A War Over Capital, Not Capitals

People have been turning the furniture upside down in their apartments trying to figure out the deterioration in relations between Moscow and London. We all know the story, Alexander Litvinenko, ex-KGB, became British citizen in the company of the fraudulent and much loathed Boris Berezovsky, then was poisoned last year by a rare radioactive element in a London restaurant, and the radioactive substance left traces everywhere one Andrei Lugovoi (in the pinstripe on the left), also former KGB, went on his trip back to Moscow.

Like any media phenomenon this one is getting increasingly difficult to follow and it must be taken in proper context. Some believe that that context is unwarranted NATO expansion, which aroused the iracity of 'the bear'. Others think the breakdown in East-West relations has something to do with a missile shield in Poland and the Czech Republic, put there ostensibly to give NATO partners the same protection as other (American) members of the alliance.

I think that one sliver of truth in this mosaic is contained in the following Bloomberg article:

The U.K., which is the largest foreign investor in Russia, could find that British companies are barred from major new energy projects, said Lukyanov. BP Plc's Russian joint venture is the third-largest oil producer in Russia and last month had to surrender control of the giant Kovykta gas field to state gas monopoly OAO Gazprom.

So the UK has some pretty strong tentacles that reach deep into the heart of the Russian market. And a nationalist leader, like Vladimir Putin, perhaps wishes to shake the tree, get that capital to flea, and to establish state-owned control -- through Gazprom or its subsidiaries -- over market areas where British firms are currently established.

This reminds me of some of the cockier comments that Ansip made this spring. One -- made to journalists during the Pronksöö, was that he did not fear sanctions because Estonia's major trading partners are Sweden and Finland. The other -- made at the Reform Party meeting -- was that the less Russian capital in Estonia, the better for Estonian security. While sounding bitterly provincial, he was also probably right.

Some Russian analysts, discussing the future of Russia's relationship with its favorite Baltic state, Latvia, basically supported this economic view of influence.

I think that Russia will not be of first importance to Latvia’s foreign policy, in spite of the fact that Latvia depends on Russia economically ... However, if Russia builds up its relations with Latvia preventing the neighbor from making unfavorable moves to it, Russia can influence that country. If Russia continues reacting to such steps too slowly, as it does now, its position will remain as weak as it was when the “Bronze Soldier” monument was removed in Estonia.

There you have it. Capital equals influence. In another Russian analytical piece that came out this weak, similar ideas were expressed in dealing with Georgia. In his piece, Aleksey Pilko argues that Russia should abandon the separatist movements in South Ossetia and Abkhazia in order to build a Russian-friendly elite in Georgia that will "mean greater Russian influence in the wider Caucasus, which can only lead to enhanced security on Russia’s southern border."

Given that these ideas are being churned out by Russian strategists, perhaps it is time to argue less about extradition law in the Lugovoi affair, and move onto what is really being reconsidered in Russia over who owns what. Stalin's Russia tried to make the USSR free of 'troublesome' minorities. Putin's Russia it appears is trying to make the Russian Federation free of 'troublesome' capital.