Tag: russia

Putin’s Speech and the Russian–Western Impasse

Today at the Kremlin, Russian President Vladimir Putin gave his annual address to the Federal Assembly. The speech made the news for its antagonistic tone and, in particular, for Putin’s comparison of Crimea with Jerusalem. But for all the hype surrounding the speech, it said little new, emphasizing instead the impasse that Russia and the West find themselves locked in. Putin’s message was clear: Russia’s foreign policy is not changing.

The foreign policy narratives pervading the speech were strongly familiar, reiterating the points made by Russian leaders and state-owned television throughout the last year. Yet the twisted worldview presented bears little resemblance to reality.

Putin argued that Russia is being persecuted for seeking only to peacefully engage with the world. He presented Russia as a key proponent of international law, describing the annexation of Crimea as the result of a peaceful self-determination vote. In contrast, the United States was portrayed as a meddling hegemonic menace that, he insinuated, aids Russia’s enemies, foreign and domestic. Putin even implied that European states are vassals of the United States:

Sometimes it is even unclear whom to talk to: to the governments of certain countries or directly with their American patrons and sponsors.

The speech went on to describe international sanctions on Russia as illegitimate, with Putin arguing that sanctions are largely unrelated to Crimea or to the ongoing conflict. Instead, he insinuated, sanctions are an attempt by the United States to curtail Russia’s growth and power:

I’m sure that if these events had never happened… they [the US] would have come up with some other excuse to try to contain Russia’s growing capabilities.

These points aren’t true or accurate, but they are certainly consistent with the narrative advanced by the Kremlin. This is one key reason why Putin’s approval rate is still a massive 85%, with many Russians blaming the West for Russia’s woes. Putin thus spent much of the speech deflecting blame. In particular, he focused on Russia’s faltering economy, and while he touched on key economic concerns—the collapsing ruble, the falling price of oil, stalling economic growth, rising inflation—he largely glossed over them, focusing instead on blaming the West. 

Remembering Georgia’s Freedom Fighter

Sometimes a person’s genuine significance can be assessed only after their passing. That seems to be the case of Kakha Bendukidze, Georgian entrepreneur, reformer, and philanthropist, who died unexpectedly early last month. While he was very well-known among libertarians in Eastern Europe and the former USSR, the reactions of some of the world’s leading media outlets suggest that his influence extended far beyond narrow ideological lines, making him one of the most important voices on public policy in the region.

Kakha was a close intellectual ally of Cato and did more than his fair share to promote free-market ideas in countries of the former USSR. In the early 2000s, he pressed for the adoption of a flat tax in Russia. Earlier than others, he understood Vladimir Putin’s true motives, sold his Russian businesses and moved to his native Georgia. It was there that he spearheaded, as Minister for Economy, the ambitious program of fighting corruption and liberalizing the economy, which led to extraordinarily high growth rates for Georgia’s economy. In 2007 alone, the economy expanded by 12.3 percent. After leaving public office, Kakha helped establish the Free University of Tbilisi, a private university offering Western-style undergraduate and graduate education, and the Knowledge Fund, a charity providing funding for teaching and research, including scholarships for Georgian students from poorer backgrounds.

Impressive as this account is, few would have guessed that his passing would prompt a wave of tributes and appreciations coming from sometimes unexpected places. On Foreign Policy’s Democracy Lab, Anna Nemtsova called Kakha one of Georgia’s “most progressive reformers and corruption fighters.” The New York Times published a lengthy obituary, which highlighted Kakha’s involvement with the new leadership of Ukraine. The Independent, in turn, called Kakha a “businessman and statesman who fell foul of Vladimir Putin but rescued Georgia’s post-Soviet economy.”

Finally, the New Yorker magazine offers a carefully written appreciation, offering a lot of details on Kakha’s life and activities in Ukraine prior to his untimely death, as well as the directness with which he communicated his ideas:

Even though he was unsure whether Ukrainians would accept the changes that he wanted to carry out, he agreed to work with [Ukrainian President] Poroshenko, friends say, because he saw Ukraine as the frontline of the battle for liberal reforms in the former Soviet states. With the same tough love that he had inflicted on Georgians, Bendukidze urged Ukrainians to stop blaming others for their problems. “You have broken every world record in idiocy,” he told an audience at the Kyiv School of Economics, in July. “You keep electing populists, people who promise you more. This means you are electing the worst.” He advocated cutting government spending, reducing retirement benefits for public servants, and radically deregulating the economy. Ukraine, he said, in one of his last interviews, had too many ministries and agencies. “Who needs them when the government’s sole function these days is to take money from the International Monetary Fund and pass it on in payment for Russian gas?” he asked.

Give Diplomacy a Chance in Ukraine

As I discussed in an op-ed published at Al Jazeera America last week, it seems as though the Ukraine crisis is slowly solidifying into a ‘frozen conflict.’ This is bad for everyone:

Allowing the Ukraine crisis to metastasize into a frozen conflict effectively guarantees future conflict in the region. It leaves the government in Kiev with a long-term insurgency within its borders, costing it dearly and inhibiting the greatly needed reform of the Ukrainian state. In addition, it keeps Russia and the West locked in a diplomatic stalemate and sanctions war which benefits no one.

