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The Enduring Relevance of NATO in “an Asian Age.”

Posted by democratist on March 21, 2011

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March 21st 2011,

Over the weekend Democratist has been watching a video of a recent public debate at the LSE entitled, “Out of Europe? The United States in an Asian Age.”

The debate brought together three highly respected commentators on international relations; Professors Niall Ferguson, Michael Cox, and Arne Westad; each of whom took it in turns to give their respective opinions on the extent to which US engagement in Europe is likely to wane – or not, over the coming years, as Asia becomes a more important focus of policy.

The lecture is certainly worth exploring in its entirety, but rather than give a blow-by-blow account, we would like to highlight what we thought were some of the most perceptive points.

These were;

  • Despite the headlines of a new US orientation towards Asia, transatlantic relations will continue to be important because the United States’ global reach will remain connected to the transatlantic economy, NATO, and its political relationships with the Europeans.
  • The decline of American “empire” has been repeatedly over-predicted since the 1960′s, and while the financial crisis and rise of China have contributed to a renewed “decline debate”, the US retains a great deal of (what Susan Strange identified as) “structural power”; major economic, geographical, historical, political, and cultural advantages, which no other country is able to emulate.
  • While an economic shift is underway, this does not imply a contemporaneous power shift. The US will remain at the heart of the international order in terms of military power, and indeed this order is currently incapable of functioning without it.
  • While US economic problems may imply some drawdown in overseas commitments, this may not be the case in Europe because continued US involvement in the middle East/North Africa imply that Europe will remain a strategic base for the US. The purpose of NATO/Europe is changing, and it is becoming an appendix to American power projection “out of region.”
  • NATO will remain fundamentally demand driven. It provides a security guarantee, especially for states in Central and Eastern Europe, but equally there is no appealing alternative to the US security umbrella: Many Europeans want the US to stay because, given the history of the 20th Century, they fundamentally distrust themselves, as well each other: NATO prevents the renationalization of foreign policy in Europe.

Regular readers will not be surprised to discover that Democratist finds considerable solace in these words. We remain resolutely Atlanticist: While the US may have made a number of mistakes since the end of the Cold War, it is a fundamentally democratic country which mixes both realism and liberalism in its foreign policy. Its presence in Europe guarantees internal peace, and counters attempts to “divide and rule” from outside.

Russia, despite its current (largely self-inflicted) military weakness and reformist rhetoric, is run by a small, autocratic, highly nationalistic clique of nomenklatura; its foreign policy is essentially guided by realpolitik, with little regard for democracy or human rights beyond what is politically expedient (just ask a Belarussian or Georgian). The nomenklatura respects and understands power, and will always be tempted to exploit any perceived European weakness for its own advantage. An American presence in Europe will therefore remain an important counterweight to Russia for at least as long as the nomenklatura remains in power; and - as a source for internal European stability - may well remain relevant for far longer.

Posted in Human Rights, NATO, Russian Foreign Policy, US - Russia | Leave a Comment »

Democracy and Innovation: Mevedev’s Skolkovo Illusion.

Posted by democratist on March 10, 2011

 

10th March 2011,

In our last article, Democratist looked at Niall Ferguson’s insightful analysis of the impact of autocratic government and the command economy on the Soviet Union, and the effect this had on the USSR’s ability to compete with the United States, and its eventual collapse.

But the Soviet Union has been history for almost twenty years. The more skeptical among our readers will doubtless be thinking, “The Command economy may be finished, but surely the Chinese example shows that authoritarian capitalism can come up with the goods just as well as democracy, if not better. Why shouldn’t Russia follow an authoritarian capitalist model?”

One obvious answer to this question is that the Russian elite has been following their own interpretation of just such a model since 2000, and that the results in terms of Russian economic diversity, industry and technological capability have been poor at best. 

While economic growth was indeed strong for much of the last decade (and is returning) this has been largely a result of Russia’s vast natural resource endowments, which account for around 70% of exports, and which played an important role in attracting the financial flows that boosted other sectors such as construction and the retail trade: Given easy access to money from hydrocarbons after 2002, and an ingrained fear of the social dislocation that would arise from the introduction of a genuine market economy, with a couple of notable exceptions at the start of Putin’s first term in office, the nomenklatura came to largely ignore the need for economic reform between 2000 and 2008.

One of the results of this has been that the Russian industrial and technological base has stagnated; while Soviet science and technology were inefficient and generally lacking in innovation, they at least had the advantage of being seen as strategically important and prestigious: Under the current system a mixture of cynicism and deep corruption, misjudged industrial policy and protectionism have set in, and while recently the government has again come to see science and technology as strategically critical, they face the problem that (following the nomenklatura’s own example) many of their brightest young people seem more interested in milking the state than serving the nation as scientists. Subsequently, the old Soviet engineering culture is slowly starting to die out.

