A New Capital For Russia?

Is a new capital city the key to revitalizing Russia's economy?  That is the idea being floated by Sergei Karaganov, the world economy and international affairs faculty dean at the Moscow Higher School of Economics, who wants to elevate Vladivostok, the Russian port city on the Pacific, near the borders of both China and North Korea, and more than 4,000 miles from Moscow, to capital city status.

Rather than shipping the seat of Russian power and governance east, Karaganov is talking about making Vladivostok a third capital city for Russia: Vladivostok would be the economic capital of the country, joining Moscow (political) and St. Petersburg (cultural) in this strata.  Karaganov's rationale is that the focus of the global economy is drifting steadily eastward and that Vladivostok is uniquely positioned to take advantage of this shift.  An economic capital in Vladivostok would make Russia a serious player in global trade patterns of the Pacific Rim and would signal that Russia was serious about building lasting ties with emerging Asian economic powers.

Karaganov's idea isn't as crazy as it may first sound.  Much of Russia's wealth in natural resources lie in the Asian portion of the nation; one of the largest economic infrastructure projects in Russia in the past decade has been the development of natural gas resources on and around Sakhalin Island on Russia's Pacific Coast; last year Russia opened the ESPO pipeline to send Siberian crude oil to energy-hungry China. And one other Pacific nation has already followed Karaganov's lead.  Earlier this year, the island nation of Samoa lost an entire day as it officially switched from one side of the International Dateline to the other – Samoa had originally opted to be on the same side of the IDL as the United States, which at the time was their main trading partner, but flipped to the Asian side to reflect the fact that now most of their trade is with countries like Australia and New Zealand.

Vladivostok today is a fairly run-down port city that has far more economic interaction with Japan and China than it does Moscow.  In fact, Vladivostok was the site of some of the largest public protests seen in Russia before last December's rallies against what were seen as rigged Parliamentary elections.  People took to the streets in Vladivostok in 2009 to protest new tariffs levied against imported used cars that Moscow launched as an effort to save Russia's ailing domestic auto industry. Importing used cars from Japan is one of the key economic drivers in Vladivostok, and local residents feared that the new tariffs would cripple their city's economy.

It's doubtful that the Putin government will take Karaganov's idea seriously, but that doesn't mean that it is not an innovative approach to deal with a very real issue in the Russian economy. 

A Biocoal Steamer And The Problems Of Green Hype

This odd little story caught my eye: apparently a team from the University of Minnesota, along with a group called Sustainable Rail International (under the banner “the Coalition for Sustainable Rail”) are planning to rehabilitate a 1930's-vintage steam railroad locomotive as a showcase for biocoal technologies.

In case you've never heard of it, biocoal is a supposedly “green” and sustainable fuel source made from cellular plant that has been processed and compressed into a stable, solid fuel – hence the name “biocoal”, since the resulting fuel looks and acts like your traditional mined carbon coal.  Advocates claim that biocoal is green since the carbon it contains was fixed from the atmosphere when the source plants were growing and that it does not contain the heavy metals, like mercury, found in traditional coal.  Getting more biocoal simply involves harvesting more plants.

So far, so good with the story.  The choice of a test-bed – a 1930's vintage 4-6-4 “Hudson”-type locomotive, which has spent the past few years languishing at a museum in Topeka, Kansas is an interesting one, and a choice sure to net the Coalition for Sustainable Rail some added publicity if/when the project ever does hit the rails.  But it is at this point that the claims being made by the project's backers start to get a little ridiculous.

Engine 3463 during its working days.

The steam engine project is being called Project 130 by the Coalition for Sustainable Rail, since they plan for the resurrected Hudson to race down the rails at 130 mph.  This idea is utterly ridiculous.  The recognized speed world record for a steam locomotive is 126 mph, and that was set by a highly-streamlined loco, not the boxy Hudson selected for the project.  The Coalition for Sustainable Rail also claims that the steamer will cost less to fuel and maintain than a modern diesel freight engine; this claim is also dubious.  It is impossible right now to compare the economics of diesel fuel to biocoal, since the latter is not being produced in anywhere near the levels of diesel; but higher maintenance costs were one of the key factors that doomed steam engines, they are simply more labor-intensive than diesel engines.

And that gets to the “green hype” issue.  The Coalition for Sustainable Rail couldn't leave well enough alone by merely making the already impressive claim that the steam engine test would show biocoal's viability as a sustainable, less-environmentally impacting fuel, but one that could be substituted for traditional coal without modification to existing equipment; instead they have to dress their claim up will all sorts of impossible-to-execute frills, like claiming this museum refugee will fly down the rails like a formula-1 race car.  This is a trap that green advocates seem to fall into all too often – it is not enough to offer a substitute to existing energy technologies, they have to insist their new green tech will be better, not just incrementally better, but revolutionary better, and in the process they make promises they can't keep, which ultimately makes even successful demonstrations of their technology look like failures.

