A Review of Edward Lucas' The New Cold War
The Russians are coming West with money. Should we be scared?
There are some books that surprise you with their depth or give you a new insight on past, present or future world events. The new book by The Economist's Eastern Europe reporter Edward Lucas, The New Cold War: How the Kremlin Menaces Both Russia and the West does not fall this category. Rather, the book is largely a rehash of an argument anyone who has been paying attention to the Western media coverage of Russia over the past eight years will find familiar: after a brief flirtation with democracy under Yeltsin, the Russian people, led by their new Czar Vladimir Putin, are turning their backs on freedom in return for virulent nationalism and oil-fueled economic growth.
Russian President Dimitry Medvedev and Prime Minister Vladimir Putin
To his credit, Lucas does not insist that the 1990s were a decade of unparalleled freedom for Russians. Lucas acknowledges that for millions of ordinary Russians, the Yeltsin years are viewed as an era of humiliation and personal hardship, when the promises of demokratsiya were turned to dermokratsiya (crap-ocracy). However, Lucas also seems to argue that Yeltsin left his appointed successor with a more or less open system, which Putin proceeded to turn into a dictatorship led by his former KGB colleagues.
The reality is that in 1999, Putin inherited a country where "democracy" was largely a fig leaf for rule by a handful of oligarchs, with an economy and military in shambles (witness the accidental sinking of the Russian attack submarine Kursk), and a brutal insurgency in Chechnya that boasted of plans to secede the entire Caucuses region from Russia. As Time magazine's editors acknowledged in naming Putin 2007's Person of the Year, this student of judo and Western management theory proceeded to deal with his country's multiple crises one by one.
After surging Russian troops into Chechnya, Putin turned the heir of a Chechen warlord, Ramzan Kadyrov, against the insurgency, and Mr. Kadyrov has succeeded in ruthlessly suppressing the insurgents. In the wake of 9/11, Putin firmly allied Russia with the U.S. in fighting terrorism in Afghanistan and Central Asia and agreed to pump more oil to stabilize world energy markets. In paving the way for the economic gains Russia has made, (which Lucas largely dismisses as an accident resulting from higher world commodity prices) Putin finally succeeded in many areas where Yeltsin failed. After marginalizing his Communist opponents in the Duma in the early 2000s, Putin was able to pass agricultural reforms privatizing former collective farms, and to simplify the Russian tax code with a 15% flat rate on personal income. Russia has since averaged 7% annual growth and quadrupled inflation-adjusted real wages in the last eight years, while many other resource-blessed (or cursed) economies, such as Venezuela and Iran, have stagnated.
Most of these impressive accomplishments are overlooked by Lucas in favor of focusing on Putin's controversial decision to abolish the election of regional governors in the wake of the horrific terrorist massacre at Beslan, as well as the Yukos affair. Suffice to say, Lucas does not try to defend jailed Yukos CEO Mikhail Khodorkovsky so much as to argue that he was unfairly singled out for prosecution among all the other oligarchs who built their fortunes during the Nineties using looted state property. Lucas also implies that the Kremlin is responsible for the shooting deaths of Russia's Deputy Central Bank Chairman Andrei Kozlov, Novaya Gazeta journalist Anna Politkovskaya, and the bizarre radiation poisoning of ex-KGB agent Alexander Litvinenko in 2006 - regardless of how many suspects both inside and outside of Russia could have wanted them dead.
Lucas makes many legitimate points about the challenges posed to democracy and the rule of law in Russia, but casts too much of the blame for Russia's problems at the top and not enough on a thousand year old tradition of graft at all levels, a culture of impunity that can only be be changed from the bottom up over many years. I expected to find more in Lucas' book about Russia's considerable population decline and health problems, as well as the worst human rights crisis in Russia, which is the ongoing abuse of conscripts in the Russian army. I also thought there would be more about the well-publicized excesses of Moscow's "Golden Youth", the children of Russian oligarchs, oblivious to life outside of their gilded bubble. I would have liked to have read more questions about why philanthropic giving still seems pitifully small compared to the new wealth that is being created in Russia today.
