Putin in the Valdai Club
We are reposting an article by Dr. Rahr, who allegedly was the only foreign representative at the Valdai Club meeting and who is said to have received higher orders and messages from Putin directly from him. First the article, which was also controversially distributed to Russia Ciontoversialy/ Russland Kontrovers, i.e. publicly available, and then our assessment.
Putin in the Valdai Club
0 October 26, 2020 2:23 am
[by Alexander Rahr] The Valdai Club has been around for seventeen years. International and Russian political scientists meet there to discuss the world situation. Vladimir Putin attended all these meetings and was always available to answer questions from interested participants. The results of the Valdai Club meetings are usually reported intensively, only the German media are dead silent – they prevent the Valdai Club from being noticed by the public. And this despite the fact that numerous renowned German experts also participate in the work of the club. This year the Valdai Club took place in Moscow under strict hygiene measures. The author was the only foreign participant to come to Russia from Berlin with a special permit. For three days there was intense discussion, topics were climate and environmental protection, the global economic crisis, questions of the future world order, aspects of the Asian security architecture and industrialization 4.0 .; The lectures by two leading Russian virologists on the vaccines used in Russia were extremely interesting. It was astonishing to hear how Western politicians and the media are trying to expose the success of the vaccination campaign in Russia. Russia itself wants to sell the vaccine worldwide, but is denigrated as an unwelcome competitor. Prime Minister Mikhail Mishustin spoke about digitization on the second day of the conference. Russia will soon no longer appear purely as a raw material exporter, but will modernize its economy with the help of new information technologies. Successes are already visible with the naked eye. Mishustin assured the West that Russia is striving for economic cooperation. At the end of the Valdai event, Putin discussed with the guests for three hours. His main statements were: (1) Russia is part of Europe, but not part of the West. Russia is resisting Western attempts to change Russia from outside. (2) Russia is not averse to entering into a military alliance with China. Moscow also has nothing against further nuclear armament by China. The West should disarm. (3) In the case of the poisoned Alexei Navalny, Berlin behaved unfriendly to Moscow. Russia was ready to investigate, but demanded insight into the poison samples that were found near Navalny. (4) There was no drop in prices on the oil and gas market, and Russian energy exports are functioning well. In addition, Russia is now the world’s largest grain exporter. Western sanctions no longer bothered the country. (5) Putin recalled his speech at the Munich Security Conference in 2007, at which he warned the West against NATO expansion. At the time, his ministers considered his statements to be too confrontational. Putin contradicted Western analyzes that he wanted to drive a wedge into transatlantic relations, but criticized Europe’s subservience to the USA, especially in the case of Nord Stream II. Germany, according to Putin, is not an advocate of Russian interests in the West. In 1990 I made Russia more strongly for German reunification than the West. Germany should therefore have judged the referendum of the Crimean people to join Russia positively. The author was able to hold numerous conversations in Moscow. What is certain for him is that a return to normalcy in bilateral relations is not possible today. The West and Russia have split as a result of the many conflicts. Even after the end of the corona pandemic, Russia does not really want to open up to the West. First of all, the West must treat Russia with greater respect. Most political scientists in Russia did not rule out a further dramatic deterioration in relations with the West. Western democracy has little chance in today’s Russia, the alternative to Putin lies more in nationalism. The author was surprised how much the temporarily broken contacts and connections in the Corona crisis damaged bilateral relations. They cannot be fixed overnight. The express see the US as the main culprit for the break in relations. The Germans, who actually didn’t want to start a quarrel with Moscow, would keep this on a short leash.
Many things stand out;
1) Russia wants to enter into a military alliance with China. Possible, not to be ruled out after Putin offered the US START, i.e. to extend the limit on ICBMs by one year, which the US rejected with the demand that China should be included. Now Putin again declares that he has nothing against China’s armament, Probably because this would be directed primarily against the USA, but so far these have only been threats. China, in particular, will not depend on the approval of Russia when it comes to the question of how many intercontinental acts and armaments it will have, which is why Putin is arrogant Which he cannot keep and which he would like to threaten out of his own helplessness. It is questionable how the USA will react to this and whether Russia is also ready to enter into a military defense obligation for China’s adventures in the South China or East China Sea or Taiwan or against India And what should this military alliance consist of and what i Is then the specific case of defense? Or does China want to conquer Taiwan and expect Russia to then start an offensive against Europe in order to defend the USA by means of a fragile NATO case and thus be robbed of its powers in the Far East?
