ALEXANDER ZEMLIANICHENKO/AFP/Getty Images

Russian President Dmitri Medvedev said today that the Russian military is "gaining in strength and power like all of Russia."

To prove it, he marched troops, tanks, and Topol-M nuclear missiles around Red Square today. The event was reportedly planned as early as January, and Medvedev was so intent on making the Soviet-style show of prowess a success that he ordered Russia's air force to make sure no clouds rained on the festivities. So they carried out a cloud seeding operation in advance of the parade. Meant to mark the 63rd anniversary of the victory of Nazi Germany, it was the first parade of its kind in Red Square since 1990.

It is right to consider the images coming out of the parade as a bit disconcerting. But press reports from the scene seem a bit over the top, with stories of "glamorous" troops and "mixed messages." This ignores the realities of today's Russian military. Moscow-based defense analyst Pavel Falgenhauer provides a good reality check:

Russia still has large stocks of Soviet-made military hardware; most of it fully or partially out of order. Only a handful of ships, tanks, and jets are truly operational at any given time.... The task of reviving defense hardware parades on Red Square will face grave technical and logistical problems and in any event will most likely produce only a pathetic imitation of Soviet military grandeur.... One can only hope that ...  no ancient building will collapse as tanks and ICBMs roll into central Moscow to serve the vanity of Russia’s leaders."

Let's not get carried away with the Cold War nostalgia just yet.

It looks like one of the last bits of business of the Vladimir Putin presidency may have been the expulsion of two military attachés from the U.S. embassy in Moscow. The move could be retaliation for the expulsion of two Russian diplomats from Washington in recent months. For those hoping that U.S.-Russia relations might improve under the Medvedev presidency, this is not a promising sign.

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Georgia's State Minister today described the prospect of war with Russia as "very close" as more Russian troops poured into the breakaway region of Abkhazia. Meanwhile, Abkhazia's "foreign minister" welcomed the troops and said his government favored Russia taking military control.

Despite the inflammatory rhetoric, it still seems unlikely to me that Georgia would actually go to war with its much larger and militarily superior neighbor. Since Georgia is looking for NATO protection and Russia wants keep Georgia out of NATO at any cost, the war of words seems tailored for an audience in Washington and Brussels. Both sides have a vested interest in the rest of the world perceiving the threat of war as genuine.

Still, as Russian web journalist Alexander Golts argued in today's Moscow Times, a war of words can quickly become something more serious if both sides feel the need to save face:

And so we have a paradoxical situation. Nobody wants war, but both sides are doing everything to spark a military conflict. This is not the first time this situation has arisen. Recall how World War I began. States wanted only to protect their national pride and frighten their opponents. But at some point, the tensions escalated sharply and, coupled with mass mobilizations of their armies, the conflict in the Balkans spun out of control with tragic consequences for the entire world. This scenario could be repeated in the Caucasus.

CIA Director Michael Hayden gave a smart talk earlier this week about where the world is headed and what role the United States will play in it (video). With the world population set to grow about 34 percent by mid-century, the agency will be especially attentive to demographic transitions in countries that can't sustain higher populations, he said. But Hayden also had a message for China:

China is a competitor—certainly in the economic realm, and, increasingly, on the geopolitical stage. But China is not an inevitable enemy. There are good policy choices available to both Washington and Beijing that can keep us on the largely peaceful, constructive path we've been on for almost 40 years now.

On a very hopeful note, Hayden also said Americans have to start putting themselves in others' shoes:

[A] greater number of actors will have influence on the world stage in this century. And that presents one overriding challenge to those of us responsible for our nation's security: We must do a better job of understanding cultures, histories, religions, and traditions that are not our own. We must broaden our understanding, and guard against viewing the world exclusively through an American prism. We must not rely exclusively on an American—or even more broadly, Western—lens in assessing foreign challenges and helping policymakers decide how to respond.

