In two major policy speeches (in Berlin and in St. Petersburg) in less than two days, Russia’s President Dmitry Medvedev made a splash by putting the blame for the global financial crisis squarely on the United States, and by calling for a sweeping overhaul of the international financial order and its sustaining infrastructure.

In a speech at the St. Petersburg Economic Forum, Medvedev presented a passionate argument against “economic nationalism” of states that “do not want to share the benefits of globalization,” and erect barriers to protect themselves against the financial storm, now spreading through the world economic system.

Medvedev singled out the United States as one of the key culprits of the financial crisis, by asserting that one of the principal underlying causes of the crisis is that the United States’ central role in the international economic system no longer matches its actual capabilities. “No matter how large the U.S. market was and no matter how reliable the U.S. financial system was, they could not substitute for the global commodities and financial markets,” he said. “It was erroneous to believe that one state, even the most powerful one, can assume the responsibilities for global governance, whereas global governing institutions (the IMF), responsible for international financial policy, had virtually no instruments to influence the strategies of the market players.”

Medvedev decried the proliferation of unregulated complex financial instruments by the largest world economy, which allowed for massive capital inflows into commodity backed securities (like oil or grain) in the absence of sound fiscal and economic policies. He underscored the financial prudence of the Russian government and its policy of balanced budgets and low taxes, while criticizing the United States and other Western powers for trying to artificially limit the Russian investment into the suffering Western economies.

The president called for a sweeping overhaul of the international financial architecture, and suggested that broad international dialogue to that effect could be initiated in Russia this year. He singled out three principal areas that are in need of reforms ­ streamlining the international financial institutions and coordinating their work more effectively in different financial markets; improving the capabilities of market players to evaluate their risk exposure (better information disclosure and more efficient work by the international rating agencies, for example); and stimulating more rational behavior of the “money managers,” by changing the bonuses system toward more results-oriented practices.

Medvedev also promised to turn Moscow into a major international financial center, and to make the ruble into a regional hard currency in the near future.

This is not the first time that Russia challenges the existing economic world order. Last year, at the same forum in St. Petersburg, former President Vladimir Putin criticized the U.S. role in the international economic architecture. Later the same year, Russia objected to the EU promoting the candidacy of Dominique Strauss Kahn as the new IMF Director General, on the grounds that he would not be able to reform the IMF, and put forward the candidacy of a former Czech central banker.

As the international financial crisis unfolded, the subject of Russia playing a central role in modernizing the international financial infrastructure has been widely discussed in Moscow. The expectation here is that now that Washington has lot of egg on its face following the mortgage debt debacle, Moscow could provide a reliable anchor for the international financial system. Many government economists in Moscow believe that the IMF and the World Bank have failed to adapt to the new global realities, and are pushing policies that hurt, rather than stimulate economic growth in many countries.

Does Moscow have a point? Is the restructuring of the world economic architecture in order, as the current financial crisis shows? Is Medvedev simply making populist shots at the United States, or is there a more coherent strategy at play, that seeks to assert Russia’s economic prowess and eventually win Russia a major role in shaping the international financial system? Is this a realistic prospect, or is Moscow exaggerating Russia’s real influence on the international financial arena? What chips can Russia bring to the table? Why is Medvedev supporting open markets and globalization, and denouncing “economic nationalism”? Is he aiming to lift barriers to Russian investment in the West? How would Western governments and international investors view Medvedev’s bold ideas?

Eric Kraus, Director, the Nikitsky Russia/CIS Opportunities Fund, Moscow:

There is a fundamental difference between the rich and the poor ­ the rich have a great deal more money. This tends to create an unhealthy sense of intrinsic superiority for the former, balanced by a corresponding degree of resentment in the latter. Equally, the dominant powers tend to see the current system as being not just intrinsically virtuous, but especially immutable ­ whilst the have-nots can hardly conceal their impatience to see it overturned.

Conspiracy theories are pointless. The dollar-centric global financial system was a logical outgrowth of the postwar distribution of power, in which the United States was not just the dominant Western economy, but alone, outweighed the next half-dozen combined.

