Left Flank

It's too fitting. A year after the US, the winner of the Cold War, spun into financial meltdown, Russia, its vanguished foe, succumbs to the same malady.

What makes Anders Aslund's essay even more noteworthy is, that, unlike the warmongers among the pundit class and the Pentagon who believe Cold War is resumed, Aslund interprets the August War between Georgia and Russia as the «second act» in an economic debacle begun in the 1990s.

Is Anders Aslund being a bit too dramatic when he predicts a «tragedy in five acts», with three acts yet to run?

The Russian stock market is in free fall, plummeting by 60% since May 19, a loss of $900 billion. And the plunge is accelerating. As a result, Russia's economic growth is likely to fall sharply and suddenly.

(...)

Russia is just about to enter the third act of this tragedy, a banking crisis. Numerous medium-sized banks, and some large ones, are set to go under in the stock-market turmoil. Too many big investors can no longer meet their margin calls, while borrowing costs have risen sharply. The recent appreciation of the dollar adds to their hardship.

I'm placing my marker on this prediction. I do it rarely, but the last time I did, Shinzo Abe's government in Japan fell in less than a year. I hope I'm wrong.

Powered by ScribeFire.

The consistent chest-thumping, conveniently nostalgic security meme fixating on «cold war» dominating the question of dealing with Russia in the wake of its «August war» with Georgia annoys me to no end. After a period in 1991-2001 when both Democrats and Republicans bungled devising a post-Cold War security policy, and then a diet-busting feeding frenzy from 9/11 to now, Russia is not a signal for permanent war.

After offering how much Russian corporations and its military lost in its August war, Anders Aslund argues for a post-Cold War economic attack on Moscow.

First, the EU should adopt a common energy policy, imposing the rules of the energy charter - such as transparency, equal investment rights and third-party access to pipelines - on Russia. A united EU has bargaining power as all Russian pipelines outside the former Soviet Union go to Europe.

Second, the European Commission should force Gazprom to unbundle production and transportation to break up its monopolies. Why does the EC pursue antitrust suits against Microsoft but not Gazprom? It would have to divest its pipeline network outside Russia's borders, abandon blatant price discrimination and end its planned construction of the Nord Stream and South Stream gas pipelines.

Third, the west should investigate Russian top officials and their trading companies for money-laundering.

Fourth, Russia's big state companies habitually woo politicians in other countries. Gerhard Schröder, the former German chancellor, is just Gazprom's most prominent catch. Western ethical rules for contacts with Russian state companies need to be tightened and the EU should establish American rules for the disclosure of income anybody earns from lobbying. Unethical behaviour is best fought with increased transparency.

Finally, if western intelligence agencies possess evidence of any corruption by Mr Putin or his cronies they should publish it. Nothing would undermine him more in Russian eyes than verified facts about corruption. Russia and its leaders are quite vulnerable, but to be effective the west needs to unite.

Well, screw that. Washington would have none of that, unless it's in the lead - and that means war.

Powered by ScribeFire.