David L Goldman
On 6-17-16 “Grandmaster Putin (Grandiose multi-step operation lasting 16 years)” appeared the web site The Vineyard of the Saker. It was written by a Russian blogger. It covers a lot of contemporary issues involving the Russian economy, its military and its recent history of relations with the western powers, especially the US. It has been of great interest to me and inspired me to make the following observations.
Russian/Soviet GDP history
GDP comparisons are fraught with problems because GDP is a kitchen sink of data that fails to properly distinguish its constituent elements according to their genuine wealth-generating or use values. Anatoly Karlin addressed this subject in his June 22, 2012 article with regard to the Soviet economy. Alexander Mercouris’s comments following Karlin’s article added great value to the discussion regarding, among other things, the need to assign value to Soviet-era social benefits such as housing, medical care and education in order to make meaningful comparisons with western economies. In the US all bank bailouts and bank fraud are included in calculating GDP.
With the decade long rise in oil prices beginning in 1999 the Russian energy industry provided critical support to the federal budget that allowed Putin et al to finance and stabilize the Russian state. Thane Gustafson’s “Wheel of Fortune: The Battle for Oil and Power in Russia” identifies several essential factors that made it possible for a significant renationalization of the energy industry, among which was the enforcement of the underlying state title to energy resources which had only been leased to various oligarchs. Gustafson asserts that Gorbachev had dismembered the party-apparatchik glue that held together the non-vertically integrated energy industry, which ungluing led to a race to the export markets while mostly private entities vertically integrated the industry. The export profits accrued to the oligarchic entities until the state reasserted its title and control. The revenue to the state then increased by a factor of about 10. The overreach for power and control by Khodorkovsky et al, after having been warned to desist, provided Putin with the opportunity to reassert the national interest.
The resurrection of the Russian military
Clearly there existed a legacy of Soviet-era resources and talent that could be called upon once leadership was restored following the Yeltsin debacle, with the fiscal ability to support key programs. The conflicts in Chechnya and Georgia demonstrated the will and the ability to respond effectively to challenges. Both conflicts exposed deficiencies in military capacity, with at least one disaster in Chechnya and failures to coordinate air with ground forces in Georgia. Western analysts provide valuable insights regarding Chechnya, but ultimately have underestimated the ability of the Russian military to overcome its deficiencies.
NATO began moving east during Clinton’s second term beginning 1996.
The Russian Ministry of Defense is closely supervising military operations, exemplified by the recent suspension of the Baltic fleet commander and some of his command staff.
Russian military doctrine 101
Reduced to the most simple formula for non-experts like me, the Russians historically rely on surprise and the exploitation of breakthroughs. The formulation of redlines is also said to be crucial. The real significance of the latter is that some may believe Russia would tolerate another invasion rather than strike first following a violation of a “red line.” This belief may not be well founded.
The two recent campaigns in Crimea and Syria present instances where these principles appear to have been applied. Some western observers have contended in recent memory that Russia is a paper tiger. NATO officials have a different take: “Anti-access/area denial, or A2/AD, is a growing problem,”
The events in Crimea appear especially to exemplify the employment of surprise. The Russian deployment of air assets in Syria and the intensive use of same appear to have caught the US et al completely by surprise in speed of deployment and effectiveness.
While the Russians seem to have been themselves surprised in several cases, these events reflect what arguably amounts to be misplaced confidence in agreements with adversaries rather than military failures per se. In the Ukraine in February 2014, the French, German and Polish on-site signatory witnesses to the 2-21-14 agreement regarding an organized “constitutional” process to replace the elected government walked away within days from the agreement they brokered. The Turkish shoot down of the Russian jet it claimed had violated its territory appears to have been an ambush orchestrated by the US when the US disclosed to the Turks the flight information provided by Russia to the US in a Russian effort to coordinate air activity over Syria.
Time may be Russia’s (and China’s) most strategic advantage in what now amounts to WW3: western economic weakness will likely be fatal to western interests
The US now lives off the theft of domestic and foreign resources, not the wealth generated by economic growth (see “Deflation in the Casino”). Post WW2 theft of Axis booty used to finance intelligence agencies (see Seagrave: “Gold Warriors: America’s Secret Recovery of Yamashita’s Gold”) and the transfer of control over the Asian heroin trade (see: McCoy: “The Politics of Heroin: CIA Complicity in the Global Drug Trade”) has been used to finance off-budget operations of intelligence agencies worldwide. The western deep state’s object is to capture the resources of eurasia and prevent a geopolitical alignment of Russia and Germany, formulated by MacKinder: “The Geographical Pivot of History” and the modern exponents of western hegemony, such as George Friedman (and Brzezinski, of course). With regard to Russia, didn’t we seen a version of this movie in 1918? Massive US federal deficits, drug cartel money-laundering by the too-big-to-fail-too-big-to-jail banks, banks whose survival depends on borrowing at zero-interest rate and collecting interest on their reserves at US Federal Reserve, corporations borrowing to repurchase their own stock (details in “Deflation” above) and negative interest rates in Europe (and coming to the US?) that doom the insurance industry and pension funds (see California’s projected shortfall) militate in favor of a joint Russia-Chinese economic “hold the barbarians off at the gate” strategy and the avoidance whenever possible of shooting wars.