The intrinsic uncertainty of the situation in Eastern Ukraine continues to pose the very real threat of escalation. Last week saw tensions ratchet up as the OSCE reported large convoys of weapon and armor crossing the border, but fears of a new offensive by separatists proved unfounded. Such periods of heightened tension are likely to continue, along with consistent low-level violence which has become the hallmark of the conflict.

Some parts of the U.S. government are also keen to escalate the conflict by providing Ukraine with lethal aid. There is strong pressure from Congress to do so, and Sen. John McCain, widely expected to be the next chairman of the Senate Armed Forces Committee, has promised to work closely with his colleagues on the Intelligence and Foreign Relations committees to arm Ukraine. Although the Obama administration has thus far limited aid to non-lethal and humanitarian supplies, there may be some support for lethal aid within the administration too. Deputy National Security Advisor Tony Blinken, during his confirmation hearings for Deputy Secretary of State, divulged that the White House is considering lethal aid to Ukraine, and that he believed such aid would discourage further Russian aggression.

Preliminary Results in Ukraine

Update: The results are finally in. With 98.5% of votes counted, Western-leaning parties (and independents) have done even better than expected, taking 311 seats. Pro-Russian parties took 112 seats, while 27 seats (mostly Crimean districts) remain unfilled.  In other good news, the populists, though represented in the parliament, did relatively poorly: Lyashko’s Radical Party took only 22 seats. Far right parties did even worse, with Svoboda obtaining only 6 seats, and Right Sector 2 seats. These results mark a major change for the Rada, which has typically had parliaments split almost 50/50 between pro-Ukrainian and pro-Russian parties, and will certainly presage a turn to the West for Ukraine. Unfortunately, Russia has also committed to recognize the results of the Nov 2nd rebel elections in Luhansk and Donetsk. The Rada election results are a major victory for pro-Western democracy, but the crisis in Ukraine is not over. 

Original Post: Yesterday, Ukrainian voters went to the polls to elect a new parliament, replacing the deputies elected prior to the Euromaidan protests of early 2014. In a piece at Al-Jazeera America published on Sunday, I highlighted a few ways in which the election results could impact Ukraine’s future relations with Europe, Russia, and the resolution of the ongoing crisis in Eastern Ukraine. Prior to the vote, a high level of uncertainty about the likely makeup of the Rada - especially the election of far right (ie, Svoboda or Right Sector) or populist parties (ie, Oleh Lyashko’s Radical Party) – was a major concern, as was the uncertainty over whether they might be represented in government. A new governing coalition will be instrumental in the resolution of the conflict, shaping how aggressively Ukraine pursues the rebels in the Donbas region.

Fortunately, initial exit polls today indicate reasonably positive results. The three mainstream pro-Western parties did well, with the Poroshenko bloc polling around 22.2%, the Popular Front at 21.8%, and surprise contender Samopomich, a Lviv-based moderate party, polling at 14%. These results are excellent news, as a governing coalition with no far right or populist elements should be possible. The far right party Svoboda will be represented in parliament, as will the populist Radical Party, but the latter did worse than expected, taking home only around 6% of the vote. Rounding out the major parties, Yulia Timoshenko’s Fatherland party also did worse than expected, taking just over 5% of the vote. The main surprise is the success of the Opposition Bloc, a successor to Yanokovich’s Party of Regions, which was not expected to obtain seats, but instead took around 7% of the vote.

These results are extremely preliminary, and as with pre-election polling, only give a broad national figure for how people voted. Thus, they predict the 225 seats which are allotted by proportional representation from them, but the remaining 225 seats are elected in each individual district, for which we have no exit polling data. The parties associated with Petro Poroshenko are expected to do well, but these are also likely to yield high numbers of independent candidates.  Full results are expected by Thursday morning.

Until we know the final makeup of the new Rada, as well as which parties ultimately will form the coalition government, it’s difficult to assess how the results will impact the ongoing crisis. Many citizens in Crimea and the Donbas were indeed unable to vote, disenfranchising as much as 19% of the population. The overwhelmingly pro-Western nature of the parties elected may be a double-edged sword: it will be popular with Western politicians, but it is in part a reflection of the disenfranchisement of Eastern Ukraine, and will not be truly representative. Despite this, Russian leaders appear to have accepted the results, signaling, hopefully, a willingness to work with Kiev in the future. Whether any government will be able to tackle Ukraine’s myriad problems is unclear. But while full electoral results will give us a better idea of what to expect from a new Ukrainian government, for now, the indications are reasonably positive. 

Letting it Go: Ukraine’s Frozen Future

Secretary of State John Kerry met late yesterday in Paris with Russian Foreign Minister Sergei Lavrov. Though somewhat overshadowed by Kerry’s meetings with Iran, the meeting nonetheless provided some fascinating clues as to where the Ukraine crisis is headed.

