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Business: RenCap Cuts RTS '08 Target to 2,350
Renaissance Capital on Monday slashed its year-end forecast for the benchmark RTS Index from 3,000 to 2,350 and increased its equity risk premium for the country from 4 percent to 5.5 percent in a sign of continued investor jitters.

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Wednesday, September 03, 2008 Updated at 03 September 2008 0:24 Moscow Time.

The Moscow Times » Issue 3973 » Reading The Kremlin

How Pique and Spite Can Destroy Relations

25 August 2008By Vladimir Frolov

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The failure of Moscow and Washington to communicate over the conflict in Georgia has led to a rhetorical race that now threatens to shatter the U.S.-Russian relationship. Personal pique and spite have begun to cloud the leaders' judgment.

Russia failed to impress upon Washington before the conflict the true extent of its resolve to punish Mikheil Saakashvili's regime if it attacked South Ossetia. President Dmitry Medvedev did not call President George W. Bush beforehand to tell him in no uncertain terms what the Kremlin's response would be if Saakashvili broke away from the U.S. leash. Moscow figured it was a fool's errand.

But Washington tried to warn Tbilisi not to get into a fight with Moscow, but Bush never bothered to tell this directly to Saakashvili, and U.S. Secretary of State Condoleeza Rice delegated this task to her underlings.

Moscow did not rush to inform Washington about its real aims in the operation. Apart from the confusing encounter between Prime Minister Vladimir Putin and Bush in Beijing during the Olympic Games, no high level contact between Washington and Moscow occurred before Aug. 10, when Foreign Minister Sergei Lavrov, after ignoring her calls for three days, finally picked up the phone to confront a fuming Rice.

The United States' unwillingness to recognize that it was Saakashvili who started the war by attacking South Ossetia and killing Russian peacekeepers dismayed and angered the Kremlin.

Rice issued statements in support of Saakashvili and compared Russia's incursion to the Soviet invasion of Czechoslovakia in 1968. Unwisely, Rice chose to publicly humiliate Medvedev by implying that he might not be the real authority in Russia -- a slight that could get her disinvited to Moscow.

In contrast with Rice, U.S. Defense Secretary Robert Gates urged caution about the Georgian accounts of the war at a time when the United States did not have its reconnaissance satellites in place. He was then able to use Saakashvili's exaggerations to contain hawks' arguments for direct U.S. military support for Georgia, an informed friend in Washington told me. Gates has become an agent in salvaging the U.S.-Russia relationship.

I am told that Medvedev quietly sent his unofficial aide Igor Yurgens to Washington last week to sound out ways to rebuild trust. Medvedev seems to understand that what we've got here is a failure to communicate.

Vladimir Frolov is president of LEFF Group, a government relations and PR company.