-Caveat Lector- <A HREF="http://www.ctrl.org/"> </A> -Cui Bono?- from: http://www.aci.net/kalliste/ Click Here: <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Russian Follies Russia in Catastrophe Putin Elected Beggar King With slightly more than 50 percent of the vote, it appears that Russia’s interim leader, Vladimir Putin, has captured the presidency outright. Western leaders appear befuddled over just who this man is, what he wants and what he is likely to do. Indeed, the curious notion that Putin is pro-Western has taken hold in some sectors. This is whistling past the graveyard. With the election now behind him, Russia’s president is likely to grab hold of the economy by taking control of Russia’s oligarchs. And he is equally likely to challenge the United States on its plans for a national missile defense. Such a Russian challenge will threaten to split America from its allies in Europe. Analysis With the apparent outright election of Vladimir Putin to the presidency, Russia is entering a new stage. In this stage, understanding this leader’s intentions and the forces that constrain them will be critical. To date, American leaders and the mainstream press have expressed two views. The former KGB officer is a younger, more vigorous Boris Yeltsin, ultimately committed to economic and political reforms or – as expressed in The New York Times recently – Putin is a non-entity, a product of the bureaucracy, with no idea of where he is going nor what he will do. Both views are equivalent to whistling past the graveyard. The second misreads Russian history. The first simply refuses to face the fact that economic reforms have failed, not because of bad luck but because the country’s institutions and culture could not support a free market. A free market is possible only where there are property rights – possible only when a legal system can enforce claims. Russia has been unable to implement such a system. The idea that Putin will remain committed to reforms requires resolute obtuseness. As president, Putin will grapple with two central problems. The first will be taking control of the economy and directing what capital there is into meaningful economic activity; this, in turn, will require the means of the state, enlisted to co-opt opponents, if possible, and frighten them if necessary. The second will be protecting Russian national security from the overwhelming power and influence of the United States. To do this Putin will most likely challenge Washington on the volatile issue of a National Missile Defense (NMD). Such a defense would put Russia into a strategically inferior position. To avoid it, Putin will attempt to seize upon the strategic danger of the moment, and split Washington from its European allies. The central problem facing Russia is the need to transform vast pools of money into investment capital. Because Russia lacked a functional legal system, both the internal privatization system and the foreign investment process extracted money from the economy and placed it under the control of a class of individuals with the political power to protect their claim. Much of the money was directed out of Russia; much of the rest was used to purchase and maintain a system of political protection. Investments in media, real estate and luxury goods were central. As a result, serious capital investments have been marginal at best. Anything that requires years to turn a profit has been avoided. Investment outside of the major cities is nearly non-existent. Political control and influence at the village level makes investment there too expensive and uncertain. As a result, Russia is experiencing a massive depression. Life expectancy has declined and much of the countryside has been reduced to barter. In the cities, Western currencies dominate. Russia is not facing catastrophe; it is in catastrophe. In a country where the market doesn’t operate to turn money into investment capital, the logical alternative is now the state. In the Russian case, the hypertrophied state apparatus has become decrepit – but it remains in place. And it is more likely to function than the legal system. Admittedly, state allocation of capital is a terrible idea. But the only thing worse than that is the complete non-allocation of capital, which is what Russia faces now. However, getting the state to allocate capital poses a problem of enforcement. Who will enforce the edicts of various ministries in the government that will take shape? The traditional solution is to use the state security apparatus. The apparatus has no experience in enforcing legislated property rights, but it does have a culture attuned to enforcing state bureaucratic edicts. More important, it is the only force in Russia that could seriously threaten the oligarchs. It is therefore no accident that Putin, former head of the FSB (successor to the KGB), has surrounded himself with former KGB operatives. He is reaching into the one working element of the Russian state to jump start not only the state, but society as well. Though he feigns confidence in public, it seems reasonable to assume that Putin knows perfectly well that time is not on his side. He also understands that the oligarchs have tremendous influence within the state and the security apparatus. Putin must convince them that it is in their interest to turn control of the economy back to the apparatchiks and policemen. He has two means of doing this. First, he can convert the oligarchs from businessmen into members of the apparatus. Most came from the apparatus, after all. And within it they can enjoy the power and privileges of the state elite, while keeping their cash buried in foreign banks. Russian history is replete with examples of the elite changing sides. Putin can also try to co-opt them faster than they can subvert his program, but this will be difficult to do. So, he likely has a second plan: frighten them into submission. Class hatred runs deep in Russia. The one thing that can frighten the oligarchs is a massive outpouring of anger from the masses, now apathetic. The traditional communist calls tend not to move people these days. But there