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Meet the New Boss, Same as the Old Boss
In his final press conference as Russian president, Vladimir Putin made clear yesterday that as prime minister he has no intention of playing second fiddle to his chosen successor, Dmitry Medvedev. “I have been president for eight years and worked pretty well. I won’t need to hang his portrait,” he remarked.
Putin added: “The highest executive power in the country is the Russian government, led by the premier.” One can’t imagine any of his prime ministers saying that and getting away with it during his presidency. He also made it clear he will remain prime minister throughout Medvedev’s turn in office, or for as long as “I am meeting goals that I myself have fixed.”
As if to emphasize that Putin will remain the real boss in the Kremlin, Russia’s new ambassador to NATO, Dmitry Rogozin, told the Financial Times, “Putin’s role will be as strong as ever.” Closely linked with Putin, Rogozin, a well-known nationalist politician, can even sound like the bullish outgoing president. Asked in the interview about Japan’s protest this week over a Russian bomber violating the country’s airspace, Rogozin joked: “It’s been a long time since the Japanese have seen the Russians in the air. They got quite a surprise.”
Putin’s marathon press conference yesterday was vintage stuff: he was full of his usual bluster. It was all in marked contrast and tone to Medvedev, who in a speech today in Siberia talked about how he wanted to improve relations with Russia’s neighbors. So it looks like we are going to see a routine of good cop, bad cop. Some analysts wonder if Medvedev will be prepared to play a secondary role to Putin. Will a divided power system emerge? My money is on Putin and his KGB friends to retain the upper hand.
Filed under: Government and Politics; International Economics and Development
Don’t Go Scaring the Geese Who Lay the Golden Eggs
Britain’s Labor leaders Tony Blair and Gordon Brown have long boasted how successful and sure-footed they have been in making London one of the World’s preeminent financial centers. Brown, who served as the Chancellor of the Exchequer until he succeeded Blair as Prime Minister, was more responsible than any politician in helping London leapfrog up the league tables in the financial market to challenge New York.
Financial regulation has been lighter in the UK than the US, especially since the post-Enron Sarbanes-Oxley reform, and the tax authorities have been welcoming of rich foreigners, helping to attract many of the world’s wealthiest entrepreneurs and investors to the UK, including Greek shipping magnates, American hedge-fund traders and Russian oligarchs.
But in a bid to outdo the British Conservatives, who have joined the bandwagon of economic populism, Brown has threatened London’s role as a global finance center with talk of a tax crackdown on rich foreigners.
He has provided — also inadvertently — a major object lesson on the importance of tax competition.
Unnerved by the Conservatives, who promised that in government they would impose a levy on rich foreigners, Brown and his Chancellor, Alistair Darling, announced just before Christmas that come spring, tax rules on foreigners resident in the UK would change. Under the previous regime, foreign residents could claim “non-domiciled” status and avoid paying tax on overseas earnings and offshore assets. Only money brought into the UK or generated there was liable to income tax or capital gains tax.
Brown’s new proposal would have all non-domiciled foreigners resident in the UK for more than 7 years paying an annual tax charge of 30,000 pounds ($60,000).
Filed under: International Economics and Development; Tax and Budget Policy
Musical Chairs
How much will Russia change when Vladimir Putin hands over the presidency to Dmitry Medvedev in the spring? Putin’s chosen successor has suggested in campaign speeches this month that his regime will be different. Medvedev has eschewed the anti-Western rhetoric of his boss and promised to crack down on corruption. He has even made nice noises about non-government organizations. Putin, of course, imposed tough restrictions on NGOs, especially those of foreign origin or funded by foreign sources, a policy he adopted after seeing the crucial role NGOs played in the Orange Revolution in neighboring Ukraine.
Last month, two government officials appeared to break ranks with Putin’s Kremlin and called for a change in the country’s strident foreign policy. Finance Minister Alexei Kudrin, the deputy prime minister in charge of economic policy, told an investment conference in Moscow that the government “should adjust [its] foreign policy goals in the nearest future to guarantee stable investment.” His comment was supported by Anatoly Chubais, head of state utility Unified Energy System.
So, will there be a Moscow Spring after the foregone presidential election puts Medvedev in the Kremlin?
Cato’s Andrei Illarionov warned recently that Putinism will not end with Putin relinquishing the presidency. “I don’t think so, because we are talking about the policy and philosophy of aggression against Russian people, against Russia’s neighbors, against other countries in the world,” he told the BBC’s Hard Talk program. “It does not and should not be attributed to one particular person. This is the philosophy and ideology of a group of people, of the Corporation, of the organizations that exist in the country for a long period of time, almost for a century.”
And news out of Russia suggests that the “Corporation” — constituted predominantly by former state security officials and others linked to the so-called “power ministries” — is tightening its grip on Russia business, government agencies and the media with a host of new appointments and nominations to company boards being announced. For example, Igor Sechin, the deputy chief of staff at the Kremlin, has been nominated for the board of Rosneft, the massive state oil company. Viktor Zubkov, the prime minister, has been nominated for the board of Gazprom, and he is likely to become the next chairman of the natural gas business when Medvedev relinquishes the post on becoming the Russian President.
