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September 05, 2008


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I find it hard to understand how you could frame the events as "Russian scarfing off parts of Georgia." The reality of the situation is that South Ossetia has a long-standing independence movement that was threatened when the Georgian government invaded and tried to depose the local government. Russia has not annexed any part of Georgia, but has simply forced Georgia out of the independent state.

Hardly seems like Russia was the aggressor here, and much less so than when the US did almost the same thing in Kosovo.

There's nothing wrong with describing the Kosovo War as "the US/NATO scarfing off parts of Serbia" as the description of the war is mostly unrelated to its background. Same applies in Georgia, obviously.

Fair enough point, even if Russia does annex South Ossetia. My tone here is rather informal; CG has it right that I'd describe Kosovo the same way ... at least in a post that wasn't about the reasons for the war, but reactions to it.

"Anonymous" is correct when he states that the Russian intervention does not constitute an actual "aggression", any more than the various similar, unsanctioned police actions by the Western powerss. However, he's incorrect in his statement that South Ossetia is an "independent state".

First, South Ossetia does not have a "long-standing" independence movement. True enough, the ethnic-national movement dates back to the 19th century, but a movement for an actual, independent Osset nation-state? That's an entirely new thing.

(Moreover, the idea of an independent Osset nation-state which would be separate from _both_ Georgia and Russia is practically nonexistent, and has not featured in this crisis in any way.)

Second, even if South Ossetia has an independence movement, so what? That does not make the region an independent state, not de facto or de jure. The Åland islands have a small, but very vocal independence movement. Big deal; they're still part of Finland.

When it comes to Noel's analysis, that's absolutely correct. In spite of all the political huffing and puffing, it's business as usual with Russia, never mind the crisis.

On a related note... I don't know if anyone of you was aware that Bessarion Gugushvili, who served as the first Prime Minister of independent Georgia under Gamsakhurdia, has lived in Finland ever since his exile. As one might expect, he still sees himself as the one and the only democratically elected Prime Minister of Georgia.

He hates Shevarnadze, and he loathes Saakashvili. In his opinion, Georgia was divided in spheres of influence between Russia and the West already in the '90s, when "the Western powers openly sanctioned Shevarnadze's coup, together with Russia".

He believes that the recent crisis has been a culmination of this development, and will result in the final partition of Georgia. Gugushvili's opinion is that the Western powers have already tacitly accepted the eventual Russian takeover of Abkhazia and South Ossetia. In exchange, Saakashvili will be allowed to rule over a rump Georgia as a Western puppet, whose sole purpose is to act as an administrator over a small region that has a pipeline on it.

In short, he believes that Georgia is a victim of a modern-day Molotov-Ribbentrop pact.

Whether one wants to take his opinions seriously... well, that's another matter, but let's just say that I've seen even more far-out opinions voiced over the recent crisis, by supposedly smart and educated people.


J. J.

Great work fighting the conventional wisdom, you've earned yourself a link with me!


I would argue about the reasons of the market decline. It was not because of the TNK-BP case (which actually was a long drama since Winter 2007/2008). The real reason was Putin's attack on Mechel which was made public and costed coal&steel company about $5bln in capitalization. Then the decline started.

Alexey: I'd agree with you as a general statement. The only caveat I have is that Putin attacked Mechel on July 24th, which doesn't directly explain the early-September decline.

But I would agree that without the "send in the doctors" comment from July, investors would probably be less nervous about the announcement of a resolution of the TNK-BP dispute, especially since it is not at all clear that BP is in the right.

Do Russian markets not follow a random walk model? Why should we expect them to continue to decline post-invasion because they were already declining pre-invasion? Can I get rich betting on the Russian markets' momentum?

I'm shorting Russia.


See this?


Is this a linear extrapolation of what you ahd above or is it a plunge after the implosion over here?

Short answer: I have no idea.

Educated guess: it's both. Russia isn't viewed as a safe place to keep your money, which means that when American markets start to cough up blood, Russia gets slammed.

I still don't think that it has anything to do with Georgia, though. Once it became clear that the E.U. was not going to sanction (probably a wise policy), I just can't see why investors would care.

I should do a follow-up. Man, I wish sleep were optional, and that it was sunny all day, 24 hours straight.

I'll have to say that this isn't related to Georgia. In fact, Russia's going to get off scott free, actually, for that one.

I should do a follow-up. Man, I wish sleep were optional, and that it was sunny all day, 24 hours straight.


It'll only get worse when you two take the kidlet plunge. Just ask Doug and Claudia! heh.

Will (sleep deprived and wouldn't have it any other way...uuuuh...)

By all counts it was a successful aggression. Russia showed, or thought it did, that it needs to be taken seriously or else. They lost a couple of planes and tanks but also got some experience out of it. What if investors feel that Russia is not done yet, and more wars are in the horizon? So while they beat Georgia badly they might sent the wrong vibes to the investors.

Russia has been ripping off private companies for quite a while now, yet once war started the money started to pull back. Maybe it was the last straw and already scared investors just needed an extra push to act?

I disagree with the 'succeed and you will not be punished'. Maybe only because Russia might not have succeeded yet; the markets might wait for the final tally if they think that more aggression will follow for Russia.

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