Ukraine (closed; covers till August 2014)

[AmericanPride]

Adam and Firn,

The real center of gravity is who controls Ukraine's wealth at the end of this drama. The new government in Kiev has already announced a privatization program:

"I'll tell you about the idea of privatization of the energy sector at transparent auctions: Chornomornaftogaz and other companies, which are part of Naftogaz Ukrainy," [the Prime Minister] said at a meeting with the business community in Kyiv on Monday.

[carl]

From an economic point of view, the revolution in Kiev did Ukraine no favors. In fact, it may have sacrificed whatever remaining stability the Ukrainian economy had. But I suppose Ukraine's territory integrity (there is a vote for Crimean secession planned this month) is a small price to pay to bring the Washington Concensus to Russia's doorstep.

Here I thought the Ukrainian people had something to do with all this, the various demonstrations and all. I figured they were very unhappy with their situation and are trying to change it. I figured too that since they live their they are probably most able to judge whether their situation was/is tolerable or not. Hmm. Upon reflection, I still think so and any crisis that is developing is the result of an aggressive police state invading an neighboring country.

[AdamG]

Adam and Firn,

The real center of gravity is who controls Ukraine's wealth at the end of this drama. The new government in Kiev has already announced a privatization program:

I've always understood Center of Gravity to be a What, not a Who.

Money is still at the root of the problem - had the (former) Ukrainian Kleptocracy not looted the country's coffers to the tune of $20 billion or so, they wouldn't be in this fine mess.

Meanwhile, Kremlin.

[jmm99]

For an oldster, it's comforting to see that some aspects of days gone by continue. One can still find TASS, Pravda and Izvestia. For my next round of comfort food, I'll try to find Cracker Jacks with prizes inside while listening to Moon River.

But, in the meantime, duty calls; and I will footnote an IL note. A prior post briefly noted Ashley Weeks' summary of why Russia's actions were illegal under IL. In her column yesterday, she posted the Russian response (albeit by a German, Stefan Soesanto - at very bottom of CSIS Kelly bios).

Its BLUF:

The Russian position for sending troops into Crimea is based upon five legal arguments.

First, the interim government in Kiev is not the legitimate government of the Ukraine as it violently usurped power in a coup d’état.

Second, the interim government is promoting a nationalistic agenda which is threatening the human rights of the Russian minority living in the Ukraine.

Third, given the fear of revolutionary chaos in the Ukraine Russia is facing a potential humanitarian refugee crisis at its border.

Fourth, under Article 61(2) of the Russian constitution, the Russian federation “guarantees its citizens defense and patronage beyond its boundaries.”

And fifth, President Yanukovych and the Prime Minister of the autonomous Republic of the Crimea invited Russia for security assistance to protect and stabilize the Ukraine.
...
[JMM: much more in Soesanto's post getting down into the weeds on these five points]

Again, it's comforting to see that the Cheka's IL department is still alive and well after all of those years.

Regards

Mike

[Firn]

@AdamG: Good links, I quickly read through the Remi Piets article, I liked it in general. It is of course impossible to address all his points.

@AmericanPride: If you go back in the thread I already wrote a couple of stuff about the Ukrainian economy, the role of the oligarchs and so forth with some interesting links. It is frankly quite obvious that the political turmoil and the foreign invasion have negative consequences for the economy. On the other hand a closer integration into the European systems has considerable upsides.



The success of neighbours like Slovakia and Poland in the EU had and has of course a huge attraction for many Ukrainians, especially the younger and better educated ones. When I was an active member of an European student organization you could feel the energy and thirst of the members, especially the women, stemming from those countries. Great times.

This is of course part of the vast soft power or attraction of the West, which just can not be matched by countries like Russia or China. It is no surprise that many of the brightest and many of the richest vote with their feet and money and decide to come, live, and invest in the West.

I wrote already about some basics of the weak Russian economy. This article provides a nuanced opinion on the current situation:

Fear and pain following Russia's military intervention in Ukraine last weekend is obviously a factor. Clearly some market players were expecting some sort of backlash from the world regarding Russia's moves. There was the usual talk of U.S. sanctions, presumably to fall on Russian state banks. When it comes to financial sanctions, it is hard to dream up a government player more scary and dangerous than Uncle Sam, and any action against Russia could leave a lot of folks high and dry. Naturally, smart guys would buy dollars and move them out if they feared sanctions, thus contributing to flush the ruble out. But this is not sufficient to explain the crash.

But the plain fact is that Monday's market turmoil was just a hyperextension of a trend that has been gathering steam for some time. The ruble is being punished for the sins of the Russian economy.

Any banker who is free to talk nowadays will tell you that corporates are simply not borrowing the way they used to. More generally, people are not investing into their own businesses and have not been or more than two years. Increasingly, company directors, entrepreneurs and the like have been "milking" their businesses in Russia and getting the money out of the country any way they can. This is called capital flight with a capital "F" and has been going on in Russia increasingly over the past two years.

As I wrote before in economic issues people are most readily voting with their money. Despite the high interest rates offered in Russia, the smart money has for a couple of years flowing away from Russian and the ruble into the West and the Euro, Swissie, USD or Pound. The Russian aggression against the Ukraine has accelerated the trend and the Bank Rossii had to raise and to sell reserves to slow it down. There have smart guys there but the task to stop the flood is huge.

[Firn]

@jmm99: Good job. Something for you, found while I looked at the Russian economy. The first sentences left a deep impressions in a strange way.

In Moscow, I have lived through two ideologies, two Olympics, two revolutions and several economic crises. I have wept through terrorist attacks. I have lost all my savings a couple of times. I am always getting paid in whatever currency is losing value. This week I think: I am getting too old for this.

Konstantin Sonin, a columnist for Vedomosti, professor of economics and vice rector at the Higher School of Economics in Moscow has written this nice&short piece. The quote from Talleyrand is in this occasion much appreciated and fitting. I use it also from times to times.

It is said that after Napoleon committed a particularly shocking and amoral blunder, Foreign Minister Charles Maurice de Talleyrand-Perigord remarked that "it was worse than a crime, it was a mistake." Those are timeless words, and it is no wonder that Talleyrand's political career began earlier and lasted far longer than the emperor's.

The same observation applies to the recent actions of Russia's political leadership. Whatever the legal or moral implications, sending troops into a neighboring country is a tragic mistake. This move ended all hopes of Russia attaining the long-term stability it has been working toward ever since the fall of the Soviet Union, and it will lead to serious political and economic consequences that will continue to affect this country for many years.

Historians will long debate how such a major miscalculation could have happened, but for the moment, other considerations deserve more immediate attention

@carl: It is indeed to stop sometimes and try to look at the issues through the eyes of the people living there. I fear for the Ukrainians and also the common Russians, it is a bad situation which might still result in a shooting war. An Ukrainian officer IIRC described the situation in the Crimean as a powder keg.

[slapout9]

I've always understood Center of Gravity to be a What, not a Who.

Money is still at the root of the problem - had the (former) Ukrainian Kleptocracy not looted the country's coffers to the tune of $20 billion or so, they wouldn't be in this fine mess.

Meanwhile, Kremlin.

That is I decided to return to my roots. What a COG is...is pretty worthless IMO as nobody ever agrees on what it is. IMO it is better to go with the idea of PEOPLE cause crimes and they cause wars, don't worry about the stuff involved, it is the folks that control it you need to worry about.

Which leads us to the money or rather who controls the money as the root problem. Kerry is the ultimate 1 per-center and an avowed globalist. Putin with his paltry few billions is nothing compared to the personal history of Kerry, plus Putin is from the peasant class compared to Kerry with his long pedigree to include his wife which is literally a Heinz 57, the ultimate Internationalist.

So this is Kerry and his Banker supported Real Estate Swindle vs. Putin and his KGB street fighters. Don't know WHO (not what) will win.

[slapout9]

For an oldster, it's comforting to see that some aspects of days gone by continue. One can still find TASS, Pravda and Izvestia. For my next round of comfort food, I'll try to find Cracker Jacks with prizes inside while listening to Moon River.

But, in the meantime, duty calls; and I will footnote an IL note. A prior post briefly noted Ashley Weeks' summary of why Russia's actions were illegal under IL. In her column yesterday, she posted the Russian response (albeit by a German, Stefan Soesanto - at very bottom of CSIS Kelly bios).

Its BLUF:



Again, it's comforting to see that the Cheka's IL department is still alive and well after all of those years.

Regards

Mike

Nice legal perspective jm99. No luck with cracker jacks but here is Andy Williams for you.
http://www.youtube.com/watch?v=L_jgIezosVA&feature=kp

[AmericanPride]

Carl and Firn,

The point is that with or without Russian intervention, Ukraine would still be facing this same economic dilemma. And the problem isn't is "West better than East?" Because that's a false dichtonomy. Ukraine's integration into the Washington Concensus will unleash a very painful program on the Ukrainian people that will benefit a few small class of investors and financiers. Whatever his motivations and faults, Yanukovych rejected this program. His government was in an impossible situation given the immense pressure from both Washington and Moscow. A considerable of the portion of the population is in favor of this course of action - another considerable portion is in favor of achieving the status of a Russian protectate. The narrative of a spontaneous freedom-thirsty pro-West Ukrainian revolution is a myth.

[AmericanPride]

That is I decided to return to my roots. What a COG is...is pretty worthless IMO as nobody ever agrees on what it is. IMO it is better to go with the idea of PEOPLE cause crimes and they cause wars, don't worry about the stuff involved, it is the folks that control it you need to worry about.

Which leads us to the money or rather who controls the money as the root problem. Kerry is the ultimate 1 per-center and an avowed globalist. Putin with his paltry few billions is nothing compared to the personal history of Kerry, plus Putin is from the peasant class compared to Kerry with his long pedigree to include his wife which is literally a Heinz 57, the ultimate Internationalist.

So this is Kerry and his Banker supported Real Estate Swindle vs. Putin and his KGB street fighters. Don't know WHO (not what) will win.

I don't agree with the terms but I agree with the sentiment. This is a battle of wills between the neoliberal Washington Concensus and the nationalist-realist faction currently in power in Moscow. The control of Ukraine represents $$$ for both sides, with the Ukrianian activists of all political stripes caught in the middle.

[carl]

Carl and Firn,

The point is that with or without Russian intervention, Ukraine would still be facing this same economic dilemma. And the problem isn't is "West better than East?" Because that's a false dichtonomy. Ukraine's integration into the Washington Concensus will unleash a very painful program on the Ukrainian people that will benefit a few small class of investors and financiers. Whatever his motivations and faults, Yanukovych rejected this program. His government was in an impossible situation given the immense pressure from both Washington and Moscow. A considerable of the portion of the population is in favor of this course of action - another considerable portion is in favor of achieving the status of a Russian protectate. The narrative of a spontaneous freedom-thirsty pro-West Ukrainian revolution is a myth.

Yanukovych who stole how many millions, billions, was trying to spare the Ukrainian people the pain of closer integration with the West despite the wishes of rather a lot of Ukrainians. Yanukovych the humanitarian philanthropist. You learn something new every day.

[AmericanPride]

Here I thought the Ukrainian people had something to do with all this, the various demonstrations and all. I figured they were very unhappy with their situation and are trying to change it. I figured too that since they live their they are probably most able to judge whether their situation was/is tolerable or not. Hmm. Upon reflection, I still think so and any crisis that is developing is the result of an aggressive police state invading an neighboring country.

Who are "the Ukrainan people"? The few thousand ethnic Ukrainians of Fatherland and Right Sector parties that protested in Kiev? Or the ethnic Russian demonstrators in Donestsk, Kharkiv, and Odessa in opposition to the new government? John McCain, Victoria Nuland, and others in Washington expressed strong opinions about what Ukraine's should be. The crisis would still exist regardless whether Moscow intervened in Crimea or not. The Ukrainian people expressed their popular will through an election that put Yanukovych in office (for a second time and was certified by international monitors as legitimate). Is it a democratic principle for a minority party to force the sitting president from office? Would we find it acceptable in the United States if the Tea Party occupied the White House and Congress until their demands that Obama resign were met? Probably not.

If we're concerned about Ukraine's democratic future, then we need to condemn political agitation by all outside parties, recognize the interests of the ~20% of Ukrainians who are ethnic Russians, and call upon the new government to recognize democratic principles by holding new elections. This month. Not in May or December. Given Ukraine's demographic condition and split idenity, from a foreign policy perspective, the country's best bet is the Austria or Finland model of neutrality. But neither Moscow or Washington or genuinely interested in the political sovereignty or territorial integrity of Ukraine or the democratic aspirations of any of the Ukrainian people. And until we recognize that fundamental fact, we always be surprised by the actions of others.

[AmericanPride]

Yanukovych who stole how many millions, billions, was trying to spare the Ukrainian people the pain of closer integration with the West despite the wishes of rather a lot of Ukrainians. Yanukovych the humanitarian philanthropist. You learn something new every day.

You have a superficial reading of the situation and at no point did I say Yanukovych was a "humanitarian philanthropist". Quote me. At best, he was corrupt. At worst, a murderer. But that wouldn't make him any different from most of heads of state nor does it have any bearing on the fact of his democratic legitimacy, certified by an election, or the expression of the popular will of the Ukrainian population. Nor does it change the fact that sometime this month the new government in Kiev will approve the same IMF-imposed austerity measures that have failed in Greece, Portugal, and elsewhere and that Yanukovych, whatever his motivations, rejected.

There is sufficient economic data that demonstrates the failure of austerity as a growth policy. Austerity is not about growth. Austerity is about ensuring the gains of a small class of investors and financiers in a dying economy, whatever the costs to the general population. Austerity will not save Ukaine. Austerity has not saved any country. But that's not the goal of austerity. The same pain that has gripped Russia, Greece, Chile, and even Detroit will come to Ukraine. Capitalism is not about democracy. It's about profit. And austerity brings that distinction to the forefront.

[AmericanPride]

This article describes the Latvian experience with austerity. This is the "democratic" future of Ukraine if Kiev elects the IMF program:

Latvia’s solid economic growth since its economy plunged by 25 per cent in 2008-10 is billed as a success. Its unemployment during the crisis soared above 20 per cent as the shutdown of foreign capital inflows (mainly Swedish mortgage loans to inflate its real estate bubble) left Latvia with deep current-account deficits.

That said, Latvians strongly protested austerity. On January 13, 2009, in the dead of winter, 10,000 in Riga protested against austerity and corruption. Teachers, nurses and farmers held demonstrations in the months following. The national police were called to suppress protests over the closure of a hospital in Bauska; fearing local police might not do what was “required.”

Demographers estimate that 200,000 have departed the past decade – roughly 10 per cent of the population – at an accelerating rate that reflects the austerity being inflicted. Latvian demographers estimate that at least 200,000 have left Latvia the past decade, Moreover, birth rates declined from already low numbers.

Right Sector and Fatherland will get theirs. So will Washington and Brussels. Moscow's presence in Crimea will also mean they get theirs as well. But those protestors in Kiev who risked their lives for a better vision of Ukraine will be left bankrupt and bitter. Resolving the Crimea situation will not solve Ukraine's fundamental economic problem.

[Firn]

I actually I agree with the bit about austerity and it would be economic stupidity to demand certain actions to be implemented in the short term. I have written against the bane of austerity during a depression enough in the thread about the European economy.

However it is absolutely wrong to see the integration into the broader European economy just through the prism of the Washington consensus. It is in fact even completely wrong to describe the WC in such a one-sided way. It is important to keep the simple facts in mind. An it is a fact that the reforms in the spirit of the WC did also great good and were one reason why we have graphs like that.





I think you should try to step back and lookd at the big picture and avoid to see it all the economy in the austerity light. It is very important to avoid a false balance. The world is not black and white but also not a shade of gray right in the middle...

[Firn]

On a different note, I noted for the first time that indeed a lot of the Eastern and Northern FM are quite active twitter users. The Polish one:

Radosław Sikorski ‏@sikorskiradek

In Narva, Estonia, for V4+Baltic+Nordic FMs meeting, a town with 97% Russians. Can fraternal assistance from Spetsnatz be avoided here now?

[TheCurmudgeon]

Who are "the Ukrainan people"? The few thousand ethnic Ukrainians of Fatherland and Right Sector parties that protested in Kiev? Or the ethnic Russian demonstrators in Donestsk, Kharkiv, and Odessa in opposition to the new government? John McCain, Victoria Nuland, and others in Washington expressed strong opinions about what Ukraine's should be. The crisis would still exist regardless whether Moscow intervened in Crimea or not. The Ukrainian people expressed their popular will through an election that put Yanukovych in office (for a second time and was certified by international monitors as legitimate). Is it a democratic principle for a minority party to force the sitting president from office? Would we find it acceptable in the United States if the Tea Party occupied the White House and Congress until their demands that Obama resign were met? Probably not.

If we're concerned about Ukraine's democratic future, then we need to condemn political agitation by all outside parties, recognize the interests of the ~20% of Ukrainians who are ethnic Russians, and call upon the new government to recognize democratic principles by holding new elections. This month. Not in May or December. Given Ukraine's demographic condition and split idenity, from a foreign policy perspective, the country's best bet is the Austria or Finland model of neutrality. But neither Moscow or Washington or genuinely interested in the political sovereignty or territorial integrity of Ukraine or the democratic aspirations of any of the Ukrainian people. And until we recognize that fundamental fact, we always be surprised by the actions of others.

OK … this comment is going to be less about the Ukraine specifically and more about applying political theory to human motivation … let me explain.

This is the second time in as many years that a duly elected leader of a country was removed from office by a “popular uprising” that has been embraced by the American people. The first was Egypt. In both cases the elected leader was cast aside because he appeared to be moving the country towards a identity based collectivist government. In Egypt the group was the Muslim Brotherhood. In the Ukraine it was Putin’s “Russia”. In Putin’s “Russia” the Russian State is the most important thing. It is a collectivist society. Nationalistic. Tied to a common identity.

In both cases it amounted to a choice between a government where the individual people held the power and were the most important political unit, or the Collectivist Group held the power and the group was the most important political unit. Hobbes’ Leviathan.

Don’t get wrapped around the axel over elections. That someone is elected is largely irrelevant. Autocratic, identity based leaders are elected and re-elected by the population they lead all the time. Elections are not the important point. Political ideology, either individualistic or communal, is. So, it does not matter if Yanukovych was elected. He was taking the country where those people of a individualist mindset did not want to go. We Westerners generally agree with that mindset, so we support a non-democratic change of power.

[JMA]

Mike, these Russian citizens living in Ukraine, are they Russian expats or Ukrainians of Russian origin?

I have heard that the Russians are dishing out passports to prove these people are Russian citizens? This to justify their invasion.

If this is so then you can't be a Russian or a Ukrainian at the same time... if dual citizenship is allowed then the national parliament can - quickly - push a new law through making it impossible for Russian citizens and passport holders to also be citizens of the Ukraine.

Russian citizens would then be required to apply for residence permits and work permits to live and work in the Ukraine. Pretty standard requirements for citizens of another country.

For an oldster, it's comforting to see that some aspects of days gone by continue. One can still find TASS, Pravda and Izvestia. For my next round of comfort food, I'll try to find Cracker Jacks with prizes inside while listening to Moon River.

But, in the meantime, duty calls; and I will footnote an IL note. A prior post briefly noted Ashley Weeks' summary of why Russia's actions were illegal under IL. In her column yesterday, she posted the Russian response (albeit by a German, Stefan Soesanto - at very bottom of CSIS Kelly bios).

Its BLUF:



Again, it's comforting to see that the Cheka's IL department is still alive and well after all of those years.

Regards

Mike

[AmericanPride]

Don’t get wrapped around the axel over elections. That someone is elected is largely irrelevant. Autocratic, identity based leaders are elected and re-elected by the population they lead all the time. Elections are not the important point. Political ideology, either individualistic or communal, is. So, it does not matter if Yanukovych was elected. He was taking the country where those people of a individualist mindset did not want to go. We Westerners generally agree with that mindset, so we support a non-democratic change of power.

