Wednesday, December 17, 2014

THE CURRENCY CRISIS IN RUSSIA: TURNING INTO A 'REGIME CRISIS'?

"The next four or five years will be very difficult if not critical for Russia, and the Russians, in Putin’s view, absolutely must meet the challenges and win. The alternative, although he did not say it, of course, is dire. Putin’s address was directed first and foremost at the Russian people. It has often been assumed that Russians are at their best when things are worst for them, and certainly the economic situation today is very precarious. Putin has decided “not to waste a good crisis,” and wants to use the challenge of Western sanctions and the low oil price as leverage for the country's economic revival. For years, the Russian government only talked about “getting off the oil needle,” but it is only now that it has run out of easier options and has to start doing something about it. Will it be able to do perform that feat? Vladimir Putin’s most serious and glaring weakness in his 15 years in power has been his failure to come up with a realistic strategy of economic development. He—and Russia—were instead helped by high and rising oil prices, which of course did not create a momentum for reform. Now, the relatively low and falling prices appear to create such a momentum, as Putin’s pro-business initiatives indicate. However, these initiatives will be devalued if not backed up by genuine political will to make the legal system produce justice for all, and by a sustained effort to severely reduce institutionalized corruption. Government transparency and accountability is another indispensable condition."
Dmitri Trenin, "Putin’s Urbi et Orbi". Carnegie Moscow Center. 5 December 2014, in www.carnegie.ru
"Belatedly, financial markets have realised that July 16 was Russia’s Lehman moment. On that day, the US imposed sectoral sanctions on Russia because of its military aggression in eastern Ukraine. Two weeks later the EU introduced similar sanctions. However, it was only in December that the markets recognised the severity and tenacity of the financial sanctions. Since July, Russia has received no significant international financing — not even from Chinese state banks — because everybody is afraid of the US financial regulators. Like most of the world after the bankruptcy of Lehman Brothers investment bank on September 15, 2008, Russia suffers from a liquidity freeze. It will not end until the US financial sanctions are lifted.... The current financial meltdown is bound to cause major damage to the Russian economy. On December 15, the CBR forecast a GDP decline of 4.5-4.7 per cent in 2015 if oil prices remain at $60 per barrel. Since the root cause is the western financial sanctions, the only realistic cure is to have these sanctions lifted. The Kremlin can accomplish that by fully and credibly evacuating its troops and armaments from eastern Ukraine. No other action is likely to have a significant economic effect".
Anders Aslund, "The only cure for what plagues Russia". The Financial Times. 17 December 2014, in www.ft.com.
The currency crisis in Russia in the past three weeks has grown into a full-scale economic crisis. As Aslund Anders notes, the Russian Central Bank is predicting that unless the price of oil increases to something more than sixty to sixty-five dollars a barrel in the very near future, the Russian economy will decline almost five percent of GDP. Unless and until American & European economic sanctions are lifted, there is every possibility of a major solvency crisis occurring in Russia within twelve to eighteen months time. With major bankruptcies looming for every large Russian multi-national which has accumulated dollar or euro debts. As the Economist notes, while Russia has a foreign exchange reserve of almost Four-Hundred Billion dollars, the total amount of Russian external debt in dollars is more than Six-Hundred Billion 1. In short, in the absence of a concerted turn to (for lack of a better expression) 'neo-Stalinism', the Putin regime is will soon be in the throes of a major regime crisis following from the soon to be major economic crisis 2. The real conundrum at present is if the Russian President will be willing to climb-down by withdrawing Russian forces and armaments from eastern Ukraine or not? A withdrawal at this point in time, would be a major diplomatic defeat for the regime and for Putin personally. On the other hand, it is quite doubtful that the inner circles who assist Putin in running the country, are as enamored of the Putin's va banque policy, now that state bankruptcy is staring them in the face. In that respect, former Premier Kasyanov's statement to-day that: "Russia is going into decline...2015 is a year in which Putin must make a 'principle' decision", may signal the beginnings of a change in elite opinion 3. To-morrow Putin will make his annual Presidential speech. It will be interesting to see what he says and if a hint at climbing down from his anti-Western policies is announced. I for one, predict (unfortunately for Russia's poor people), that Putin will stubbornly refuse to change course and thus look for a full-scale regime crisis by the middle of 2015. As Timothy Ash a leading 'Emerging Market' analyst at Standard Bank cogently notes:
"Putin Inc. needs a new and different model. But over his 15 years in power, the regime has appeared unwilling or unable to tolerate the kind of radical reforms now needed, because they likely challenge the very underpinnings of the regime itself 4."
.
1. "Russia’s rouble crisis: Going over the edge". The Economist. 20th of December 2014, in www.economist.com.
2. Kathrine Hille, "Rouble crisis opens up Vladimir Putin to attack". The Financial Times. 17 December 2014, in www.ft.com.
3. Timothy Heritage, "Opponent calls for Putin's exit as Russia slides into crisis". Reuters. 17 December 2014, in www.reuters.com.
4. Timothy Ash, "Beyondbrics: Hello 2015: having failed in Ukraine, Russia will turn inwards". The Financial Times. 17 December 2014, in www.ft.com.

