British-Russian relations have suffered greatly in recent years, with a series of incidents souring relations: the Alexander Litvinenko scandal, the British Council restrictions, diplomatic exits and various extradition rows.  Foreign Secretary David Milliband will visit Russia next week, the first visit by a British Foreign Secretary since relations hit their rocky low.  In an optimistic piece in the Times, the former British ambassador to Moscow, Tony Brenton, sees 'common ground' between Russia and Great Britain, and offers five suggestions for how the two sides can improve relations - without Britain shying away from tackling Russia on human rights.First, we should remain true to our own liberal principles. Russia is a signatory ...

a href="http://1.bp.blogspot.com/_ngczZkrw340/SqeIfEhvvOI/AAAAAAAAPG0/gIej76YsWCU/s1600-h/Latvia+exports.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 260px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5379418347289951458" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SqeIfEhvvOI/AAAAAAAAPG0/gIej76YsWCU/s400/Latvia+exports.png" //abr /br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/Sqduz5AQyYI/AAAAAAAAPGc/VPWJ-B5zMVI/s1600-h/quarterly+constant+price+imports+and+exports.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 257px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5379390117671651714" border="0" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/Sqduz5AQyYI/AAAAAAAAPGc/VPWJ-B5zMVI/s400/quarterly+constant+price+imports+and+exports.png" //abr /Latvia’s economy shrank a revised 18.7 percent in the second quarter of 2009 over a year earlier in what was the second-steepest drop in the entire European Union (worsted only by Lithuania) according to detailed data released by the statistics office yesterday. The contraction, which is now the largest since quarterly records began in 1995, was revised down from a preliminary estimate of a 19.6 percent annual drop. And Latvia's problem can easily be seen in the above charts which show the most recent movement in exports, and quarterly data for constant price imports and exports. The Latvian economy grew driven by domestic consumption and ...

Yesterday on Foreign Policy Christian Caryl published one of those "Russia-more-isolated-now-than-ever-thanks-to-their-own-policies-of-confrontation" type of articles.  We are beginning to see this topic come around and around ever since the Ukraine smackdown, but the trend has been building over the past number of years - I would say well before the war with Georgia.  What I like about Caryl's piece is that he points out that it certainly doesn't have to be this way, and that Russia's missteps with its neighbors could be easily corrected should the leadership ever get it right.

Russia's ability to get in its own way remains a cause for much head-scratching in the region. "When they tried to stop NATO enlargement, whom did they discuss it with? The United States and Germany," notes Kadri Liik, Director of the International Center for Defense Studies in Tallinn, Estonia. "But in fact

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Emerging Europe investing is staging a comeback. In the past couple of months, stock markets in the region have posted big rallies. The index for Lithuania has shot up 58 percent since June 30, while the indexes for its Baltic neighbors Estonia and Latvia have climbed 33 percent and 27 percent, respectively. In Central Europe, the key stock indexes for the Czech Republic and Hungary are both up 26 percent in the third quarter through Friday, and Polandrsquo;s index has gained 20 percent. All of these stock markets suffered mightily in the global credit crisis as their overheated economies stalled, their currencies dropped, and the cost of loans denominated in dollars and euros skyrocketed. Now it appears that intervention by the International Monetary Fund, combined with a growing belief that the worst of the financial woes and global recession are behind us, may have mitigated the regionrsquo;s risk profile and lured investors back. Not that ...

Emerging Europe investing is staging a comeback. In the past couple of months, stock markets in the region have posted big rallies. The index for Lithuania has shot up 58 percent since June 30, while the indexes for its Baltic neighbors Estonia and Latvia have climbed 33 percent and 27 percent, respectively. In Central Europe, the key stock indexes for the Czech Republic and Hungary are both up 26 percent in the third quarter through Friday, and Polandrsquo;s index has gained 20 percent. All of these stock markets suffered mightily in the global credit crisis as their overheated economies stalled, their currencies dropped, and the cost of loans denominated in dollars and euros skyrocketed. Now it appears that intervention by the International Monetary Fund, combined with a growing belief that the worst of the financial woes and global recession are behind us, may have mitigated the regionrsquo;s risk profile and lured investors back. Not that ...