Several questions:

(1) Is it justified for those of "an individualist mindset" to conduct a "non-democratic change of power"? What if those individuals are not in the majority or are distinctly in the minority? Is the reverse equally justified; can those not of an individualist mindset also execute a "non-democratic change of power"? If tomorrow ethnic Russians in Ukraine conducted a counter-coup and installed a pro-Russian government, is this justified politically or morally?

(2) If the fact of someone's election is "largely irrelevant" and "elections are not the important point", then how do we measure democratic governance?

(3) Is this a useful framework for understanding the events in Kiev and Washington's and Moscow's actions? It seems to me to be a strain of ideological consistency to champion democratic governance on one hand and to install governments in a "non-democratic change of power" on the other. Is that not the opposite of individualism?

[TheCurmudgeon]

Several questions:

(1) Is it justified for those of "an individualist mindset" to conduct a "non-democratic change of power"? What if those individuals are not in the majority or are distinctly in the minority? Is the reverse equally justified; can those not of an individualist mindset also execute a "non-democratic change of power"? If tomorrow ethnic Russians in Ukraine conducted a counter-coup and installed a pro-Russian government, is this justified politically or morally?

As with any form of governance (democracy, autocracy, or monarchy), who is in the majority (or who was right) is a matter of who wins. Crude, but realistic (but not really "realist"). Often it follows the sentiment of the majority of people but in reality it is the majority who are willing to act in the seat of power, in this case Kiev. The motivation to act is key. The motivation is often set off by a threat to a perceived gain (the Davies J-Curve), or a disjoint between the values of the leader and the values of the people (individualism versus collectivism - system legitimacy), or it is motivated by a feeling that those in power got their unlawfully (procedural legitimacy, or an illegitimate claim to power). People will endure terrible hardship if the feel that the system, even an inequitable one, matches their values and ideals of legitimacy.

Let me provide two examples. A commoner will brag about his king and live in a hovel while the king lives in a palace because the king and the commoner share an identity (English, lets say). The King is the representative of the whole of England. There are good kings, and sometimes bad kings, but the commoner still understands the system, built on a common identity and an obligation of the king to take care of his subjects, and agrees to it. The communal or collectivist ideal. The identity, survival, and advancement of the group, even at the expense of the individual, is what is important.

On the other hand, there is the individualistic ideal. Here every person is his own master and creates his own destiny. If a man builds a company and lives in a palatial house, with and income 100,000 time that of the average worker, that is not inequity. That is the way it should be. Even if I lose everything in a business venture and end up homeless, I do not begrudge the rich man of what he has or expect him to care for me. That is not the system I believe in, even if others might see this as the epitome of inequity. Here the individual is supreme - let ten guilty men go free rather than convict one innocent man.

In is all in what you value, what you believe. And when the values of the people and the values of the government diverge, expect trouble.

As for the reverse, it is happening as we speak in the Crimea. The people there, who share a common identity with Russia and are ideologically aligned with it, will vote themselves into an autocratic state because that is what they want. For those in the West, we will not understand. We will scream that this was Putin stealing the will of the people. But it will be the people exercising their will. They just are coming at the problem from a different set of values and ideals.

(2) If the fact of someone's election is "largely irrelevant" and "elections are not the important point", then how do we measure democratic governance?

Yeah, that one has been a problem for years. Polity database, Freedom House, and others have tried to come up with reliable measures of democracy, or even just to define the term. If you figure that one out you will be famous.

(3) Is this a useful framework for understanding the events in Kiev and Washington's and Moscow's actions? It seems to me to be a strain of ideological consistency to champion democratic governance on one hand and to install governments in a "non-democratic change of power" on the other. Is that not the opposite of individualism?

It doesn't matter how it comes to power, only how it conducts itself. The US did not come to be through an election. We fought a war. We WERE the rebels.It is not about how you get there, it is about what you are once you are there.