Bloomberg News

Putin’s Obama Snub Signals Harder Russian Policy as Reset Fades

May 10, 2012

President Vladimir Putin’s decision to skip this month’s Group of Eight summit in America signals Russian foreign policy is hardening as a “reset” in relations with the U.S. fades, analysts from Moscow to Washington said.

Putin told President Barack Obama in a telephone call yesterday that Prime Minister Dmitry Medvedev will take his place at the May 18-19 gathering, the White House said in a statement. His first foreign visits after reclaiming the presidency for a third term will be to Mexico, China and Brazil.

The Russian leader was inaugurated May 7 as his country and the U.S. lock horns over missile defense, the future of Syrian leader Bashar al-Assad and Iran’s nuclear ambitions. Putin ratcheted up anti-American rhetoric in the run-up to his election victory, while the U.S. has voiced concern at the detentions of demonstrators who oppose his 12-year rule.

“There will probably be raised eyebrows in Washington,” Lilit Gevorgyan, a Russia analyst at IHS Global Insight in London, said today by phone. “His refusal may be taken as a sign that Russia under Putin will indeed be more inward looking and favor a tougher foreign policy.”

Russia’s benchmark Micex stock index, which has gained 0.3 percent this year, is down almost 13 percent since Putin won a March 4 presidential ballot. The cost of insuring government debt against non-payment for five years using credit-default swaps has risen to 207 basis points from 179 on March 2.

Ties Sour

Efforts to improve relations with the U.S. under Obama’s so-called “reset” policy were spearheaded by Putin’s predecessor, Medvedev. Ties have soured of late.

Putin objects to U.S. plans to house parts of a missile shield in eastern Europe, saying it would damage the two countries’ strategic defensive balance. Pre-emptive strikes against the system are possible as a last resort, Nikolai Makarov, chief of the country’s General Staff, said May 3.

Russia is also critical of U.S. positions on Syrian leader al-Assad’s crackdown on opposition protesters and Iran’s nuclear program, citing the ouster of Libya’s Muammar Qaddafi as evidence Western nations are pursuing regime change in the Middle East.

“Relations with the U.S. aren’t what they used to be,” Masha Lipman, an analyst from the Moscow Carnegie Center, said today by phone. “Despite the ‘reset,’ there’s been no movement toward trust or closer partnership.”

Opposition Figures Detained

Most recently, arrests of protesters against Putin’s rule, such as opposition leaders Sergei Udaltsov and Alexey Navalny, have irked the U.S. The Obama administration, which vowed to work with the newly elected Russian government, is “troubled” by reports of violence in Moscow in the wake of Putin’s election, Mark Toner, a spokesman for the State Department, said yesterday.

“Maybe he doesn’t want to face criticism, if not from his partners, then from the media,” Lipman said of Putin’s decision to send Medvedev to the U.S. after this week’s protests.

Putin said he can’t attend the G-8 meeting at Obama’s retreat in rural Maryland because he needs to make decisions concerning the new Russian government, to be headed by Medvedev after he was confirmed by parliament this week.

He must review Medvedev’s proposals on the composition of the Cabinet, presidential aide Arkady Dvorkovich said today, the state-run RIA Novosti news service reported.

Handled All Issues

Medvedev “worked as president for four years and handled all the issues” on the meeting’s agenda, Dvorkovich said, according to RIA. “So there won’t be any problems.”

Obama and Putin will continue to work on matters including nuclear security and non-proliferation, according to yesterday’s White House statement.

The two leaders discussed “the concrete achievements of the last three years and expressed their commitment to enhance bilateral cooperation on the basis of mutual strategic interests,” the White House said.

Putin and Obama will hold a separate meeting at the Group of 20 summit in June in Los Cabos, Mexico. The Russian leader meets Chinese officials in Beijing and attends a United Nations conference on sustainable development in Rio de Janeiro, Brazil, that same month.

Turning down the chance to make the U.S. the first official visit as Putin embarks on a six-year presidential term may further harm his country’s bilateral relationship, said Jenia Ustinova, an analyst at Eurasia Group in Washington.

“Sending a prime minister -- a second-in-command position in the Russian government -- reinforces the notion that the Putin administration will not prioritize relations with the G8 and the West,” she wrote in an e-mail today. “Putin was probably not keen on fraternizing with President Obama.”

To contact the reporter on this story: Scott Rose in Moscow at rrose10@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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