Georgia's Mikhail Saakashvili; POOL/AFP/Getty Images

Georgia, whose bid to join NATO was put on hold earlier this month thanks to Russian pressure, is now getting back at its unfriendly neighbor to the north by blocking Russia's membership in the World Trade Organization. While it's not clear how much Russia's leaders really care about the WTO, this is sure to at least annoy them.

The two countries are locked in an increasingly tense dispute over the status of Georgia's separatist regions and Russia's alleged shootdown of a Georgian spy drone. Today, Russia announced it is increasing its peacekeeping force in the Abkhazia reigion and accused Georgia of preparing an attack. Watch this space.

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Do you find Vanity Fair and Vogue just a bit too bourgeois? Are you tired of lumpen-proletarians who don't know their place trying to friend you on Facebook? Can you never find anything on TV classy enough to show on that sweet plasma screen you had installed in your breakfast nook? Well then Snob may be for you!

"Bad-boy oligarch" Mikhail Prokhorov, who at 42 is Russia's fifth-richest man and the country's "most eligible bachelor," is investing $150 million in a new lifestyle media brand called Snob. The brand will include an exclusive social networking site, magazine, and TV station, all aimed at upwardly mobile young Russians.

Prokohorov, who made his fortune by investing in nickel and gold during the 1990s, is a kind of poster boy for the champagne-drinking, Mercedes-driving set that Russians derisively refer to as "new Russians." His motivtion for this project, he says, is to reclaim the word "snob" from its connotations of unearned privilege and make it a kind of rallying cry for Russia's nouveau riche:

Snob to us means a person who is a 'self-made man', a person who has gained a right to snobbishness," he said emphasizing the main difference with the British meaning which he said referred to inherited wealth.

The Snob media empire aims to focus on "lifestyle features, business news and travel." If Prokohorov's personal hobbies are any indication, the snob lifestyle also includes skiing, art collecting and upscale prostitution rings.

After rumors spread last Friday that Putin had divorced his wife in favor of a medal-winning rhythmic gymnast, the outgoing president seemed surprisingly good-humored about the whole thing. To a crowd of journalists in Italy he said,

In other publications of the same type, the names of other successful, beautiful young women from Russia are mentioned. I think it won't be unexpected if I say that I like them all — just as I like all Russian women."

But as it turns out, Putin's last laugh was to pack a slightly bigger punch. That same day, Moskovsky Korrespondent, the tabloid that broke the story, was shut down. National Media Company, the media house under which the tabloid ran, denied any suggestion that the suspension stemmed from political pressure, claiming instead the paper had closed so that they could develop "a new concept." Incidentally, the paper’s editor-in-chief has resigned.

Perhaps National Media should consider a Russian version of Hunting Illustrated as its "new concept." It might put the company back on the big man's good side.

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The Russian tabloid Moskovsky Korrespondent has spread rumors that outgoing Russian President Vladimir Putin has left his wife, Lyudmila Putina, in favor of the younger, sprightlier rhythmic gymnast Alina Kabayeva (left).

Kabayeva, known for her medal-winning flexibility, would be quite the catch.  Since winning the gold for rhythmic gymnastics (yes, that’s the one with the hula-hoops), the Uzbek native has not only appeared in this music video but now currently serves as a parliament member in the lower house of the Duma –- representing Putin's party, of course.

Today, however, at a meeting with Italian leader Silvio Berlusconi, Putin flatly denied the story as containing "not a single word of truth." That's just as well for Miss Kabayeva. This is what Lyudmila has to say about life in the happy Putin home:

He never praises me and that has totally put me off cooking...   He has put me to the test throughout our life together. I constantly feel that he is watching me..."

 Guess once you've gone KGB there's no going back.

University of Texas

Is Georgia teetering on the brink of civil war? Or will the status of the breakaway republics of Abkhazia and South Ossetia remain an ambiguous frozen conflict? Either way, Russia wins.

