A stronger Russia

Even as the club of G-8 leaders meets in St Petersburg in a clear signal that they see (or would like) Russia as part of the western alliance, the fact is that the West looks with growing concern at Russia under President Putin breaking away from liberal values and democratic practices, and moving his country in the direction of a strictly managed democracy, without a free press, with the opposition muzzled, and with the business environment clouded by events such as the destruction of Yukos and the imprisonment of its owner. These concerns will almost certainly have played a role in the United States refusing over the week-end to go along with Russia's hoped-for entry into the World Trade Organisation, though the ostensible reasons have been stated to lie more in the realm of economics and such issues as protecting intellectual property rights. This is a setback and perhaps even a snub for Mr Putin, for whom a WTO announcement at St Petersburg would have been a heady prize. But that is unlikely to make him change course.

The Russian president's strength comes from the sterling performance of the Russian economy, which has been growing as fast as India's since 2000. This is only partly explained by high energy prices, though that has undoubtedly helped transform the external account of a country that defaulted on its international obligations as recently as 1998 and then devalued its currency. The big difference between Mr Putin and Mr Gorbachov is that the latter had no understanding of how to usher in a market economy or how to manage the government's finances, thereby bringing the economy to its knees, while Mr Putin has ensured good macro-economic management. Inflation has been brought down to single-digit levels, fiscal management has been sound, the foreign debt has been paid down, the days of international default are long forgotten, and the country even introduced capital account convertibility last month""all of it causing the Russian stock market to soar to undreamt-of heights.

Mr Putin is also different from his immediate predecessor, Boris Yeltsin, in that he maintains a strong hand on all the levers of power and is not particularly concerned about western approval of his methods of governance. Indeed, concern is now on the western side as European consumers worry about whether Russian gas supplies through pipelines are as secure as they would like them to be. In short, the chips are now on Mr Putin's side of the table, and will stay there until oil prices fall. Since that seems a distant prospect, expect Mr Putin to increasingly strike out on an independent path. Does that give India more diplomatic leverage, or would India now prefer to lay greater store by American friendship?