Anybody who regular uses Twitter may have been frustrated yesterday by the two hour outage, as well as some irregularities at Facebook.  What you may not have known is that it was all caused by a massive, coordinated attack against one Georgian blogger known as CYXYMU (if his blog ever gets back up online, it is located here).  The popular social media platforms, as well as LiveJournal, were taken down by the now familiar cyber warfare tactic of "denial of service" attacks, which seek to create artificially high simultaneous hits and requests which are capable of crashing servers (read this article to learn how easy it is to become a cyber foot soldier). It is these kinds of DOS attacks which have become frequently targeted against Russia's periphery, such as Estonia and others. ...

by Edward Hugh: Barcelonabr /br /This post accompanies my recent piece on Sweden. I have been scratching my head and trying to see what could be learnt from making a comparison between Finland and Sweden. Some of the differences are obvious - one is in the euro, and the other isn't, once can adjust monetary policy and currency values, and the other can't. Others are less so. Finland's goods trade surplus has been declining steadily since joining EMU while Sweden's has remained relatively constant. And Swedish males live on average three years longer than their Finnish counterparts. So what is important here, and why? And if convergence theory has anything positive to be said for it, shouldn't we be able to observe so sort of convergence going on here.br /br /br /First, and just to remind ourselves, here is the chart from Claus Vistesen which shows what the relation ...

by Edward Hugh: Barcelonabr /br /br /pa href="http://3.bp.blogspot.com/_ngczZkrw340/SlmdGD2bh-I/AAAAAAAAOoo/P8vnyB3RTno/s1600-h/bulgaria+population.png"img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 400px; DISPLAY: block; HEIGHT: 258px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5357485959172294626" border="0" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/SlmdGD2bh-I/AAAAAAAAOoo/P8vnyB3RTno/s400/bulgaria+population.png" //abr /br /br /The International Monetary Fund this week forecast the recession in Bulgaria would be deeper than it previously predicted. Such a decision should come as no surprise to anyone, since the country's economic dynamics in both the short and long term look extremely unstable, and Bulgaria is now almost certainly headed towards a series of more or less hair-raising roller-coaster rides. Even the briefest of glances at the population chart above should lead even the most sceptical among us to stop and think a little about the possible economic implications of such an appauling demographic outlook. As can be seen, the opening to the west brought a sharp outflow of people in the late 1980s (mainly ethnic Turks), but the important thing ...

Peering out of the window on a rainy and cold Sunday (election) afternoon in Copenhagen it is difficult not to paraphrase, yet again, one the Economist's many classic cover stories but really; it sure has been one hell of ride this week in Latvia. One wonders whether politicians and economists in the central bank really want to see what happens come tomorrow as markets and the flow of news re-commence. The truth however is that they really do not have a choice. Consequently and what actually started a little more than a week ago has now steadily turned into the well known story of politicians and official authorities doing their best to maintain a crumbling edifice. Markets, analysts, and commentators, on the other hand, are beginning to smell a rat and this particular rat looks set to gnaw its way right to the core of the

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Despite the significant equity market rally off the March lows and the talk of "green shoots," we still see a challenging global economic backdrop and a less than robust environment for the Machinery sector. In fact, what we have seen is certain economies stabilize at much lower levels from peak cycle activity, rather than any sort of V-shaped recovery. As foreign economies deal with weaker exports to the U.S and Europe, industrial customers are cutting back on capital spending. On a y-o-y basis, equipment orders continue to decelerate in almost every end-market -- from machines used in construction, infrastructure, and agriculture. On the bright side, production cuts have helped reduce inventory levels. As a result, we should see less of a near-term drag on output. But let's not confuse a potential inventory rebuild and fiscal stimulus with a real, sustained U.S consumer-led recovery. The combination of U.S job cuts, minimal income growth ...