On Wednesday, the Russian foreign ministry ratcheted up the pressure on Georgia by establishing legal ties with the two republics, which have been quasi-independent entities since the early 1990s. Georgia's leaders are predictably apoplectic over what they see as a Russian annexation of one third of their territory. Putin claims he wants to take steps to improve relations with Georgia and has instructed his government to lift trade restrictions between the countries. These overtures haven't gone over that well either, though. The United States and European Union strongly criticized Russia's meddling in the breakaway regions, but the Georgians probably sense that Western onlookers aren't prepared to do much to back up their words.

Whatever happens, it's likely to be good for Putin. If violence breaks out in the republics, it effectively scuttles Georgia's bid to join NATO. If the stalemate persists and Georgia is forced to live with the new arrangement, it demonstrates Russia's ability to impose its will on its neighbors without international consequences. In either scenario, Putin also gets to attack Western hypocrisy over the recognition of Kosovo.

I guess "lame duck" doesn't really translate in Russian.

VLADIMIR RODIONOV/AFP/Getty Images

Vladimir Putin took another step toward consolidating his post-presidency powers Tuesday by accepting the position of chairman of the United Russia Party, the loyal faction that has supported the president throughout his term. The only thing is, he's not actually joining the party. At Putin's request, United Russia has tweaked the rules so that Putin can be chairman without actually being a member.

President-elect Dmitry Medvedev also refused party membership, which makes sense. It wouldn't look very good for Russia's president to be outranked in the party by his own prime minister. But Putin's legal maneuvering is more unexpected and more significant. By maintaining his political independence, Putin may be signalling that he has no intention of ceding his central position in Russian politics.

As chairman Putin now effectively controls the State Duma, where United Russia holds an overwhelming majority. This could give him the power to approve new legislation, change the Russian constitution, or initiate impeachment proceedings against Medvedev. United Russia's overwhelming power is already drawing comparisons to the old Soviet Communist Party. Together with last week's announcement that the prime minister (who, incidentally, is also Putin) will control the appointment of regional envoys, there seems to be a major restructuring of power away from the Kremlin to the Russian "White House," where Putin will be taking up residence next month.

But by remaining somewhat removed from the party, Putin can still appear above the  fray of the Duma and maintain his highly personalized political "brand." He is also free to criticize the party as he did yesterday, saying, "It should be debureaucratized and cleansed of strange people pursuing only selfish goals." (This might thin the ranks quite a bit.)

The big unknown is what Medvedev thinks about all of this. It's now clear that Vladimir Vladimirovich has no intention of fading away. The new president will need all his wits about him if he plans to be more than a figurehead. Something for Russia's yogi-in-chief to meditate on.

DMITRY ASTAKHOV/AFP/Getty Images

As many of you know, I have been blogging this week from the Salzburg Global Seminar’s session on Russia: The 2020 Perspective.

Most of what I've written so far has been focused on U.S. policy toward Russia. But the United States can only influence Russian domestic developments on the margins. So, what does Russia itself need to do over the next 12 years?

If I were president of Russia, my absolute top priority would be to strengthen property rights, which will make it possible for Russia to diversify its economy away from oil and gas, build a real middle class, and bring in much-needed foreign investment and advanced technology. There is much work to do. Exhibit A: the case of Hermitage Capital Management Limited, which until recently was the top portfolio investment fund working in Russia.

Hermitage CEO Bill Browder, you may recall, made news in 2005 when he was suddenly barred from reentering Russia. Browder had been making too much noise about "shareholder rights," and in doing so he apparently stepped on some powerful toes. The fund has since pulled its $4 billion worth of investments in Russia, but new details are emerging that paint a disturbing picture of the business environment in the country. Last week, Hermitage updated its investors on a campaign of "administrative harrassment" in Moscow that could have ended with corrupt local officials absconding with hundreds of millions of dollars worth of the fund's assets.