The list goes on and the flurry of appointments is reminiscent of the early days of Putin’s presidency when the neo-KGB state started to form. Medvedev may not come from a KGB background but the state security men will be all around him with their hands on key levers of power. Even if he is independent minded, how can he withstand the interests of the security services and of his likely Prime Minister, one Vladimir Putin?
Filed under: Foreign Policy and National Security; General; International Economics and Development
Voters Refuse to Bear Teddy
Michael Tanner’s list of winners and losers from last night seems spot-on but it is incomplete in one regard — his list of losers leaves out the Kennedy clan. Despite the endorsement of Ted Kennedy, Massachusetts went for Clinton, surely one in the eye for the Bay State’s senior senator.
But then Ted Kennedy endorsements have never fared well in recent times. Since 1982 the Senator has had an unerring ability to back the loser when it comes to presidential races: those he supports either fail to win the party nomination or are beaten subsequently in the general election. Kennedy’s endorsements since 1982 have been: Dukakis, Mondale, Tsongas, Gore and Kerry. However, he did get it right in 1996, but that was an easy one.
The Kennedy clan was also dispatched to deliver latino votes in California for Barack Obama. A notable failure there, as well.
Thank You For Smoking
A central claim of those eager for restrictions on tobacco use is that smokers cost society more.
A new study from the Netherlands may help lay that oft heard chestnut to rest. The study shows that there would be no cost savings for governments and taxpayers from preventing obesity or reducing illnesses caused by smoking.
The study found, quite to the contrary, that healthy people cost more.
The study, undertaken by the National Institute for Public Health and the Environment in Holland, found that ultimately healthy people, who live on average four years longer than obese people and seven years longer than smokers, cost the health system about $417,000 from the age of 20 compared to $371,000 for obese people and $326,000 for smokers.
One of the economists working on the study commented: “if you live longer, then you cost the health system more.”
Filed under: Government and Politics; Health, Welfare & Entitlements; Regulatory Studies
Still Conservatives?
For those of us who experienced the revival of Britain during the Thatcher years, the dismal plight of the British Conservative party under a series of post-Thatcher leaders has been startling and increasingly dismaying.
Short-lived Tory leaders have been intent on ditching the classical liberal principles that Thatcher and her inner coterie foisted on the party – principles that gave the Tories their finest years of the 20th century and ones that pulled Britain out of decades of economic failure. David Cameron, the current no-doubt short-lived leader, has been as determined as his recent predecessors to distance himself and the party from the Iron Lady and all that she stood for – from low, or at least lower, taxation, to expanding individual choice and on to a healthy skepticism of government.
Now at last one Tory grandee has had enough of the retreat from Thatcher principles. The former Thatcher cabinet member, Michael Ancram unveiled this week an alternative manifesto [pdf], entitled “Still a Conservative,” to the Cameron agenda, one that calls for a return to the core values that won four successive elections for the Conservatives. He warns that the British public perceives that the party lacks “an overall sense of vision and direction.” And he argues that the party should support lower taxes, leaving people with more of their own money to make their own decisions. By contrast, Cameron wants to match the Labour government’s public spending and has turned his back on lower taxes.
And there is much else in Ancram’s manifesto that would please libertarians and classical liberals, especially his call for the regulatory state to be turned back and his advocating of widening the areas of life left to individual choice rather than government diktat. There are things, though, in the manifesto that are unappealing – from his over-defined Euro-skepticism to his rejection of treating gay civil partnerships equally with marriage when it comes to benefits and taxes. He says there are other long-term relationships outside marriage which should be welcomed for their commitment, but “for Conservatives there can be no fudging the issue of marriage.”
It is a great pity that he overdoes the Euro-skepticism and is prepared to treat gays unequally – for at heart Ancram’s alternative manifesto places classical liberal principles front and center.
And how has Cameron and his supporters responded? Not much of a welcome: they have told him to hold his tongue. A party spokesman said: “This is just a blast from the past. Just as Britain has changed, the Conservative Party has to change along with it.” And a former cabinet colleague of Ancram’s, Michael Portillo, said: “I was a great admirer of Margaret Thatcher but to invoke Thatcherism now, a phenomenon which is 25 years old, just makes the Tory party look old-fashioned and, of course, divided.”
Well, apparently that isn’t the viewpoint of Labour Prime Minister Gordon Brown, who like his predecessor, Tony Blair, realizes that Thatcher is still a name to conjure by. This week he spoke of his admiration for the Iron Lady. “I think Lady Thatcher saw the need for change,” he told a press conference. “Whatever disagreements you have with her about certain policies – there was a large amount of unemployment at the time which perhaps could have been dealt with – we have got to understand that she saw the need for change.”
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