News 7 Apr: NATO Founders, Western Media Deconstructed

America’s desire to have Ukraine and Georgia accede to MAP foundered on European opposition from Germany, France and (somewhat surprisingly) the UK, despite Saakashvili’s implicit comparison of this to Nazi appeasement. Nonetheless, this is good for NATO as an alliance (as we’ve covered previously, the European desire for a rapprochement is linked to Russian logistical help on Afghanistan), as well as in line with public opinion about the importance of good relations with Russia amongst the Ukrainian and Georgian publics. This is not to mention Russia itself, where 64% think Georgian accession to NATO is a security threat and where Ukrainian accession could result in restrictions in territorial revisionism and new visa controls.

However, this was most certainly not a Russian victory, as RFE noted:

There would be no MAP at this time, that was true. But there would be what sounded like a pretty firm commitment of eventual membership. Not a firm commitment for MAPs — but actual membership. All the key players who famously opposed the MAP this time around were on board, including Germany and France. Moreover, NATO foreign ministers have been instructed to assess Kyiv and Tbilisi’s progress in December 2008 and have authority to issue formal MAPs as early as then — provided the progress was sufficient. It would all be in an official protocol by the evening, we were told. The mood in the Georgian and Ukrainian delegations pivoted on a dime, from bitter disappointment to unexpected elation. Ukrainian President Viktor Yushchenko said Ukraine had “broken the sound barrier.” Georgia’s Mikheil Saakashvili called the announcement a “geopolitical coup.” One top Georgian official, speaking on background, told my colleagues from RFE/RL’s Georgian Service that the decision was even better than getting a MAP. They would be admitted to NATO after all. The only question was when.

The US also got an agreement with the Czech Rep. on the radar station for their missile defence system. Meanwhile, east European countries led by Poland and Estonia have pressed for even more anti-Russian measures.

Yet at its core, the dispute within NATO is about the renewed threat from Russia. Members of “old Europe” may hope to avoid a clash with the Kremlin, but many countries of “new” Europe say the struggle has already begun. For them security lies in expanding the frontiers of what was once the transatlantic alliance to the Black Sea and ultimately to the Caspian.

Even its strongest advocates recognise that such expansion raises questions about the purpose of the alliance: should it be mainly a military organisation, or a political club of democracies? Radek Sikorski, the Polish foreign minister, questioned whether the promise of mutual defence from armed attack enshrined in Article 5 of NATO’s charter was becoming “diluted”.

Mr Sikorski wants NATO to move military infrastructure east. He complains that NATO hesitates even to make intelligence assessments of perils from Russia. Others want more attention to non-conventional threats, given last year’s cyber-attack on Estonia, blamed on Russia. Not that they ever bothered producing evidence. “We do a disservice to Russia by not taking it seriously,” said Toomas Ilves, Estonia’s president.

Putin opted for a pragmatic response, repeating Russian concerns about NATO expansion and missile defence (“an attempt to neutralise, whether immediately or in the future, its nuclear arsenal”), and recommended that a) the radar in Czechia be cemented into the ground, b) switching on the system only when an Iranian or other threat materializes, c) integrating early-warning systems and d) maintaining a constant Russian military presence at the sites. It would be interesting to see what the West, always accusing Russia of non-coperation, will make of these, but the augurs aren’t promising – the eastern Europeans have already objected to the last proposal.

According to rumors, Putin unloosed the rhetoric behind doors, hinting that Russia work to break up Ukraine and extend recognition to Abkhazia and South Ossetia, citing the Kosovo precedent.

President Vladimir Putin hinted at last week’s NATO summit in Romania that Russia would work to break up Ukraine, should the former Soviet republic join the military alliance, Kommersant reported Monday. Putin “lost his temper” at the NATO-Russia Council in Bucharest during Friday’s discussions of Ukraine’s bid to join NATO, Kommersant cited an unidentified foreign delegate to the summit as saying. “Do you understand, George, that Ukraine is not even a state!” Putin told U.S. President George W. Bush at the closed meeting, the diplomat told Kommersant. After saying most of Ukraine’s territory was “given away” by Russia, Putin said that if Ukraine joined NATO it would cease to exist as a state, the diplomat said. Putin threatened to encourage the secession of the Black Sea peninsula of Crimea and eastern Ukraine, where anti-NATO and pro-Moscow sentiment is strong, the diplomat said, Kommersant reported.