is one hot button that can still mobilize Russians: nationalism. Putin has done everything possible to revive Russian nationalism and create an image of himself as the owner of and spokesman for the Russian national interest. Chechnya was critical, a case study in how he would halt the disintegration of the Russian Federation. Much of his popularity depends on nationalism. Throughout Russian history, political leaders finessed economic disaster by feeding the populace Russian national pride. Putin is gifted at the game. But he must now do more and build on the Chechen experience – and this is where Putin will likely face his second problem, putting Russia back on equal footing with the West. Putin must now create a sense in Russia that he is dedicated to returning the country to its international greatness. Putin needs to confront the West, and particularly the United States. He has already quietly laid the groundwork. For example, he has stated that he would be willing to join NATO as an equal; some in the West saw this as a gesture of conciliation when it was actually a warning. Any attempt to extend NATO without including Russia, with a veto power equal to that of the United States, would be resisted. It is in fact fascinating to observe the degree to which Putin has made the West think that he is being conciliatory. Many of his initial contacts with Western visitors and journalists have given a variety of impressions. This may be a reflection of the fact that in Putin’s experience he has little first-hand understanding of the West. The chief confrontation with the United States will clearly be over American plans for a National Missile Defense (NMD), an anti-missile defense that would in theory protect most of the United States from a limited ballistic missile attack. The Clinton administration plans to make a decision on deployment this summer, following a series of tests. The American argument for this system is that it is not aimed at Russia but rather at aspiring missile powers such as North Korea. Since the Cold War is over, the argument goes, and the U.S.-Russian balance of terror is defunct, Russia should have no objection to abrogating the Anti-Ballistic Missile Treaty in order to defend against “rogue nations." The Russians have resisted – at times quite loudly. After all, an American missile defense upsets the strategic equation with Russia. Russian strategic forces are the backbone of defense for the nation. And Russia could not possibly afford to build its own national missile defense in a quest for relative parity. But what the Russians have really been saying is that an American dismissal of Russian nuclear interests is another – the final – insult. From Russia’s point of view, it is still a great nuclear power. As a result, it seems that Russia under Putin is prepared to make the nuclear balance a meaningful question again. This is a critical issue, one Putin can use to whip up the nationalism already at his disposal. It is also a strategically effective ploy. Putin came of age in Germany during the 1970s and early 1980s, when the deployment of American Pershing II missiles came to head. Russia’s argument at the time was for a nuclear freeze – and it was designed to split the Western allies. Indeed, it did, sparking a grassroots movement in Europe that was nearly impossible for the Reagan administration to overcome. The target of the Russian campaign was West Germany. A crisis over ballistic missile defenses now would be a replay of the Pershing II crisis. This time ground zero will be a unified Germany. The last time, the United States got its way. But this time there are quite possibly different outcomes at hand. Europe has nothing to gain from a National Missile Defense that doesn’t protect the European continent and is not desired by Europeans. The Germans do not want to see a replay of the Cold War, in whole or in part. As important, Germany is heavily exposed financially in Russia. Berlin would rather work with the Russians in repairing their economy – even by authoritarian means – rather than confront them. For their part, the Russian leadership will want to split the United States from its European allies, to prevent future episodes of unbridled American power, like last year’s war for Kosovo. Putin will force a confrontation with the United States for reasons other than geopolitical ones, as well. He needs to create both a sense of national purpose and a sense of national crisis if he is to cut a deal with the oligarchs or – if necessary – liquidate them. The oligarchs flourish to the extent that there is a sense of national helplessness and apathy. To the extent that Putin can create a sense of national empowerment, mobilization and, above all, a sense that Russia now has a leader willing to act, Putin can confront his old friends, the oligarchs. To avoid going the way of Yeltsin, Russia’s leader faces a fairly seamless web of choices. He has to get the country’s economy going and to do that he must get control of the oligarchs. To get control of the oligarchs, he must both entice them and frighten them. To frighten them, he must create a sense of national embattlement that strengthens his regime and puts them at risk. To create that sense of embattlement, Putin needs an international crisis. If missile defenses won’t do, he will find something else. For this Putin needs a foreign enemy and the United States is the obvious choice. Putin is, indeed, not driven by ideology. Like most Russian leaders, he believes in power and order more than anything else. If one looks at the current situation dispassionately and non-ideologically, as Putin is certainly doing, there is a road map to follow. Part of the map runs through tense times with the West. The complacency about Vladimir Putin, therefore, is difficult to fathom. There is no mystery. He is one of the most understandable leaders Russia has had since Yuri Andropov. Stratfor's Global Intelligence Update, March 27, 2000 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations. Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. 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