No country could be expected to resist the temptation offered by the ability to create international reserves by fiat. The first internationally negotiated economic edifice in history, the Brenton Woods system, eventually collapsed when Vietnam-era deficit spending exhausted any pretence that the United States could back each dollar in circulation with 1/28th of an ounce of gold. Yet, given continued U.S. economic preponderance, it was replaced not by a diversified system, but by a dirty-float against the U.S. dollar, which allowed Washington to continue financing consumption far in excess of domestic production for several decades. It is possible that the George Bush-era explosion in American consumption of Asian exports, along with a massive buildup in military spending, sounded the death knell for the entire edifice.

In any event, the dollar-based system was doomed at least as much by the secular rise of the Asian economies and the creation of the euro as by U.S. faith-based economics. The spontaneous reorganization of the global economic system now underway is paralleled by the redistribution of political power; neither process can be expected to be entirely smooth and consensual.

Medvedev is correct in that even if the U.S. economic policy had been selfless and responsible, equally encompassing the interests of all stakeholders in the global system (and to expect any group of politicians, living and dying by the next electoral cycle, to sacrifice short-term expediency for the goal of long-term sustainability would be dangerously utopian), the rapid decline in the relative weight of the United States would have eventually rendered the system archaic.

The act of naming things can itself create a new reality, and compensating for its inglorious foray into Russia in the run-up to the 1998 crisis, Goldman-Sachs has unwittingly done so for the weightiest emerging economies. Whilst the differences between the individual BRIC countries far outweigh the similarities, what they do have in common is a passionate desire to wrest a degree of influence commensurate with their economic weight from the old G7 countries.

It should be obvious that any system allocating a greater weighting to the UK alone than to India and Brazil taken together is not long for this world. Although Brazil and India retain a predominantly internal focus, given the imperatives of feeding their huge and impoverished populaces, Russia and China both generate massive capital excesses and increasingly venture out onto the global stage. China’s willingness to challenge the Atlantic-centric system increases, as the collapse in U.S. consumer demand forces it to reallocate economic production to alternative markets; after the humiliations of the 1990s, Russia is delighted to show that the Bear is back ­ and will be treated with the respect owed to a major player.

Do not expect a new global economic order to emerge from the vaults of the Russian Central Bank; expect instead the ruble as the predominant regional currency, the deployment of massive financial firepower from Russia’s burgeoning international reserves, and an increasingly focused energy policy. What a difference a millennium makes!

Eugene Kolesnikov, Private Consultant, the Netherlands:

President Medvedev made two very important international policy statements in Germany and in St. Petersburg that continue and further develop the policies pursued by Russia over the last eight years. Evaluation of these statements should take into account their difference as far as urgency of the issues and main target audiences are concerned.

In Germany, Dmitry Medvedev emphasized the inevitability of the advent of a polycentric international system, reiterated the case against NATO enlargement, rejected as catastrophic the idea of a “concert of democracies” dreamed up by the United States, and offered an alternative for world security governance based on “genuinely equal cooperation between Russia, the European Union and North America as three branches of the European civilization.” This policy statement primarily targets Western policy makers. Toward the rest of the world, Russia demonstrates its commitment to playing a role of the defender of multi-polarity and network diplomacy within this troika. This commitment was made particularly clear during Medvedev's visit to China that preceded his trip to Germany. Security issues for Russia are quite urgent, and Russia has the capability to throw its weight around in Eurasia to make the point abundantly clear. This policy statement thus reflects Russia’s immediate priority on the international arena.

President Medvedev's speech in St. Petersburg unequivocally stated the Russian view on the dire state of the world economic order, and on what should be changed­just what Putin’s Munich speech did with regard to the world political order. Medvedev openly criticized the United States for the egocentric and reckless economic policies that have lead to huge imbalances in the world financial system, created a threat of protracted global economic slowdown, and increased poverty. Medvedev also openly condemned the Western bio-fuel gamble. All this is not new, but as in the Munich case, politically-correct Western leaders have been too hypocritical to publicly state the obvious facts.

What Medvedev proposed at the forum is a sweeping change of the world financial and economic governance system. This change implies creation of a basket of reserve currencies (including the ruble), reorganization of international financial institutions by doing away with the domination of the United States and EU and increasing the role of big developing economies, better regulation of financial markets, and a concerted effort of developed and developing countries in dealing with the agricultural and energy crises.