Not surprising, Timoshenko and Ukraine’s ambassador to Russia were not impressed. Nonetheless, the fact remains that pro-Russian sentiment is strong in Eastern Ukraine, Crimea was given away to Ukraine by Khrushev in 1954 and NATO expansion closer to Russia’s border cannot be allowed.

Russian Soviet-era dissident novelist Solzhenitsyn took a break from writing his glybs (a joke for those who’ve read Moscow 2042) to launch a diatribite against Bush for honoring the so-called Holodomor and ignoring the fight against fascism:

The interview came after Solzhenitsyn unleashed a memorable broadside last week against US President George Bush who, during a two-day visit to Ukraine, laid a wreath at a monument to victims of the great famine of the 1930s, in which millions of Ukrainians died. Ukraine’s pro-Western government has dubbed the catastrophic 1932-33 famine holodomor (literally, ‘death by hunger’). It claims that it was a genocide.

In a vituperative piece, however, Solzhenitsyn dismissed the claim as ‘rakish juggling’ and said that millions of non-Ukrainians also perished in the famine, which was engineered by the Soviet Union’s leadership. ‘This provocative outcry about “genocide”… has been elevated to the top government level in contemporary Ukraine. Does this mean that they have even outdone the Bolshevik propaganda-mongers with their rakish juggling?’ an incensed Solzhenistyn wrote. Bush had been duped by a ‘loony fable’, he added.

And from Russia Today,

This provocative outcry of genocide was voiced only decades later. At first, it thrived secretly in the stale chauvinist minds opposing the “bloody Russians”. Now it has got hold of political minds in modern Ukraine. It seems they’ve surpassed the wild suggestions of the Bolshevik propaganda machine. “To the parliaments of the world” – a nice teaser for the Western ears. They have never cared about our history. All they need is a fable, no matter how loony it appears.”

Just proves how the West, its rhetoric to the contrary, behaves just like any power – it uses you for its own interests, before casually discarding you when you become a political embarassment – a fan of President Vladimir Putin with an increasingly nationalist anti-western tone (perish the thought!). As they say, the Moor has done his duty, he can now go.

Russian govt. expects proposals to improve 2020 development plan, in particular “property rights protection, the development of corporate management, an environment of competitiveness, financial markets, and measures to enhance efficiency of state-owned companies”. As we’ve already reported, “Russia’s president-elect Dmitry Medvedev, who held his first State Council Presidium meeting in the West Siberian city of Tobolsk on Thursday, proposed a ban on unauthorized checks of small businesses”.

Russia should shift highly qualified people from industry to the innovation sectors. Russian banks flooded by foreign billions, forcing efficiency increases on domestic banks and improving access to credit. Russian firms ditch London for Asia for their listings due to booming economies and less stringent disclosure requirements. British supermarket chain Tesco has announced plans to expand in Russia. Increasing numbers of people in Britain are putting their pensions in Russia and other emerging markets – risks are perceived to be higher, but so are returns.

On 6th March the Nikitsky Fund released its always excellent Truth and Beauty (… and Russian Finance), Against Respectability. Here’s a few succulent quotes and comments from their article
Against Respectability – A Rant:

• Viewing the media, we find that respectable commentary follows a well-defined pattern. Anyone who fails to respect an entire herd of sacred cows is quickly consigned to the lunatic fringe. Unlike the Soviet System, modern capitalism silences its critics not with gags and gulags, but by drowning them out with a cacophony of well-targeted info-tainment, asystem far more pernicious than anything Soviet censors could have aspired to (for, unlike the BBC, hardly any educated person believed what he read in Pravda).
• Western-style corruption involves ownership of media by financial interests, government influence over editorial boards, state co-option of senior editorial figures, and occult financial flows. The end result is more pernicious – a well-orchestrated campaign of convergent disinformation, which most readers are too lazy or complacent to penetrate.
• In the BBC/Economist world, there is a select group of countries (Iran, Cuba, Russia…) about which one can say virtually anything – from unbalanced criticism of real ills, to outright slander. A second group (e.g. Singapore, Brazil, Georgia) is susceptible to moderate criticism which must, however be kept credible; finally, even the most savage criminality by a third group (UK, US, EU) if it criticized at all, is discussed in the mildest and most balanced possible terms.
• Why? 1) outright corruption, 2) an attempt to ingratiate themselves with the information-bearers (political leaders, etc) and achieving a sense of belonging to the inner circle that
  these hacks so desperately crave and 3) making up for past mistakes, e.g. the BBC on challenging Blair on Iraq.
• BBC – made a hero out of Khodorkovsky and the Yukos/Menatep gang, claiming they have a massive following in Russia – even going so far as to interview Misha’s parents (but not the parents of those the organization murdered, obviously – that would spoil the mood).
• Financial Times – The FT is caught in the same terrible bind as much of the Western Press – is Russia a weak, spent force to be pitied, or instead, a deadly, looming colossus, to be feared? Unable to decide, they risk ridicule by alternating back and forth between the two… (and yes, it was terribly rude of those Russians to succeed when their betters thought they should fail). Lambasts its agitprop article Why Putin’s rule threaten’s Russia and the west, which fails by proving Godwin’s Law in its first sentence. Then it fails some more by contrasting Russia’s supposedly low growth with other former Soviet countries – an argument I demolished here (funny how all Russophobe articles all trot out the same points. So much for Western “media diversity”. Still, it makes my job easier. Shoot a few holes in one, and they’re pretty much all dead). Next on the list comes Kazakhstan – a thriving, Western style democracy (well, Dick Cheney likes it…maybe ‘cause it smells of oil). Belarus follows (another fine example of democracy in action), then come Tajikistan (don’t you wish you were there?), and the Balts.
• Wolf – predictably – employs the oldest trick in the journalistic book: why bother trying to substantiate a weak argument when you can simply find someone to say it for you –quoting him gives it an aura of “fact” – reporting that is, not mere editorializing! Wolf thus approvingly quotes that “superb scholar” Ander Aslund (he who fatally discredited the Carnegie Endowment by soliciting a large bribe from Khodorkovsky, then shilling for Yukos so egregiously that in the end, even Carnegie had to force him out), the mad, Russophobic Lucas (he who in 1998 predicted, that Russian GDP would collapse, the rouble would go to 10,000/$, while Russia broke up into 4 warring regions), and tired old McFaul, who under Yeltsin was so important, and is now routinely and cruelly ignored. Wolf even stoops to quote the Neocon Freedom House, the home of such luminaries as Wolfowitz, without mentioning that it is a Washington-funded propaganda center.
• While denying Russia’s success becomes exponentially harded year on year, these tools now resort to the myth that a) Russia was doing just fine in 1999 and b) all positive developments since then were despite, not because of, Putin (but heck, even Illarionov disagrees with that last bit!, at least when talking with other Russians). Not to mention that their likes were writing articles like Russia is Finished back in those good old days!
• As anyone who lived here at the time will tell you, this is patent nonsense. At best, Russia had reached some slight degree of stabilization. Save for currency overvaluation, all of the problems which gave rise to the August 1998 collapse were still present – predatory oligarchs, regional Balkanization, budgetary chaos, and a dysfunctional tax system. If one simply reads the stories in Western press from that period, not one of them suggests that Putin would be any more a success than Yeltsin – he was to be nothing more than Berezovsky’s puppet – and Russia was receding back into the third world…so unfortunate that journalists are not obliged to defend their track records!…Eight years later and Russia is stable, wealthy and growing three times as fast as anyone else in the G8; average incomes have increased fivefold, poverty has fallen by 60%, the middle class has more than doubled. Since 2006, birth rates finally started to rise as people finally have enough trust in the future to risk having children.
• Outside the smug and self-centered world of the sunset Western powers, Russia is respected and envied, if not always loved. Much of this was due to one man – “providential” hardly seems too strong a word. And whatever misery T&B still has to endure at the hands of the local bureaucracy, as Russophiles, we are deeply grateful to Vladimir Vladimirovich.

In geopolitics, Russia challenges US in the Islamic world. The Muslim world is no longer a good card for Washington to use against Moscow, in fact it has flipped. Russia is far more popular amongst Muslims than the Great Satan and with just a very few exceptions, no Muslim country recognized Kosovo. This positions it in good stead to build bridges between Islam and the West, or to lever the former against the latter, as it chooses. This is reflected in Russia constructing Saudi Arabian railways, building nuclear plants in Egypt and developing Iraqi oil fields, as well as selling arms to everyone.

