By Owen Matthews
Newsweek International

April 2 2006

April 10-17, 2006 issue - Peter the Great built St. Petersburg in hopes
that its sweeping neoclassical boulevards would prove to a skeptical
Europe that Russia was no longer a barbarous Asian principality but
part of mainstream Western civilization. As Vladimir Putin prepares
to host this summer's G8 summit in the old imperial capital, he
faces a similar challenge. Buoyed by a windfall of petrodollars,
Russia's president has transformed his country from a dysfunctional,
debt-ridden post-Soviet wasteland into a major world economic and
political player. All that's missing is recognition from his peers
that Russia is a full member in the club of the world's leading
industrialized, democratic nations.

He's likely to be kept waiting. Instead of a triumph, the St
Petersburg summit is fast shaping up as the biggest rethink of
Russia's relationship with the West since the collapse of the Soviet
Union. Rather than the recognition that Putin craves, there's talk of
diluting Russia's G8 membership with a revival of the old G7. Just last
week, his old friend George W. Bush responded to calls to boycott the
summit, after it was alleged that Russia had passed military secrets
to Saddam, with a less-than-ringing endorsement: "I haven't given up
on Russia." Give up on Russia? It was only eight years ago that Russia
was ceremoniously welcomed into the G8. Yet now, critics in Brussels
and Washington seem to talk of it as a borderline outlaw nation.

Russia's reversal of fortune!in the eyes of the West!has been swift
and remarkable. Europeans' confidence was shaken this winter, when
the Kremlin cut off gas supplies to Ukraine just as much of Europe
was finalizing long-term energy strategies tied to Russia. Then came
a new Kremlin law restricting foreign NGOs working to build civil
society in Russia!receiving, for their pains, a barrage of hostility
and accusations of espionage. In recent weeks Europe's last dictator,
Aleksandr Lukashenka of Belarus, was re-elected amid police brutality
and heavy support from Moscow. Now, NEWSWEEK has learned, the European
Court of Human Rights (already reviewing hundreds of other human-rights
complaints concerning Russia) has fast-tracked a complaint by the
former Yukos Oil oligarch Mikhail Khodorkovsky, jailed on charges
of tax evasion and fraud after he challenged Putin politically. Soon
European judges will have their say on the fairness of a case that,
to many, has come to symbolize the Kremlin's abuse of power.

Nowhere has the shift been sharper than in America. A tipping
point came late last month, when the Pentagon claimed that Russia's
ambassador to Iraq had passed U.S. war plans to Saddam Hussein on
the eve of the invasion. That sparked a chorus of denunciations from
Congress. "They've endangered American lives," thundered Sen. Edward
Kennedy. "I think you'd have to rethink whether we're going to the
G8 conference." More, the news set off a mini-avalanche of criticism
of Russia's sins, from Putin's steady repression of civil society at
home to his support of obnoxious dictators in Russia's near abroad.

The new thinking is clearly set out in the White House's latest
national-security strategy, issued last month. Washington's principal
foreign policy objective, the paper said, was now the "support of
democratic movements and institutions around the world." And U.S.

Under-Secretary of State Nicholas Burns didn't mince words, either,
when he spoke of exactly which regions of the world Washington has in
mind. The United States would make a point of "encouraging democracy
and withstanding oppression in Central Asia and the Caucasus," said
Burns, as well as urging "Ukraine and Georgia to work toward ties
with NATO and the EU." In the U.S. view, it seems, Russia has become
a major obstacle to America's geostrategic interests.

What a change from 2000, when Bush famously looked into Putin's
"soul" at a meeting in Slovenia and found a reliable partner. Putin
subsequently wasted little time engineering his vision of
"democracy"!dismantling any sources of opposition, closing down
independent TV stations and scrapping elections for regional governors,
as well as waging a bloody war in Chechnya. But here's the rub. Much of
Putin's anti-democratic crackdown took place in his first term, when he
was still in good odor in Washington. So what's changed? The answer,
says Alexei Arbatov, former chairman of the national Parliament's
Defense Committee, is that "Russia is becoming more independent in
its foreign policy; it's becoming more actively assertive in the
former Soviet Union."

>From the Kremlin's point of view, the "rethink" of Russian relations
is sheer hypocrisy, sparked by perceptions that Russia is crossing
U.S. interests. It began, perhaps, with the Kremlin's opposition to
a U.S. war in Iraq. It grew with the ongoing nuclear confrontation
with Iran. More recently, when Moscow invited Hamas representatives
to Russia in the wake of their election victory, Washington complained
that the Kremlin was abetting terrorism. "From now on the main criteria
in the relationship between the United States and other countries will
be their conformity to American notions of democracy," a spokesman
for Russia's Foreign ministry said in an indignant rebuttal. And
indeed, why shouldn't Russia pursue independent policies, its elites
ask. After the mess the United States has made in Iraq, is Moscow
supposed to stand idly by as, for example, Washington puts pressure
on Tehran and the Palestinians?

