Russian Offshore Wealth Likely Equal To Country’s Entire Household Wealth

WASHINGTON — Capital flight from Russia is now likely equal to the collective wealth of all Russian households, according to a new report by a respected U.S. research firm, a trend that has helped to drive the country’s income inequality to extreme levels.

 

The National Bureau of Economic Research says in a paper being published this month that the top 1 percent of Russians now hold up to 25 percent of the country’s wealth, a function of capital flight that has accelerated in recent years.

You can read the rest here.

Iraq was not the first illegal US-led attack on a sovereign state in recent times. The precedent was set in 1999 in Yugoslavia.

The legality of the war against Iraq remains the focus of intense debate – as is the challenge it poses to the post-second-world-war order, based on the inviolability of sovereign states. That challenge, however, is not a new one. The precursor is without doubt Nato’s 1999 attack on Yugoslavia, also carried out without UN support. Look again at how the US and its allies behaved then, and the pattern is unmistakable.

Yugoslavia was a sovereign state with internationally recognised borders; an unsolicited intervention in its internal affairs was excluded by international law. The US-led onslaught was therefore justified as a humanitarian war – a concept that most international lawyers regarded as having no legal standing (the Commons foreign affairs select committee described it as of “dubious legality”). The attack was also outside Nato’s own remit as a defensive organisation – its mission statement was later rewritten to allow for such actions.

This article is old (it was first published in 2003) but is relevant for understanding current Chinese suspicions of American hegemony.

You can read the rest here.

Do Economic Sanctions Cause a Rally Around the Flag?

Sanctions are usually the first option in coercive diplomacy considering that the use of force is so morally tainted. But how effective they are is highly contested. There are costs and benefits to their use and one of the most notable cost is the “rally around the flag effect.”

Timothy Frye looks at this very aspect of Russian sanctions and writes,

I studied this issue in a recent working paper and found little evidence that economic sanctions influenced levels of support for the Russian leadership.6 To reach this conclusion, I conducted a nationally representative survey of 2,000 respondents in Russia in November 2016 just following the US presidential election, in which I randomly assigned respondents to receive questions with different prompts.7 In the baseline condition, respondents were asked, “To what extent do you support the Russian leadership (rukovodstvo) on a 5-point scale where 1 equals very negative and 5 equals very positive?” In the baseline condition where respondents received no additional information, the average level of support for the Russian government was 3.52.

Prior to receiving this question, one group of respondents was reminded that “since 2014 the United States has levied sanctions against Russia,” and another group of respondents were told that “since 2014 the European Union has levied economic sanctions against Russia.” If the “rally around the flag” argument was correct, we would expect support for the Russian government in these two groups to be higher on average than in the baseline group. Instead, in these groups the level of support for the Russian government was 3.40 and 3.46, respectively—lower than the support in the control group. Reminding respondents that the United States and the European Union had levied economic sanctions against Russia produced no discernible effect on the respondents’ support for the Russian government.

Short read and you can access the rest here.

“NATO allies boost defense spending in the wake of Trump criticism.”

From the WaPo

NATO allies of the United States plan to boost their defense spending by 4.3 percent this year, Secretary General Jens Stoltenberg said Wednesday, a response in part to intense pressure from President Trump that the nations invest more in their militaries.

The rest can be found here.

The Forgotten War

All told, the conflict has displaced between two million and three and a half million people. According to the United Nations High Commissioner for Refugees, at least 1.6 million Ukrainians moved west toward Ukraine’s capital, Kiev as a result of the fighting. Russia says that 2.6 million Ukrainians moved east. In its report ending March 12, the refugee agency also estimated that from mid-April 2014 to mid-March 2017, at least 9,940 people have been killed and 23,455 wounded.

That is from a June 20th NYT piece titled The War No One Notices In Ukraine.

 

Europe may no longer be able to rely on the US for defense against Russia. Here are its options

This is at Quartz.

Options discussed include

  1. European Army
  2. Increase spending and pool resources
  3. “Get good at what’s actually possible without the US”
  4. Convince the US it needs Europe
  5. “Don’t do anything drastic”

The issue with NATO isn’t that the allies are free riding. Don’t get me wrong, NATO is “welfare for the rich” and its utterly stupid that Americans are arguably paying more for European security than Europeans do, but to me the issue is that the alliance has been extended into areas into territories that produce the security dilemma from a Russian perspective.

Taking political stock of the past 18 months, It is becoming clear that 1) the original NATO is becoming more essential than we realized and 2) it needs the United States to lead. There is too much latent populism and nationalism on the continent to let Germany rise without some sort of outside check to manage it. And frankly, NATO can’t survive without the United States. You have clear evidence of shrieking now. If the United States were to transfer power to NATO and the alliance was actually somehow needed, why would we assume buckpassing wouldn’t emerge as the dominant response?

Is Macron Delusional?

First there was the handshake with a message. We are still not sure what the message is, but apparently it’s serious.

Now Macron is taking on Putin’s policy in Syria informing him that if chemical weapons are used again, Russia will have France to deal with.

I’m not sure if he is serious or if this is just sour grapes because both supported his rival. But if there is any country that needs to look at itself before beyond its borders it is France. At one point it was a regional hegemony, but France today doesn’t get much correct.

Below are two indicators of its economy, unemployment and GDP growth. Both are from FRED and both speak for themselves.

 

 

There is also the seemingly perpetual issue of integration and terrorism. France more than the United States, the U.K. or Germany seems to have a unique problem integrating members of foreign cultures into their society.