As covered in previous News, Russian weapons sales to China fall due to rapid indigenous Chinese progress and Russia’s strategic concerns. Iran: Russia, China Unlikely To Welcome Tehran Into SCO – as long as SCO-US relations don’t deteriorate too much, anyway. Meanwhile, Russian intelligence sees U.S. military buildup on Iran border. The prelude to the Iran Plans, as uncovered by Seymour Hersh; or more posturing? Realistically speaking, however, Iran’s ADGE (Air Defense Ground Environment) is sparse and outdated; the USAF will face few problems conducting surgical strikes on nuclear facilities.

A very cold war indeed – the Guardian has awoken to the new Great Game about to be played out at the top of the world as Canada, Russia, Denmark and the US increase their military presence and claim territory suspected to be rich in hydrocarbons. Meanwhile, Russia has also extended its claims on the Sea of Okhotsk.

In addition to credit and sub prime woes, we are also facing the spectre of the oil peak. I must remind myself to write a more detailed exposition on the topic once the Demographics project is finished and time is freed up; otherwise, read the Futurist’s optimistic take on it and my response.

Meanwhile, we are also facing the end of cheap food, as wheat, corn and rice prices explode, triggering food riots and social unrest throughout the world. This is linked with China’s growing apetite for meat, oil price rises and adverse weather (driven by climate change – my predictions may already be coming true). But preventable and unnecessary factors include America’s biofuels splurge, which a) is very energy inefficient, b) diverts food from the global poor to SUV owners and c) accelerates climate change in a vicious circle.

Disappointing jobs figures offer yet more proof that America is in recession. The Nikitsky Fund report mentioned above has an entertaining (at least for non-Americans) description of the hole it’s in:

Welcome to The Wall Street Mortgage Meltdown

Like the mythical frog lured into complacency as he is slowly boiled to death, Investors are becoming accustomed to a daily flow of news which would have seemed utterly outlandish just a year ago; indeed, T&B was routinely mocked for predicting some of the current carnage – though by no means either the speed of the unwind, nor the extent of the damage.

1. The term “collapse” is being used with increasing frequency when referring to the
world’s erstwhile reserve currency, which – after meeting the initial resistance we predicted at the $1.45 level, the dollar now heading for our second support level – $1.57- 1.60. A classical currency crisis involving the dollar no longer seems outlandish. Investors would do well to treat the constantly renewed reassurances that it has “finally bottomed” with great caution.

2. The Chairman of the US Fed has just warned of the likelihood of collapse of some of the “smaller US banks” (we agree, but fear that for one or more of the bigger ones, it is just a matter of time)

3. When the credit crisis began last August, terrifying stories of overall losses to the banking sector ranging up to $50bn began to circulate. A few months later, Goldmans shocked the market by speaking of eventual losses ranging up to $200bn. Yesterday, UBS (and they should know!) warned that losses to the financial system would total $600bn. We await the next estimate with some trepidation.

4. Large segments of the US credit market have simply shut down – structured finance, high yield, CLOs, and much of the corporate and municipal loan markets. The solvency of the banking sector is no longer taken for granted. Frighteningly, it appears that only a small fraction of the expected damage has already been recognized – a collapse of the conduits and the CDS markets could yet bankrupt much of the financial system.

5. The US housing market is heading into a depression. The famous “nationwide
housing prices have never fallen on a year-on-year basis” has been firmly debunked. Goldmans estimates that prices are crashing at an annualized rate of 18%. As more supply continues to come onto the market due to completions and repossessions, a crisis is developing. According to RMS, if housing prices fall another 10% (ed: and they certainly will) – 20 million US homes will have negative equity value. We are utterly amazed by the inability in Washington to cobble together some sort of a viable rescue plan, as the crisis continues to worsen.

6. Having been aggressively pro-cyclical during the good times, the Bush administration’s legacy will be a Federal Deficit ranging up to $800 bn (source: Bill Gross, Pimco). As further structural factors kick in (lower returns on assets, retiring baby-boomers, underfunded state pensions, increased medical costs) huge cuts in
expenditures and increased taxation are inevitable.