But, as Andrey Kolesnikov, a columnist for Novaya Gazeta wrote in an excellent article for Open Democracy last July, even since 2008 President Medvedev has felt obliged to restrict his plans for Russian innovation within the confines of the “ghetto” of the Skolkovo project, and in a manner heavily reliant on foreign investment, as opposed to domestic innovation.

According to Kolesnilov, Medvedev is attempting, just like Peter the Great, Stalin, Khrushchev and Brezhnev before him, to import technological know-how into Russia from the West, lest the reforms necessary for the development of an innovative culture at home threaten Russia’s social order, and the existing power structure.

But as we saw in our piece about the roots of innovation, genuine innovation (as opposed to re-engineering the ideas of others) can only come from the kind of flexible, creative and inventive culture that emerges from a competitive market economy, backed up by democracy and the rule of law.

Kolesnikov states that the results of this are that;

 “…currently just over 9% of Russian enterprises invest in innovative technology. A comparison: in Germany, the number is eight times that. Fundamentally new Russian products account for just over 70 billion roubles (£1.5 billion). This was 0.4% of the total volume of industrial production in 2007 (in Finland, the figure was 16%). The percentage of innovative production in the total volume of sales in Russian industry is around 5%. Put another way, Russia is backward. 98.5% of patentable innovations are created by 15% of the world’s population, and Russians do not number among them (we are talking in the main about OECD countries)…And this technological gap can only get worse, since the speed of progress is increasing with each year: if in earlier times, moving from one technological generation to another was a matter of 10 or 15 years, now we see that, in aviation at least, this is happening every five years (my source of data are the four 2009 editions of Moscow’s Higher School of Economics Foresight magazine).”

In the first article we posted to Democratist in May last year, we quoted Dimitry Trenin as saying, “The Kremlin …[has been]… forced to come to terms with the fact that Russia cannot modernize on its own and that it needs Western investment and strong business partnerships with the West.”

But upon reflection, even if that partnership were to bear fruit in Skolkovo this still would not really resolve the broader problem of the stagnation of Russian science and technology: That kind of change implies a deeper political and cultural shift.

 

Posted in Autocracy and Innovation, FDI, International Political Economy, Liberalism, Russia - US Relations, Russian Corruption, Russian Economy, US - Russia | 3 Comments »

Book Review: Strange Days Indeed, The Golden Age of Paranoia by Francis Wheen

Posted by democratist on December 24, 2010

24th December 2010,

In line with our policy of writing book reviews for titles that have already been available for some time (a result of both sloth and impecuniosity), Democratist recently acquired a copy of Francis Wheen’s excellent Strange Days Indeed: The Golden Age of Paranoia. (4th Estate, 2009) through the good offices of www.Amazon.co.uk, and for the very reasonable sum of £0.01 (plus £2.75 post and packaging).

Strange Days is essentially a political and social history of the 1970′s, focused principally on the US and UK, which seeks to highlight the developing “mélange of apocalyptic dread and conspiratorial fever” that characterized much of the decade, as the optimism of the 1960′s came face to face with (among other things); Watergate, the 3-day week, Baader-Meinhof, the IRA, the growth of religious cults, and the popularity of conspiracy theories.

As such, the book provides an especially interesting re-introduction to the decade to those of us who were born during it but were too young to understand much about what was going on at the time (and which was considered too recent for us to be taught as history at school).

The pages dealing with the origins of the “troubles” in Northern Ireland were especially revelatory in this regard; Democratist grew up under the very real threat of IRA bombs, but was only faintly aware of the civil rights movement in Northern Ireland in the 1960′s and 1970′s, or the 1972 “bloody Sunday” massacre (for which the UK government has only recently apologised).

However, while Democratist strongly recommends Strange Days to our readers, from our own particular perspective, we have to say that we think the book might perhaps have benefitted from a few extra paragraphs about the role of the Soviet bloc during the period.

This is firstly because the USSR and its satellites were a political arena in which paranoia played a key role, not just in terms of the KGB’s repression of the Soviet people, or the commonly held views about capitalist/Zionist conspiracies of their senior staff (see “The Mitrokhin Archive“), but also in their tendency to pander to the Kremlin’s paranoid fears of western aggression in their intelligence reporting, culminating in participation in operation RYAN in the early 1980′s, which in turn led to tensions over the NATO Able Archer ’83 exercise, that brought the possibility of nuclear war closer than it had been at any time since 1962.

The second reason to bring the Soviets and their fellow travelers into the picture is that, in a number of cases, their hand is visible in stoking political instability in the West, as well as the fires of paranoia initially lit by Watergate (and other US intelligence abuses). The promotion of instability is clearly demonstrated in the case of Baader-Meinhof, who had extensive help from the East German Stasi after 1977. More subtlety, the KGB was involved through its program of “active measures” in the promotion of numerous conspiracy theories throughout the 1960′s and 1970′s (especially in relation to the Kennedy assassination) which did much to heighten the “conspiratorial fever” to which Wheen refers.

