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.

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FT's Chrystia Freeland and Thomas Kleine-Brockhoff of the German Marshall Fund on the Online Newshour highlights an aspect of the situation in Georgia, that money has as much to do with the tanks rolling through South Ossetia as does realist ideology.

Thomas Kleine-Brockhoff: So there's no way to work around Russia. At the same time, we have to change their strategic calculus in acting.

(...)

Chrystia Freeland: Well, I think Thomas was absolutely right to emphasize the WTO. And while it is certainly true that the petro-power of Russia today makes it a very different player, a very different actor from the Russia of the late '80s and the early '90s, which was really impoverished, I do think that Russia's integration into the global economy is also a potentially very powerful point of leverage.

One of the Russian oligarchs recently said to me that the tragedy of Putin is he wants to rule like Stalin but live like Abramovich, the wealthy Russian businessman who now lives in London and owns a soccer team and has sort of a fabulous, plutocratic lifestyle.

And I think that's a really good way of understanding a large part of the Russian elite right now. They want to flex their muscles like neo-imperialists, but they also want admission to all of the Western clubs, including the nightclubs and the fabulous homes on the French Riviera.

Those are some things that we can start taking away. And we can start saying, «If you are going to behave like an authoritarian state, we are not going to accept your leaders and your elites.»

Gwen Ifill: Does the -- let me just follow up with you on that. Does the United States' democracy agenda, which allied itself so closely with Georgia, for instance, does it make it more difficult for these conversations to happen for threats even to have any weight?

CHRYSTIA FREELAND: No, I don't think so. I think the democracy agenda is absolutely correct. I mean, I think the democracy agenda was very wrongly handled in Georgia itself and clearly in Iraq, as well, but actually a lot of this fight is about democracy.

We have been tending to see it as a question of Russia's strategic interests, Russian imperialism, but a lot of what is going on is the Russian government being concerned about its own regime and being very frightened that its efforts to build a more authoritarian state could be imperiled if ordinary Russians, especially richer, middle-class Russians, see prosperous democracies like Georgia and like Ukraine on its borders.

The rest of the discussion is moderate and revealing, instead of the straw-man realism the MSM continues to hustle.

Nina L. Khrushcheva understands the autochthonous nature of the Russian state, and how it can coopt a questionable icon, like Solzhenitsyn

The old Soviet iconography has broken down completely; despite heroic efforts, not even Putin could restore Lenin, Stalin, and the old Soviet pantheon. Yet the Kremlin understands that something is needed to replace them as Russia adapts to its new oil-fueled autocracy. Solzhenitsyn, one of the most famous and heroic dissidents of the Soviet era, now seems certain to become a towering figure in the iconography of Putinism.

Throughout his presidency, Putin repeatedly invoked Russia as an ancient, powerful, and divinely ordained state going back a thousand years, a civilization separate from the West, neither Communist nor a western liberal democracy. That message echoes Solzhenitsyn’s famous commencement address at Harvard in 1978: “Any ancient deeply rooted autonomous culture, especially if it is spread on a wide part of the earth’s surface, constitutes an autonomous world, full of riddles and surprises to Western thinking. For 1,000 years, Russia has belonged to such a category.»

For Solzhenitsyn, a survivor of the gulag system enforced by the KGB, the desire to see Russia as a great nation, its eternal spirit superior to the West’s vulgar materialism, found him in old age supporting ex-KGB man Putin, who once said that there is no such thing as an ex-KGB man and who sees the Soviet Union’s collapse as the greatest geo-political catastrophe of modern times. Despite this, Solzhenitsyn seemed to accept Putin as a «good dictator,» whose silencing of his critics enhances Russia’s soul.

I wouldn't have thought former Secretary of State Lawrence Eagleburger would say it, and another former Secretary of State, Madeleine Albright, agreed, that it is possible for the US and Russia «...to go back to Cold War period and treat each other as adversaries...» It's like listening to arthritis inflame a nonagenarian's knee joints. Or, reading about «escalation dominance».

The long-term response, as CFR's Stephen Sestanovich argues, is to restore the credibility of a united American and European diplomatic strategy, as, in the immediate term, the US reads the riot act. Zbigniew Brzezinski, in The Grand Chessboard, argues that Russia has three bad choices in the post-Cold War period, and one good one. The Bush administration pushed Russia into one of the bad choices, recreating its near-abroad Soviet empire, as a result of American support for Georgia and Ukraine. The good choice is Russia's integration within Europe. Economic integration, not military confrontation, must be the long-term message.

Two talented commentators highlight the substance of this two-pronged strategy. Firstly, not only was Georgia's leadership suckered into attacking Russian troops for territory, but it lost the battle for cyberspace. As John Robb argues, Georgia should adopt a poison pill strategy.