Saturday, December 13, 2014

THE DIFFERENCE BETWEEN STRATEGY & TACTICS OR WHY THE BATTLE OF WATERLOO DID NOT MATTER

"Waterloo was instead that most definitive of defeats: an irremediable loss at the level of grand strategy. It was in this sense an intellectual defeat for Napoleon himself: had his mind been working properly, he would not have been at Waterloo that day, or on any other battlefield, because by June 1815 the coalition ranged against him comprised the Habsburg Empire, the Duchy of Brunswick, the Kingdoms of Prussia and Hanover, the Duchy of Nassau, the tsarist Empire of all the Russias, the Kingdoms of the Netherlands, Portugal, Sardinia, Sicily, Sweden and Spain, the Grand Duchy of Tuscany, the Swiss Confederation, and the French monarchists with their loyalist troops, as well as the British and their empire. The 118,000 troops actually at Waterloo, from the armies of Prussia, the Netherlands, Hanover, Brunswick and Nassau, along with 25,000 British soldiers and 6000 of the King’s German Legion, were quite enough to outnumber the 73,000 French soldiers, yet they were only a fraction of the total troop strength of the coalition.... In the end the shortcomings of Marshal Ney as a tactician made no difference. If Wellington was right, the balance in the field might have been tilted by exceptionally good tactics, but that would merely have delayed Napoleon’s final defeat until the next battle, for the coalition would not have seen a tactical defeat as conclusive. The same is true at the operational level: if de Grouchy’s 33,000 soldiers, once thrown into battle, had succeeded in breaking Wellington’s array, driving off the Prussians, Napoleon’s Waterloo would have come in some other place, as soon as the coalition could reassemble to fight, with the added forces that could not be deployed in time for Waterloo. That is how the logic of strategy works. Its different levels might be thought of as the floors of a building. Nothing can be achieved at the operational level of strategy without adequate tactical capacity below it – there’s no point in moving units around in clever manoeuvres if they cannot fight at all – just as there is no capacity at the tactical level if there are no supplies and no weapons. The technical level of strategy is just as essential, for all its simplicity as compared to the mysteries of unit cohesion, morale and leadership which largely determine tactical strength. But this edifice of several storeys has a most peculiar feature: there are no stairs or elevators from the operational level, where battles are fought, up to the level of grand strategy, where entire wars are fought with every political and material strength or weakness in play, including alliances and enmities. Absent overwhelming superiority to begin with, no war fought with the wrong allies against the wrong enemies can yield victory, even if a hundred battles are won. By 1814, that was Napoleon’s predicament, as it would be for Germany in both world wars: German forces fought skillfully and often ferociously to win again and again in battles large and small, but nothing could overcome the consequences of siding with the decrepit Ottoman and Habsburg Empires against the British, French, Japanese and Russian empires the first time around, or with Bulgaria and Italy against all the Great Powers but Japan the second time.... In retrospect the fight against Napoleon seems to have engendered a new strategic method, later employed against Germany in two world wars and against the Soviet Union thereafter. The French might call it the Anglo-Saxon encirclement strategy. Its essential aim was to avoid direct combat with a formidable enemy, or at least to limit engagement to a minimum. Instead of confronting one vast army with another – at Waterloo there were only 25,000 British troops – the Anglo-Saxon approach was to take on the big beast by assembling as many neighbourhood dogs and cats as possible, with a few squirrels and mice thrown in. With the obvious exception of the Western Front in the First World War, that is how the two world wars were fought, with an ever longer list of allies large, small and trivial (e.g. Guatemala, whose rulers could thereby expropriate the coffee plantations of German settlers), and that is how the Soviet Union was resisted after 1945, with what eventually became the North Atlantic Alliance. Like the anti-Napoleon coalition, Nato was – and remains – a ragbag of member states large and small, of vastly different capacity for war or deterrence, not all of them loyal all the time, though loyal and strong enough. Like the challenge to British diplomacy in the struggle against Napoleon, the great challenge to which American diplomacy successfully rose was to keep the alliance going by tending to the various political needs of its member governments, even those of countries as small as Luxembourg, whose rulers sat on all committees as equals, even though they could never field more than a single battalion of troops. Now it is the turn of the Chinese, whose strength is still modest yet growing too rapidly for comfort, and who are inevitably provoking the emergence of a coalition against them; the members range in magnitude from India and Japan down to the Sultanate of Brunei, in addition of course to the US. Should they become powerful enough, the Chinese will force even the Russian Federation into the coalition regardless of the innate preferences of its rulers, for strategy is always stronger than politics, as it was for the anti-communist Nixon and the anti-American Mao in 1972. China cannot therefore overcome its inferiority to the American-led coalition by converting its economic strength into aircraft carriers and such, any more than Napoleon could have overcome strategic encirclement by winning one more battle.."
Edward Luttwak, "A Damned Nice Thing". The London Review of Books. 18 December 2014, in www.lrb.co.uk.
While finding his more than occasional obiter dicta to be annoying as well erroneous historically speaking, the amateur historian and commentator Edward Luttwak, does on occasion rise, nay more than rise to the occasion by way of profound and penetrating analysis. His piece in the current issue of the London Review of Books more than qualifies. In a very cogent and learned review article, Luttwak amply demonstrates once again, why the outcome of the Battle of Waterloo did not matter in the least. That even if Bonaparte had beaten the British and the Prussians in the later part of June 1815, that victory would not have mattered. That with the overwhelming predominance of Allied forces over the French in both numbers and elan, the outcome was inevitable. It was merely a question if that outcome would occur sooner (in late June) or later (sometime in August) in anno domini 1815. In retrospect, it is clear that Bonaparte had sold the pass back in the second quarter of 1813, by refusing to agree to the modus vivendi offered to him by Graf von Metternich. That by holding out for everything, Bonaparte inevitably ended up with nothing 1. Similarly, as Luttwak points out, the Germans in both the Great War and in World War II, regardless of their (occasional) brilliance at military tactics, made their defeat inevitable by the gross stupidity at both war-time diplomacy and overall strategy. As the British scholar Alexander Watson points out in his new book on Austria and Imperial Germany during the Great War, the so-called 'Central Powers' entered with war, with heavily outmanned in terms of armed forces, population numbers and economic & financial strength 2. Something which the entry into the war of Japan, Italia, and the United States did not make any better. In the case of World War II, Hitler's own stupidity in attacking first Sovietskaya Vlast, then in declaring war on the United States, speaks for itself. And, while the Cold War did not see Sovietskaya Vlast commit so egregious errata in either strategy or diplomacy, the original discrepancy in overall economic and military power vis`-a-vis the United States and its allies was never really over-come. With the effort made to match the Western powers resulting in the economic exhaustion of the Soviet Union. As per what may occur with the Peoples Republic, all one may say is that given the blundering diplomacy that Peking has engaged in these past half dozen years with its neighbors, one may not be very surprised at a repeat `a la Luttwak's surmise in the future.
1. For this see: Paul Schroeder. The Transformation of European Politics, 1763-1848. (1994), pp.459-471 & passim.
2. Alexander Watson. Ring of Steel: Germany and Austria-Hungary at War, 1914-1918.(2014), p.104 & passim.

Friday, December 05, 2014

HOW IMPORTANT IS THE FIRING OF CHUCK HAGEL?

"Occasionally top jobs go to the best qualified people. Ashton Carter’s likely nomination to replace Chuck Hagel as President Obama’s next Pentagon chief would be a stellar choice. In Donald Rumsfeld’s terminology, Carter is a known unknown. Carter “is the most important man in Washington nobody has heard of”, as Martin Dempsey, chairman of the joint chiefs of staff, put it. Having been deputy defence secretary and previously head of acquisitions, Carter knows the Pentagon inside out. In spite of never having worn the uniform — and in contrast to the twice decorated Mr Hagel — Carter is highly regarded by the military. He also has a detailed grasp of the situation on the ground in Syria and Iraq, where his urgent focus will be needed. Moreover, he has the respect of John McCain, incoming chairman of the Senate armed services committee, which means his confirmation would probably be smooth".
Edward Luce, "Obama’s Pentagon favourite will lack the autonomy he needs." The Financial Times. 4 December 2014 in www.ft.com
"At a superficial level, President Obama's firing of Chuck Hagel as defense secretary conforms to this pattern. With 54% of the public disapproving of the president's foreign policy, which has produced disasters in Iraq, Syria and Ukraine, among other places, someone had to pay the price. The problem is not that Hagel shouldn't have been fired — he was pretty much a nonentity as defense secretary. The problem is that firing him is not going to change much, if anything. Indeed, the reason he was jettisoned is precisely because he had so little influence on real decision-making, which is tightly controlled by a small coterie of White House aides such as national security advisor Susan Rice, White House Chief of Staff Denis McDonough, deputy national security advisors Ben Rhodes and Tony Blinken and senior advisor Valerie Jarrett. That crew is responsible for steering the Good Ship Obama onto the rocks, but because they are so tight with the skipper, they remain at the helm. Even when there were strong defense secretaries in charge, they found themselves endlessly frustrated by their dealings with imperious White House aides who mistook themselves for field marshals. Just read the memoirs of Bob Gates and Leon Panetta. Gates, for example, complained that the White House staff had “a presence and a role in national security decision making that I had not previously experienced.” That extended to White House staffers directly calling field commanders — an action that “would have been unthinkable when I worked at the White House,” Gates wrote, 'and probably cause for dismissal'."
Max Boot, "Chuck Hagel's firing won't help U.S. foreign policy ". The Council on Foreign Relations. 24 November 2014, in www.cfr.org.
Mr. Edward Luce of the bien-pensant Financial Times is for once correct: American Secretary of Defence designate Ashton Carter is indeed all things considered (AKA political allegiances) by far the very best man to run the Pentagon. A position which requires more the talents and skills of a Chief Financial Officer and or Permanent Secretary of the State at the Treasury (in the United Kingdom of course), then a global strategist. It has been the singular misfortune of the Americans that almost every appointee to run the Pentagon, regardless of their prior career pattern and experience chooses to ignore the voluminous managerial challenges involved in running the Department of Defence, to indulge in bureaucratic infighting with the State Department and or the National Security Advisor. One merely needs to remember the names of Robert McNamara, James Schlesinger, Donald Rumsfeld (twice!), Caspar Weinberger, among others. Insofar as Mr. Carter, takes as his model former Secretary of Defence Robert Gates, then all will be well. As Secretary Gates, was exemplary in avoiding needless and wasteful bureaucratic battles. As per the real source of the problems relating to overall American strategy in the war against ISIS, which are evident to anyone who cares to examine the matter, it is foolhardy to expect that even in the unlikely event of a 21st century Field-Marshal Graf von Moltke the Elder, occupying the post of Pentagon chief would be able to plot a coherent strategy, if he is faced with remorseless opposition from the White House. If not in fact the Commander-in-Chief himself, sotto voce. The place to 'fix' the problems with current American strategy, both world-wide and especially in the Near and Middle East, is in the White House and not in the Pentagon. A perhaps unfortunate, or even annoying fact, but true just the very same.