Russia's Paranoid Air Disaster Response

Three weeks ago the future of Russia's civil aviation industry took a major step back when their showpiece Sukhoi Superjet 100 slammed into a mountain in Indonesia while on a six-nation publicity tour of Asia to drum up sales.

The stakes couldn't be higher, and the accident more costly, for Russia's civil aviation industry.  The Superjet is the first civilian jetliner designed since the collapse of the Soviet Union; in addition to bringing a new product to market, Sukhoi also had to fight widespread perceptions that Russian aircraft are inherently unsafe, a reputation earned by Russia's generally lousy civilian aviation record, and not helped by the high-profile crash of a passenger jet last October, which killed the entire Yaroslavl Lokomotiv hockey team.

Perhaps it is for these reasons that the GRU, the intelligence wing of the Russian armed forces is offering up this explanation for the Superjet crash in Indonesia on May 9: it was an act of industrial sabotage on the part of the United States meant to cripple the Russian aviation industry.  The GRU is apparently serious about this story, explaining in the pages of Moscow's Komsomolskaya Pravda that the “most plausible” explanation for the crash was electronic jamming that interfered with the Superjet's onboard navigational equipment, jamming apparently done by the United States.

The problem is that this is not the “most plausible” explanation, what's more plausible is that the still unexplained crash of the Superjet was due to error on the part of the pilot Alexander Yablontsev. The doomed flight of the Superjet was suppose to be a simple flight departing and returning to Jakarta, flying over the mountainous interior of Indonesia. But roughly midway through the flight, the aircraft ran into thunderstorms.  Yablontsev, who is regard as one of Russia's most-experienced test pilots, for some reason requested permission to fly below the storm, where pilots are typically trained to try to fly above such adverse weather.  Because of his years of experience, Yablontsev's unusual request was granted by air traffic controllers, according to Time magazine.  The Superjet soon flew into the side of a mountain.

It is possible then, that flying over unfamiliar terrain, Yablontsev simply did not know there were tall mountains ahead of him when he made his request, and couldn't see them due to the stormy conditions.  But there should have been an audible alarm warning of a possible collision.  Crews recovered the Superjet's flight voice recorder but have heard no sounds of an alarm in the cockpit.  It is here that Time offers two possible explanations: one that Yablontsev deliberately flew into the heavy weather to show off the Superjet's handling to the planeload of dignitaries; and that the alarm systems may have been shut off because guests on these show flights were freely allowed to enter the cockpit to get a better view of the Superjet in action.  These allegations are based in large part on Russian travel blogger Sergei Dolya who reported on the Superjet's trip, but who missed the fateful flight.  Pictures from an earlier flight show Dolya dressed as Poseidon performing a mock ceremony with the flight crew as they flew over the Equator (an old naval tradition for sailors crossing the Equator for the first time).  It is a clear example that the typical regulations regarding guests in the cockpit were not being followed during the Superjet's tour.

Time's explanation is frankly far more plausible than what's being offered up by the GRU, which seems like nothing more than spin to cover up a very embarrassing accident.  It's worth noting that some in Russia also tried to offer American sabotage as the reason for the failure of their recent attempted Phobos-Grunt mission to Mars.

Mystery Surrounds European Union Raid in Somalia

The initial story last week received little attention from the global media: a raid carried out by helicopters from unidentified naval vessels belonging to European Union members destroyed several fast attack boats used by Somali pirates in the port city of Haradheere.  The attack was mostly noteworthy in that it was the first reported attack on Somali pirates in one of their port cities and a rare military action by the European Union.  But all is not apparently as it seems with the story of the raid.

The European website DefenseReport claims that the Haradheere raid was carried out not by helicopters, but by actual EU troops on the ground.  If true, this would mark a new, dramatically different approach to dealing with the Somali pirate problem.

According DefenseReport, ground troops were used to ensure that there would not be any civilian casualties in Haradheere and to guarantee that high-speed, high-horsepower (and hard to acquire) engines of the skiffs Somali pirates use to surround and board target vessels would be destroyed in the raid.  According to a military official familiar with the raid, only by using ground forces could you be sure that the engines themselves were destroyed.  Some confirmation of the ground troops story came when records showed that the only EU vessel capable of launching the helicopter raid as described was no where near Haradheere on the night of the raid.

Some military officials have wanted to use troops against pirate strongholds like Haradheere for some time since intercepting pirates in the vast expanse of the Indian Ocean is a hit-and-miss affair.  It seems that the go-ahead was finally given because more and more ships sailing through the Indian Ocean/Gulf of Aden sea lanes off of Somalia - which is the route to the Red Sea, Suez Canal and Europe – are using armed security guards, a situation which has led to some unfortunate shooting incidents with innocent fishing vessels mistaken for pirates by jumpy ship guards.