According to Hermitage, the story goes like this. In summer 2007, its offices were raided by the Moscow Interior Ministry, supposedly as part of an investigation into Kameya, a company owned by one of Hermitage's clients. The allegation was that Kameya owed $48 million in taxes. When Kameya's people went to clear things up with the Tax Ministry, officials there confirmed in writing that in fact, the company was eligible for a refund and owed no back taxes. Meanwhile, when one of Hermitage's lawyers complained about the raid's questionable relevance to Kameya, he was beaten by Interior Ministry goons, arrested, and fined 15,000 rubles for his insolence.

So, what was going on? Hermitage alleges that "a more sinister agenda" was at work. The real purpose of the Kameya raid was for Moscow Interior Ministry officials to get their hands on documents that could be used to seize the fund's assets.

Here's how the attempted scam worked. The Moscow Interior Ministry official in charge of the "investigation" launched what Hermitage calls a "fishing expedition" to locate the fund's assets -- demanding all records from four foreign banks that might lead him to the prize. At the same time, somebody used the captured documents to fraudulently change the ownership of three investment vehicles owned by British bank HSBC, a Hermitage trustee. From there, it gets complicated, but the bottom line is that a mysterious team of lawyers representing "their" companies then assented to a fake court ruling that would have put the three HSBC entities on the hook for $380 million. Luckily for Hermitage, the vehicles were "dormant" and held no assets, so the would-be millionaires came up empty.

"The more we learned, the more unbelieveable it became," Hermitage says. The fund's management passed along their findings to Russia's finance minister in Davos, which were then put in front of President-elect Dmitry Medvedev and a pair of investigations has begun. The year before, though, Medvedev had personally assued Browder in Davos that his visa troubles would be cleared up, and he couldn't deliver. Now, Hermitage says the officials involved in the attempted theft are making "spurious claims" and feeding misinformation about the fund to the press -- so the fund is going public with the story.

This case will be a key test for Medvedev,  a lawyer by training who has vowed to tackle Russia's property rights and corruption problems when he takes office in May. But as European Commissioner for External Relations Bentia Ferrero-Waldner put it to us in Salzburg this week, "Ultimately the world will assess Mr. Medvedev on his deeds, not just on his words." It's showtime, Dmitry.

Blake Hounshell is Web Editor of ForeignPolicy.com. He has been blogging this week from the Salzburg Global Seminar session on Russia: The 2020 Perspective.

VLADIMIR RODIONOV/AFP/Getty Images

It's been one of the recurring themes of the Bush administration: a rejection of the traditional concept of diplomacy as a game of give-and-take in which trading away concessions allows you to get what you want on your top priorities.

Nowhere is this more evident than in U.S. policy toward Russia. Allow me to explain what I mean. The United States and Russia differ starkly on a few discrete issues: NATO enlargement in former Soviet republics such as Ukraine and Georgia, the ABM Treaty and the proposed U.S. missile shield in Poland and the Czech Republic, the Conventional Forces Europe (CFE) Treaty, Kosovo, the Nabucco trans-Caspian pipeline, and democracy and human rights. Meanwhile, the United States has sought cooperation from Russia on Iraq, Iran's nuclear program, the six-party talks with North Korea, and a host of other issues large and small.

Normally, you might think that the United States would prioritize these issues and make tradeoffs to achieve its most important objectives. But, as President Bush made clear in Ukraine last week, when he said, "There's no tradeoffs, period," U.S. officials don't believe they have to make any concessions. Each issue should be viewed separately and on its merits, they argue, rather than linked. Ukraine and Georgia should be admitted to NATO because it's the right thing to do. Russia should not feel threatened by U.S.-backed "color revolutions" in former Soviet republics or by American defense installations in Poland, the Czech Republic, Romania, and Bulgaria. Russia should accept Kosovo's independence. Russia should cooperate in preventing Iran from going nuclear because a nuclear Iran is not in Russia's interests. And so on.