For all the hoopla surrounding the G8, and whether Russia should be
considered a member in good standing, Moscow has ready and often
reasonable answers to most of the charges against it. Clearly,
democracy is in retreat under Putin, much as he tries to deny it. Yet
it is also true that the Russian president has not been alone. His
predecessor, Boris Yeltsin, long Washington's darling, was no slouch
in browbeating practically all of Russia's media into supporting him
when he was up for re-election in 1996. Yet when Putin did the same
in 2004, the U.S. NGO Freedom House downgraded Russia's status from
"partially free" to "unfree." (U.S. allies Jordan, Kuwait and Yemen,
however, remained "partially free.") By the same token, Russia has
been condemned in Europe and the United States for intriguing in its
near abroad, from meddling in Ukraine's 2004 elections to backing
repressive regimes from Belarus to Uzbekistan. Yet here, too, not
only did Yeltsin support Lukashenka, but he also sponsored separatist
wars in Abkhazia, Transdnistr, South Ossetia and Nagorno-Karabakh!
specifically to punish breakaway republics for disloyalty to Moscow.

Putin has rightly been tarred with Chechnya, but he inherited that
war from none other than Boris Yeltsin.

Perhaps nothing symbolizes Russia's new anti-democratic era more
than the Khodorkovsky affair. Seen from the West, it's the case of a
modern, reform-minded businessman cum dissident taken down by jealous
bureaucrats threatened by his power. The charges against him!from
tax evasion to fraud and money-laundering!have been dismissed
as exaggerated if not trumped up. But while there's little doubt
that the decision to prosecute Khodorkovsky was indeed politically
motivated, the lesser-known truth is that the case against him was
also deserved. As the European Court of Human Rights in Strasbourg
prepares to hear a complaint by the oligarch's lawyers that the state
"persecuted" their client, they would do well to heed such attorneys
as Peter Clateman, a lawyer for Renaissance Capital in Moscow who
has been following the case closely. As he tells it, the prosecutors'
case was not only well put together but proved its claims beyond any
reasonable doubt. "Khodorkovsky is guilty as charged," he says. The
Yukos magnate went to extraordinary lengths to evade Russian laws
and bilk the country of hundreds of millions (if not billions) of
dollars. "You can't prevent a country from enforcing its own laws,"
says Clateman. Indeed, even the CIA listed Khodorkovsky's Menatep
Bank as one of Russia's most criminal in the late 1990s.

Now come other flaps. In late March Putin accused Washington of
"artificially pushing back" Russian accession to the World Trade
Organization. "We have received a list of questions from our American
colleagues requiring additional agreement which we considered settled
long ago," complained Putin. And he has a point. Russia's the only
major economy outside the 149-member WTO, and it has been trying to
gain admission for 13 years. Washington says Russia needs to open up
its banking sector and cut down on DVD piracy. Yet WTO member China
has stricter controls on foreign banks and, admits Dan Glickman,
president of the Motion Picture Association of America, pirates more
DVDs. As if to add insult to injury, Ukraine, a major intellectual
property infringer, is on the verge of WTO membership, thanks to U.S.

It remains to be seen how reports that Russia's ambassador to
Baghdad, Vladimir Titorenko, passed sensitive war intelligence
to Iraqi officials will play out. Russian officials say they have
nothing to hide. "It was no secret that we maintained diplomatic
relations right up to the end," says one Russian diplomat in Moscow,
speaking on background. "In the framework of those relations, there
were extensive briefings and exchanges of analysis." Both the Kremlin
and the Bush administration seem determined to keep such tensions
from escalating. But there's no mistaking the chill in the air. A
recent report by the influential Council on Foreign Relations in
New York urges "the democratic members of the G8, including the
United States," to "protect the credibility of the organization" by
"effectively reviving the G7 within the G8." The purpose: to "convince
Russia's leaders that ground that has been won can also be lost."

Is Russia's membership in the Western club really so precarious? Of
course not. President Bush, for one, hasn't even flirted with the idea
of not going to St Petersburg. But Russia-baiting is a dangerous
game, even so, for it risks alienating the West's main ally in
Russia!Putin himself. For all his faults, he is a modernizer and
far more benignly disposed toward Europe and the United States than
most in the Kremlin!or the Russian population. "Being valued by the
West is very important to Putin," says Arbatov. "He considers Russia
a great Western power!that's the basis of his world view. Excluding
him would be a personal insult, like spitting in his face." As if
sensing that danger, Bush tried to tone down the rhetoric: "I still
think Russia understands that it's in her interest to be West, to work
with the West, and to act in concert with the West." Fair enough. But
having to say so only testifies to how wide the divide has grown.