What is Vladimir Putin up to?

What Russia wants it gets if it can.

Vladimir Putin's contempt for the useless fools of the West who fawn upon him has again been revealed by the sentence given to three members of Pussy Riot last week. An appropriate and proportionate response might be to suspend Russia from the Council of Europe until they are free. This won't happen, as Tory MPs sit with Putin stooge MPs at the Council of Europe and despite hand wringing from a junior minister on the sentence, Cameron and Hague are refusing to criticise Putin.  

In 2008, Cameron flew to Tbilisi from his Aegean holiday to show solidarity with the people of Georgia after the Russian invasion and dismemberment of their country. Last week Putin admitted it was a pre-planned and pre-meditated military assault. At a press conference, Russian reporters were astonished to learn: “There was a plan, it's not a secret”.

Putin made the remarks in response to a TV documentary, The Day That Was Lost, in which Russian generals made outspoken and unprecedented criticisms of the then President, Dmitri Medvedev. The military men accused  Medvedev, who was then commander-in-chief of the Russian armed forces, of failing to act decisively in the crucial first few hours of the August 2008 conflict - a "tragic delay that cost so many lives" in their view. Putin, who was then prime minister, is portrayed in the film as the saviour of the situation - the man who "provided personal leadership" during the military operation. The then Chief of the General Staff, Yuri Baluyevsky, said that that until Putin "delivered a kick, everyone was afraid of something".
 
Now back as president and commander-in-chief Putin was not going to disavow his generals. “There was a plan, and within the framework of this plan that Russia acted. It was prepared by the General Staff at the end of 2006 or the beginning of 2007. It was approved by me, agreed with me."
 
At a stroke the Kremlin line that the Georgian war was wholly the responsibility of Georgia's leader Mikheil Saakashvili was discarded. Until now Russia has always denied taking offensive action. So why has Putin suddenly revealed the truth?
Inside Russia the slapping down of the Prime Minister, Dimitri Medvedev taking a shot across the bows of his predecessor.

According to the Russian political analyst, Mikhail Rostovsky, the comments are evidence of a "war" being waged within the Putin-Medvedev double act, as Medvedev "actively struggles for the role of real co-ruler of the country".
 
As over Syria Putin may just be fed up with pretending he has any interest in working with the West. What Russia wants it gets if it can. Belarus and Ukraine are now firmly  in Moscow's orbit and the invasion of Georgia four years ago was a signal that Russia would not tolerate an independent western aligned state that
formerly was part of the Tsarist and Soviet imperiums.

Putin's remarks were also aimed at Tbilisi. Political tension is rising in Georgia in the run up to Parliamentary elections on 1 October where Saakashvili's ruling party faces a serious challenge. A Georgian oligarch whose fortunes come from business in Russia and whose net worth is about one third of Georgian GDP is backing a recently created party, Georgian Dream. There are plenty of reasons to challenge the personalized rule of Saakashvili but big money seeking to buy power is not attractive. Win or lose Georgia is entering a period of political instability. If the post election scenario is one of chaos and confrontation Russia could be tempted to restore order and stability. This fear is heightened by upcoming Russian military exercises in the Caucasus which also were prelude to the 2008 invasion.

President Obama's reset diplomacy with Russia has produced very little. British policy wavers. Mr Cameron greets Putin warmly at the Olympics and the Foreign Office refuses to implement a unanimous resolution of the House of Commons mandating action against Putin's functionaries connected with the death of Sergei Magnitsky. The Labour MP Kerry McCarthy attended the Pussy Riot show trial on which the British government was silent until the sentences provoked global outrage.
 
Next week British Conservatives will be at the Russian Embassy in London to launch a “Conservative Friends of Russia” group and William Hague has made clear that under his foreign policy trade  trumps human rights.

In two years' time the keen skier President Putin hopes the Sochi winter Olympics will boost Russia. They take place close to the Georgian region of Abkhazia now being turned into a major Russian military zone complete with missile bases. Putin's revelation that the invasion of Georgia was premeditated are not a good augur for a tension-free Winter Olympics in 2014.

Denis MacShane MP is a former FCO minister. Follow him on Twitter as @denismacshane
 

There is now a war being waged within the Putin-Medvedev double act. Photograph: Getty Images
Denis MacShane is MP for Rotherham and was a minister at Foreign and Commonwealth Office
Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR