30 January 2012 at 9:47 GMT
I have been travelling to Russia and Moscow for about five years now. It has always fascinated me: the infinite resources, the warm Russians and even the corruption.
Every time I have been there I have had the feeling that Russia was about to finally do something to change its ways, yet I am always unfortunately let down. This time however it feels and looks different.
Being in Moscow in January is not the smartest move quite frankly - minus 20 degrees is a challenge even to a mighty Viking like myself - but this year the timing is perfect as the presidential election in March enforces all micro-trends.
Real discontent and disaapointment in Medvedev
The discontent is real and the opposition likewise, particularly when trying to understand what has changed and why now the Duma election in December keeps being the main point. Looking deeper into the Russians or at least the Moscowites it is apparent to me that the are truly disappointed in Medvedev.
Initially he sounded and looked different but ended up doing more of the same - then the contested Duma election became the last straw for the opposition.
Russia got a real sense of some uprising happening. Just yesterday when I arrived there were mini-rallies with cars flagging their protests and they were widely reported in the media, even by the Putin friendly press.
February 4 looming
The big date is February 4 where the streets of Moscow will see major demonstrations against United Russia and more specifically Putin.
Even the Russian Church has felt the changing winds. Archpriest Chaplin (yes Chaplin) is quoted for saying: 'The government must respond to popular concerns or be “slowly eaten alive”. Chaplin identified the main cause of dissatisfaction as corruption and the suppression of investigations into officials. (Source: Financial Times)
Nash equilibrium and Putin's version
How real is this change? Well I like to use my old favourite John Nash concept of Nash equilibrium.
In game theory, the Nash equilibrium is a solution concept of a game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only his own strategy unilaterally. If each player has chosen a strategy and no player can benefit by changing his or her strategy while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding pay-offs constitute a Nash equilibrium.
So in the Russian version Putin knows the opposition's strategy and will adopt a strategy which optimises 'his change' relative to the expected. In my words: Putin losing momentum will be the best thing that could happen to Russia. It will force him to reset his optimal strategy and that strategy needs to more daring, open and reform friendly otherwise the Archpriest Chaplin could be predicting the future.
More business-friendly Russia
Putin clearly recognises the need for change. Already back in December he initiated a proforma reform programme that this morning became a Manifesto whose underlying conclusion is a move to a more business-friendly Russia.
The private initiative needs to have better conditions to thrive in. Russia's brand new World Trade Organisation membership needs to be used to open markets and competitions.
The state will sell state-owned companies - in the words of Putin: not to raise proceeds, but to enforce greater competition.
Another crucial point is also even the few grass roots people I have met who seem to firmly believe that any changes need to be true and transparent but not necessarily Putin unfriendly.
Belief in change not personalities
In other words they believe in change not in personalities. Any change will do, but as my old colleague and former Russian correspondent, Mr Samuel Rachlin wrote in his latest book: 'Me and Stalin' - Every Russian has some DNA of Soviet Russia in them, meaning that the Russian search for a new way will be defined by its history and not a naïve European version of democracy.
The demonstration in February and the election in March will tell us how much will ultimately change, but my feeling is that almost by definition things can only improve from here on in.
The economy is fundamentally sound due to crude oil and mining. Now with even small steps Russia could start on the road towards a better balanced economy where the need for reforms, business friendly initiatives and a bigger handover from the public to the private sector could become the cornerstone of Russia's true potential.
If these promises are met, I'm a big bull on Russia in equity and foreign exchange, but as with our Q1 theme: Perfect Storm - patience is the essence and waiting for some 'discount' is probably the right strategy.
Safe travels,
Steen