First, international tensions over Ukraine seem to be slowly relaxing, although violence continues to mar the ceasefire in the Donbas itself. Russian troops are withdrawing from the border, as specified in the Minsk Protocol. The United States is making encouraging noises about the possibility of sanction removal. More importantly, Kerry made a clear point of emphasizing Russian-American cooperation and announced that the two countries would engage in intelligence sharing on ISIS.  This represents a major about-face for the Obama administration, which just six months ago said its goal was to “isolate President Vladimir Putin.” It seems that faced with the difficulty of managing simultaneous conflicts – something the White House is not good at – officials are opting for a more conciliatory approach to Russia.

Second, Crimea wasn’t mentioned. Though it calls for Ukrainian sovereignty to be respected, the protocol doesn’t explicitly discuss Crimea. In short, it looks like Crimea may be off the negotiating table, effectively ceded to Russia. Instead, the main point of contention between Kerry and Lavrov appears to have been the worry that Ukrainian separatists will hold another referendum on joining Russia, in place of Ukrainian parliamentary elections in late October.

Russia Imposes Embargo on Itself

The American economist Henry George wrote, “What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.” In Russia, Vladimir Putin started a war and then, in response to mild American and European sanctions, retaliated by imposing greater sanctions—on his own people.

Even American journalists, whose economic acumen I have been known to question, have noted the likely effects of Putin’s sanctions. See Michael Birnbaum in the Washington Post:

Russia on Thursday banned most imports of Western food products, a sweeping escalation in an economic war that will deal a multibillion-dollar hit to affected nations but will also unreel wide-ranging consequences at home.

The measures were a signal that Russia is not backing down from a confrontation that has sent Western-Russian tensions to heights not seen since the Cold War—and that it is willing to risk barer shelves and higher food prices at home in the name of striking a blow against countries that have tried to punish it over its role in the Ukraine conflict.

Russia has suspended imports of meat, fish, fruit, vegetables and milk products from the United States, the 28-nation European Union, Norway, Canada and Australia for a year. The move came in retaliation for sanctions those countries imposed on Russia….

In Russia, the food measures promised to hit not just city centers, where the urban middle class has grown accustomed to visiting supermarkets overflowing with high-quality imported European cheeses, fish and sausages. Analysts warned that food prices also would increase and that a wide range of Russian industries, including food processing plants, shippers and retailers, would be affected….

“It will be quite sensitive,” said Yevsey Gurvich, the head of the Economic Expert Group. “Not only rich people will feel it, but literally every family will be affected.” He said he estimated that Russian consumer prices would go up 2 percent this year because of the measures.

“Alternatives to imported foods will be more costly, and, anyway, I believe they will be insufficient, and our supplies will diminish. And, hence, prices will go up,” he said.

Americans who wished for more painful sanctions on Russia than President Obama has imposed are getting their wish—thanks to Putin. 

Russia, Sanctions, and Food

The Russian government announced on August 6 that it will ban imports of most food and agricultural products from Australia, Canada, the European Union, Norway and the United States for one year.  The full extent of the ban, as well as its effects on exporters and Russian consumers, are not yet clear.  It is interesting, though, to contrast this action with an earlier effort to use food sanctions as a diplomatic weapon:  the 1980 embargo of U.S. grain sales to the Soviet Union. 

The Soviets had invaded Afghanistan in December 1979 with 80,000 troops and 1800 tanks.  President Carter responded by cancelling private contracts to supply 17 million metric tons (MMT) of U.S. wheat and corn to the Soviet Union.  However, he chose to allow shipment of 8 MMT that had been agreed as part of the 1975 U.S.-Soviet Grains Agreement.  Sales in excess of the level assured in the Grains Agreement were embargoed.

Because grains are relatively fungible, and because numerous countries had surpluses available for export, the Soviets were able to replace most of the embargoed grain from willing suppliers.  Argentine agriculture did particularly well during that timeframe.  U.S. agriculture did not do so well.  Market prices had been relatively high, in large part due to strong export demand.  When a considerable portion of that demand evaporated with the stroke of a pen, commodity prices fell precipitously. 

The grain embargo became a potent political issue in the 1980 presidential campaign.  Ronald Reagan’s opposition to the embargo helped to boost his campaign in rural areas.  He took office in January 1981 and revoked the embargo three months later.

In retrospect, the grain embargo generally is seen as supporting the proposition that economic sanctions often inflict greater costs on the country imposing them than on the country at which they are aimed.

The new sanctions are expected to cut off some $15 billion in Russian imports from the EU.  Russia has been Europe’s second largest (behind the United States) export market for foodstuffs, accounting for 10 percent of the EU’s total foreign sales.  The United States has a smaller stake, with only $1.3 billion of food/ag exports to Russia.  That country has been the third largest market for U.S. poultry exports.  About 7 percent of U.S. poultry exports – valued at over $300 million – were shipped to Russia last year, down from 20 percent as recently as 2008.  Russia’s WTO commitments should prevent import restrictions based on political pressures.  Nonetheless, trade in poultry appears to have fluctuated over time in response to the influence of Russia’s domestic poultry producers.  (It’s worth noting that Russia’s import ban does not include either baby food or wine.  It’s not clear how those omissions should be interpreted.)