 

Posted in Book Reviews, Russia - US Relations, Russia Propaganda, Russian Espionage, US - Russia | 1 Comment »

Belarus: The Geopolitics of the “Black Revolution.”

Posted by democratist on November 23, 2010

23rd November 2010.

More evidence is beginning to emerge of the Russian government’s all-but-openly-declared plotting to oust President Alexandr Lukashenko during, or shortly after the Belarussian Presidential elections due on 19th December.

In this regard, last Sunday Russia’s Channel One (also widely available in Belarus) ran a propaganda piece relating to the pre-election situation.

This declared that Lukashenko was “weaker today than he has ever been before” due to Belarus’ economic and other problems, and predicted that the country will likely face a currency crisis early in the new year.

More significantly, the programme (Vremya) also attempted to pull off what we can only describe as an impressive attempt at doublethink, as it tried to paint the EU as having been supportive of Lukashenko (employing a recent ill-judged quote by Lithuanian President Dalia Grybauskaite) while Russia was recast as a stalwart defender of the Belarussian opposition (or at least of two pro-Russian opposition presidential candidates; Andrei Sannikov and Stanislau Shushkevich).

Thus, Sannikov was quoted as saying (in a line presumably scripted in Moscow),“We should proceed from the real situation. If Europe speaks about supporting Lukashenko, while Russia speaks about the opposition, we should take this into account and welcome it.”

And Shushkevich was permitted to chip-in with a spot of rabble-rousing anti-Lukashenko xenophobia; “You know, I have only Belarusians among my ancestors. [Lukashenko's] nationality is unknown: maybe he is of Roma origin, or of Jewish origin. In any case, he is definitely not a Belarusian.”

So, a fascinating scenario is emerging: The Belarusian electoral administration is massively dominated at all levels by Lukashenko loyalists. It is no exaggeration to say that the Territorial Electoral Commissions (TECs), which oversee the key organizational aspects of the process have been specifically designed to allow them to co-operate with local authorities (since they are largely composed of the same people) to allow them to use their influence in universities, hospitals and Belarus’ many state-enterprises (who employ 51.2% of the workforce) so as to both “get out the vote”, and pressure individuals to vote for the incumbent.

As long as this system remains functioning, there is no chance of any opposition figure being declared winner of the Presidential elections. Even if it does break down to some degree, the most popular Belarusian opposition politician (according to the independent IISEPS research centre) Russian-backed Vladimir Neklyaev, currently has only 16.8% of support in the opinion polls, while Lukashenko remains the most popular with support from about 48% of the electorate, regardless of recent external media pressure. Additionally, Sannikov himself is currently polling about 8.6%, with Romanchuk’s taking about 6.1% and Mikhalevich’s on 6.4%.

Thus, the most likely outcome is still a Lukashenko victory in the first round. While a second round run-off remains a possibility, we suspect that the key move (if it comes) will have to be during the days immediately after the first round poll, presumably in the shape of a coup dressed-up as some kind of popular revolution (a “Black” revolution), with one of the opposition candidates as a figurehead.

For the most part, the West, which (as the history of much of the last two decades has demonstrated) has limited political or economic  influence in Belarus, will be forced to watch from the sidelines as the drama unfolds; their main strategy (apart from calling for a transparent vote) is likely to be to act as quickly as possible to build up an enhanced relationship with the most likely future “candidates” (although these may be somewhat reluctant to play along, because they know Russia remains the only serious player).

If they do decide to go ahead with such a scheme, the Russians will be gambling that the US and EU are unwilling to risk the recent political and strategic advantages they have secured from the “reset,” to a lengthy spat over a coup in a country over which they have never had any significant control.

Posted in Belarus, European Union, Russia Foreign Policy, US - Russia | Leave a Comment »

What the Shcherbakov story tells us about contemporary Russia.

Posted by democratist on November 13, 2010

13th November 2010,

One of the many insightful literary themes to be found in the novels of John Le Carré is the notion that the espionage apparatus and modus operandi of the intelligence services of different countries reflects their national character. 

Thus the British upper-middle classes, with their public school gift for deception, even among their closest friends, are represented by the Bill Haydon/Philby character in Tinker, Tailor, Soldier Spy, American post-9/11  aggression and hubris is given an ample airing in A Most Wanted Man, and efficient, ideologically driven Soviet ruthlessness exemplified in the figure of Karla in Smiley’s People.

But if Le Carré is really onto something, then what do the recent revelations of the defection of Colonel Alexander Vasilyevich Shcherbakov and their aftermath tell us about the state of Russia, and the Russian intelligence “organs” over the last decade under Vladimir Putin?

