My wife Katrin is also sometimes my researcher, especially for stories from the Baltic, since she is Estonian and also speaks fluent Russian.
Most recently, there has been a lot of chatter about Gary Kasparov, the infamous chess player, and his fight against Vladimir Putin. Katrin helped me collect my research through several Russian news agencies, translating the stories for me. As a commodity and energy investor, I find it invaluable to be able to read these stories from the perspective of the Russian press. Here’s what we found:
With new pipelines running through the region, key commodities and resources in demand and the need for more investment capital in Russia, the actions of the next year will be key for what happens for decades to come. The Cold War may be over, but the sentiment in much of Russia is still suspicious of Americans and the West in general. Now legendary chess player Gary Kasparov may be getting involved in the ultimate chess match, and the stakes are high.
Kasparov has a new opponent: Russian leader Vladimir Putin. After over two decades of dominating the chess world, establishing a place in history as perhaps the greatest in the game, Kasparov has a very different opponent in his sights.
Kasparov was born in 1963 in the Azerbaijan capital, Baku. His father was of Jewish descent and his mother was Armenian. Since Kasparov’s 1985 victory over Anatoly Karpov to become the world champion of chess, he has been described as the outsider who, like the country of Azerbaijan, took on the Soviet establishment…and won!
Most recently, Kasparov helped to establish a group, Committee 2008, dedicated to suppressing Putin and halting the constitutional changes allowing the Russian president to run for a third term. As far as Kasparov is concerned, President Vladimir Putin’s regime is dealing in ‘fascism’ and dismantling Russian democracy. Kasparov says the West is to blame for this, too.
I believe that Kasparov does wish the best for Russia, but I question his biased tale of Russia’s political environment today. A lot of what Kasparov writes seems more like a Putin-bashing session, rather than sustentative ideas. Recently, the BBC reported that Kasparov said that allowing Moscow to host the G-8 summit in 2006 is synonymous to allowing Nazi Germany host the 1936 Olympics:
‘[It is vital] to make sure there is no meeting in Moscow in 2006. It will be like the Berlin Olympics in 1936, it will be the equivalent of Munich 1938, integrating Putin’s Russia.
‘The democracies are conceding to a brutal dictator. He has abolished the nature of democratic institutions. He will go further. The West must stop its overt and tacit support for Putin.
‘What is required from the West is a simple message: ‘Leave us alone.’ Don’t support Putin. It is not about giving support to us, but Putin’s main support comes from Western leaders. President Bush is not shy about calling this KGB colonel his friend.’
Kasparov goes on to say that the YUKOS sale was ‘the greatest robbery of the 21st century.’ Needless to say, I don’t think he will be invited to dinner at the Kremlin anytime soon. But according to the articles Katrin showed me, most Russians don’t trust the West, even now. And many others simply think of Kasparov as a buffoon.
Putin himself has compared Russia’s democratic standards with any from the West. He states that he is upholding democracy and fighting corruption.
Where in the West? Cuba?
Even so, observers from the Organisation for Security and Cooperation in Europe criticised the presidential election and earlier elections to the Duma, and are keeping a close eye on the whole situation.
Recently, when speaking of the collapse of the Soviet Empire, Putin described the event as ‘the greatest geopolitical catastrophe of the century.’ Putin had also fostered separatist movements inside Russia. During his annual State of the Nation Address, Putin told parliament and the country’s top political leaders that the fall of the Soviet Union was ‘a genuine tragedy’ for Russians.
But the real problem is that big business is like the queen in chess: vital. Unfortunately, nobody wants to rush in to invest after YUKOS. Last month, Putin tried to reassure business leaders that the influx of back-tax investigations, ignited by the probe against Khordokovsky and his oil company, would be managed using greater restraint. But those words were quickly forgotten. The Anglo-Russian oil company, TNK-BP, was first victimised with a $1 billion back-tax bill weeks later. Then, Russian antitrust authorities deflected an investment made by Germany’s Siemens AG.
So much for bringing things under control. And regardless of some claims, according to several articles Katrin translated for me, Putin’s popularity during the last year has been blemished by the onslaught of street protests due to social reform and by the uprisings in the ex-Soviet republic of Ukraine.
The big question for investors now is: What next? Putin cannot constitutionally seek a third term, but many Russians – and Katrin, too – assume that the Kremlin will befriend a Putin loyalist for the balloting in 2008.
Make no mistake – it’s business as usual in Moscow. The stakes are high right now…and as Russia gets more and more tied in with China and as more pipelines are built, the shape of the Baltic is changing forever, too. The role of the Trans-Siberian Railroad in the economy of the Asia-Pacific region is becoming more significant each year. The Grodekovo-Suifenhe Russian-Chinese railroad corridor has experienced the most rapid growth in freight traffic.
This Russian-Chinese railroad corridor transported 5.7 million metric tons of cargo in both directions in 2003- five times more than four years ago. In 2004, they expect to move 7 million metric tons of cargo. In the past, most of the cargo transported was Russian. Today, China’s freight traffic is growing exponentially.
This summer, Russian petroleum products will begin exportation. In the first three months of 2004, greater than 1.5 million metric tons of foreign-trade cargo – 10% more than in 2003 – were shipped via the Grodekovo- Suifenhe railroad corridor. And the cargo volume that Russia imported from China grew more than 50% in comparison to the first quarter of 2003.
So the stakes are huge and likely to get even more intense as China and Russia grow closer.
Checkmate? Maybe!
In reality, Kasparov is doing the Kremlin a huge favour. If he really wants to get involved in politics, I think the Kremlin will be all too happy to give him the rope to hang himself. According to many of the articles from Russia, Kasparov won’t ever unite Russia’s liberals, but instead, only highlight their internal conflicts.
You just never know, though. Kasparov is a master strategist, so he better use those finely tuned skills to achieve his goal…and fast. There are only a few moves left on this shrinking chessboard.
by Kevin Kerr for The Daily ReckoninEditor’s Note: With 15 years of experience, Kevin Kerr is a true veteran of the commodities markets. A licensed commodities trader since 1989, he’s worked the trading pits in Chicago, New York and London with legends like Paul Tudor Jones. He’s dealt with everything from cotton to currencies to oil and natural gas, and his unparalleled expertise has made him a regular contributor to US news outlets like CNN, CNBC and CBS Marketwatch, where he’s been quoted in over 500 articles. He’s also the editor of Outstanding Investments, a commodities-based newsletter that tips stocks set to make the most of the commodities boom.