7. The rating agencies have been fatally compromised. Corrupted by the easy money to be made in sweetheart deals with Wall Street Banks, they actively helped to stuff
toxic waste into every corner of the global financial system. By continuing to rate the soon-to-be bankrupt bond insurers triple-A (they must currently pay 1400 bp over Libor for their borrowings, i.e. deeply distressed levels); the agencies have forfeited any last remaining pretense to independence or credibility.

8. The childlike faith of international financiers in the safety and stability of the US dollar and US financial assets in general, has now imperiled the very survival of some of their institutions. This faith will not be restored. The dollar-centric system is dead. The ability of the US to run a trillion dollar military while maintaining domestic consumption and investment on other people’s dime is now history.

9. The fate of the global economy and of the G7 economies in particular, is almost
entirely dependent upon the ability of a select group of emerging countries to maintain their recent rapid economic growth. The tail now wags the dog.

10. As long warned by eco-crazies, numerous countries are seriously threatened not just with ecological havoc but with imminent famine due to explosive growth in food prices, driven by unsustainable population growth as well as the criminally irresponsible craze for Northern hemisphere biofuels.

11. Oil prices have broken through $100, wheat prices have more than doubled in one year, and gold is heading for $1000 (alas, we missed this last trade). Global inflation is being driven not primarily by excessive demand, nor by monetary madness, but by the uncontrollable increase in cost of commodity inputs – which are not amenable to control by monetary means. Supply is becoming the major issue. Competition for resources from emergent “Chindia” has fundamentally altered the relative positions of producers and consumers…to the benefit of the former.

12. Quite extraordinarily, amidst all the devastation – Russia is increasingly assuming the role of a safe haven! No subprime, virtually no structured finance, reasonably profitable banks, and a rouble seeing gradual appreciation. Add in the huge twin surpluses, political stability and sustained economic growth (8.1%), along with good domestic liquidity (with a little help from the Central Bank.) Only inflation
(largely commodities-driven) is a substantial issue. Doomsday scenarists and survivalists should take note of Russia’s self-sufficiency in energy, food and metals.

Russophobe developments include Tim Bell going to work for Lukashenko to polish his image. If his relationship with Berezovsky is anything to go by, the West will soon by lining up to lick dear old Batka’s boots. The West reveals its innate hypocrisy – Russia slams acquittal of Kosovo war crime rebel as biased. Slanderous serpent Aslund sells an asinine story, Putin’s last stand, venom practically poring out from its text. Loco Lucas scares us with a piece on Russia’s alleged SIGINT activities. Robert Service (We provoke Russian paranoia at our peril – By agreeing to place an American defence system in Eastern Europe, Nato has given the Kremlin the perfect excuse to further cement its autocratic rule) has the right idea, but for the wrong reasons.

Thankfully Russophiles balance out the picture somewhat. The excellent Russia scholar Nicolai Petro has a piece on the Russian elections, which makes the point that all the allegations levelled against Russia in electoral performance can equally be made against most European countries and the US, and that their cardinal sin was in making the “the wrong choice by voting in favor of a continuation of the present political course”, as in Palestine or Venezuela. His other article, Should Moscow Root for Obama?, comes to the conclusion that all the candidates are dinosaurs.

For now, the dinosaurs are firmly in control of US foreign policy toward Russia, on both the Republican and the Democratic side. Senior advisors from all three campaigns took part in the March 2006 Council on Foreign Relations report, “Russia’s Wrong Direction,” co-chaired by Jack Kemp and John Edwards. Criticized by Russian commentators as hopelessly out of touch with today’s Russia, it remains,
nevertheless, the touchstone of US thinking about Russia. So long as that is true, the only thing to expect from US policy toward Russia is a further slide into irrelevancy. The initiative for change, it seems, will have to come from Russia.

Note that both these pieces confirm the views expressed on this blog here, here (under The Myth of Sham Elections) and here (although I did say Clinton may be the least worst).

Russophile blogger colleen shows up Lucas, if indeed it isn’t obvious by now, for the incompetent lunatic he is.

