Tag: russia

Beware of the Kremlin’s Propaganda

Since the beginning of the turmoil in Ukraine, some have attributed a large part of the blame for the crisis to the European Union and the United States, whose meddling allegedly brought down the President Viktor Yanukovych.

While, as a general rule, the foreign policy of the EU and the US deserve to be criticized on various grounds, it should not be forgotten that other actors are present on the world’s geopolitical scene as well – some of them quite malevolent. The idea that the eclectic, bottom-up movement that fueled the revolution in Kyiv was somehow orchestrated by the United States (and/or by the notoriously unimaginative bureaucrats in Brussels) is grotesque – as is the notion that Russia’s invasion of Crimea is a response to genuine secessionist desires of the citizens of South-Eastern Ukraine.

In short, one needs to be careful to avoid the trap of falling for the propaganda spread by Russia’s current regime, as Alexander McCobin and Eglė Markevičiūtė, both from Students for Liberty, argue here:

It’s much too simplistic to solely condemn the United States for any kind of geopolitical instability in the world. Non-interventionists who sympathize with Russia by condoning Crimea’s secession and blaming the West for the Ukrainian crisis fail to see the larger picture. Putin’s government is one of the least free in the world and is clearly the aggressor in Crimea, as it was even beforehand with its support of the Yanukovych regime that shot and tortured its own citizens on the streets of Kyiv.

[…]

Some libertarians’ Kremlin-style speculation about pro-western Maidan’s meddling in Crimea’s affairs is very similar to what Putin’s soft-power apparatus has been trying to sell in Eastern Europe and CIS countries for at least 15 years. Speaking of the Crimean secession being democratically legitimate is intellectually dishonest given that the referendum was essentially passed at gunpoint with no legitimate choice for the region to remain in Ukraine’s sovereign power.

Don’t Wreck Relations with Russia and China over Syria

Most opponents of the Obama administration’s plan to launch missile strikes against Syria have rightly focused on the possible costs in American blood and treasure if the United States becomes entangled in that country’s civil war. There is, however, a more subtle, yet extremely worrisome, cost: the potential damage to America’s relations with other important nations, especially Russia and China.

Russian leaders have been extremely outspoken in opposing military measures against Syrian President Bashar al-Assad, especially if such actions are taken without approval from the UN Security Council, on which Russia possesses a veto power. Russian President Vladimir Putin also has warned that a U.S.-led attack on Syria could further destabilize the Middle East, proving “catastrophic” for that region and beyond. Moscow has now dispatched three naval vessels to the eastern Mediterranean to show support for Assad and warn Washington against rash action.

China has been less vocal than Russia in criticizing U.S. policy toward Syria, but Beijing is also opposed to the course that the Obama administration has adopted. The Chinese government shares Moscow’s anger at Washington’s growing tendency to bypass the UN Security Council on matters of war and peace. That is a source of discontent that has been building for a decade-and-a-half. Western (especially U.S.) policy regarding Kosovo—both the war in 1999 and the decision to bypass the Council and grant that province independence from Serbia in 2008—became a prominent source of irritation. The U.S.–led invasion of Iraq in 2003, again without Security Council approval, added to the list of Sino-Soviet diplomatic grievances against Washington and its allies. Most recently, the West’s cynical misuse of a Council resolution authorizing air strikes in Libya, supposedly to prevent Muammar Gaddafi’s forces from attacking innocent civilians, antagonized both Beijing and Moscow.

The Obama administration’s transformation of the Libya resolution into a vehicle for regime change makes Russian and Chinese officials especially suspicious that the proposed limited missile strikes to punish Assad for the use of chemical weapons will be perverted in the same fashion. And it is clear that Beijing and Moscow are tired of having Washington disregard their views and flout the interests of their countries.

U.S. leaders need to do a far better job of calculating America’s foreign policy priorities. Maintaining good relations with Russia and China outweigh any theoretical gains that might flow even from a well-executed policy regarding Syria. And the prospects of a meaningful U.S. policy “victory” in that country are midpoint between slim and none.

Conversely, we need cooperation from Moscow and Beijing on a host of important issues. Without Russia’s help, there is little chance for serious progress on nuclear issues, either reducing the bloated U.S. and Russian stockpiles of such weapons or discouraging Iran and other countries from barging into the global nuclear weapons club. China’s cooperation is even more important. Not only is China a major purchaser of U.S. government debt, which in an era of chronic budget deficits is no trivial matter, but the country is an increasingly crucial U.S. trading partner and a vital factor in the overall global economy. An angry, recalcitrant China would not be good for America’s or the world’s economic health.

China is also the most important player in efforts to discourage North Korea from engaging in reckless, destabilizing conduct. During the first half of 2013, Beijing appeared to grow weary of Pyongyang’s disruptive, provocative conduct and began to exert pressure on its obnoxious client. That pressure has been at least one factor in North Korea’s more conciliatory behavior in the past few months. But China will have little incentive to continue that course if Washington tramples on Beijing’s interests in Syria and the rest of the Middle East.

Obama administration officials must avoid policy “tunnel vision.” Pursuing a dubious strategy in Syria is bad enough, even taken in isolation. Doing so when it will likely damage U.S. relations with two major powers in the international system is dangerously myopic.

Obama Administration Should Close NATO Door to Georgia

Although many members of the defense establishment haven’t seemed to notice, the Evil Empire collapsed. The Soviet Union is gone, along with the Warsaw Pact. Europe is wealthier than America. Why is Washington still pushing to expand NATO?

In May, Secretary of State John Kerry announced that “We are very supportive of Georgia’s aspirations with respect to NATO.” In June NATO Secretary General Anders Fogh Rasmussen visited Tbilisi, where he said that once Tbilisi made needed reforms “the burden will be on us to live up to our pledge that Georgia will be a member of NATO.”

Alas, the biggest burden of adding Tbilisi would fall on the United States. The administration should halt the process before it proceeds any further.

The North Atlantic Treaty Organization was created to contain Joseph Stalin’s Soviet Union. The U.S.S.R.’s demise left NATO without an enemy. The alliance desperately looked for new duties, finally settling on “out-of-area” responsibilities. 

In essence, the alliance would find wars to fight elsewhere, such as in Afghanistan and Libya, while expanding eastward toward Moscow. That process continues today. For instance, Rasmussen declared: “Georgia’s full Euro-Atlantic integration is a goal we all share” 

That’s a dumb idea. Georgia would be a security liability to the United States and Europe.

Syria’s Annual Inflation Hits 200%

In an attempt to beat Western sanctions and halt the fall in the Syrian pound, the Assad regime – with the help of Iran, Russia, and China – has begun conducting all of its business in rials, roubles, and renminbi. This decision supplements other existing arrangements between Syria and its allies that are keeping the Syrian economy on life-support. These include transfers of $500 million per month in oil and an unlimited credit line with Tehran for food and oil-product imports.

According to Kadri Jamil, Syria’s prime minister for the economy, this life support is necessary because Syria’s devastated economy is the target of an elaborate plot, hatched by the U.S. and Britain, to “sink the Syrian pound.”

So, what about the sinking pound? As the accompanying chart shows, the Syrian pound has lost 66.2% of its value in the last twelve months.

The rout of the Syrian pound has been widely reported in the press.  But, Syria’s inflation problems that have accompanied the collapse of the pound have gone largely unreported.  That’s because, beyond the occasional bits of anecdotal evidence, there has been nothing to report by way of reliable economic data.

To fill that void, I employ standard techniques to estimate Syrian’s current inflation. Currently, Syria is experiencing an annual inflation rate of 200% (see the accompanying chart).

Indeed, Syria is experiencing a monthly inflation rate of 34%. To facilitate the monitoring of the quickly deteriorating situation in Syria, I am creating a resource which will allow readers to view up-to-date data on the Syrian pound and the country’s inflation problems. Soon, black-market exchange-rate data and ­inflation estimates for countries with troubled currencies like Syria will be made available via the “Troubled Currencies Project” – a joint Cato Institute-Johns Hopkins collaboration under my direction. In consequence, the days of Syria’s plunging pound and raging inflation being covered in a shroud of secrecy are soon coming to an end.

Cyprus: Follow the Money

While the Cypriot Parliament may be dragging its feet on a proposed rescue plan for Cyprus’ banks, the country ultimately faces a choice between Brussels’ bitter pill…and bankruptcy. Cyprus’ newly-elected President, Nicos Anastasiades, has quite accurately summed up the situation:

“A disorderly bankruptcy would have forced us to leave the euro and forced a devaluation.”

 Yes, Brussels and the IMF have finally decided to come to the aid of the tiny island, which accounts for just 0.2% of European output – to the tune of roughly $13 Billion. But, this bailout is different. Indeed, the term “bail-in” has emerged, a reference to the fact that EU-IMF aid is conditional upon Cyprus imposing a hefty tax on its depositors. Not surprisingly, the Cypriots, among others, are less than pleased about this so-called “haircut”.

Still, the question lingers: Why now? The sorry state of Cyprus’ banking system is certainly no secret. What’s more, the IMF has supported a “bail-in” solution for some time. So, why has the EU only recently decided to pull the trigger on a Cyprus rescue plan?

One reason can be found by taking a look at the composition of Cyprus’ bank deposits (see the accompanying chart).

 

There are two main take-aways from this chart:

  1. European depositors’ money began to flow out of Cyprus’ banks back in 2010. Indeed, most European depositors have already found the exit door.
  2. Over that same period, non-Europeans (read: Russians) have increased their Cypriot exposure. If the proposed haircut goes through, Russian depositors could lose up to $3 billion. No wonder Valdimir Putin is up in arms about the bail-in.

Perhaps a different “red telephone” from Moscow will be ringing in Brussels soon.

Sequestration Will Not Make the United States Less Safe

Will sequestration undermine U.S. national security? Hardly. Today, the Cato Institute released a new infographic putting these minor cuts in perspective.

Military spending will remain at roughly 2006 levels—$603 billion, higher than peak U.S. spending during the Cold War. Meanwhile, we live in a safer world. The Soviet Union has been dead for more than two decades; no other nation, or combination of nations, has emerged since that can pose a comparable threat. We should have a defense budget that reflects this reality.

To be clear, sequestration was no one’s first choice. But the alternative—ever-increasing military spending detached from a legitimate debate over strategy—is worse. We should have had such a debate, one over the roles and missions of the U.S. military, long before this day of reckoning. And politicians could have pursued serious proposals to prudently reduce military spending. Instead, they chose the easy way out, avoiding difficult decisions that would have allowed for smarter cuts.

Until now, there have been few constraints on Washington’s ability to spend what it pleases on the military. As my colleagues Benjamin Friedman and Justin Logan put it, Americans “buy defense like rich people shop, ignoring the balances of costs and benefits.”

Policymakers can’t postpone the tradeoffs forever, especially when the public has grown increasingly weary of foreign entanglements. If forced to choose between higher taxes, less military spending, or lower domestic spending, in order to balance the budget, the military fares least well, with solid pluralities favoring cuts in military spending over cuts in other programs.

Which is why it is so important to get the foreign policy debate right. If we are going to give our military less, we need to think about asking it to do less.

A number of experts have done that, rethinking the military’s purpose, and documenting the savings that would flow from a more modest foreign policy. The sequester is a first step, albeit an imperfect one, that could finally compel policymakers to do the same.

Download and share this infographic on your blog, Twitter, or Facebook.

Russia Responds by Punishing Orphans

When Congress passed legislation this month establishing permanent normal trade relations with Russia, it included travel and financial sanctions against Russians accused of gross human rights violations, particularly those involved in the suspicious death of anti-corruption whistleblower Sergei Magnitsky. At the time, I counseled against “poking Russian officials in the eye with sanctions.” The Russian legislature is currently contemplating its response to that poke, and it doesn’t look good.

Having made clear its intention to retaliate in some way for the Magnitsky bill, which it deemed a national insult and intrusion into domestic affairs, Russia has decided to target America’s own human rights abusers—adoptive parents of Russian orphans. Russian media have been fueling a controversy over abuse by American parents of adopted Russian children, and the Magnitsky bill gave the legislature in Moscow an opportunity to kill two birds with one stone. At first, Russian leaders called for a travel ban on specific people accused of abuse in an obvious parallel to the U.S. sanctions. The current proposal under consideration is to ban all adoptions by American citizens.

Russia has an impressive surplus of orphans and is one the most common countries of origin for international adoptions in the United States. Thousands of children will be denied access to loving families. Not all the blame lies with Congress and its attempt to be a global human rights cop, but the end surely condemns the means.