President’s Report

January 15, 2005

Dear Friends and Colleagues of CCI,

Our best wishes to you for a prosperous and wonderful 2005! We greatly appreciate your friendship and look forward to our continued cooperation. Now to ponderings about what's transpired and predictions about what's ahead.

The end of 2004 saw the US and Russia at the most serious odds since the end of the Cold War. This has been worrisome to us here at CCI.

Tensions have dramatically increased since Russia sided with Germany and France regarding Iraq, Putin refused to commit troops, Khordorkovsky was jailed and Yukos was subsequently dismantled. In the fall, Beslan brought knee jerk reactions from Putin who used the opportunity to begin to break up regional fiefdoms by appointing governors which he can dismiss. Finally this winter Putin misjudged events in Ukraine and overplayed his card, which by year-end put a huge pall over US-Russia relations. All the while, the issues of media control and hassling of foreign NGOs continued to smolder between Russia and the west. Media hype has been constant.

These tension points can be viewed from several perspectives. From one, the situation looks quite sinister. From another, these bumps can be viewed as part of Russia's attempt to find her own way in the post-communism era, and to restructure the economy after the wild oligarchic capitalism of the 90s.

Personally I have fewer concerns about Russia's bumpy evolution toward democracy than the West's expectations for Russia to model Western democracy immediately - and the effect this is having on Russians. Furthermore, I'm concerned that western media's hammering Russia will recreate Western stereotypes of Russia as a rogue nation. Considering the residue still lurking in many minds, it could result in the "remaking of the enemy".

I scan about 25 articles a day from both western and Russian press. Few have the time to follow Russia events this closely, and many of you email to ask my point of view. In 2005, I plan to use this website to provide you with differing points of view for each serious topic that arises.

Finally my humble predictions for 2005 are:

• Putin will continue his drive to get Russia's energy companies in compliance with the state, and if not, under state control; but he won't bother other industries.
• Energy money will be used to reduce poverty and make life easier for ordinary citizens.
• Putin will not be deterred by western opinions of his "authoritarianism."
• Illarionov, the libertarian, will leave his Kremlin post, as he left Chernomyrdin's government, rather than Putin firing him.
• Putin will continue to align regional and federal power structures which will create angst both to regional bosses and to Western pundits.
• Russia's reforms will stall until these governing structures are in better alignment and corruption is reduced.
• The middle class will continue to grow, salaries will increase, poverty will decrease.
• Putin will move on administrative corruption in some dramatic form this year.
• Control of Russia's three national TV channels will continue as is, but less so in print media except that decency norms will be expected. Russian journalists will become more self monitoring, as in western countries.
• Russians will feel increasing state pressure to comply with tax and other legal norms, and Russia will gradually move a notch or two toward being a more law abiding nation this year.
• Putin won't meddle in other nations' elections. Ukraine was an embarrassing lesson.
• Putin will integrate counsel from Europe on Chechnaya.
• Khordorkovsky will trade his prison suit for street clothes.
• Official relations between Russia and the US will continue at half mast.
• Russia and Putin have been weakened politically going into 2005 but will be stronger by end of the year.
• 2005 will be a year of consolidation. Nothing spectacular will happen, making it less troublesome than 2004.

The process of democracy, two steps forward and one back, may take another generation in Russia as it has with other countries; but there will be some progress in 2005, albeit Russian style.

Predictions are presumptuous and risky for any country, particularly Russia. Now to watch what really transpires in 2005.

Our best to you during this coming year!

Sincerely,

Sharon Tennison
President