2) Sputnik 5 is not taken seriously. Why?. According to Russian information, it has not even gone through the first test phase, a mass vaccination has been started, while the number of new infections is exploding all over Russia, Putin’s daughter and the defense minister have been vaccinated, but Putin has not even been officially vaccinated with it. And that should be believed, like Trump’s promises that a vaccine will be existing at election day. Total stupidity and Putin expects respect and faith for this whole fake.
3) We don’t want to discuss Navalny here. Putin probably poisoned him to prevent the rebellion in Eastern Russia and Belarus from reaching the Urals. It may not have been Novichok, but he was poisoned.
4) Digitalization. Every time you ask to what extent Putin-Russia promotes and advances modern technologies, you don’t get any concrete answers. There is neither a future fund fed from the oil and gas revenues nor are Russian representative be able to name any essential hi-tech companies, technology parks with real performance, Russian hit-brand and companies.With the exception of the technology showcase park in Skolokow, which wants to become a „Russian Silicon Valley“, there is not much in the media. Especially since there is no venture capital in Russia, only limited state funding and the fact that the Russians are better off with cell phones than the Germans and Yandex has developed an autonomous taxi does not refute that. If western reports are to be believed, the main successful companies are those for surveillance technology and facial recognition, which are sold in authoritarian countries. But the Western reports about the technology center in Skolokow agree that there is still a lot missing to be a Silicon Valley. The Skolokow Technology Park is not a Potemkin village, but the following interview makes it very clear where the limits and the difference to Silicon Valley lie:
“Benjamin Wilkening is a real Russia pioneer. Born in Hessia, he came to Moscow in the wild 1990s as a management consultant and helped economic tycoons to set up business. Today he works for the Moscow Innovation and Technology Center Skolkowo and supports Russian start-ups in entering the German market. In an impulse conversation, Wilkening explains what makes Skolkowo different from Silicon Valley and why Russian start-ups should expand abroad.
Skolkowo is often described as the Russian Silicon Valley. Do you agree?
The crucial difference is: In Silicon Valley there are billions upon billions of private funds, the venture capital industry is very well equipped. The start-ups in Silicon Valley are not dependent on government aid and get their money from private investors. Here in Russia, on the other hand, there is virtually no venture capital industry, the numbers are ridiculously low, and it is very difficult for startups to even get started. So Skolkowo is a great idea because the state intervenes at an early stage. When a young team has a good idea and needs a laboratory, the start-ups get support from Skolkowo.
What advantages does Skolkowo bring to companies?
Skolkowo is comparable to a special economic zone, but specializes in start-ups and research and development. Program participants receive ten years of tax privileges, pay no sales tax, no sales tax and no import duties on machines or components. Non-wage labor costs have been reduced from 30 to 14 percent. This is a huge advantage because many start-ups have no sales for several years despite high spending on research and development. Start-ups can also apply for a grant. These are not loans, but grants that do not have to be repaid. The start-ups benefit from the Skolkowo ecosystem. There are a number of laboratories and workshops as well as Skoltech, the first Russian university for applied sciences modeled on MIT and Fraunhofer. This is where contract development is done for the economy. Bosch is currently working on two projects in Skoltech.
With its many construction sites, Skolkowo still looks rough and unfinished. What is the long-term goal of the technology center on the outskirts of Moscow?
There are three pillars: the first is the promotion of start-ups, the second is Skoltech and the third is the establishment of research and development for large Russian and international companies. In addition to Sberbank and Tatneft, Boeing, Philips and Panasonic also operate research centers in Skolkowo. Incidentally, foreign companies receive the same privileges as Russian ones. If you want to build your own development center here, you can even get the building land on the Skolkowo site for a symbolic price. Even German medium-sized companies use the offer, for example the AHK member company Phoenix Contact is currently building its own research and development center in Skolkowo. The aim of Skolkowo is to deepen the added value in Russia. The country, with its well-trained programmers and engineers, offers the best prerequisites for this. ”
When you talk about start-ups in Germany, you first think of the USA, Israel and Scandinavia, rather less of Russia. Wrongly?
Very wrongly. In Germany and the USA, too, interest in deep tech, in deep technological innovations, arose very late in the venture capital scene. Originally, people were only interested in consumer solutions, in as many clicks and user numbers as possible. It took a while until the West realized that you can earn billions with innovative B2B solutions that are protected by patents. In Russia there are many agile start-ups that have a realistic chance of conquering a position for themselves in the world markets.