On a related note, if the European Union is starting to undertake their own military missions as a group rather than as individual nations, what does this mean for the future of NATO, which is suppose to serve as the pan-European organization to promote military cooperation among the Europeans?    

Iran, US, Others Try One More Time To Avoid War

A meeting is set for tomorrow in Baghdad that could determine the future of the US-led sanctions regime and whether or not there will be another war in the Mid-East this summer, this time over Iran's nuclear program.

The rhetoric out of the region seems to have cooled off a bit in recent weeks – unless, of course, you're Benjamin Netanyahu, who continues to beat the wardrums.  The most likely reason, as explained here, is that all of the parties involved realize that they can't afford a war or a disruption in global oil supplies: not Iran, not the United States and certainly not Europe.  But Iran and Europe can't risk seeing the sanctions regime continue either, the United States, which doesn't import Iranian oil, is largely immune from the impact of the sanctions we've slapped on Iran and are expecting the rest of the world to abide by.

Of course the European economies most vulnerable to the lack of Iranian oil are the European economies in the worst trouble; including Greece and Italy.  Both are suppose to halt imports from Iran on July 1 as per the European side of the sanctions regime, but Italy is owed billions of dollars worth of Iranian oil as payment for infrastructure projects completed by Italian companies, while Greece also has favorable deals with Iran to buy oil, if they need to replace this oil, it will likely be at a higher cost from other sources.  And if Greece drops out/is kicked out of the Euro as some are speculating they will be, they will have to negotiate new oil deals in the midst of a full-blown economic crisis.

From the Iranian side, the sanctions are having an effect on their economy, with food and fuel prices soaring, though the bite is reported to be not as bad as Western authorities expected (there was some foolish hope in the West that the pain caused by the sanctions would inspire the Iranians to rise up and overthrow their government. Good luck with that...).  The Iranian government has stepped in and is offering subsidies to perhaps 60% of the population to help defray costs.  Of course this isn't a sustainable policy for the long run, but so far it seems to be working.  Meanwhile two of Iran's biggest oil customers, China and India, are balking at joining in the US-led sanctions regime.  Oil exports from Iran to China actually increased in April, reversing a decline in March.  Technically, both China and India could face punitive action from the US for not joining in on the sanctions party, but let's see if the US has the nerve to slap sanctions on them.

Of course it's also hard to see how the US and Iran back away from the crisis they have created.  Iran may offer some level of inspection of their nuclear sites, but it is unlikely to satisfy the US, which has demanded a full stop to their nuclear program; from the American side, agreeing to anything less than the full compliance we demanded of Iran will be pounced on by President Obama's Republican opponent in November election as a sign of “weakness” (never mind that it may be the most practical/rational thing to do), so that's unlikely to happen.  And then there's Israel, where Benjamin Netanyahu has made a career of stoking fears of an Iranian nuke; it is hard to imagine just what Bibi would accept short of a military raid against Iran, which the US Republicans will expect the Obama regime to fully support...

Navigating out of this quagmire created by political posturing and stubbornness will require some deft political maneuvering and probably more finesse than we can expect from the Baghdad meeting. 

Putin's Potemkin Inauguration

I was on vacation last week, so I'm still getting caught up on things that I missed while I was away.  One of those things was the inauguration of Russian President Vladimir Putin, though I don't feel so bad since most Muscovites missed out on that event as well.

Putin's inaugural was carefully crafted to impress.  Gilt-covered doors were opened by uniformed Kremlin guards to allow Putin to stride across a gleaming white marble floor, in front of a gathering of decked-out dignitaries, all under a vaulted golden ceiling to take the oath of office.  But there was something missing: minutes earlier, aerial shots on television showed Putin's limousine, guarded by a phalanx of motorcycle police, speeding through Moscow streets utterly devoid of people.  It had the eerie feeling of one of those post-apocalypse that are all the rage today.  Where were the people? (One Russian satirist even noted there were no birds in the TV shots and asked how did they drive away the birds?)  Crowds turned out for the inaugural of Francois Hollande in economically-depressed France just days later, so where were the Russians to celebrate the biggest political event of the year in Russia?

The truth is that the crowds were kept away from the celebration by design, and that for all of his alpha-male bluster, Putin is, at heart, deeply afraid of the people he pledged to lead for the next six years.  The fear isn't that someone in the crowd will try to assassinate Putin or commit some act of terrorism, but rather that they'll do something far more subversive, like boo, or wear a white ribbon.

