What CIS really needs from Russia?

Russia's influence in the CIS has been deteriorating over the past months, and some observers are already seeing a possibility of an orange or velvet revolution in Moldova and Georgia. Opposition in Georgia failed to topple the Saakashvili government and still rejects the offer to negotiate. But what does it mean for Russia?

It is clear that the opposition to Saakashvili that will come to power will be much more pro-western than Saakashvili itself, and this does not align with the Russia's interests. Georgia will make every effort to join NATO in any case either under the current rule or its successor. This makes Russia lose its stand in the CIS region.

Another country that promised to be friends with Russia forever, has been consistently looking to the West. It is clear that Russia-Belorussian 'friendship' was based solely on the economic subsidies and help from Russia. Belorussia was receiving $1.5 bln. worth of gas subsidies a year, and was promised a economic bailout if it were to declare sovereignty of Abkhasia and South Ossetia. But it didn't, and it didn't get the money from Russia. The West can provide more than just financing the Belorussian elite and authoritarian rule of Lukashenko. In fact, by providing more benefits to his people Lukashenko will be able to regain his rule and power.

"In general, Lukashenko will gradually move to pursue a policy that will be more independent from Russia, and this is natural. He is a strong leader and does not want to be dependent on anyone" - said foreign policy analysis Oreshkin on Ekho Moskvy Radio. Furthermore, the IMF delegation just arrived in Minsk, and Belorussia will likely to get a line of credit. This forces Lukashenko to turn to the West.

In Moldova, Voronin has shown that he is not in favor of tough control and tries to improve his image in the West. As as he succeeds there will be little control left for Russia. Furthermore, Russia is more and more likely to lose its control in Chechnya as economic conditions deteriorate and the battle for power now came to Moscow. This is the first sign that the situation in Chechnya is out of Russia's control.

To sum up, Russia's influence in the CIS has become overly dependent on money that Russia was able to provide at no or little cost. As situation in Russia continues to deteriorate, and Russia has lost its gas price leverage in CIS it will keep losing its influence.

Gazprom secures a new pipe extension

Russia today reported that Italy's economic Minister wished to bring Russia's gas through an extension of the Blue Stream pipeline that is going to end in Turkey, to Italy. In the light of the latest crisis with Ukraine and the gas cut-offs that were felt almost everywhere in Europe, this idea provides a solution. Transporting energy through more politically stable countries bypassing Ukraine will low gas delivery risks.

With this statement Italy become the number one advocate for a higher dependency on Russia's energy supplies. This comes about when the European economies are anticipated to start growing by the desired pipe construction deadline and will be able to rely on higher volumes of Russia's gas by 2015-2016. Extension to the Blue Stream pipeline also makes alternative projects Nabucco and TGI more and more unlikely to be pursued.

Time to save

In 2008 Americans reduced their debt outstanding for the first time since the World War II, according to the Federal Reserve, says the Wall Street Journal. What could this mean for the future of the global economy?

Well, first of all, it is a positive trend that will potentially be able to eliminate current disproportions in the global economy, but might also be bad news. If the idea to save lingers in the American’s minds the process of the global economic recovery may take more time as the major component of GDP, consumer demand, will not grow as fast. Countries like China will be severely affected by this as they are heavily dependent on the demand for consumer goods in the U.S.

Situation in the emerging economies would be different as U.S. investors have additional funds to invest into the high return BRIC markets. Ultimately, we might see Americans returning to their old spending habit, but it will likely to take a few years.