But regarding foreign policy, France should  be mostly concerned with Germany’s apparent willingness to chart a more independent path. The biggest long term concern for France is still Germany.  NATO was just as much designed to keep the Soviets out as it was to keep control over a recovering German.

The Trump u-turn on China and Russia is welcomed policy: Why the United States should be wary of Russia, and not China.

During the presidential race, political commentators were equally dismayed and puzzled by the developing relationship between then candidate Trump and President Putin. All sorts of explanations were offered to explain the apparent goodwill, from naked business interests to an alleged sex tape. But whatever the reason, Trump complimented Putin on a regular basis, referring to Russia’s president as a “strong leader” and “smart,” and stated that he intended to have a good working relationship with Russia’s president.

China, however, would be the center of a Trump administration’s ire. Trump accused China of “raping” the United States and promised that on day one he would label China as a currency manipulator and erect steep trade barriers. During his confirmation hearing, his nomination for Secretary of State suggested denying Beijing access to their artificial islands in the South China Sea.

That was then but this is now. After 100 days of Trump, the expected rapprochement with Russia has cooled and Chinese-American relations have apparently warmed. President Trump has directed 59 Tomahawk cruise missiles at Russia’s ally Syria, accused Russia of complicity in Syrian war crimes, has made no attempt of removing the sanctions imposed after Crimea, and has publicly stated he expects the peninsula to be returned to Ukraine.

Trump, however, has failed to label China as a currency manipulator, reneged on trade barriers, and restricted Navy patrols in the South China Sea. Xi Jinping, apparently, is even President Trump’s friend.

This u-turn is highly welcomed news for the simple fact that Russia is the troublemaker, and China, not so much.

Russia is the bigger problem for American foreign policy primarily because Russia is seeking to undermine 50 plus years of European economic integration and political liberalism. As articulated in a 2013 Center for Strategic Communications policy paper titled “Putin: The New World Leader of Conservatism,” Putin’s strategy of gaining influence in Europe is by assuming the leadership role of a transnational movement that defends and renews traditional social values, both in side Russia in Europe. This means supporting positions that are anti-immigrant, homophobic, and Eurosceptic, among other anti-liberal policies. This essentially makes Russia a proselytizing power as Putin seeks to export these policies to Europe by hacking elections, funding far right parties, and spreading fake news. The French presidential election offers ample evidence of this strategy in motion.

Compare this to China which has no designs on the political makeup of foreign states, doesn’t seek to export any particular culture to its neighbors and, despite lifting 800 million people out of poverty, doesn’t pressure others to adopt its version of state sponsored capitalism. They do hack, but not to influence election outcomes, and the fake news it produces is mainly for Chinese consumption and not to influence foreign elections.

The Chinese and Russian objectives for their respected neighborhoods are in contrast to one another. Russia’s objective is to sow political and economic uncertainty throughout their neighborhood, as a Europe divided by nationalism and economic populism is a plus for Moscow. But where Russia is deliberately stirring up tensions throughout Europe, China’s number one regional goal is stability. From their policy towards North Korea to their relationship with the United States, China’s number one goal is to avoid destabilizing the region. This is because unlike Russia, China has experienced legitimate economic gains and political consolidation over the past 30 years and would prefer not to upset this trend.

When one also considers that Putin’s Russia has also invaded two countries, committed war crimes in Syria, has sold arms to the Taliban, and violated the 1987 Intermediate-Range Nuclear Forces Treaty, it is rather clear that Russia, and not China, should be considered the bigger problem for American. American priorities and rhetoric should reflect that.

 

 

Russia and social conservatism.

Many have discussed Russia’s pursuit of a new identify following its disastrous experiment with communism. Would Russia have a purpose on the world stage, or would it merely be an ad-hoc pragmatic power, largely selling the world natural resources on its way towards a full blown kleptocracy?

It turns out Russia does have a purpose and it is the restoration of social conservatism.

Putin is the movements leader.

This effort is obviously strategic. Consider the following from Alina Polyakova’s brilliant piece, Putinism and the European Far Right.

“Europe’s far-right parties and the Putin doctrine frame their respective nations and people as being in the middle of a culture war between Western liberal plurality and traditional Christian values. In 2013, the Center for Strategic Communications—a Russian based think-tank— published a report entitled “Putin: The New World Leader of Conservatism.” Putin, according to this report, stands for traditional values in a world fraught with instability: law and order, family, and the Christian heritage. The FN’s Marine Le Pen has praised Putin for standing up for Christian civilization and traditional values, hailing him as a “natural ally to Europe.”

You can read the report in its entirety here.

American Versus Russian Intervention

Excellent WaPo piece about American intervention by Simon Waxman.

The point of the article is to lend understanding about why Putin supported a Trump presidency, but what I found most insightful was his point about Putin and Syria.

Of course, Putin does not oppose militant humanitarianism for idealistic reasons. He, too, claims to be a militant humanitarian. In justifying Russian policies toward Syria and Ukraine, Putin and his supporters have explicitly relied on arguments the Clinton administration used in Kosovo. If NATO can stumble into Yugoslavia’s civil war, why can’t Russia do the same in Syria? Indeed, Russia is Syria’s ally, sworn by treaty to protect its government. And if Saddam Hussein’s genocide against Kurds was a reason to violently unseat him from power, then why shouldn’t Russia protect persecuted ethnic Russians, as it has claimed to do in Georgia and Ukraine? If there is a principled difference between the Clinton and Putin approaches to militant humanitarianism, it is that the latter is essentially conservative, seeking to preserve the status quo or restore the status quo ante, and the former is transformative, attempting to build new states along lines preferred by U.S. politicians and strategists.

The rest can be read here.

His homepage is here.