Evidently, the picture they paint is not a flattering one; it would appear that, through Shcherbakov’s defection, the FBI had been onto the “illegals” for some years, and allowed them to remain in place as they slowly built up a picture of their activities and methods, while none of the “illegals,” (supposedly the “best of the best”) cottoned on to the fact that they were being observed.

Which demonstrates just how inept and corrupt the SVR has become since 2000: Far from being the shining example of Soviet self-sacrifice that so captivated the young Vladimir Putin (capable of cultivating an Ames or a Hanssen), under his watch the SVR has declined to the point that is apparently easily infiltrated, while the kind of personnel security safeguards that should have raised the alarm some years ago (e.g. the fact that Shcherbakov’s daughter was living in the US) have not been functioning effectively, because they are easily subverted due to contemporary Russia’s all-pervading culture of corruption.

But this is hardly surprising; it has already become clear that the senior ranks of the SVR (such as Vasily Kushenko, Anna Chapman’s father) had been enrolling their own children as a way of giving them access to cash and connections, rather than for anything to do with serving the motherland, so why would anyone care if the head of the “illegals” section dedicated to spying on the US (surely one of the most sensitive posts in the Russian intelligence community) would have sent his own daughter to live…in the US?

Posted in Russian Corruption, Russian Espionage, US - Russia | 2 Comments »

Planning for the “inertia scenario.”

Posted by democratist on September 8, 2010

September 8th 2010,

Introduction

As stated in previous posts, Democratist sees Russia’s pronounced and increasing national inability in the sphere of technological innovation as one of the key motivating factors behind the apparent current “modernization” drive.

As Dimitry Trenin has noted, Russia continues to fall behind in terms of its industrial, technological and scientific capabilities, and this is already starting to have serious implications for her continued status as an international political, economic and (especially) military player.

As an example, these technological limitations have already manifested themselves in Russia’s inability to produce and deploy an effective reconnaissance Unmanned Ariel Vehicle (UAV) during the 2008 war with Georgia: Related areas of concern (mentioned in a speech given by Medvedev to Russian diplomats earlier this summer) include genetics, space, IT, energy, telecommunications and nuclear power.

While superficially novel, this contemporary desire for modernization among a section of the elite reflects and echos an enduring and often overriding historical preoccupation with the importance of military competition against comparatively advanced western nations, that runs throughout modern Russian and Soviet history at least as far back as Peter the Great, and which has provided the impetus for various spurts of Russian and Soviet technological modernization.

Twentieth-century examples include Stalin’s preoccupations about the impact of economic and technological backwardness on the USSR’s military capacities as a central motivation for Soviet industrialization in the 1930′s, as well as for the development of the Soviet nuclear arsenal in the 1940′s. Military competition with the west was also a central early motivation behind the economic reforms of perestroika (“restructuring”) in the 1980′s.

Three Scenarios

With regard to the contemporary case, in The Russia Balance Sheet (2009) Anders Aslund and Andrew Kuchins note that, far from being the brainchild of Dimitry Medvedev, the Kremlin had already formulated all the main goals and strategies currently being considered in relation to medium-term Russian economic growth and modernization during the final months of the Putin Presidency.

This programme, called “Russia 2020, was outlined in a speech given by Putin in February 2008, with the Ministry of Economic Development and Trade presenting a more detailed version a month later.

Russia 2020 outlines three alternative scenarios, in terms of the potential trajectories of economic development;

  • The first is the “innovation” scenario. This presupposes the development of a national innovation system, competitive human capital, and regional development centers, and requires a comprehensive reform and investment programme.  It foresees a subsequent average annual GDP growth of 6.5%.
  • The second is the “energy and raw materials” scenario, which is based on faster development and modernization of the extractive sector, and projects a subsequent average annual growth of 5.3%.
  • The third is the “inertia” scenario,” which assumes no significant improvement, and therefore forecasts an average growth rate of 3.9% per year.

In Democratist’s opinion, while over the last two years Medvedev has genuinely attempted to put some flesh on the bones of the proposed “innovation” scenario (introducing tax breaks, promoting technology parks, abolishing import duties on high technology equipment and encouraging foreign investment), over the past few months the “innovation” strategy has started to show signs that it is encountering increasing resistance from within the elite.

The reason for this emerging impasse is that many in the nomenklatura, grown rich under Putin on the proceeds of  corruption, are implacably opposed both to reform itself (which threatens their privileged position) and even more so to the implied political reforms which would be the backbone of an innovative economy, and which Medvedev tentatively began to promulgate over the summer.

In this regard, we consider Putin’s hints at the Valdai club meeting in Sochi on September 6th that he intends to make a return to the Presidency in 2012 as indicative of a broader reassertion of power by these interests, and an indication that the nomenklatura remains eager to avoid the potentially “destabilizing” effects of the political reform required to both attract increased western investment, and achieve the “innovation” scenario.