Friday, November 28, 2014

THE RIGHT WAY AND THE WRONG WAY TO DEAL WITH PUTIN'S RUSSIA

"German chancellor Angela Merkel on Wednesday called for trade talks between the EU and a Russia-led economic bloc as a way of maintaining dialogue with President Vladimir Putin – and of countering claims her Ukraine policy is too tough on Moscow. German officials believe the proposal could help ease tensions if the terms of a ceasefire agreed in Minsk in September can be implemented. Discussions between the EU and the Eurasian Economic Union are unlikely as long as fighting continues in breakaway regions of eastern Ukraine. “We are ready for talks between the Eurasian Union and the EU on trade issues,” Ms Merkel told the German parliament. The German chancellor floated the idea in a long late-night meeting with Mr Putin during her recent visit to the G20 summit in Brisbane. While much of this four-hour encounter focused on the differences and lack of trust between east and west, Ms Merkel took the opportunity to air a plan focusing on possible future co-operation rather than the current conflict. Jean-Claude Juncker, European Commission president, later joined their meeting. The proposal was discussed again when Frank Walter Steinmeier, German foreign minister, met Mr Putin in Moscow last week. “One of the interesting questions now is whether you can engage with Russia at all, for example at a political level between the EU and the Eurasian Economic Union,” said a German official. But he made clear that there could be no real progress without first calming eastern Ukraine where pro-Russian separatists and Ukrainian forces have continued fighting despite the ceasefire agreement."
Stefan Wagstyl and Roula Khalaf, "Merkel offers Russia trade talks olive branch". The Financial Times. 26 November 2014, in www.ft.com.
"Although Kennan’s article puported to address the sources of Soviet conduct, it’s clear from the text that he equated the Soviet Union with Russia, Soviet leaders with Russian leaders, and Soviet conduct with Russian conduct. And that is why, unsurprisingly perhaps, his analysis holds up remarkably well when applied to Putin’s Russia.... Like the Soviet Union, Putin’s Russia fosters antagonism to the West, and, like the Soviet Union, it feels impelled to expand, but not “immediately and unconditionally” or against “unassailable barriers.” It is under no real threat: NATO has been in decline, Europe has been cutting its defense budget, and the United States has been distracted by the Middle East and domestic priorities. Instead, Putin’s neoimperial ideology and his standing as Russia’s all-powerful leader require him to gather former imperial territories. The implications for the West of Kennan’s analysis are no less relevant today. For starters, the United States and Europe must understand that “there can never be on Moscow’s side any sincere assumption of a community of aims between the Soviet Union and powers which are regarded as capitalist.” Second, Putin’s Russia “can be effectively countered not by sporadic acts which represent the momentary whims of democratic opinion but only by intelligent long-range policies on the part of Russia's adversaries.” It’s high time, in other words, for the West to abandon its illusions about Putin and his regime and develop a serious, steady, long-term policy response to Russian expansionism. And that, of course, means containment. In today’s terms, the front lines of containment are the non-Russian states in the potential path of Russian expansion. Seen in this light, a divided Ukraine occupies the same role in today’s containment strategy as a divided Germany did in yesterday’s. Ukraine should therefore be the recipient of similar financial, political, and military assistance. Finland, Sweden, Estonia, Latvia, Lithuania, and Moldova—as well as, possibly, Belarus and Kazakhstan—must also figure as points where counterforce, in the form of enhanced military assistance, will have to be applied. The goal in all these cases is not to roll back Russian power but to stop its penetration of the non-Russian post-Soviet states".
Alexander Motyl, "The Sources of Russian Conduct: the New Case for Containment." Foreign Affairs. 16 November 2014, in www.foreignaffairs.com.
The case for applying new version of George Kennnan's original idea of containment (id. est., a predominately non-military, but diplomatic and political form of the policy), has been made several times in this online journal 1. Alexander Motyl, has in the American periodical Foreign Affairs, made one which is I would admit more cogent and insightful than my own arguments. Au fond, the argument that the way to deal with Putin's Russia is to endeavor to bargain and negotiate with it as German Chancellor Merkel seems to believe, is to my mind both fruitless and dangerous. The only policy that can possibly work, in the long-run is that of 'regime change'. Which is I would admit a very, very dangerous and unfortunate policy. Because it is highly unlikely that the Putin regime could possibly be forced out without there being a systemic ramifications for the stability of the entire Russian Federation. Perhaps I am wrong and there might be something akin to a internal coup d'état, in which Putin and some of the more egregious aspects of 'Putinism' are dealt with, without the entire regime crumbling from within. However, some of the more recent examples from history such as Iraq under Saddam Hussein, points to the probability that with the ouster of Putin the entire regime will collapse. Again, this is by far the least optimum outcome. As the very last thing that both the world and the Russian people needs is an unstable Russia. Unfortunately, it is difficult to hazard a surmise as to how Putin and his regime can possibly be prized free of the portions of Eastern Ukraine that they have seized otherwise. That Western sanctions in conjunction with the rapid decline in the price of oil (to-day's close bringing it to the lowest level in almost five-years), is already having a serious impact upon the Russian economy can be seen from a posting in yesterday's Financial Times, which states:
"In Russia, economic problems have been increased by overseas sanctions following the annexation of Crimea. “The outlook was already grim – there was virtually no growth and an absence of growth drivers,” says Craig Botham, emerging markets economist at Schroders. “Now that oil prices are falling, and sanctions have been imposed it’s looking even worse.” Investors say they are growing increasingly concerned about refinancing because Russia remains all but cut off from capital markets. A recent foray into domestic currency bond markets resulted in the treasury selling less than one tenth of the amount offered. One banker says Russian companies and banks appear to have enough assets to cover refinancing for one year. After that, he says, things will become ugly" 2.
Lest anyone forget, it was the rather rapid and marked collapse in the price of oil from 1986 onwards which whose impact upon the Soviet economy assisted (not mind you mandated) the collapse of Sovietskaya Vlast circa 1990-1991. With this historical background in mind, it would be supreme folly to not allow the sanctions regime which now exists to have its full weight upon Moskva. Then it becomes merely a matter of allowing time to take its course. Hopefully, the greater the economic pain on Matushka Russia, the quicker that some form of 'regime change' will take place and Putin and Putinism will become merely a matter of historical, not contemporary discussion. Talks for the sake of 'talks' `a la Mme. Merkel, et. al., are allow me to repeat, worse than useless.
1. The issue which I allude to herein is that Kennan's own ideas of what became later on known as 'containment' were very far indeed, from the policy which emerged after the outbreak of the Korean war. When 'containment' became a highly militarized and static policy, rather than dynamic in nature. For this issue, see in particular: John Lewis Gaddis. Strategies of Containment:A Critical Appraisal of American National Security Policy during the Cold War. (2004). Revised Edition. It goes without saying of course that the line between a 'diplomatically' oriented policy of 'containment' and one which is militarized is rather a thin one. It is also quite subjective.
2. See: Elaine Moore, "The good, the bad and the ugly of emerging market debt". The Financial Times. 27 November 2014, in www.ft.com.