If Russia and China play for time and build genuine wealth through economic development while modernizing their defence industries, then the economically flailing hegemon is going to become increasingly desperate and belligerent and of course, ironically, this strategy may well accelerate the very shooting wars Russia and China seek to avoid. For this reason, I suspect electronic warfare may play a very big role, what with NATO missile bases being established in Romania and Poland. Shutting these bases down electronically and rendering them useless would be the most desireable outcome, all things considered. CERN isn’t the only very high tech physics project being tested as we speak. The history of advanced weapons development goes back to the German Nazis deeply secret weapons programs. See Nick Cook’s “The Hunt for Zero Point: Inside the Classified World of Antigravity Technology.”
Still, there are facts on the ground in Syria and the Ukraine that need to be addressed: ceasefires undermined, Plan Bs, Iranian treaty non-compliance by the US and possible Georgian safe-havens should Islamic militants be forced to retreat from Syria. July 2016 could well be a month to remember.
And speaking of surprises, Sibel Edmonds has predicted that the airport attacks in Paris, Brussels and now Istanbul presage a possible “October surprise” in the UK or the US that will be used as an excuse to commit substantial US ground troops to Syria.
Russian domestic politics
The story of the 2012 Presidential election, following the Duma election in December 2011 remains to be told in some detail. The suggestion that the 5th column’s activities and plans were anticipated and effectively countered deserves a stand-alone treatment in the context of color-revolution phenomena.
The 2016 Duma election doesn’t attract very much comment. Neither does the on-going effort in Syria to conclude agreements with local communities and armed contingents. It’s understandably more fun to play armchair general and speculate on geopolitical machinations than to engage on getting agreement on the ground. But at the end of the day these efforts build the foundation for political solutions.
The run up to the Duma election this year includes corruption investigations in Vladivostok and Kirov. Perhaps of more interest is the on-the-ground political work of the parties to build their slates of candidates with a focus on developing a consensus to adopt federal legislation they support and for some to address what they perceive to be the 5th column establishment in government agencies, including the Russian Central Bank.
Now comes the eye-glazing stuff. The Russian Constitution, Chapter 3, Article 75, establishes that the Central Bank shall fulfill its responsibilities independent of other state authorities. Chapter 9, Article 136 establishes that amendments to Chapters 3 and 6 require approval of legislative bodies that represent two-thirds of the subjects of the Russian Federation after adoption as a “federal constitutional law” (Chapter 5, Article 108) by three-fourths of the Council of the Federation (members defined: Chapter 5, Article 95 (2)) and two-thirds of the members of the State Duma (members defined: Chapter 5, Article 95 (3)). Got that? This is constitutional stuff and making it happen requires real day-to-day consensus building.
There are many people who object to the way that the Russian Central Bank has conducted itself during the sanctions regime imposed on Russia and who want a central bank that is more responsive to the president of the Russian Federation and his executive team. Those who advocate subordination of the Russian Central Bank to and all Russian economic policy formally under the office of the president ( see: Engdahl: Russia’s Achilles Heel – Reflections from St. Petersburg) rather than under the prime minister (the Chairman of the Government of the Russian Federation (Chapter 6, Articles 111 & 112)) face the need to amend the Russian Federal Constitution. That requires concerted political action at the local and regional levels to ensure that candidates sympathetic to such changes get elected to the Duma.
There are other views of this election. See: 2.0 RESTRUCTURING BEGAN
The Putin team and the politics of virtue
The political establishment in the United States has long claimed the US is the “exceptional” nation and is therefore entitled to operate beyond its shores without respecting other nations and their cultures and indeed without adhering to international agreements it signed. There are eras in Russian history when Russians believed the Russian nation to have a special destiny. Some may believe that now.
Political cynicism runs rampant today and many of us believe some version of the following:
All politicians are the same:
- They are all untrustworthy.
- They are all crooks stealing whatever they can.
- They are all conniving with the money power everywhere.
I am persuaded that Vladimir Putin and his closest allies in power in Russia are citizens of character with values based on a variety of religious and spiritual beliefs. Perhaps this means I am naive, but at every turn I see Putin et al promoting what I understand to be some modern version of Westphalian principles, including respect for exclusive national sovereignty, meaning the right to conduct domestic affairs without outside interference, taking responsibility for acts of the state’s agents abroad and respect for the choice of religion within a state accompanied by recognition of the right of religious minorities within a state to practice their beliefs without interference.
While members of the Russian leadership now directing foreign policy and national security concerns may be people of this or that “book,” at the end of the day they fully honor their agreements with all parties to these agreements in spite of any possible personal objection to the beliefs of the other parties. It appears this team has occasionally extended trust to parties who couldn’t be trusted and has paid the price for that.
I call what I have described above the politics of virtue. It’s inconceivable to me that this could become routine any time soon for the majority of the current members of the western political class. What’s more, given the present cynicism about politicians in general, leaders acting virtuously may render their acts beyond the imagination and therefore beyond the understanding of their opponents.