For the first time in his 14-year reign, it appears Russian President Vladimir Putin is coming under serious political pressure and could be losing his grip on power. Yesterday, a long-time Putin ally and adviser, Alexei Kudrin, publically announced on television that Mr. Putin was hurting the country’s “business interests” and had made Russia “the west’s adversary again”. The statement is a sign that Putin is losing the faith of his powerful oligarchs, who dominate the country’s business sectors, and that his long weak opposition is starting to mount a serious fight. In fact, the reality that Itar-Tass, a state-owned news agency, would even run the interview shows that Putin is losing his grip on the absolute power he has maintained for years. The Russian economy is slowing rapidly, the country’s banks cannot access funding even while harsher sanctions are being prepared, and according to one policy analyst “Vladimir Putin is now in the most difficult situation since he took office”.
FINSUM: Everything is at stake for the oligarchs who have supported Putin’s reign. Putin may have miscalculated badly, as if further sanctions come, his powerful constituency may fully turn against him.
Obviously fearful of angering China, British PM David Cameron made a complete turnround on promises he made to the Hong Kong government just a few years ago, and yesterday refused to meet with top former Hong Kong leaders Anson Chan and Martin Lee, instead deflecting them to low level administrators. The rejection means that Britain is highly unlikely to support the movement to protect Hong Kong’s tenuous democratic rights, despite the UK’s treaty obligation to do so, agreed when London ceded the island to Beijing in 1997. The lack of support for Hong Kong also comes with no obvious benefit for Britain, who is not receiving any special favours from Beijing for keeping quiet on the matter, though Cameron and his government are probably scared to ruffle Beijing’s feathers amidst the array of new Renminbi deals they are trying to bring through the City of London. China reacted severely two years ago when Cameron met with the Dalai Lama against Beijing’s wishes.
FINSUM: The British have completely capitulated on the issue of defending Hong Kong’s democracy, which is their responsibility. It seems a short-sighted decision considering the amount of democratically-enshrined assets, like major British banks, which exist on the island of Hong Kong.
A major new academic study out of Columbia University has found a correlation between birth year and political viewpoint which indicates that people’s experiences between the ages of 14 and 24 are hugely influential for their future political views. The study only addresses white Americans, but shows that the political and economic climate which predominates during a generation’s teens and early twenties will guide their political views the rest of their life. An interactive chart here shows how those born in the early 1940s were profoundly shaped by President Eisenhower and leaned Republican for the rest of their lives, while those born a decade later were molded by the successes and failures of Kennedy, Johnson and Nixon, leading them to be more Democratic. What this means is that the events taking place now in the United States may not only affect 2016’s presidential election but elections in 2056. The study also found that the link between advancing age and growing Republicanism has been broken.
FINSUM: This is a very important study in its own right, but also for the upcoming presidential election. Those who will be 18 years old, just old enough to vote in 2016, will have little memory of President Bush’s failures and more remember a struggling country led by a democratic president—a very different prospect to Obama’s 2008 election.
As a response to reports that Iraqi government soldiers were abandoning their posts along the border with Saudi Arabia, Riyadh has sent 30,000 troops to the border with Iraq. Saudi Arabia is worried that ISIS may spread over the border and into their country, so it wants to present a strong force to guard against the possibility. The border area is along the Anbar province of Iraq, which is now the centre stronghold of the Islamic State. The last major incursion into Saudi Arabia came from Iraq, in 1990, when Saddam Hussein’s soldiers invaded Kuwait. Many in the Middle East accuse Saudi Arabia of fueling the ISIS insurgency by feeding it weapons and funding, a claim that Riyadh denies. Many believe ISIS has no plans to cross into Saudi Arabia, as doing so would engender an international response, particularly from the US.
FINSUM: This is very important news for markets. Should fighting breakout along the Saudi-Iraqi border, which could signal a pan-Middle Eastern war, expect oil prices to soar.
New polls show that concerning September’s referendum vote in Scotland, which will decide if the country separates from the UK, the “no” vote, or those choosing to remain in the UK, holds a 49% to 37% majority, with the rest undecided. The “yes” vote has grown in the last month, but is still below its peak in March, as voters have grown more wary of the economic consequences of separation. Research has shown that support for independence is highest for those in the lowest income groups. This article, run in the Financial Times, examines the failure of London to fully appease Scottish voters, and argues that England has not successfully cultivated a sense of British identity among Scots that might make them more inclined to stay. Instead of trying to build bonds, the article argues that the English have instead reverted to scare tactics in order to threaten the Scots into submission, which has proven unsuccessful.
FINSUM: The chances that Scotland separates in this vote seem small, however, devolution is a growing long-term movement that will continue to plague the UK from all sides as time goes forward.
In what is amounting to the first serious commercial fallout since the NSA spying scandal erupted in Germany earlier this year, Berlin has just announced that it has terminated a contract with major US-based mobile phone provider Verizon. Germany cited Verizon’s complicity in NSA spying as the reason for terminating the contract, saying it was shocked at the company’s willingness to provide information. Revelations of the spying showed that Verizon received a secret court order which both told them to hand over information on a daily basis to US spy agencies and that it would be illegal to publicly disclose the existence of the court order. Germany is in the process of completely reorganising its government’s information and communications systems in order to have an “increased level of security”. Similarly, Brazil has dropped the use of Microsoft Outlook throughout its government and is currently building a domestic alternative.
FINSUM: Now that the initial shock has passed, the long term repercussions are beginning to be felt. The spying by the NSA will do nothing but harm political relations and hurt US industry. Why was it so important to tap Angela Merkel’s mobile phone?