What about the innovative strength in Germany?
There is a risk that America will leave the European and German players behind in the long term. If the German economy does not wake up and integrate agile technologies faster, then there is a great risk. Germany is still the market leader in many industrial sectors, especially in mechanical engineering. But digital competition comes from everywhere.
What are the biggest hurdles for Russian start-ups in international expansion?
Money. There are hardly any institutional investors in Russia, so it is difficult for start-ups to obtain core funding for international expansion. It’s the typical chicken and egg problem. An innovative Russian start-up wants to enter the German market, but needs around half a million to a million euros for an office, sales and marketing alone in the first year. Where should this money come from? This question does not arise in Silicon Valley.
Where does the mentality difference between the start-up culture in Russia and the West come from?
I think that applies to all private investment in Russia. The market is not big and the appetite for risk is limited. In the West, the way it works is that you first burn a lot of money to grow successfully. This mentality has not yet arrived here. The question is more: How quickly do we break even? When do we have a million dollars in sales to feed our developers? In the western venture industry, on the other hand, one asks: How fast can we grow and what does it cost?
2000 start-ups take part in the Skolkowo funding program. How many of them have the potential to become a unicorn, in other words, to reach a valuation of over a billion dollars?
I estimate one percent, around 20 startups. Skolkowo only gives kick-off funding and tax breaks, so many companies often don’t get to the point where they can grow up and survive regardless of the program. The program is designed for ten years. For the first companies, the first ten years will soon expire and there is nowhere near enough follow-up financing to reach the next level
Khodorkovsky, who before becoming an oil oligarch began his career in the Russian IT industry, calls in his book in the chapter „The Future of Russia“ for economic reforms and a freer intellectual and innovative climate in Russia in order to promote the new IT technologies. Yes, he is that Russia’s economy is not expanding traditional industries and relying on oil and gas exports, but rather dares a technological leap into the digitized knowledge society – „leapfrog“. He is not alone in this.
“Many people in Europe are asking themselves these days: is there any opposition in the Russian parliament? The MP Ilya Ponomarev answered the question a few months ago in an interview with “Zeit” himself: “As you have seen, there is one, but it is very small.” Ponomarev is talking about himself only one of the 450 Duma deputies against the annexation of Crimea. The 39-year-old should now pay for this. The Russian judiciary is calling for his immunity to be lifted. Only the Duma still has to approve the prosecution’s motion to clear the way for getting rid of the unwelcome parliamentarian.
The background to this is a dubious court case for corruption. A few years ago, during the presidency of Dmitri Medvedev, Ponomarev was involved in innovation projects of the Russian government. In the Moscow suburb of Skolkowo, an industrial area based on the model of Silicon Valley is to be built. Ponomarev acted as a consultant to the foundation, gave lectures and received more than $ 700,000 for it. After Vladimir Putin’s re-election in 2012, the foundation complained that Ponomarev had received excessive fees. The court is therefore now demanding partial reimbursement of the funds. „Something like this often serves as a warning, even if the allegations are not followed up,“ explains Russia expert Jens Siegert from the Böll Foundation. „It varies from person to person whether that means: ‚be quiet‘ or ‚get out of here‘.“
Indeed, the process has political reasons. For months, Ponomarev’s face has been emblazoned on posters in the center of Moscow next to that of other opposition politicians such as Boris Nemtsov, who has now been murdered, and the imprisoned Alexei Navalny. „The fifth column“ is written below it. Within a year, Ponomarev made it into the ranks of the most senior Kremlin enemies. The IT entrepreneur, who was born in Moscow and took part in anti-Putin protests in 2012, became a „traitor to the fatherland“ in March 2014. „
Like Khodorkovki, Ponomarjow urged economic and political reforms and spoke out against the military annexation of Crimea, especially since the sanctions also interrupted technology transfer and cooperation. but he accused the EU of having contributed to such a development with its association agreement with Ukraine. Now he was considered a “traitor to the fatherland” and “supporter of the fascists” and fled to the USA. Ruissia’s opposition to Putin is partly explained by economic interests and the demand for a modernization of the Russian economy, while in their view Putin hinders these forces, if he makes them not impossible.Now there are also the sanctions. Everything is apparently still primarily based on the resource empire, with crashing energy prices.