Monday, November 03, 2014

MARTIN JACQUES ON CONTEMPORARY CHINA: OR WHAT IS WRONG WITH THIS PICTURE?

"Yet China’s governance system has been remarkably successful for more than three decades. It has presided over the greatest economic transformation in modern history. The state is highly competent, able to think strategically, while at the same time pragmatic and experimental. It has presided over rapidly rising living standards and enjoys a great deal of popular support. The idea that sooner or later – the western assumption has generally been sooner – public support will evaporate is farfetched. On the contrary, with economic growth still rapid and living standards rising similarly, it seems more likely that the regime will enjoy growing rather than declining support. We should not, however, regard support for the regime as simply a function of economic growth. It has become almost axiomatic in the west to believe that democracy is the sole source of a regime’s legitimacy. This is mistaken. The legitimacy of the Chinese state lies deep in the country’s history. Along with the family, the state is one of the two most important institutions. For at least two millennia the state has been seen as the guardian and embodiment of Chinese civilization".
Martin Jacques, "The myopic western view of China’s economic rise". The Financial Times. 22 October 2014, in www.ft.com.
"Underlying Xi’s vision is a growing sense of urgency. Xi assumed power at a moment when China, despite its economic success, was politically adrift. The Chinese Communist Party, plagued by corruption and lacking a compelling ideology, had lost credibility among the public, and social unrest was on the rise. The Chinese economy, still growing at an impressive clip, had begun to show signs of strain and uncertainty".
Elizabeth Economy. "China’s Imperial President: Xi Jinping Tightens His Grip". Foreign Affairs. (November / December 2014), in www.cfr.org.
"The state created by Frederick II combined two qualities which were elsewhere opposites. It had, on the one had, the unscrupulous authoritarianism, the disregard both of humanity and of principal everywhere characteristic of a rule by a privileged upper class; on the other hand, a striving after efficiency and improvement, a rigid devotion to the balancing of accounts, elsewhere associated with the rule of a reforming middle class. The Prussian Junkers one might say, were politically in the Stone Age; economically and administratively they looked forward to the age of steel and electricity."
Alan John Percivale Taylor. The Course of German History. (1945), pp. 29-30.
One does not have to be excessively cynical to look with a degree of skepticism at Martin Jacques apotheosis of the contemporary Chinese polity and state apparatus. One merely needs to: a) remember that Jacques was once the celebrated editor of the British periodical 'Marxism Today', so his inclination to read contemporary realities in a sort of Hegelian-style treatment are very much par for the course. Which of course does not negate the fact that in this instance, seeing matters via Hegelian-colored glasses is not the best recipe for critical analysis; b) concentrate on other aspects of modern-day China that Jacques in his infinite wisdom refuses to look at or tabulate. Like for example the amount of unrest, both rural and urban which is an ongoing affair in China. Indeed as far back as 2006, the Congressional Research Service noted that China suffered from:
"In the past few years, the People’s Republic of China (PRC) has experienced rising social unrest, including protests, demonstrations, picketing, and group petitioning. According to PRC official sources, “public order disturbances” have grown by nearly 50% in the past two years, from 58,000 incidents in 2003 to 87,000 in 2005. Although political observers have described social unrest among farmers and workers since the early 1990s, recent protest activities have been broader in scope, larger in average size, greater in frequency, and more brash than those of a decade ago 1."
Of course one cannot gainsay the fact that contemporary China in the past thirty some years has made enormous progress in the economic and to a certain extent the social realm. Merely that per se, this type of development cannot be copied by other countries, nor can it hide the fact that Chinese society and indeed its elites are non-believers in the type of analysis that Jacques employs. As the great Chinese scholar, Perry Link cogently notes in the current issue of the New York Review of Books:
"If people in the Chinese elite were truly confident in their system of Leninist capitalism, they would not need a huge budget for domestic repression, would not keep a Nobel Peace laureate in prison, and would not be looking to emigrate. Schell correctly notes that they find Western criticisms of their one-party rule to be condescending. But that very fact reveals their ambivalence about the West. If they were really confident that their system is superior, they might simply pity the misguided West. That they feel “condescended to” shows that, at one level in their minds, they are still according the West an elevated position . 2"
And as anyone who is in the least informed about the New York metro area real estate market knows, there are an increasing number of Mainland Chinese who are looking to 'park' their (usually) ill-gotten gains in the more protected and secure real estate market. That if nothing else speaks volumes as per the lack of confidence that mainland Chinese elites have in their rather rickety system of governance 3.
1. Thomas Lum, "Social Unrest in China". The Congressional Research Service. 8 May 2006, in www.loc.gov/crs.
2. Perry Link & Orville Schell, "China Strikes Back’: An Exchange". The New York Review of Books. 20 November 2014, in www.nybooks.com.
3. On this, see: "Latest hot spot for Chinese property investors." The Real Deal. 2 November 2014, in www.therealdeal.com.