The Putin team learned just how troublesome the general public could be last November.  Putin stepped into the ring of a mixed martial arts event being broadcast live across Russia on the NTV network to congratulate the winning fighter Fedor Emelianenko.  For Putin, a martial arts enthusiast, it seemed a quick way to score a few points and burnish his he-man image.  But the crowd of 20,000 started booing once Putin hit the ring, a public scolding broadcast live to the nation that would later become a staple on Russian social network Internet sites.  The Kremlin tried to spin the event as an unruly crowd jeering defeated American fighter Jeff Monson, though Internet-savvy Russians would later flood Monson's Facebook page with messages of support for Monson and to confirm that Putin was the target of their ire.

 It's not a coincidence that just a month later, previously politically-apathetic Russians would take to the streets in the tens and hundreds of thousands to protest allegations of fraud in December's parliamentary elections; protests against the rule of Putin that have continued through to today (the white ribbon has become the de facto symbol of anti-Putin protesters, though the Boss, with typical Putin bravado, said the ribbons looked like used condoms). 

Team Putin has learned the lesson that many other autocrats have: once the people lose their fear of speaking out against the leadership, they tend to keep on speaking.  That is why we had the odd visuals of motorcycle police escorting Putin's motorcade though deserted Moscow streets, there to protect Putin from no one, apparently.  This puts Putin in an odd position.  He has spent the past 12 years carefully crafting an image of himself as not only a Russian superman, but also as a Russian everyman, a true man of the people; yet now he fears the people for their unruliness and their unpleasant demands that he actually make good on the promises he's offered for the past decade about tackling corruption and turning Russia's legal and political systems into something more than vehicles to simply make the oligarch class richer.

In his third term in office, Putin will likely find that actually serving as the leader of a nation is much more difficult than just playing one on TV.

Tymoshenko: From Prime Minister To Political Prisoner

Even though she is out of office, former Prime Minister Yulia Tymoshenko continues to dominate the political life of Ukraine.

The past few years have seen a true reversal of fortune for Tymoshenko.  In 2004, she was one of the two heroes of the Orange Revolution, along with the eventual president Viktor Yushchenko; but infighting between her faction and supporters of Yushchenko would paralyze Ukraine's government, helping to stifle the national economy and eventually lead to the re-election of former President Viktor Yanukovich, whose ham-handed attempts at vote-rigging in 2004 sparked the Orange Revolution in the first place.

Tymoshenko was set to lead a opposition faction in Ukraine's parliament, but was jailed first on charges that as Prime Minister she illegally diverted funds from a government greenhouse gas emissions reduction program.  Tymoshenko now also faces charges of tax evasion dating back to the 1990s, when she amassed a personal fortune operating a natural gas pipeline network in Ukraine (a position that earned her the unfortunate nickname of “the gas princess”).  The charges seem eerily similar to those leveled against Russian oligarch Mikhail Khodorkovsky, the former head of the oil conglomerate Yukos, in 2003.  And just as critics have said that the charges made against  Khodorkovsky were political payback from his rival Vladimir Putin, the charges against Tymoshenko are widely seen as a move by Yanukovich to keep her out of Ukrainian politics.

But the Tymoshenko case is starting to spin wildly out of control.  Tymoshenko began complaining that her jailers were not treating long-standing medical problems she has with her back, a condition that was causing her near-constant pain.  Tymoshenko began a hunger strike to protest both her arrest and the conditions of her imprisonment.  Now, photos have surfaced of Tymoshenko with visible brusies on her arms that she claims are the result of rough treatment by her jailers.  Tymoshenko's daughter Evgenia said at a press conference earlier this week that her mother's condition is worsening due to the back problem, abuse and hunger strike.

The Tymoshenko issue is turning into a major international embarrassment for Ukraine.  Several European leaders have pulled out of a summit meeting planned for later in May in Yalta, Ukraine in protest.  Leaders like Germany's Angela Merkel are also suggesting that they will stay away from UEFA's Euro 2012 soccer tournament this summer if the Tymoshenko situation is not resolved.  Co-hosting the Euro 2012 tournament (along with Poland) is a major accomplishment for Ukraine in their post-Soviet history, a boycott by European heads-of-state would be a stinging rebuke to Yanukovich's government.  To make matters even a little worse, the city of Dnipropetrovsk, which is scheduled to host some of the Euro 2012 games, was rocked by a series of explosions caused by bombs dumped in trash bins around the city.  Thirty people were injured in the blasts.  UEFA has issued a statement of official concern to Ukraine over the blasts, which are being treated as terrorism, though no group has yet stepped forward to claim responsibility.

Meanwhile, the Tymoshenko situation will hang over Ukraine's relations with the rest of Europe.  She may no longer be prime minister, but Yulia Tymoshenko continues to drive Ukrainian politics.