Instead, the elite appears to be hoping that a recovery in hydrocarbon prices over the next few years will allow them to return to a greater emphasis on the second, “energy and raw materials” development path, with its promise of a (still robust) 5.3% average annual growth.

This does not necessarily imply that the “innovation” scenario or its rhetoric is to be abandoned wholesale, or that Russia will instantly return to an openly confrontational and anti-Western foreign policy stance, but rather it seems more plausible that, over the next few years, where the needs of meaningful innovation come into conflict with intrenched elite interests (including in relation to  encouraging foreign investment), innovation will have to give way.

However, Democratist suspects, in contrast to the nomenklatura’s apparently rosy expectations, that Russia’s extraordinary and increasing corruption (which stems from the top, has become an integral part of how the country has been ruled especially since 2000, and which has been almost completely unaffected by supposed recent clean-up campaigns) will, in addition to putting firm limits on the “innovation” scenario, also put a considerable brake on  the development of the extractive sector.

Indeed, it does not seem implausible to suggest that, in the absence of serious political reform, within a few years Russia may be looking at growth rates closer to those of the “inertia” scenario than of the other two, as the system slowly begins to seize up.

Additionally, a second (and more certain) effect of this reassertion of power by the nomenklatura over the next few years is that, in the absence of innovation from within the domestic Russian public or private sectors, or from foreign investors (and with a continuing “brain-drain,” as many of Russia’s most talented people leave to pursue careers abroad) the corporatist Russian State will seek the innovation it has historically seen as essential in order for it to remain militarily competitive, and additionally for many other industrial sectors (including hydrocarbons and arms), through a greatly enhanced reliance on a tried and tested method employed extensively during the Soviet period, namely espionage.

Conclusion - Planning for the “inertia scenario.”

Whereas the conviction and subsequent swap of 10 Russia Foreign Intelligence Service (SVR) officers on July 9th in Vienna will doubtless have caused acute embarrassment to many in the nomenklatura, given the likely continued lack of domestic sources of innovation, and of foreign investment, while Russian foreign policy in general may remain less confrontational than that witnessed over the last few years for some time to come, Russian intelligence operations in the west are very likely to become considerably more extensive and aggressive over the next few years, with a greatly increased focus from both SVR and GRU on industrial and military espionage.

With this in mind, it is imperative that those same western companies that Medvedev and his backers have been trying to entice into committing to invest in Russia, as well as many others in the areas mentioned above, understand this increasingly virulent threat to their commercial interests, and therefore redouble their efforts with regard to both personnel and IT security.

Additionally, those western agencies tasked with dealing with this problem, might well wish to reconsider whether counter-espionage is not deserving of more than, say 3% of their budgets (as is apparently currently the case for the British Security Service – MI5).   

Indeed, in as far as the effects of a return to relative economic stagnation, coupled with an increasingly obviously technologically inferior military over the next few years are likely to strengthen eventual calls for a return to the “innovation” path, and for political reform, both from within concerned sections of the nomenklatura and the Russian public, western governments might start to consider counter-espionage activities, in relation to Russia at least, as an important aspect of their foreign, as much as security policies, and therefore provide them with a commensurate increase in funding.

Posted in Russia Foreign Policy, Russian Corruption, Russian Economy, Russian Espionage, Russian Liberalization, Russian Politics, Russian Science, US - Russia | 16 Comments »

Obama’s Devilish Masterplan revealed

Posted by democratist on July 28, 2010

28th July 2010

This morning Democratist has been laughing at yet another (somewhat delayed) Russian attempt to gloss over the “reset” spy scandal.

The latest explanation from Robert Bridge at Russia Today is that,

In an effort to distract attention from the release of thousands of secret documents on the Afghanistan War, the US rounded up 11 Russian “spies” according to internal sources.” 

Come again?

Bridge’s un-named “internal sources”, supposedly a US “defense expert” claims;

“The White House understood it needed something really big to distract attention away from what was coming down the pipe…There was really no need for the FBI to round-up those Russians when they did unless there was some higher purpose. And that purpose…was the threat that Assange would release documents that would be extremely damaging to the war effort in Afghanistan.”

Yes of course, it’s all been a cunning smoke screen, run from the White House right from the start! There was no need for the FBI to round-up those Russians – except perhaps for the fact that they were spying on the US, and well… it’s kind of the FBI’s job to catch spies.

This is just the latest in a parade of increasingly pathetic disinformation jobs on the “reset” spy saga from RT and represents a complete U-turn from their original line after the story broke in late June, which was that the arrests were part of a plot by hawkish elements in the FBI to discredit Obama and disrupt the “reset”.