The only problem is, the Russians have a vastly different view of their own interests. They see U.S. moves, such as trying to convince Turkmenistan to sell its gas to Europe or pushing to bring Georgia into NATO, as extremely hostile acts reminiscent of the cold war. It makes them less willing to cooperate on other issues; it heightens their paranoia and feeling of besiegement, and it strengthens the elements within the Russian strategic class who see geopolitics as a zero-sum game with the United States as their chief adversary. (By the way, these are the same guys who aren't so into the whole democracy thing.) For many years, a failure to take Russian interests into account wasn't an obvious problem because the Russians were weak and took their lumps. But as we're seeing nowadays, they are willing to make provocative moves such as pulling out of the CFE treaty or threatening to split Ukraine when they don't get their way.

Now, maybe Russia is still a paper tiger and its bluster shouldn't dissuade the United States from strongly backing pro-Western governments in Ukraine and Georgia or trying to cut Gazprom off at the knees in Central Asia. Maybe some degree of democratic backsliding was inevitable after the chaos of the 1990s. I tend to think, though, that the United States underestimates how these issues interrelate at its peril. In the real world, there are tradeoffs, and we can't wish them away.

Blake Hounshell is Web Editor of ForeignPolicy.com. He has been blogging this week from the Salzburg Global Seminar session on Russia: The 2020 Perspective.

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What do Russians think about the U.S. electoral campaign? I spoke with two distinguished Russian scholars last night here at the Salzburg seminar I'm attending this week.

The first scholar told me that the hardliners and the security establishment are eager to see John McCain in power. He's more or less a known quantity, and his recent statements about ejecting Russia from the G8 will make it easier for them to make the case that the United States seeks to humiliate and corner Russia. A McCain election would be seen as evidence that Americans want to continue George W. Bush's policies, which are generally unpopular in Russia.

On the other hand, the scholar said, Republican presidents from Nixon to Ford to Reagan have a much better track record in making overtures to Russia, perhaps because they don't fear being painted as weak.

Both scholars, who come from the liberal end of the political spectrum in Russia, seemed intrigued by Barack Obama as someone who could offer a "fresh start" in U.S.-Russia relations. They weren't so comfortable, however, when I told them that Michael McFaul is Obama's main Russia advisor. McFaul, a past FP contributor, is well known in Russian foreign-policy circles for his harsh criticism of Putin's democratic credentials.

Clinton would be more predictable, given that her main Russia advisor is Stephen Sestanovich. His 2006 report for the Council on Foreign Relations was read closely in Russian political circles. But Richard Holbrooke, another Clinton advisor and a potential secretary of state, is seen as hostile to Russian interests for his role in the Balkans during the 1990s. When I told them that it's not inconceviable that Holbrooke would get a top job even under Obama, they weren't too psyched.

Blake Hounshell is Web Editor of ForeignPolicy.com. He has been blogging this week from the Salzburg Global Seminar session on Russia: The 2020 Perspective.

If you want to wrap your head around Russia's current attitude in the world, you have to understand the Russian view of three key periods: the breakup of the Soviet Union, the chaos of the 1990s, and the so-called color revolutions in Ukraine and Georgia. Dmitri K. Simes ably deals with the key issues here, but I just want to highlight this insightful quote about U.S.-Russian relations in the 1990s:

We haven't played everything brilliantly with these people; we haven't figured out how to say yes to them in a way that balances off how much and how often we want them to say yes to us. We keep telling Ol' Boris [Yeltsin], "'OK, now here's what you've got to do next – here's some more shit for your face.'"

–Bill Clinton to Strobe Talbott, 1996

Blake Hounshell is Web Editor of ForeignPolicy.com. He has been blogging this week from the Salzburg Global Seminar session on Russia: The 2020 Perspective.

DANIL SEMYONOV/AFP/Getty Images

The focus of the seminar I'm attending here in Salzburg is figuring out what Russia will be like in 2020. It's no small task, since Russia's political and economic development in the past few decades has been notoriously unpredictable.

One thing we do know is that the future of Russia will largely be determined by oil and gas, at least in the near term. Oil and gas account for about 20 percent of Russian GDP and more than 60 percent of its exports. The rest of the economy depends heavily on energy. As one panelist put it today, oil is like the blood of the economy, so you can't think about it solely in percentage terms. You can't live without blood, no matter what its percentage of your body weight might be.