Friday, October 24, 2014

PUTIN'S STATEMENT AT VALDAI: A COMMENT

"Russian president Vladimir Putin on Friday accused the US of undermining the post-Cold War world order, warning that without efforts to establish a new system of global governance the world could collapse into anarchy and chaos. In one of his most anti-US speeches in 15 years as Russia’s most powerful politician, Mr Putin insisted allegations that its annexation of Crimea showed that it was trying to rebuild the Soviet empire were “groundless”. Russia had no intention of encroaching on the sovereignty of its neighbours, he insisted. Instead, the Russian leader blamed the US for triggering both Crimea’s breakaway from Ukraine and thousands of deaths in the war in the east of the country, by backing what Mr Putin called an armed coup against former president Viktor Yanukovich in February. “We didn’t start this,” Mr Putin said. Citing a string of US-led military interventions from Kosovo to Libya, he insisted the US had declared itself victor when the Cold War ended and “decided to … reshape the world to suit their own needs and interests”. “This is the way the nouveaux riches behave when they suddenly end up with a great fortune – in this case, in the shape of world leadership and domination. Instead of managing their wealth wisely … I think they have committed many follies,” he told a conference of foreign academics and journalists at an Olympic ski venue near Sochi. The speech was one of Mr Putin’s most important foreign policy statements since he surprised the west in Munich in 2007 by accusing the US of “overstepping its boundaries in every way” and creating new dividing lines in Europe. Some commentators speculated that it reflected Moscow’s fury after US President Barack Obama recently ranked Russia alongside the Islamic State of Iraq and the Levant, known as Isis, and the Ebola virus among the top three global threats. But his tone surprised even supporters."
Neil Buckley, "Putin unleashes fury at US ‘follies’". The Financial Times. 24 October 2014, in www.ft.com.
"The United States, in turn, is looking to step up its own game. Policymakers are considering giving global companies a choice: stop providing long-term financing and energy assistance to major Russian companies or be kicked out of the U.S. financial system. Such measures resemble the sanctions the United States placed on Iran a couple of years ago. But Iran was a different problem. And treating Russia the same way would be a mistake. Sanctions can be an effective tool for forcing engagement and negotiation. But the pace and implementation must be tailored to the target. In the case of Iran, the United States was able to tighten the screws by pressuring foreign firms to stop dealing with the country. That move created some angry blowback, but it generally worked. And partially as a result, Tehran is at the negotiating table. When it comes to Russia, though, the political pushback that would come from blacklisting dealings with the strategic Russian energy and banking sectors would be much more severe because Russia is a more important market. Further, more companies would likely be willing to forego access to U.S. markets in order to continue working with the Russians. And that would undermine the sanctions’ effectiveness. More generally, policymakers in the United States should be wary of continually relying on sanctions that penalize foreign firms by preventing their access to U.S. markets. Ultimately, such a strategy could backfire. At some point, foreign companies may decide that doing business in U.S. markets -- and being subject to U.S. sanctions policies -- is simply not worth it. That would hurt the U.S. economy and diminish the United States’ ability to use economic levers to advance its foreign policy".
Eric Lorber and Elizabeth Rosenberg, "Don't Mistake Russia for Iran: Why the Same Sanctions Strategy Won't Work". Foreign Affairs. 20 October 2014 in www.foreignaffairs.com.
The recent statement by Russian President Putin puts the lie to the concept trotted out by some (such as Eric Lorber and Elizabeth Rosenberg above) that the sanctions regime instituted by the Western powers on Russia are or will prove to be 'ineffective'. It being very difficult to imagine that Grazhdanin Putin fury, fully on display to-day would not have occurred but for the fact that sanctions are indeed taking a bite on the Russian economy. Indeed, it appears that given the recent decline in oil prices of upwards of twenty-six percent, that already Western sanctions are having a measurable negative effect on the Russian economy 1. Given these circumstances it boggles the mind that already defeatist sentiments are endeavor to end or diminish the sanctions regime on Russia. To my mind, the desiderata of sanctions on Russia are two fold: i) create enough economic 'pain' that Russia shall in due course withdraw from Ukraine and eventually Crimea; ii) ideally, following from 'i', the eventual ouster of Putin by another 'Orange Revolution' style coup. Ideally, some type of political version of a 'surgical strike' akin to what happened in Ukraine earlier this year, in Georgia in 2003 and Serbia in 2000. Perhaps 'ii' is an overly optimistic goal. Certainly at the moment, it is not in the least likely. However, given several years of an ongoing recession in Russia, with oil prices stagnate and with capital flight rampant, it is not in the least unlikely, that akin to what happened in late Sovietskaya Vlast, in the 1980's, that an economic crisis will in turn create a 'regime crisis' a crisis in the legitimacy of the regime itself 2. In such an event, far from appearing the overwhelming powerful state apparatus that it presents to the outside world as at present, the question will become whether the Russian Federation will completely collapse and break-off into various pieces.
1. On this, see: "Oil Prices Continue to Define Geopolitics". Stratfor: Global Intelligence. 14 October 2014, in www.stratfor.com. See also: Delphine Strauss, "Russia’s rouble falls to new dollar lows". The Financial Times. 23 September 2014, in www.ft.com.
2. For this analysis of what occurred in late Sovietskaya Vlast, see, Stephen Kotkin. Armageddon Averted: The Soviet Collapse, 1970-2000. (2000).

