- With President Obama embarking on his visit to Asia, John Plender examines the nature of China’s challenge to US dominance. Cheng Li and Jordan Lee suggest what the President has to do in striking the right tone for US-China relations going forward. Kishore Mahubani, meanwhile, views Asia’s rise through the prism of Francis Fukuyama’s End of History twenty years on.

- In a wide-ranging interview with Der Spiegel, Russian President, Dmitry Medvedev talks about Stalin, democracy and the rule of law, his relationship with Vladimir Putin, and ongoing Western entanglement in Afghanistan.

- Elsewhere, Stefan Theil argues that, aided by the financial crisis, the EU’s global standing is on the rise:

“The EU’s modus operandi — sharing power, hammering out agreements, resolving conflict by endless committee — can be boring and even frustrating to watch”, he argues, “[b]ut in an increasingly networked and interdependent world, it has become the global standard.”

Julian Priestley, meanwhile, suggests four conditions if the EU is to get the most from its “institutional architecture”.

- Finally, writing in the New Yorker, Seymour Hersh explores US concerns about the safety of Pakistan’s nuclear arsenal amid growing instability.

- With yesterday’s US-Russian pledge to reduce strategic nuclear arsenals came news of the death of Cold Warrior, Robert S. McNamara, former US defence secretary and later president of the World Bank. Thomas Lippman offers a sympathetic portrait of a man who will be forever remembered for his role in Vietnam. Indeed, The New Yorker asks whether the original Whiz Kid is likely to be the “Ghost of Wars Past, Wars Present, or Wars Yet to Come”.

- Turning to those wars present, Rory Stewart, the former British diplomat turned Harvard academic, offers a critical perspective on current Af-Pak strategy in the current LRB. “Obama and Brown”, he reflects, “rely on a hypnotising policy language”, which “misleads us in several respects simultaneously: minimising differences between cultures, exaggerating our fears, aggrandising our ambitions, inflating a sense of moral obligations and power, and confusing our goals. All these attitudes are aspects of a single worldview and create an almost irresistible illusion”.

- In a similar vein the American military scholar, Andrew Bacevich, laments “the consequences of strategic drift” in current US overseas engagements. “The urgent need”, he suggests, “is for the administration to articulate a concrete set of organizing precepts — not simply cliches — to frame basic U.S. policy going forward”.

- Finally and on a different note, offering a preview of his latest book, Cass Sunstein – of Nudge fame – asks what leads us to hold extreme views. His answer: “group polarisation”.

I recently interviewed Sergei Markov, who is a key spin-doctor to the Kremlin. He told me that the West had completely underestimated the extent to which things will change under Russia’s new president, Dmitry Medvedev.

He said: “Most western observers expect no change because Medvedev is the new president. On the contrary, Putin chose Medvedev precisely because he believes Russia needs to change. He has decided that Russia has now completed the previous stage, the stage of stabilization. For that stage, you needed a KGB guy to consolidate state structures and to consolidate the state’s control over the oil and gas sector. Now, Russia has come to a new stage, the stage of development. The country needs to develop new sectors of the economy, such as the hi-tech sector, and this form of development needs a new type of leadership, run by technocrats rather than KGB guys, with less state control and more innovation.”

Medvedev himself stated this new direction in his key speech in Krasnoyarsk in February, when he made an implicit criticism of the state-driven economic policy of Putin’s second term. He said: “We have to admit that we have been running the economy in manual over these last years. The time for this kind of hands-on decision-making in the economy is over. The new economy calls for a completely new approach: incentives for innovation and not directives from above. It is private initiative…that must be the foundation for the new economy.”

Medvedev has called for a number of liberal reforms to create this new hi-tech, entrepreneur-friendly and innovative economy: less red-tape for new businesses, fewer civil servants, less bureaucrats in charge of state corporations, more independence for the judiciary, more protection for small businesses from corporate raiders, lower VAT.

He has also called for more people with private sector experience in the top echelons of the government. The only time I’ve spoken to him, at a press conference in 2006, he said: “I would like to see more people with a background in business working in the government.” We shouldn’t forget he is the first ever leader of Russia to have experience of working in the private sector.

But this programme is setting Medvedev on a collision course with the Siloviki, or security services, who as a group have seen their interests furthered more than any other group during the Putin years.

Professor Stephen White of the University of Glasgow and Olga Kyrshtanovskaya of the Centre for the Study of Political Elites estimate that Siloviki account for around 23% of the political elite under Putin, compared to around 11% under Yeltsin and around 4% under Gorbachev. So they’re actually more powerful now than they were in the USSR.