Unfortunately, like several other Western commentators, Lucas views one part of the solution to these social ills - the revival of a nationalist and philanthropic tradition inspired by the Russian Orthodox Church - with alarm, rather than appreciating its efforts to encourage Russians to have children again and give more to charitable causes. Russian Orthodoxy continues to receive a more hostile reception in the Western media than, say, the revival of Islam in previously secularist Turkey, probably because, in contrast with Islamic spokesmen, the pastors of Protestant denominations, and the Vatican, much of the Orthodox Christian world shuns publicity.
Where Lucas leaves himself most open to the charge of sensationalism is his hyping of the "threat" Russia allegedly poses to the West. In particular, Lucas compares Moscow's dispute with the Republic of Georgia over the breakaway region of Abkhazia, to Nazi exploitation of the Sudetenland as a pretext for aggression in the 1930s. In reality, for all Lucas talk of an increasingly militarist Russia, the Russian army remains more of a threat to the health of its conscripts than to any of Russia's neighbors.
There is another gaping hole in Lucas' argument about the alleged "Russian threat" to the West - globalization. While Lucas sees a flood of "Kremlin petrodollars" corrupting Western businesses and institutions, Russian investment abroad means that upwardly mobile Russians now have a vested stake in their country maintaining friendly, stable relations with the rest of the world. While Britons and other Europeans may deplore the conspicuous consumption of Russians, people do not generally cause problems in places where they are buying tons of high-end real estate.
To name just few examples of the growing investment links between Russia and the West, last year the Bush Administration sought additional investment in America from the Kremlin's $130 billion Stabilization Fund. Earlier this year, Bloomberg reported that some of Russia's billions in dollar reserves would be invested in U.S. debt like Fannie Mae, and Freddie Mac bonds - all of which have been affected by the American subprime mortgage and liquidity crisis (so much for the prognosticated "decoupling" of emerging and developed markets).
Even if Lucas could imagine a scenario where Moscow schemes with Beijing to punish America by dumping hundreds of billions in dollar reserves overnight, the result would not just be economic shocks to the U.S. and Europe, but most likely hyperinflation and perhaps even civil unrest in both Russia and China. If the Kremlin were to try to use its "energy weapon" in cooperation with OPEC against global oil and gas consumers, this could also lead to tit for tat nationalization of Russian assets overseas and skyrocketing food prices in Russia (thanks to the failed legacy of Soviet collective farming, Russians still import more than half of their foodstuffs and the majority of their meat and dairy products from abroad). In other words, the "oil weapon" - as well as the "nuclear option" of a major bear run by America's creditors against the dollar - would likely point in both directions.
Just like everyone else, Russians will have no choice but to alleviate their higher transportation costs over the next several years with some combination of pumping more oil and gas, enhanced conservation, and new technologies. The Russian government will also have no choice but to invest a significant amount of its natural resource windfall outside of Russia, if the Kremlin want to prevent an unsustainable appreciation of the ruble (ten years ago, Moscow's problem was exactly the opposite - the ruble was worthless). This monetary pressure also explains why Russian firms like Evraz and Severstal are acquiring steel mills in Oregon and West Virginia with Moscow's blessing, and why the CEO of Gazprom recently announced that the state-owned giant was bidding to build a new natural gas pipeline from Alaska to the lower 48 U.S. states. Without investing more abroad, there will be too much money chasing too little productivity (the classic definition of inflation) in Russia and other oil exporting countries, inflating real estate prices and speculative bubbles in commodities. Prudent investments in developed economies will continue to be a safety valve for Russia's portion in this boiling cauldron of global liquidity.
While few would argue that Lucas has failed to identify some of Russia's serious problems, polemics like The New Cold War contribute very little towards understanding the growing interdependence between Russia and the global economy. The prize in this new great game is not spheres of influence but wealth creation, and the players are not militaries or proxy guerilla forces but currencies and companies. This is the world we are living in, and while it is dramatically safer (thank God!) than the world of the Cold War, it is not so simple, and neither is Russia. Modern Russia is neither a liberal democracy nor a dictatorship, but remains an ambivalent country that is rapidly opening up to the modern world. The Kremlin wants to continue this process on its own terms, although the price of investing abroad and receiving investment at home will be revealing more of Russia's problems to the world.
