Friday, November 28, 2014


"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
"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
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

Monday, November 03, 2014


"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
"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
"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
2. Perry Link & Orville Schell, "China Strikes Back’: An Exchange". The New York Review of Books. 20 November 2014, in
3. On this, see: "Latest hot spot for Chinese property investors." The Real Deal. 2 November 2014, in