03-03 Reality

The war-time prime minister, Winston Churchill, said it best when describing Russia. It is “a riddle wrapped up in a mystery, inside an enigma.”
I find it almost impossible to project the future of Russia. It is a country that wants to engage with the world while maintaining its independence and authoritarian institutions. The old Russian poem says it best.
It is a society that would seem ungovernable if it was truly free. So many languages and ethnicities. A huge geography with 80% of the population living close to the West, but with about 80% of its resources coming from its Asian regions. A sinking birth-rate except within its Muslim population.
And, something I find difficult to explain, lots of women compared to men. Must be too much vodka and too many early deaths from alcoholism.
A Russian-American was a speaker at the International Small Business Congress in Stockholm in 2001, and he said he was assembling a product in Moscow that he had designed in the US. And he had rented an expensive apartment which included a garage to hold his BMW.
But only after a week of being settled he was told by a total stranger that he had to pay a monthly fee to use the garage. He refused explaining that the garage was part of the monthly rental he paid for his apartment. The next day thugs destroyed his new car.
It was a warning that Russia is not a free-market economy, but one plagued by corruption and organized crime. His advice about investing in Russia. “Tread with caution.”
And what I noticed in the late 1980s when visiting the old Soviet Union was that they were unable to take innovations and new technologies designed for space and the military and transfer them into the domestic economy. That problem still exists. It is typical of a centrally-planned economy compared to a free-market economy.
But let’s not minimize some great investments in Russia. I was there when they opened the world’s biggest McDonalds restaurant. And to my amazement, everyone took their cups home with them.
And, when it comes to sports, everyone loves the World Cup of soccer, and the photo shows an opening day event in Moscow. Russia is a world player in all areas of sport.
On the other hand, I cannot see Russia as a world power. They want to be like the US and China but have an economy more the size of the UK or France. But they are strategic powers in Europe and in the Arctic.
It is just a matter of time before the EU and Russia enter into a Free Trade Agreement. What will make that possible is Europe building LNG terminals to buy natural gas from the US and provide a threat to the sale of Russian natural gas. And Europe must as well, provide more of the funding for its own defense and rely less on the US.
And in terms of the Arctic, Canada and Russia represent 75% of the North in terms of geography and access to what is going to be the world’s biggest resource development boom.
Canada is threatening its own future by its ongoing criticism of Russia for its annexation of Crimea. But this is just domestic politics and playing to the Ukrainian populations in the western provinces.
Successful diplomacy will enable Canada to hate Russia in the Ukraine but love it in the Arctic. Being two-faced is a standard operating procedure in politics.
In the Arctic there are real things to do. Jobs and training for the Innuit. Protecting the environment. Applying new solar and wind technologies. Building new trade routes. And developing new communities. Russia and Canada are natural partners.