Edward Lucas used to think and say that German Chancellor Angela Merkel hated
Russia, loathed it from birth, and will lead a strong European Union against Russia. I’m not sure exactly in which way, but Lucas could have easily contemplated economic embargoes and public slanders and stuff like that. He is a very fantastic and imaginative writer, no less. lol

But he does hate Russia a lot, no doubt, so maybe when it came to writing about ways a German-led E.U. would stick it to Russia, he would have thought of something clever.Anyway, something must have happened in the hot summer days of 2007, while I was probably at a beach in the still-affordable Hampton Bays, which led Lucas to change his mind. Did Angela Merkel telephone Lucas threatening a lawsuit for libel? Was The Economist scared that such a phone call was forthcoming and decided to pull the plug? Did the FSB pressure Lucas, or was it the KGB??? Was David Miliband in on it, perhaps trying to resuscitate British-Russian relations?Or, did Lucas himself decide to end the outlandish, misguided, and ill-conceived allegation himself?

Maybe, just maybe, Lucas realized that he’s just making things up after it became more and more apparent that the Russian-German strategic partnership forged between Putin and Schoeder is simply being reinforced during Merkel’s reign. This signifies that strong Russian-German relations are not reliant on any one political party in Germany and reflect more of a state-policy.

An Economist writer admits the obvious fact Russian is the world’s best language. A new feminine vodka brand was launched, thus joining the sovereign vodka Putinka and masculine Grazhdanskaja Oborona (Civil Defence), its supposed Nazi imagery criticized by the human rights folks and praised by the far right “White Pride” movement.

Topping off the ludicrous, Abramovich plans a bridge from Chukotka to Alaska. Then again, the source for this is “speculation within the Russian press”…so maybe not.

Following my introduction to Levada, I’m presenting a few more polls from their archives.

NATO poll – the number of Russians thinking that Ukraine joining NATO represents a threat to Russian national security increased from 60% in 2000 to 74% in 2008. For Georgia, it was 77% in 2008.

Can Western criticism of Russia on democracy and human rights be considered interference in Russia’s internal affairs? – 51% say yes, while only 27% say no. Take that, Russophobes of the world! You’re not needed, least of all by Russians!

Internet poll – the number of individuals saying they possess a mobile phone increased from 2% in 2001 to 19% in 2004 and 71% in 2007. The number of people whose families possess a computer increased from 4% in 2001 to 10% in 2004, 17% in 2006 and 28% in 2008, while the number of people saying they use one everyday increased from 9% in 2001 to a quarter in 2008. Weekly Internet use has expanded to 18% in 2008 from 3% in 2001. (Internet penetration in Russia as of 2007 is estimated from 20% to 25%.)

Electronics poll – From 2003 to 2007, the percentage of Russians saying they have access to a computer increased from 26% to 43%, Internet access increased from 15% to 29%.

How did things change in Russia in the past ten years? The percentage of people saying respect for the state has strengthened rose from 10% in 2000 to 44% in 2007, respect for marriage from 5% to 17%, respect for the law from 4% to 29%, personal responsibility from 11% to 33%, the work ethic from 12% to 26%, belief in God from 67% to 64%, concern for social outcasts from 16% to 31% and tolerance for others from 25% to 26%.

Two comments. Firstly, while more people said most of these situations got worse rather than better, it needs to be borne in mind that people generally mistake these questions for current perceptions rather than conduct a real analysis of trends. For instance, there are many cases when crime goes down but people say it increased. Secondly, goes to show that, if it isn’t already obvious to everyone who is not a religious nutjob, that belief in God does not necessarily correlate with more morality.

How would you rate Putin? – 70% are positive on living standards, 85% on foreign policy, 64% on security and 62% on democracy and human rights. As of 2008, his main achievements are judged to have been economic and social, while his greatest failures were in the war against corruption and crime.

Which country would you prefer to live in? – From 2000 to 2008, the percentage of Russians who’d like to live in a Great Power or in a small, cosy country increased from 63% to 75%; those who’d like to live in a country which actively defends its culture and traditions as opposed to a completely open country increased from 62% to 77%; the percentage of Russians who’d prefer to live in a country heavily influenced by religion as opposed to secular state decreased from 33% to 27%.

What do Russians believe in? – 45% believe in the Afterlife, 40% believe in the Devil, 45% in Heaven, 40% in Hell and 49% in religious miracles. Worryingly high figures.

According to this poll, Communists are by far the most pessimistic people in Russia, while those who are pro-Putin and pro-United Russia have the most confidence in tomorrow. The Liberal Democrats (ultra-nationalists) are in between.