibble a bit with Giles -- any meeting that details indicative guidelines on macroeconomic imbalances is not gonna be a routine meeting. [Um...could you translate that last sentence out of bureaucratese, please?--ed.] Sorry, to rephrase -- any meeting in which the G-20 points out that China's trade surplus is part of the problem in the global economy is not going to be a smooth meeting.