Russia Reform Monitor: No. 1587

August 26:

Georgian President Mikheil Saakashvili has called Russia’s recognition of the breakaway regions of South Ossetia and Abkhazia an attempt to “militarily annex” Georgia and a “direct violation of international law” that “imperils the international security framework that has ensured peace, stability and order for the past 60 years,” the New York Times reports. “Russia’s decision today confirms that its invasion of Georgia was part of a broader, premeditated plan to redraw the map of Europe,” Saakashvili said in a statement. “Russia today has violated all treaties and agreements it has previously signed.” Meanwhile, Reuters quotes U.S. Secretary of State Condoleezza Rice as calling Russia’s recognition of South Ossetia and Abkhazia “regrettable,”

Russia’s dollar-denominated RTS Index has fallen to the lowest level in almost two years and the ruble has dropped on news of the recognition of Georgia’s breakaway regions, Bloomberg News reports.

President Dmitry Medvedev has said the deployment of a U.S. missile shield in Europe close to Russia’s borders will create “additional tensions” and that Russia may respond militarily, the Associated Press reports. “We will have to react somehow, to react, of course, in a military way,” RIA Novosti quoted Medvedev as saying.


August 27:

Foreign Ministers of the Group of Seven major industrial powers have jointly condemned Russia’s recognition of South Ossetia and Abkhazia, the Voice of America reports. The ministers said Russia’s action calls into question its commitment to the peace and security of the Caucasus region. Meanwhile, Russian Foreign Minister Sergei Lavrov condemned Western criticism of its actions in Georgia as President Medvedev discussed the situation in the Caucasus with his Chinese counterpart Hu Jintao. Lavrov called British Foreign Secretary David Miliband’s criticism of Russia “inappropriate” and “hypocritical,” Agence France-Presse reports.

German industry groups have stepped up their warnings about isolating Russia in a sign of mounting concern that Moscow’s diplomatic showdown with the West over Georgia could damage business relations, Reuters reports. “It is important for the politicians not to give Russia the cold shoulder,” said Klaus Mangold, chairman of the Committee on Eastern European Economic Relations at Germany’s BDI industry association. Mangold warned against punishing Russia by excluding it from the World Trade Organization or scrapping EU-Russia talks on a new strategic partnership pact.


August 28:

The Times of London reports that the possibility of “a new Cold War” between Russia and the West has grown after Moscow warned about “direct confrontation” between U.S. and Russian warships in the Black Sea. Dmitri Peskov, a spokesman for Prime Minister Vladimir Putin, said Russia was taking “measures of precaution” against U.S. and NATO naval ships in the Black Sea. “Let’s hope we do not see any direct confrontation in that,” Peskov said, adding that any attempt by Western countries to isolate Russia would “definitely harm the economic interests of those states.”

Prime Minister Putin has accused the United States of encouraging Georgia to attack South Ossetia, saying his defense officials told him it was done to benefit a U.S. presidential candidate. “U.S. citizens were indeed in the area in conflict,” Putin told CNN. “They were acting in implementing those orders doing as they were ordered, and the only one who can give such orders is their leader.” White House spokeswoman Dana Perino called Putin’s allegation “patently false.”


August 29:

Kommersant reports that according to Russia’s Central Bank, capital continues to flow out of the country, with at least $3 billion leaving last week. The business newspaper writes that the flight of capital “is predetermined above all by the growth of political risks connected to the August war in Georgia.”