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Russia has emerged from the war with Georgia in August 2008 with considerable long term strategic challenges, both within the South Caucasus and in its dealings with the United States. Whilst Moscow indulges in self congratulation over the failure of Georgia and Ukraine to secure a timetable for NATO membership, believing it has gained a victory over a divided and weakened Alliance and President Dmitry Medvedev expresses his hope that the new Obama administration in Washington will presage compromise over missile defence, Russia will face growing problems in reconciling its self-generated image of resurgence with economic downturn and lack of support from close allies in the CIS.

China’s successes in establishing itself in Central Asia have been furthered in recent months. After the agreement signed with the Tajik aluminum smelter in spring, during the fall Beijing has once again confirmed its place in the gas and nuclear sectors in Kazakhstan, to Russia’s disadvantage but to the benefit of the Kazakhstani authorities, who as a result will gain in autonomy in strategic domains.

The avowed political objective of the leadership of the Caucasus Emirate is to create an independent, sharia-based state on the territory of the North Caucasus. Let us imagine for one moment that the Emirate actually exists: a new nation-state with definite geographical boundaries resting conspicuously on Russia’s southern Caucasus frontier. What kind of relationship would the Emirate seek to cultivate with the ‘international community’ at large? How interested would world powers be in establishing relations with a state such as the one envisaged by the leaders of the Emirate?

The government of Turkmenistan officially confirmed that it will go ahead with the currency denomination with the exchange rate of 5,000 Turkmen manats per one U.S. dollar. All previously issued banknotes will be exchanged for notes with a higher level of security protection and new symbols on January 01, 2009. When the first announcement came, people began emptying shelves and stalls remembering their past negative experiences with currency reforms. On many occasions, the locals have begun converting their savings into hard currency. The panic gradually settled, but many questions remained. Will the currency exchange lead to wider financial reforms?  Will it achieve the full convertibility of the manat? Or will it turn out to be a simple replacement of the old banknotes?