The recent high oil prices have a great deal to do with Russia's democratic backsliding, as Thomas Friedman argued in "The First Law of Petropolitics." Oil revenues allow the Russian state to satisfy its citizens without granting them greater political rights. So, if you want to understand where Russian politics are headed, you need to know where oil prices are going to go.

But here's the problem: Nobody has a clue what oil prices will look like in 2020. As one of the presenters pointed out, even people you would think would be the top experts on this issue are usually wrong. Take the case of former BP CEO Lord Browne, who told a crowd at the Peterson Institute back in 2005 that he expected "a price that stabilizes at around $30 a barrel." Whoops. Today, oil prices are just under $107 per barrel.

If oil-company CEOs can't predict the future accurately, what about the oil futures market? In theory, oil traders ought to know better than anyone where prices are headed, since their livelihoods depend on making sound decisions. In reality, though, oil futures prices are almost always just an extrapolation of today's prices into the future. If oil is $10 a barrel today, the futures market will guess that it will be $10 tomorrow.

The obvious implication here is that anyone trying to forecast Russia's future is in big trouble. Another implication is that Dmitry Medvedev is only going to be able to shape Russia's development on the margins. More on that soon.

Blake Hounshell is Web Editor of ForeignPolicy.com. He has been blogging this week from the Salzburg Global Seminar session on Russia: The 2020 Perspective.

Artyom Korotayev/Epsilon/Getty Images

Greetings from Salzburg, Austria, where I will be blogging this week from the Salzburg Global Seminar's session on Russia: The 2020 Perspective. I'm here thanks to the generosity of the Knight Foundation, which paid my way. I'm by no means an expert on Russia, but with Vladimir Putin's succesor now chosen and the NATO summit freshly ended, the timing couldn't be better for me to get up to speed.

One of the assigned readings for the session was "Putin's Plan," a fascinating  Washington Quarterly article by Brookings scholar Clifford Gaddy and CSIS Russia expert Andrew Kuchins. Gaddy and Kuchins got their hands on a dissertation Putin wrote for his 1997 graduate degree for the School of Mines in St. Petersburg. They argue that the thesis, "Strategic Planning of the Reproduction of the Mineral Resource Base of a Region," does much to explain Putin's behavior as CEO of Russia, Inc. Other scholars, notably the Carnegie Endowment's Martha Brill Olcott, have examined excerpts from the dissertation before, looking for clues to Putin's thinking about the relationship of energy companies to the state. But Gaddy and Kuchins extend the analysis to the Medvedev succession, arguing that Putin was looking above all for someone who could replace him as Russia's top "strategic planner."

In the course of his research, Gaddy discovered that Putin -- or whoever really wrote the disseration -- had actually lifted 16 of the document's 218 pages nearly verbatim from a Russian translation of Strategic Planning and Policy, a 1978 mangement tome written by University of Pittsburgh professors William R. King and David Cleland (though the author did include a reference to the book).

It's actually quite common for Russian politicians to beef up their resumes with questionable degrees and/or have ghostwriters pen their theses. It's also standard practice, I'm told, for intelligence officers to borrow analyses with attribution. Perhaps Putin was merely upholding the academic standards of the KGB, his former employer. Whatever the case, the outgoing Russian president obviously never suffered the fate of U.S. Sen. Joseph Biden, whose presidential aspirations were doomed in 1987 by accusations of plagiarism. Instead, the Russian media leapt to Putin's defense and said that King and Cleland had gotten their ideas from Soviet economists. Still, Russia's CEO seems touchy about the topic. When Gaddy asked Putin about his dissertation a few years back, he tensed up and dodged the question.

As for Dmitry Medvedev, many analysts here seem to be searching for clues that the Russian president-elect won't simply "plagiarize" Putin's policies. Will he be his own man? How long will it be before he can stake out a different path? More on this important issue in the next installment.