Instead, now we are to believe the opposite, i.e. that it’s all part of a White House plot to distract attention from US failings in Afghanistan; Obama was the evil mastermind behind this devilish scheme all along, because he wanted to distract attention from the wikileaks story (even though almost no one other than RT has shown any sign of interest in the spy story for some weeks).

For Democratist, the fact that RT (who one suspects get much of their information, and indeed some direction from the SVR in  Yasenevo, rather than from un-named US defense specialists) is still talking such obvious nonsense about this story, long after much of the Western media and public have packed their bags for the summer hols,  once again confirms our conjecture that the timing of the US spy arrests were part of a calculated, clever, and already very successful FBI plan to discredit the SVR both at home and abroad, and by extension Vladimir Putin and the Siloviki.

And  it would appear that Putin is doing his level best to ensure that the plan succeeds beyond the Americans wildest expectations;

Why else would he admit to having so much as met with this collection of inept failures (who according to court documents managed not to notice that they were being watched by the FBI for more than a decade), let alone make the bizarre admission that he had a drunken singalong with them to 1960′s soviet spy-tunes, while the person(s) responsible for this fiasco apparently remain happily uncaught, despite Putin’s claims that “we know who it was”?

It seems that it was this latest PR disaster, and the opportunity presented by the wikileaks story, that have sparked off this most recent round of unfocused dissembling.

Posted in Russian Espionage, US - Russia | Leave a Comment »

Encouraging Liberalization in Russia.

Posted by democratist on July 27, 2010

27th July 2010

Democratist has been reading  Samuel Charap’s article in the Washington Post (“U.S. needs to carefully plot engagement with Russia” – 23rd July 2010) with interest.

Charap suggests a number of potential benefits that might stem from enhancing US foreign policy engagement, as part of a gradualist strategy aimed at fostering the development of a more open political system in Russia, while also counteracting more regressive political forces. He sees three main benefits of improved ties;
.
  • They increase the chances that the US can express concerns about what is happening in Russia without the discussion devolving into a “shouting match.”
  • Such engagement deprives the Kremlin of the specter used to justify its turn away from open politics (the “West as the enemy at the gates”) and the removal of this should improve the position of western-backed NGO’s and increase Russian citizens’ exposure to the US and its political system.
  • Successful governmental engagement will, over time, raise the cost to the Kremlin of actions that would undermine ties.

Democratist is broadly in agreement with the notion of enhanced engagement with Russia, but remains sceptical of the likelihood of success in terms of fostering a more open Russian political system (sections of the nomenklatura have little interest in reform, and remain all to happy to return to a “shouting match” at the earliest opportunity).  We therefore offer the following suggested analysis and approach;

Democratist sees contemporary Russia as suffering from two relevant, and related problems driving the country towards some degree of liberalization; one minor and probably of only medium term relevance, and the second more significant and deeper, but both of which have the same common fundamental cause;

The first problem is the  sharp reduction in world market price for hydrocarbons since 2008 (e.g from around $100 per barrel, to about $75 now). The Russian economy suffers from a lack of diversification and is therefore remains reliant on oil, gas and minerals for 70% of exports. The recent fall in prices for these as a result of the financial crisis has resulted in some additional fiscal pressure, which will have some impact on spending over the next few years. However, this problem should be at least superficially alleviated as hydrocarbon prices recover.

The more significant longer-term problem is a pronounced and increasing national inability in the sphere of technological innovation: Russia is falling behind in terms of its industrial, technological and scientific capabilities. This has serious implications for her continued status as even a regional political, economic and military player, and has manifested itself (for example) in an inability to produce and deploy an effective  reconnaissance UAV (as demonstrated during the August 2008 war with Georgia). Genetics, space, IT, energy, and telecommunications are all other areas of concern.

It is apparently this second problem (especially in relation to the loss of military prowess) which is of greater concern for the nomenklatura, and which therefore provides greater impetus for the current reform drive.

Democratist believes that both of these problems; lack of economic diversification and technological innovation have the same fundamental cause; Russia’s truly extraordinary levels of corruption (worse than many sub-saharan African countries according to Transparency International) which extends throughout all sections of society, but which stem from the top –  because the distribution of rents on the basis of loyalty has been a central component of how the Russian government has done business, especially since 2000, as part of a corporatist economic model.

So, as we have argued, while until recently the government may have been initially hoping to resolve Russia’s lack of diversification and innovation simply by encouraging investment from the West through tax breaks and technology parks, this tactic is unlikely to have any significant effect on its own in as far as it refuses to countenance the kind of deep political reforms required to seriously address Russia’s “hypercorruption”, and thereby make the country a place where innovative Western firms would actually want to invest, and where Russia might develop its own innovative companies.

However, evidence is starting to emerge that for Medvedev at least, this stance may be changing; as George Bovt from the EU-Russia center notes; in a speech given to the Russian diplomatic corps last week, the President stated that the foreign ministry should engage in three tasks as part of his modernization agenda; the fight against organised crime, modernising the economy and most significantly, strengthening the institutions of Russian democracy and civil society.