5) Resource Empire: What Putin says about the oil and price development is probably wishful thinking if you believe this article:
At a ten-year low: heating oil and gas prices remain low
Heating oil and gas are still cheap at the beginning of October.
Market watchers believe that prices won’t rise too quickly either.
US President Donald Trump’s corona infection has continued to depress energy prices.
The news of US President Donald Trump’s corona infection has continued to depress the already low energy prices. Consumers in Germany are also feeling the effects. Information portals such as Esyoil and Heizoel24 stated the price on Saturday morning at significantly less than 40 euros for 100 liters.
Market observers emphasized, however, that Trump’s illness was one of the reasons for the low prices. Rather, heating oil was cheap before that.
Trump’s corona infection is just one influencing factor
„Due to the corona pandemic and the associated weak global economy, energy prices have fallen significantly in 2020, and the lower VAT rate has been added since July,“ said Lasse Schmid, Managing Director Energy at the comparison portal Check24. Trump’s illness was now also added. According to analysts, this weighs on the price because the president is a big supporter of the US oil industry.
But other US news has an even bigger impact. „A US stimulus package agreement was a long way off, and the number of active rigs in the US rose significantly,“ said a market commentary from Esyoil. In addition, oil-producing countries such as Saudi Arabia, Russia and Libya have recently increased their exports – despite a lack of demand.
That only about the short- and medium-term outlook and the longzrtm forecast doesn’t read better either:
Energy market Corona crisis affects oil and gas prices in the long term
A new study by the International Energy Agency (IEA) has calculated that the corona crisis will have a strong impact on the oil and gas market for even longer. Crude oil is currently worth a third less than last year and will continue to decline according to the IEA. The demand for natural gas is expected to fall by an average of four percent.
In Europe, wholesale gas prices are particularly low, as there was already an oversupply before the corona crisis. The oil and gas market barely recovered from the effects of the crisis in the second quarter. The gross profit of the oil and gas industry fell by almost 40 percent. Overall, the IEA estimates a decline in gas and oil investments by a third. Even if the onset of winter will temporarily boost gas prices again, they will nonetheless remain at a low level compared to previous years. On average, energy prices will not make a big leap up in the next few months.
Due to the developments caused by the pandemic, the energy experts assume that the peak of oil demand will be reached earlier than 2040. Oil and gas companies are now investing more in renewable energies due to the weakened market situation. The Energy Agency is observing this trend towards clean energy primarily in European oil and gas companies and therefore considers general structural changes in the oil and gas industry to be likely.
Putin’s Resource Empire and global supplier of international security has reached its definitive limits like an independent economic modernization. And economically it doesn’t look rosy either. Roughly speaking, the Putin era can be divided into four phases: In the 2000s, confidence in Putin grew and at the same time the economy and real income grew. From around 2008 confidence began to decline, but incomes continued to grow (for now). In 2014, Putin turned the tide. With the annexation of Crimea, approval for him grew to unprecedented heights, but the economy shrank and incomes began to fall. This so-called Crimean effect has seemed to have been used up since 2018 and, for the first time under Putin, incomes and trust in the president have been falling at the same time. Then there is the corona crisis and falling oil and gas prices. From this position of weakness and the apparent failure of the Resource Empire and a modern IT industry, which a Khodorkovsky in exile demanded as his program for Russia as leapfrog, Putin seriously demands because of his Sputnik 5 fake and the threat that a failing Russia could ally firmly to China in a military alliance. For this threat, he wants : respect. Is it about real political goals or about national pride as a replacement of crumbling power or should respect mean that the West, because of Putin´s threat to enter into a military alliance with China, should be shocked and appease him-with respect? Is all that respect talk now firmly committed to his foreign policy goals, of which one can suspect and speculate what they are if they should be accommodated by means of unilateral concessions. Putin’s Resource Empire and global supplier of international security have reached its definitive limits as an independent economic modernization. Only threats remain to solidly cooperate with China..
Nevertheless, it remains up to Putin to offer and clearly explain his goals towards the West, be it the non-alignment pact for Ukraine and Belarus or something concrete, and also make compromises. Demanding respect is the kowtow that the Chinese demand from the West. It is this archaic concept of honor that aggressors like Erdogan demand in order to threaten their unconscious victims with an honor killing. No, no respect, honor and such nonsense, no vain symbolic gestures, but simply clear achievable goals are required. Otherwise, such a discussion is superfluous. Otherwise, you meet at 6 o’clock with your respective Russian-Chinese-Turkish challenger at the oak or on the battlefield. The West has if not honor and demands for respect, then at least principles and real political goals that could be agreed upon.