Markov says he believes Medvedev can pursue his new direction without upsetting the Siloviki: “I don’t think the KGB will resist too much. They will accept Putin’s decision, not Medvedev’s. The old guard will not lose their positions. New people will come in and take new positions and new government structures, such as an agency to promote small businesses.”

But this doesn’t sound like a genuinely new direction or genuine administrative reform, but instead like the proliferation of more government, more civil servants, more agencies. You can’t make an omelette without breaking some eggs, and you can’t reduce the role of the state in the economy without upsetting some interest groups.

Professor White tells me: “The security services are at the moment in control of both the political structures of society, and the commanding heights of the economy, and the reports are that they have used this position for enormous personal enrichment. They’re not going to give that position up without a struggle. So there’s alot of room for instability in the mid term.” (more…)

The foreign banks active in Russia tend to have a far more informed and less cliched view of Russian politics than foreign policy analysts in Washington or London. They also tend to have better contacts with Kremlin sources than foreign diplomats, particularly the woeful British embassy in Moscow.

Banking analysts and strategists have been quick to recognize the ramifications of Putin’s handover of the presidency to Dmitri Medvedev. As Deutsche Bank’s Russian research team says in a report today:

If Putin was as keen to retain full political control over the foreseeable future as most of the Western press suggests, he would have opted for a third term in our view…Thus, in our view, Putin’s voluntary exit from the Kremlin puts a huge question mark on the consensus opinion that the political strategy is a retention of the status quo of the recent past.

So if we’re not going to see a continuance of the status quo, what will we see? Deutsche thinks probably a change in the personnel running the national champions. Out with the KGB, in with more private-sector individuals:

we believe that substantial – and welcome — shifts in the balance of power within the political establishment are highly likely in the coming months. Putin’s first priority in 2000 was to check the predatory behaviour of oligarchs and create incentives for them to use their efforts more productively. Similarly, it is quite likely that in his first 6-12 months as president, Medvedev will concentrate on tightening the leash on the burgeoning bureaucracy, which has shown increasingly abusive behaviour in recent years.

Medvedev’s mission is finally to modernise the public sector. In order to achieve that, he will most likely have to rely on the expertise and human capital of the private sector once again. Therefore, the key gauge to watch, politics-wise, is not simply the alignment of top ministers in the next government, but also the tendency of seasoned private sector professionals to take senior roles in policy-making and state-controlled corporations.

The real challenge for Medvedev and for Russia, in the coming years, is whether he can de-personalize Russian politics. Putin built up a political system where power was very much centred in his person, at the cost of just about every other institution – the press, the judiciary, the Duma, the party system, the NGO sector, the business sector, the regions. In essence, he made himself a Tsar again, albeit a Tsar prepared to relinquish power after eight years.

If Medvedev simply turns himself into a new Tsar, and keeps the other institutions of the country in a state of arrested development, he will not have taken Russia forward. But which politician ever consciously lets go of the powers of their office? As Yevgeny Yasin, head of the Higher School of Economics in Moscow, put it: ‘Medvedev is a good boy. But he will face many temptations in office.’

Am back in Moscow for a week, working on a story. The impression I get from my meetings so far is that the West has underestimated the extent to which a new era has begun in Russian politics, and the extent to which Russia genuinely has a new leader, with his own agenda, in Dmitry Medvedev, who was elected president on Sunday.

The consensus Western view is that Medvedev is Putin’s stooge. The Western press were full of cartoons last week depicting Medvedev as a puppet sitting on Putin’s knee. Western politicians have been happy to parrot the same negative opinion of the new president. Hillary Clinton, for example, said the new president (whose name she couldn’t even remember – see this video. Man, that’s foreign policy experience for you!) is “someone who is obviously being installed by Putin, who Putin can control, who has very little independence”.

Obama was similarly down on the new guy, saying “Putin will still have the strongest hand”, while John McCain, well-known Russophile, said Medvedev’s election meant that “Putin had just made himself president for life”. Nice one fellows – how to offend the new Russian president before he’s even been inaugurated!

Russians themselves are unsure how seriously to take their new president. I haven’t met anyone who’s voted for him, in fact, I haven’t met anyone who voted at all. When he appeared on stage at a rock concert with Putin on Sunday, it was Putin’s name the crowd chanted, which must have been somewhat gutting for Medvedev. The public have already given the diminutive president a nickname though: ‘nano-president’.

But we shouldn’t be too quick to write off Medvedev. Kremlinologists tell me Medvedev is his own man, with his own team, and his own agenda. And, as president, he has vast powers of appointment. In fact, the rumours from the Kremlin are that there is already tension between him and Putin over personnel changes. Medvedev wants to bring in his own team, and get rid of some of the old guard.

What can we expect from the forthcoming personnel changes? It may mean out with the spooks, in with the lawyers. (more…)