01/27/2007 04:57 pm ET Updated May 25, 2011

Davos Day 4: An Impressive Russian Delegation

Russia sent an impressive delegation to Davos this year. After good
representation in the Yeltsin years, the level of participation had slipped
somewhat. This time they sent the first team. With higher oil prices, they
are feeling their oats. I was asked to comment on US-Russian relations at a
dinner with top officials from the government and Gazprom. I said that
Americans had too many illusions about democracy in Russia in the 90s, and
we were now going through a stage of disillusionment. Nonetheless, the idea
of turning our backs on Russia and excluding them from the G-8 as Senator
McCain has suggested is a mistake. We have serious business which requires
cooperation regardless of how we feel about their internal backsliding.
For example, we need to cooperate on stopping nuclear spread to North Korea
and Iran, halting the leakage of nuclear materials from former Soviet
arsenals, combating terrorism, increasing energy production outside the
Persian Gulf, and working together on global challenges like climate change
and pandemics. But I said cooperation should not prevent friendly
criticism, and I offered the following four reasons why I thought Russia
will not remain a major power in 2020 unless it changes.

1. They are
failing to diversify away from energy and develop a broad based economy
rapidly enough.

2. They need a rule of law that protects entrepreneurs
and helps foster a middle class that will support a democratic market

3. They have a terrible situation in demography and public
health, and have not invested in an adequate social safety net.

4. Their
current bullying attitudes in the energy area are destroying trust and
undercutting their soft power in other countries.

Most participants seemed
to ignore these criticisms, but it was interesting to hear one important
participant admit that reform might progress faster if oil prices dropped,
and another accept the point that friendly criticism should be welcomed as
long as it is a two-way street. And the fact that they have reappeared in
Davos to defend themselves may be a small but healthy sign.