Thursday, October 23, 2014

'THE DOCTOR OF DIPLOMACY' REVISITED OR A REVIEW OF HENRY KISSINGER'S 'WORLD ORDER'.

"Kissinger attempted to apply the theoretical principles of classical realism to achieve what he saw as a global equilibrium of power. Together with Nixon, he promoted détente with the Soviet Union, established relations with China, ended the Vietnam War, and pursued shuttle diplomacy to end the 1973 Yom Kippur War between Israel and the Arabs. In essence, Kissinger outmaneuvered the Soviets in both China and the Middle East. Kissinger’s aim was not to launch a crusade against the Soviet Union, but to formulate a creative response to promote a balance of power in the mold of the Congress of Vienna, which secured the peace for much of nineteenth-century Europe before the big bang of World War I, when a rising Wilhelmine Germany embarked on a reckless bid to relegate the British Empire to the second tier of world powers. IN HIS NEW book, World Order, Kissinger does just that....He offers a meditation and a mode of thinking about events that is starkly at variance with much contemporary foreign-policy discourse. Diplomatic history has largely fallen into desuetude in the American academy, but Kissinger expertly mines the past to draw parallels between it and the present. Kissinger returns to his central concern of the difficulty of establishing an equilibrium among the great powers. He has been preoccupied with this problem since his first book, A World Restored, in which he examined the efforts of Metternich and Castlereagh to create a stable Europe in the nineteenth century. It is remarkable how consistent his thought has remained over the decades. He argues that the central challenge of the twenty-first century is to construct a new international order at a time of mounting ideological extremism, advancing technology and armed conflict. Kissinger begins by returning to the tension in Europe between the Peace of Westphalia in 1648 and the French Revolution. He next turns to Islam and the Middle East. He follows his scrutiny of the Ottoman Empire and Islam with a study of China’s rise and its implications for its neighbors. But his most extended thoughts are reserved for what he sees as America’s ambivalence about its status as a superpower. He traces the rise of the United States from Theodore Roosevelt down to today, discussing his own tenure in the Nixon administration to explore the unresolved tensions in U.S. foreign policy between isolationist and crusading instincts. Throughout, he aims to reconcile American universalist aspirations with the stark reality of competing powers intent on protecting and projecting their own visions and concepts of order".
Jacob Heilbrunn, "Kissinger's Counsel". The National Interest. 26 August 2014, in www.nationalinterest.org
"The deepest problem of the contemporary international order may be that most of the debates which form the headlines of the day are peripheral to the basic division described in this article. The cleavage is not over particular political arrangements---except as symptoms---but between two styles of policy and two philosophical perspectives....As for the difference in philosophical perspective, it may reflect the divergence of the two lines of thought which since the Renaissance have distinguished the West from the part of the world now called underdeveloped (with Russia occupying an intermediary position). The West is deeply committed to the notion that the real world is external to the observer, that knowledge consists of recording and classifying data---the more accurately the better. Cultures which have escaped the early impact of Newtonian thinking have retained the essentially pre-Newtonian view that the real world is almost completely internal to the observer".
Henry A. Kissinger, "Domestic Structures and Foreign Policy". Daedalus. (Spring 1966), pp. 526,528.
"Whatever the qualities of Soviet Leadership, its training is eminently political and conceptual. Reading Lenin or Mao or Stalin, one is struck by the emphasis on the relationship between political, military, psychological and economic factors, the insistence on finding a conceptual basis for political action and on the need for dominating a situation by flexible tactics and inflexible purpose. And the internal struggles in the Kremlin ensure that only the most iron-nerved reach the top....As a result, the contest between us and the Soviet system has had many of the attributes of any contest between a professional and an amateur. Even a mediocre professional will usually defeat an excellent amateur, not because the amateur does not know what to do, but because he cannot react with sufficient speed consistently."
Henry A. Kissinger. Nuclear Weapons and Foreign Policy. (1957), pp. 434-435.
Jacob Heilbrunn's essay quoted above is if nothing else illustrative of the aura which still surrounds the man who was once called 'the Doctor of diplomacy', Henry Alfred Kissinger. And let there be no mistake: regardless of the less than positive comments about him which are to follow, I am quite willing to be the first in acknowledging that with the exceptions perhaps of Theodore Roosevelt, George Kennan, and Dean Acheson, Henry Kissinger possessed the preeminent mind in American foreign policy in the twentieth century. Anyone who has had the pleasure of reading both his memoirs and his diplomatic cables and communications while in office, readily sees that he is dealing with someone who evinces a superb mind and intellect as it relates to diplomacy and foreign relations. With however that being said, what does one make of his current book, World Order? First thing that comes to mind and which needs to be repeated again and again when one discusses the mind, art and indeed 'philosophy of power' of the former Secretary of State is that he is not, and has never been a historian. Certainly not a diplomatic historian. For many of course my statement appears to be an odd one insofar as Kissinger's first and perhaps best book, dealt extensively with early 19th century European diplomatic history, A World Restored: Metternich, Castlereagh and the Problems of Peace 1812-1822. Unfortunately, the fact that Kissinger received his doctorate not in history but in the Department of Government at Harvard University is made evident by the book's contents: there is no evidence of archival research and Kissinger is quite happy to admit his reliance upon the existing published primary and secondary sources for his evidence. Accordingly, notwithstanding the fame that the book gave to its author from that time to this, historians in the field have largely chosen to ignore it almost entirely 1. With almost no one now adhering to the Kissinger's thesis that the post-Congress of Vienna peace was due to "an equilibrium among the great powers" 2. Similarly, Kissinger's rather humorous (post-facto) comments on the positive aspects evinced by the leadership qualities of Mao, Stalin or Lenin read distinctly odd to put it mildly. And indeed given the fact that they were published after Nikita Khrushchev's denunciation of Stalin's 'the cult of personality', one is somewhat amazed that Kissinger would ignore the same and publish these comments. And of course in his public praise for Chou En-lai found in his three volumes of memoirs, one sees a almost willful ignorance of the fact that Chou was at his very best of more subtle enabler and enforcer of Mao's more demonic and catastrophic actions, then the suave and grand statesman that Kissinger makes him out to be 3. As for the idea that in his time in office, particularly in the more creative, earlier years, Kissinger endeavored to: "to formulate a creative response to promote a balance of power in the mold of the Congress of Vienna", unfortunately the historical record that has come out in the past twenty years clearly show that in fact whatever Kissinger was endeavoring to do, promoting a balance of power was most certainly not one of his goals. As the writings of Raymond Garthoff among others have clearly shown 4. Which is not to gainsay the fact that at times, Kissinger was indeed a very skillful diplomat and very good tactician. Merely that Kissinger's time in office shows that with the exception of being mesmerized by Peking and its denizens, he had no use for, nor any wish to recreate a stable equilibrium between the United States and the Soviet Union. Much less between the United States and its allies as well as China and the Soviet Union.
With all that being understood what does the reader make of Kissinger's new book? Well I for one am amused that it conjurors up the same inaccurate and or outdated diplomatic history of the 18th, 19th and 20th century that Kissinger has trotted out time and again for a good number of years now. Additionally of course he in a sotto voce fashion intentionally endeavors to confuse the reader as to what he and President Nixon were endeavoring to do while in office. Which as we have seen had absolutely nothing to do with trying to create or recreate 'equilibrium' between the various powers that he dealt with. For the most part, the book is nothing more than a re-hash of some of the points made in two of his more recent books: that on China in 2011 and his book on diplomacy in 1994. Among which are: i) the need to appease Peking, at almost whatever cost to Western interests and prestige, in order to avoid a repeat of the clash between the United States and China; ii) the need for existing Great Powers to accommodate 'rising ones', in order to avoid a breakdown in the diplomatic equilibrium, the failure of Great Britain to so accommodate Imperial Germany being of course from Kissinger's own (rather out-dated) perspective the primary cause of the outbreak of the Great War 5. In short, while endeavoring to be kind, there is nothing substantive or penetrating about Kissinger's newest book. For those who enjoy reading Kissinger's own take on diplomatic history in the 18th, 19th and 20th century, his book of twenty-years ago was both much more interesting and cogent in its arguments and assertions. For those interested in his observations on the contemporary scene, aside from its boringly blatant call for appeasing Peking, there is nothing of real interest or substance. Which given Kissinger's advanced age is perhaps par for the course. In short, the 'Doctor of diplomacy' book of remedies for contemporary international scene is perhaps best ignored or if given one as a gift, put up on the bookshelf for display but not for reading. Much less for understanding the world that is going on around us. Past, present or indeed future.
1. On this see: Paul Schroeder. The Transformation of European Politics, 1763-1848. (1994). Where it is quite noticeable that Schroeder does not cite Kissinger once in the entirety of the text of more than seven-hundred pages.
2. Ibid. See also: Paul Schroeder, "Did the Vienna Settlement Rest on a Balance of Power". The American Historical Review. (June 1992), pp. 683-705. See also: Robert Jarvis, "A Political Science Perspective on the Balance of Power and the Concert". The American Historical Review. (June 1992), pp. 716-724.
3. For the more egregiously sycophantic statements by Kissinger on Chou see: Henry A. Kissinger. The White House Years. (1979), pp. 741-749. See also, volume two of the memoirs: Years of Upheaval. (1982), pp. 45-49 and passim. According to perhaps Kissinger's best biographer, Jussi Hanhimaki, Kissinger had: 'an extraordinary positive view of the Chinese premier [Chou]'. See, The Flawed Architect: Henry Kissinger and American Foreign Policy. (2004), p. 142.
4. For this see: Raymond Garthoff. Détente and Confrontation. Revised Edition. (1994), pp. 24-36 and passim. See also: Hanhimaki, op cit., pp. xviii-xix and passim.
5. For the recent reviews of the historical literature, see: Hew Strachan, "Review Article: The origins of the First World War." International Affairs. (March 2014), pp. 429-439; William Mulligan, "The Trial Continues: New Directions in the Study of the Origins of the First World War." English Historical Review. (June 2014), pp. 639-666. Romedio von Thun-Hohenstein, "Review." The Royal United Services Institute. (February / March 2014).