But even if Medvedev is personally committed, the obstacles to meaningful reform remain enormous and include most prominently an authoritarian concept of the State that flourished precisely as a reaction to the supposed shortcomings of the liberalization of the 1990′s.

So, what can Western countries do to encourage potential liberalization?

We have two initial suggestions:

Firstly, Democratist urges a little restraint. We should begin by highlighting what we can’t do. Preaching at the Russians is likely to be counterproductive given the mindset of many in the nomenklatura. However, in relation to foreign investment, the main position to take is to reinforce the point that, whereas Russia may currently have a corporatist system with a high degree of political control and support for ostensibly private firms, this is generally far less the case in the West, and therefore while the tax breaks, techo-hubs and other initiatives we have seen so far are to be welcomed, it is essentially up to the Russians themselves to make their country a place where innovative Western firms will want to invest.

Secondly, if the Russians do show signs that they are starting to take such an approach seriously, the US and EU might also quietly suggest that, as an initial step they could do far worse than ensuring that the OSCE ODIHR is allowed to observe the forthcoming parliamentary and presidential elections in late 2011/ early 2012. These polls could potentially provide Russia with the opportunity to  demonstrate how things are beginning to change (especially in contrast to the polls in 2007/8 where the Russians deliberately sabotaged the OSCE missions). It would be easy enough to allow some limited media liberalization and reform of the electoral law, and thereby potentially allow some genuine opposition voices into the Duma, while either Medvedev or Putin would almost certainly win the presidency without need for too much recourse to the abuse of “administrative resources” or other forms of fraud. Indeed, this line of thinking may already beginning to emerge; the issue of “winning without the use of administrative clout” was mooted at a special meeting of the United Russia general council (Kommersant, 16th June 2010). However, it will take clear guidance from the top to ensure that such aspirations are observed in practice – and at the moment Democratist still fully anticipates widespread fraud in the local elections due this October (as was the case last year).

If Russia really wants to move from its current position as a raw materials supplier at the periphery of the world economy towards becoming the sort of diverse economy where innovation flourishes, it will have to develop the institutional structures required to make this a reality, and these imply democratic reform because, as Russia is now discovering, accountable institutions provide the sine qua non that supports technological innovation.

Posted in International Political Economy, OSCE, Russian Economy, Russian Liberalization, UK Foreign Policy, US - Russia | 1 Comment »

“Yes, my dad’s the ambassador to Syria, and my grandad was a lieutenant-general in the NKVD, but I’m just a secretary…”

Posted by democratist on July 4, 2010

4th July 2010

Following the media frenzy that has erupted over the past week, especially in the UK, where the case is perfectly suited to tabloid sensationalism – it even has topless photos - Democratist’s (doubtless more sober and less easily titillated) readership must surely be wondering if there could possibly be anything more to say about the recent Russian Spy scandal?

Well…..yes. Quite a bit in fact. So here we go;

Firstly, while there has been plenty of speculation concerning the timing and rational of the FBI’s decision to move in and arrest the 10 suspects, ranging from cluelessness masquerading as hauteur in the UK’s Independent to the  kind of disinformation/conspiracy hybrid that one now automatically expects of the Kremlin’s English-language mouthpiece Russia TodayDemocratist has yet to see a more convincing explanation of what is going on than our own.

In the words of Russian Foreign Minister Sergey Lavrov (surely quoting Carl Douglas?), this was all done “with expert timing”: Those that have suggested that the United States’ hand was forced because Anna Kushenko/Chapman became suspicious after having been contacted by a FBI false flag should keep in mind that it seems fairly obvious that the Americans would never have made such a risky move if they had been intending to continue this (already 20-year long) investigation for much longer.

Or, are we to believe that the FBI is so incompetent as to think that the next time Chapman met or contacted her real handler(s), she would have failed to mention that she had been asked to pass on a passport to a fellow spook, or to report on the results? Or that the recipient would not have done likewise? Instead, it seems that the FBI already knew they were approaching the end-game, and were therefore willing to take an (almost certainly terminal) risk in order to flush-out a (so far) anonymous third-party.  