Blake Hounshell is Web Editor of ForeignPolicy.com. He has been blogging this week from the Salzburg Global Seminar session on Russia: The 2020 Perspective.

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President Bush's bid to win NATO membership for Ukraine and Georgia turned out to be a non-starter. Member states opposed admitting the countries to a "Membership Action Plan," choosing instead to merely issue a non-binding pledge to admit them some day and review their application again in December. (Albania and Croatia did get the green light, continuing the alliance's expansion into the Balkans.) Russia's ambassador to NATO, Dmitry Rozogin, was quick to declare that the review would alter nothing:

I doubt very much that in less than a year Georgia can solve its territorial problems and Ukraine can change the current proportion of NATO sympathizers," he said.

While it's easy to attack the Russians' motives, he's actually quite right. Half of Ukrainians oppose joining NATO and Georgia is still grappling with decades-old territorial conflicts in Abkhazia and South Ossetia. Both countries believe that NATO membership can help them resolve their internal divisions. European governments were skeptical of this approach from the beginning. Estonian President Toomas Ilves had this advice, based on his own country's experience with NATO membership:

Don't be a Marxist" he said, "and by that I mean Groucho Marx-ist". He reminded the audience of the scene where Groucho Marx walks into a bank with a gun to his head claiming that he'll take his life unless they give him all their money.

But if Georgia and Ukraine's leaders' understandable desire to join NATO makes them Marx brothers, Bush comes out looking like a stooge. It's fairly clear that the primary U.S. goals in Bucharest were gaining support for a missile defense system in Eastern Europe and cajoling the Europeans into a greater commitment in Afghanistan. Why Bush would want to distract from these goals with an initiative that was bound to fail from the start is beyond me.

Fourteen members of a Russian doomsday cult on Tuesday abandoned the remote underground bunker where they had been hiding for nearly half a year awaiting the end of the world.

Full story here.

The world's 16th richest man -- already the proud owner of the world's longest yacht -- may soon also be the owner of the world's largest drill bit (think he’s compensating?).

Roman Abramovich, the Russian dropout turned oil tycoon, recently invested $160 million in the 19-meter-wide drill, outdoing the previous recordholder by a good four meters.

Not only has Abramovich set the record, but his colossal purchase just happens to coincide with rumors that President Vladimir Putin will propose the construction of a physical link between Russia and the United States: a 64-mile, $66 billion tunnel beneath the Bering Strait.

Abramovich has denied that his purchase has any connection to Putin's plans. But seriously, but what else is he going to do with a drill that can bore a hole wide enough for a four-lane highway?

Rumors of the tunnel come at a precarious time in U.S.-Russian relations, currently strained by the Kosovo decision, the proposed U.S. missile shield, and George W. Bush's renewed NATO membership push for former Soviet states Georgia and Ukraine.

Hopefully, all this Cold War nostalgia won't stand in the way of a great bicontinental highway. Just imagine the road trip possiblities -- you could park your RV in Red Square.

Anders Åslund predicts in today's Moscow Times that Russia's oil revenues and current account surplus will help it weather the subprime storm. In fact, the country may become increasingly attractive to Western investors:

What better safe haven for investors is there than Russia? First, the ruble is undervalued. Second, Russian equities rose moderately last year and are quite cheap by any comparison. Third, commodities are scarce and their prices have surged for long. As they have become securitized, they can easily be purchased by ordinary people. They are likely to be a prime object of speculation or just safekeeping. As a consequence, Russia's export revenues might soar even more and the economy will flourish, rendering all kinds of Russian assets -- real estate, stocks and bonds -- attractive to foreign investors. At the same time, the country's macroeconomic indicators will continue to ride and further attract investors.

The main worry, Åslund feels, is that excessive capital inflows will create a "resource curse" the fosters corruption and thwarts efforts at reform.

I would only add that if Dmitry Medvedev's government plans to attract foreign investment during the financial crisis, shakedown tactics, such as those it is currently employing against BP's Russian venture, need to go.