It is time to stop this talk of respect and to offer real political and concrete goals. Just as Putin seems to love this gossip of respect, quoting some fake successes and nonexistent strengths that can be seen through quite transparently, conversely it is noticeable that Western transatlantists are incapable of self-criticism of their own mistakes and want to negotiate from maximum positions.
Putin’s offer to extend the current START arms control agreement for ICBMs by one year should be mentioned as a constructive and concrete proposal that would not solve the problem immediately but would give a breather to stabilize the situation somewhat beyond the US election date and to create time to keep talking. The rejection by the USA on the grounds that they also want to include China is very unwise. Because China does not want to be included at the moment and an extension of START would last for eternity, but would first prevent another arms race between the USA and Russia. But as it is, Putin is now threatening a military alliance with China, just as he no longer contradicts China arming with intercontinental missiles in order to be noticed at all.
A former diplomat who worked for the German embassy in Moscow for a long time assesses Putin’s speech and the role of the Valdai Club as follows:
“Sascha Rahr’s report from the Valdai Club is certainly a grain of wheat that deserves processing, and from my point of view you have already done that correctly. So just a few comments:
1. I was able to visit the dreamed-up innovation center near Moscow Skolokow in 2016 and was quite disappointed. In any case, the project has nothing to do with Silicon Valley, but rather reminded me of the research campus at RWTH Aachen University or the Max Planck Institute in Geltow near Berlin or the HU campus Berlin-Adlershorst. Not bad, but certainly not earth-shattering.
2. Very clear: Russia has a problem with the drop in oil and gas prices. At USD 40 per barrel, Rosneft and Gazprom are up to their necks. So I hear Putin’s optimistic statement as whistling in the forest.
3. The reference to the Munich speech 2007 is remarkable: Putin considers it – like me – to be the programmatic presentation of his policy, which is still valid. Comprehensible due to his understanding of history and the world.
4. Russia – China: From my point of view, whether there will be a military agreement is of secondary importance. More important are, in my opinion, similarities in individual policy areas and the power relationship between Beijing and Moscow. There will always be ad hoc agreement on regional and cross-cutting issues. Possibly. also maneuvers with smaller participation of the other side and exchange of information as a barter trade. But I don’t see a military convention like the Russian-French one of 1894, partly because it would reveal Moscow’s status as a junior partner in one way or another.
5. Start: Share the opinion that the Russian offer of a one-year extension makes sense and is in Moscow’s interest.
6. Current geopolitical situation: What is striking to me is what Putin does not talk about, namely the current geopolitical situation in Moscow. It’s pretty bad: I’ve already written about the drop in raw material prices and the country’s weakness in innovation.
But now put yourself in the perspective of geopolitical analysts in Moscow and look around: Where is Moscow not involved everywhere? In Libya, Syria, in the Caucasus, in the Crime, in Eastern Ukraine, in Belarus, in Kyrgyzstan, also in Afghanistan. This is a full concert program that you must play with financial, military, intelligence, and political instruments. Does Moscow have the resources to do this, and for how long? None of this sounds good, which is why the conductor Putin did not play this program in the Valdai Club!
7. On the person: Putin is my year. He is getting old, has seen, experienced and moved a lot, is a grandfather and now believes that he only has to concentrate on the major strategic issues. The Valdai Club! Great, that’s almost as nice as the meeting of old, white men on Swiss mountains or in the Rocky Mountains. But let’s not fool ourselves, these forums are used for aloof discussion and reality is no longer fully understood. Above all not the needs and expectations of the young generation – and they take to the streets in Minsk and at some point in Moscow or Novosibirsk.
Conclusion: Putin in autumn 2020 and of life! With the constitutional amendment in the spring, he has the chance of a lifelong presidency, during which he can continue to dream of the Orthodox empire.
As Shakespeare wrote so beautifully:
„We are such stuff as dreams are made of
and our little life is rounded by a sleep. „“
What is very important is what Putin did not say – namely all of the geopolitical commitments that he still has and if they can be sustained in the medium and long term. It can also be assumed that the current Libyan ceasefire is also due to the first fatigue and weaknesses of an imperial overstretch of both Erdogan’s and Putin’s. It is also interesting that on the Western side the threat of a military alliance with China is not perceived as so threatening. All in all: a Putin and his empire in the autumn of his life.