This policy statement is aimed primarily at the champions of new economies and the oil windfall countries, such as China, India, Brasil, and Saudi Arabia. This is a (very) long-term project, that Russia knows well it cannot implement on its own. But this country is large and influential enough to start co-opting non-Western countries that have suffered and will continue to suffer most from the unilateral policies of the United States (and EU), that is still pulling the strings of the world financial and economic systems. The United States and EU will not give up these strings unless forced to by other players. Sustained economic growth in the BRIC and other non-Western countries and the related redistribution of wealth and financial resources make this project a possibility. As Medvedev stated, Russia would like to participate in forming the new rules of the game. The role of a protagonist of change and of a leader on the side of the abused suits Russia quite well morally, politically and economically.

Vlad Ivanenko, Economics PhD, Ottawa:

The recent moves by Dmitry Medvedev provide more information on the limitations he faces than on new initiatives he is going to launch. Medvedev is not breaking the news regarding the need for the overhaul of global financial architecture, especially the ailing IMF, because this debate goes on at least since Anne Krueger joined the organization in 2001. His comments are not outstandingly anti-American, as he claims what most economists agreed with long ago, namely, that the U.S. double fiscal and trade deficit is unsustainable in the long run. Neither does Medvedev announce brand-new Russian policies because, judging by national discussions, the Kremlin is still unable to come up with a new vision of what Russia’s global role should be.

My reading of his move is mundane. Unlike the real bear that does not indicate the timing of an attack, Medvedev ensures that the world hears Russia growling prior to the G8 summit in 2008. In this way, he signals that if his country finds itself empty-handed again, it will go on its own. In this scenario, Russia will play tit-for-tat with countries that refuse to accommodate Russian concerns. But what are Russia’s options in global finance?

There are not many. In spite of its impressive currency reserves, this country needs the cooperation of other global creditors ­ mostly in Eastern Asia ­ to launch a successful attack on the dollar. Since the latter are in no hurry to see the U.S. currency collapse, the talk of the “new” global financial structure will remain just that ­ talk. Russia may be more successful in getting the attention of the international oil producers, who are unsure what to do with rapidly growing piles of petrodollars and, correspondingly, are in no hurry to raise the output responding to nominally higher prices. And, certainly, Medvedev can reap the applause of the developing countries if he announces that Russia will significantly increase its development assistance package. In short, it is business as usual.

Ethan S. Burger, Adjunct Professor, Georgetown University Law Center, Scholar-in-Residence, School of International Service, American University, Washington, D.C. :

From a substantive perspective, today’s global economy needs to be better regulated. I have no doubt that failures in corporate governance and regulatory controls in the United States have contributed to international economic instability. Furthermore, economic decisions made in Washington have global consequences. Yet, the same can be said of numerous other countries (though no single country’s behavior has so great of an impact).

If president Medvedev wishes to be part of a constructive process in addressing these types of issues, he should be embraced. On the other hand, if the motivation for his remarks is to slam the United States in order to win propaganda points and divert attention from international/global issues where Russia fails to act in a responsible manner, the situation is quite different.

There are numerous reasons for many of the global economic problems we see, some, but not all were “made in America.” Certainly, both U.S. private entities and governmental regulators own the largest share of the “fault” for the “sub-prime mortgage” crisis. It is tragic that Moody's, apparently due to a human coding error, assigned AAA ratings to mortgaged backed securities (normally reserved for governmental bonds). Nonetheless, there is a lot of blame to go around to those who invested their organizations’ capital in such securities.

It has also been irresponsible for the Bush administration to finance enhanced expenditures on homeland security and the military operations in Iraq and Afghanistan without raising taxes. But it would be simplistic to blame all the world's economic troubles on such things.

The United States is not the only country to "over consume" (under-save) and waste natural resources. While the United States is responsible for a good share of the world's pollution, China's, India's and Russia's governments must own up to their roles in polluting the air and water. To my knowledge, the nuclear waste situation has yet to be solved.

Greed is a universal characteristic of man. Advances in communications (including moving/investing money) have resulted in the financial markets often operating at full throttle without sufficient corporate governance and criminal/civil regulation -- this is a global problem. Law enforcement is principally national (and sometimes regional) in structure, but international economic crime knows no borders.

Perhaps, we should re-examine some of the principles that have led to the abandonment of fixed exchange rates (couldn't prices be adjusted instead)? Issues like bad management of natural disasters, corruption, inadequate distribution of food, instability caused by the commodities future and stock markets, over-population (in certain areas), poor health care and war also do not have "made in America" labels. Perhaps we have to abolish some and establish other international organizations. These are complex issues that cannot be addressed by sound-bites and speeches.