Georgia's mistake, and it is a common one, is that it thought that connectivity to the global system (as well as the US) was a viable defense against a hostile Russian takeover. As a result, it became a vital cog in the BTC and a willing participant in the US adventure in Iraq. That defense proved mostly hollow. In short, the only real defense against hostile takeovers by aggressive corporate states is to make the cost of the acquisition too expensive for the acquirer. The way to do this is through the development of a poison pill: the intentional disruption of Russian energy pipelines...Global guerrilla methods, particularly cyber/physical disruption, compliment interconnection as part of a Micropower defense strategy.

Secondly, Western Europe needs to remind Russia of its problems, and offer assistance. «With the exception of oil prices, Russia has nothing to offer the world※it doesn’t make anything, it can’t produce much of value, its population is growing progressively older and sicker at an increasingly rate, and its political system is really collapsing if Putin can contract it in so short a time. Russia is a dying power, and like most dying powers it is lashing out in fury at its loss of prestige and power.»

Russia's lure was a cheap «Grozny-like» way to give Putin and Medvedev a full term of office without domestic political opposition and a chance to reform the Russian political arena permanently. It's predicated on the assurance that Russia's economy is sound. Now, Georgia and other EU states need to remind Moscow of the two-way street between consumers and producers. Bluster will only provoke retrenchment behind fortress walls. Moscow must understand its best destiny lies with Europe, not its own stars.

It seems Seoul, Moscow, and Pyongyang have reached a deal on Rajin, and left out the Chinese.

North Korea has agreed to rent out a 52-kilometer section of track to Russian Railways as part of a plan to link East Asia to Europe via the Trans-Siberian Railroad.

The 49-year lease was signed during talks Tuesday and Wednesday in Pyongyang, Russian Railways said Friday. Russian Railways will refurbish the line and build a container terminal at the North Korean port of Rajin.

Construction is expected to begin by the end of the year, Russian Railways said. North Korea and Russia also agreed to study the possibility of upgrading the rail link from Rajin to the Chinese border.

Russian electricity trumps Chinese tourists. I can't blame the xenophobic North Koreans for being practical.

I'm not Neville Chamberlain's grandson, just to refute what any fans of Georgian aggression might want to claim.

Many commentators have neglected the legacy of economic reform in Russia in the 90s. Whether it augurs a recrudescence of realism, the debate is couched in military terms. However, I would refer to the debate between Joseph Stiglitz, in Globalization and Its Discontents, and Anders Aslund, in Russia's Capitalist Revolution. Stiglitz would argue that shock therapy in the 90s was a mistake and advocates gradualist reforms. Aslund argues that shock therapy succeeded, but democratization failed.

Aslund characterizes Putin's administration's weakness as an elite problem, not a popular one. Putin can retard political democratization, but only by «surprises». Like Grozny, this view would argue that this Georgia invasion is another desperate attempt to keep Putin in power, and nothing more.

There is also the Kosovo precedent.

Georgia is certainly no victim, and is arguably the aggressor (and, only the Georgians and CNN would disagree). Matthew Lee reports on the Georgian delegation's rationale for acting at the United Nations Security Council, backed by the US and UK, and it's a conspiratorial strategy, not the action of innocents.

Western geopolitical commentators stick to cold war simplicities about Russia bullying plucky little Georgia. However, anyone familiar with the Caucasus knows that the state bleating about its victim status at the hands of a bigger neighbour can be just as nasty to its smaller subjects. Small nationalisms are rarely sweet-natured.

Worse still, western backing for «equip and train» programmes in Russia's backyard don't contribute to peace and stability if bombastic local leaders such as Saakashvili see them as a guarantee of support even in a crisis provoked by his own actions. He seems to have thought that the valuable oil pipeline passing through his territory, together with the Nato advisers intermingled with his troops, would prevent Russia reacting militarily to an incursion into South Ossetia. That calculation has proved disastrously wrong.

Taking Russia as the villain, though, Ambassador Richard Holbrooke argues that «PM» Vladimir Putin realized that, with a new administration in the US due on January 20, he had a window of opportunity to deal with Georgia. As Michael Merritt puts it, «...all we’ve heard from the U.S. leadership regarding this conflict is essentially tough talk...», because the US «...just isn’t willing to possibly bring on Cold War II to try and bail out an ally that’s so close in location to one of its biggest rivals.» Does that mean there's a conspiracy, where Putin is shrewdly disposing of Georgia’s leadership, annexing Abkhazia and Ossetia, and possibly securing his rights for the Black Sea fleet from a humbled Ukraine, all to give himself another few years of popularity to rule. It’s Grozny redux. Maybe Putin isn’t all that clever after all, just a one-trick pony. Even as reported by CNN, how «President» Dmitry Medvedev's has «ordered» the cessation of hostilities looks like a scripted transfer of «Grozny» credits from the master to the apprenctice, assisted by the villain's, in this case Mikhail Saakashvili's, sneering rejoinder.

Furthermore, especially with any mention of President Bush's role (which looks pathetic in light of US actions at the UN), what this «Georgia as victim» meme demonstrates is not so much a Russian crisis as a crisis within the US about where to go in a post-Cold War world. The comfortable manichaeanism of the Cold War, with the lucrative returns of the military-industrial complex, is a safety blanket for addled defense intellectuals and hack politicians.