Instead, it is more probable to suggest that the timing of the arrest, coming as it did just a few days after the Medvedev-Obama summit, was quite deliberate, and had been in the planning for some months – not because right-wing elements within the FBI were seeking to embarrass Obama (he knew exactly what was going on), or derail the “reset,” or because the G-Men wanted to remind Washington of its usefulness after a series of security “slip-ups” over the past year - as some in the Russian media have rather lamely suggested, but in fact because the US wanted to it make clear that;

i)  They have been onto these people for years (stated numerous times in the court documents); maybe right from the start; maybe since even before the start, maybe since the 1980′s in some cases.

ii) Whatever these “great illegals” got up to (and it was probably a lot more than currently admitted, because the FBI doesn’t want to make them look too good, and it’s not like any of the “illegals” are likely to brag about what they were up to at the trial) the FBI never thought that the damage the “illegals” were inflicting on the US during a 20 year period made it worth its while to call a stop to the party - and were never worried that they did not know what was going on to the point that they felt they needed to step in.

iii) That they did not feel threatened by the “illegals” for so long suggests that the FBI developed a fairly low opinion of their opponents, and an inversely high opinion of their ability to trust their own people (again for 20-years, which suggests that more than a few people were in the know), and of how well the CIA (or an allied agency) had infiltrated the SVR.

iv) That all of the above demonstrates (and will demonstrate in US courts over the coming months) just how inept and corrupt the SVR has become since the end of the USSR: Far from being the shining example of Soviet self-sacrifice that so captivated the young Vladimir Putin (capable of cultivating an Ames or a Hanssen) under his watch the Service has declined to the point that is apparently easily and repeatedly infiltrated, while the senior ranks (such as Vasily Kushenko) have apparently been enrolling their own children as a way of giving them access to cash and connections, rather than for anything to do with serving the motherland (and Anna Chapman is very unlikely to be an isolated case).

v) All of this underlines Democratist’s oft-made point that almost the entire Russian political-economic system is rotten from (especially) top to bottom: These arrests, and any subsequent ones (perhaps also in other countries) over the next few months, are going to do a superb job of repeatedly and brutally highlighting that this is true even for the holiest of holies; the “illegals,” and that they and their superiors are just as incompetent and crooked as everyone else in the nomenklatura. This is bound to strengthen calls for meaningful reform, regardless of whether Medvedev or Putin takes on the Presidency in 2012 (but as we mentioned before, tends to benefit Medvedev at Putin’s expense).

Despite their nationalist bluster, Russia has always been obsessed by the West, especially the US, as a kind of mirror-image and rival to which they can compare themselves (as half an hour watching Russia Today will quickly confirm). Over the next few months, maybe even years, the Russian political class and intelligentsia is going to be continually reminded just how bad things have become, at a time when the government is in no position to rattle enough sabres to mask the howls of anger.

Posted in Russian Espionage, US - Russia | 2 Comments »

The End of the Myth of the “Great Illegals”

Posted by democratist on June 30, 2010

30th June 2010

Democratist has been most interested, and initially somewhat surprised by the timing of the FBI’s decision to arrest and charge 10 people as members of an alleged Russian spy-ring. While Russia’s continuing espionage activities in the US (and elsewhere) should hardly come as a surprise to anyone who has read the August 2009 US National Security Strategy or visited MI5′s snazzy website (including pages handily translated into Welsh) the timing of these arrests, only a week after Medvedev cordially ate burgers with President Obama during his “reset” visit, seems a little puzzling.

While the 10 have not been charged with espionage as such, but the lesser crime of “conspiracy to act as unlawful agents of a foreign government” – which carries a penalty of up to five years in prison, nine of them face far more significant charges of money-laundering,  threatening sentences of up to 20-years. Additionally, the FBI has suggested that none of the information these “illegals”  (individuals spying under a false identity without diplomatic cover or immunity) were tasked with collecting by their masters in Yasenevo was classified. This makes little logical sense as it breaks the so-called “Mossad rule” of espionage; why invest millions of dollars in training these people and putting them in place, only to have them collect information that the SVR and their Kremlin masters could have read in The Economist

Democratist’s best current theory as to what is going on is that the FBI has been onto these “illegals” for a number of years, and has been biding its time as it slowly collected information about the extent of the network and its (apparently rather unimpressive) activities and targets, as well as the evidence required for a prosecution. That the FBI has chosen to prosecute so soon after the recent “reset” summit can only have been authorized at the highest level – and one suspects that President Obama would have been fully aware of the situation as he shared french fries with Medvedev in Washington last week.

It seems therefore that the current arrests and the publicity that will surely surround any subsequent trial are part of a calculated US plan to discredit the SVR at home, and by extension the so-called Siloviki, (the many members of the ruling elite with a background in the KGB and the military - a group informally headed by Prime Minister Vladimir Putin). It appears that enough evidence is in place to allow the FBI to implicate the SVR’s “illegals” in a variety of inglorious, and purely self-serving criminal activities through a lengthy trial, in which the 20-year terms that the accused will face for money-laundering will eclipse the charges they are likely to face for their “official” espionage activities. 

The “great illegals” have long been the subject of largely unmerited Soviet and Russian hagiography (as detailed in The Mitrokhin Archive and elsewhere). It would seem that the FBI’s very public revelations are about to put a serious dent in that image.

Posted in Russian Espionage, US - Russia | Leave a Comment »

 
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