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Putin: Great Leader? Or Huge Failure?

By Shlomo Maital


U.S. Presidential candidate Donald Trump has expressed admiration for the Russian President Vladimir Putin, comparing him favorably with Barak Obama and calling him a great leader. In today’s New York Times, Paul Krugman adds up Putin’s achievements since he came to power in Russia in 1999.

   He has destroyed Russian democracy, creating a handful of billionaire oligarchs who support him while destroying others who did not. He has utterly failed to diversify Russia’s economy out of oil and gas, even though the old Soviet Union left behind superbly educated people, including many thousands of engineers and scientists who emigrated to Israel beginning in 1990, and who fueled Israel’s high-tech boom. (Many, of course, did not emigrate, but their skills were not made use of – except for Putin’s global hacking operations).

       According to New York Times columnist Paul Krugman, writing in today’s Opinion section,   Putin has shaped a massive Russian military —   which he used for grabbing part of the Ukraine and the Crimea. Crimea, once a tourist haven, has lost most of its tourist business, so it has become a drag on Russia’s economy.

       Why then is he so popular? Putin’s aggressive nationalism appeals to Russians, who seem to recall Stalin fondly and who are not at all fond of democracy, which brought them raging inflation and little else.   One can perhaps understand, partly, Putin’s popularity in Russia. But his popularity among Trump supporters?  

     Utter folly.

Is Money the New Morality?

It is – And That’s Good!

By Shlomo  Maital

Russia capital flight

Really bad things are happening in the world today – and good people seem powerless to do anything about it.  Syria’s Assad bombs civilians.  Russia’s Putin grabs Crimea.  Unspeakable crimes occur in Central African Republic.  And that’s just a start.  The United Nations?  Deadlocked.  Obama?  Words, no deeds.  European Union?  Russia’s gas and Russian oligarchs’ money parked in London dominate. 

    But guess what.  Where good people fail, money succeeds.  Here is how.  When countries like Russia do bad things, money flees.  When money flees, the currency declines, inflation rises and economic growth plummets.  This is happening to Russia, according to the World Bank.  Putin is paying the price — not because of Obama sanctions, but because of market economics.  Here are the figures:

    “… the (World)  bank said Russia’s gross domestic product (GDP) might shrink by 1.8 percent in 2014. …. The Economy Ministry estimates net capital outflow (out of Russia) at up to $70 billion in the first quarter alone, compared with $63 billion in the whole of last year.  … the World Bank envisages capital outflow at $150 billion this year and $80 billion in 2015. This year’s forecast exceeds the $120 billion in capital flight that Russia saw in 2008 during the global financial crisis. … The outflow of money will put further pressure on the rouble, which despite its recent firming is still 7 percent down against the dollar this year.   The weakening of the currency is likely to put upward pressure on inflation, which the World Bank sees at 5.5 percent in 2014, higher than the upper end of the central bank’s targeted range of 4.0-5.0 percent.”  

    So, it’s very simple.  When countries’ leaders do bad things, money flees.  Flight of capital trashes the economy.  People suffer.  They protest.  And eventually, the bad leader leaves, is removed, flees, or is forced to adopt repressive measures, which ultimately fail.  Russia cannot afford to lose $150 b.

   This is the new morality.  Money and capital keep leaders in line, not ethics, values or Obama.   It’s the new ethics of globalization.

    Is it so bad?   The message is:  Run your country properly, treat your people well, or, the money will leave and go elsewhere, where leaders are smarter and more ethical.     And every country needs to keep its capital at home, rather than flee abroad.

    The morality of the new global system is money.  Let’s watch Russia closely to see if it really works.  

Lessons of the Ukraine/Crimea:

Will Insanity Recur?

By Shlomo  Maital    

            Crimean war

Crimean War

My friend Bilahari Kausikan, Ambassador at Large in Singapore’s Foreign Ministry and until recently First Permanent Secretary, has wise words regarding the Ukraine/Crimea crisis, published in the Straits Times.  He visited Kiev in December, recalls hearing a speech by an EU politician in Independence Square – and thought, “this could end up like Hungary in 1956”, when the West encouraged Hungarian revolt, then folded its arms and did nothing to help when Russian tanks invaded.

    “Russia cannot allow Ukraine to become part of the Western system without losing an essential part of itself and abandoning Putin’s goal of a revived Russia as a great power,” Kausikan observes.   Some 17% of Ukraine’s population, or 8 million people, is ethnically Russian. This is the largest Russian diaspora in the world.  They live in the Crimea, and East and southeast Ukraine.  Russian gas pipelines run through Ukraine, and Sevastopol is Russia’s only warm water port.

     “It was inevitable that Russia would move decisively,” Kausikan notes.  (He once served as Singapore’s Ambassador to Moscow).   And as usual,  Russia’s intervention  “caught the West flatfooted”.   The U.S. is weary of wars. And “the EU has neither the stomach nor the capability to wage war on Russia”. 

    Kausikan believes that the West gave false encouragement to the Ukrainian, without the capacity to deter Russian intervention or respond effectively. 

     Once again, my own view is that President Obama, and the incompetent EU foreign Minister Katharine Ashton have proved worse than incompetent.   “The West mistook their hopes for reality,” Kausikan writes.  Because the West has no stomach for military intervention, they thought Russia felt the same.  Stupid.

       “Do not listen to the sweet words of foreigners,”  Kausikan counsels Singapore.  And, he might have added,  Israel, as well.   Small countries have no room for error.  And the great powers that ‘support’ them are increasingly unwilling to stick out their necks for their friends. 

  “It is the Ukrainian people who paid and who will continue to pay the heaviest price,” Kausikan writes.  “We (Singapore) must never lose the ability to look after ourselves, because if we cannot look after ourselves, nobody will look after us.”   True of every single small nation, sandwiched between a paper-tiger marshmallow former great nation, America, a bankrupt internally-conflicted EU, and an aggressive Russia led by a megalomaniac dictator who is, according to Merkel, “detached from reality”.   

    Watch your backs, small nations.  Nobody else will. 

    And, an historical footnote:  The Crimean War, between the French British & Ottoman empires and the Russian Empire, lasted from Oct. 1853 to Feb. 1856.  Russia lost.  But there were 300,000 to 375,000 dead, including 100,000 who died of disease.       The cause of the war?  Rights of Christians in the Holy Land.  France promoted the Catholics. Russia, the Orthodox.   I’m not kidding.  That was the cause of a bloody war.  So maybe, in the 21st C., we are a tiny bit more civilized. 

Blog entries written by Prof. Shlomo Maital

Shlomo Maital