Would more trade and investment promote a better Russia - with a larger middle class, less dependency on exporting raw materials, and political pluralism? The answer is, free market reforms have already created tremendous improvement in standards of living and more demand for honest governance in Russia, which President Medvedev has acknowledged by promising to overcome "legal nihilism". Nonetheless, uprooting Russia's most debilitating and deeply entrenched malignancies of corruption and poverty will require many years of sustained engagement with the Western democracies - as well as with other emerging powers. For those of us in the West, investing and directly lending a helping hand to the Russian people will prove far more productive than paranoia and tired appeals to the Cold War past.
Charles Ganske is the former editor-in-chief of Russia Blog (www.russiablog.org) and a cofounder of the Seattle-based Real Russia Project. The views expressed here are his own.
Comments
Regarding the Russian Orthodox Church, there're these thoughts, which are a refreshing break from some of the other views:
http://www.cdi.org/russia/johnson/2008-113-34.cfm
Concerning the above book review's reference to what Lucas said about Abkhazia: Russia didn't create the problems evident in the former Georgian SSR.
A CSPAN televised Radio Free Europe/Radio Liberty gathering featured Lucas promoting his book. At that event, he said that Russia fears secessionist movements, because of their (in his view) potential impact within Russia.
Unlike official American government policy, Russia doesn't formally recognize any of the disputed former Communist bloc territories as independent states. Contradicting United Nations Security Council Resolution 1244, the US government has been regretfully supportive of an independent Kosovo.
As for Lucas' point about Russia fearing secessionist movements, he should be aware that Pridnestrovie (Trans-Dniester) and South Ossetia had referendums expressing the desire to reunify with Russia. There's little doubt that these referendum results are indicative of how the involved populations feel. If given the opportunity, it's quite likely that some other former Soviet territories outside of Russia would express the same sentiment, if given the opportunity. Chechen separatism's appeal of the last decade declined in large part to the enhanced mayhem in that republic; when it had considerable autonomy on two different occasions.
Posted by: Michael Averko | June 23, 2008 10:49 PM
Communism was installed on Russia like the Shahs regime was installed on Iran so as far as this Rothschild owned journalist rag is concerned Russia historically has more to fear from the west.
This is typical European view of Russia that it is evil. These oligarghs who are Israeli citizens and have no loyalty to Russia stole the wealth of the nation and in the case of Berezovsky and Guisinky conspired with Chechen terrorists to annex its southern region so western governments can have access to Russia's Caspain oil basin. Typical anti Russian bias the way western media reported on Beslan from a typical pro-chechen perspective essentially becoming its PR outlet. There was no mention that the terrorists (with the media refuse to call them at the time instead calling them rebels) deprived the children of food and water for 3 days, some changed into civilian uniforms then run around the school shooting and killing as many children as they could. They could only get away with terrorism due to the many war myths like "250,000 dead" the mass rapes and the best one that there is no international terror networks involved. These are the same lies used against the Serbs were western media, intelligence agencies and middle eastern countries funded and trained Muslim terrorists to orchestrate a campaign of terror against the Serbs. The exact same is being done against Russia. Chechen militants are on the CIA payroll, they run there websites and lobby on there behalf. Mrs Politkovskaya is a Chechen propagandist who is indirectly funded by the CIA through NED. No one has questioned or gave a critical review of her work. Some of her stories a plainly false like testing plutonium on Chechen children. Did she interview the people in Degastan refugee camps made homeless by the invasion and massacres of the 1999 invasions. Did she speak to ethnic Russias ethnically cleansed by the first chechen presidents militia the real cause for the first Chechen war. Even this blog wont do a serious critique of Putins main protagonists.
If you are going to review a book why dont you review Paul Murphys "Wolves of Islam".
Posted by: james | June 24, 2008 10:16 AM
There is not much knowledge on how the West can contain a resurgent Russia. With the US military bogged down in Iraq and Afghanistan and the EU being institutionally weaker then Russia, and the shear reluctance of Western powers to put economic pressure on Russia, fearing of economic drawbacks for themselves, all shoots in Moscow's favor. Russia's economic growth has often stunned many Western analysts, who many still illegitimately consider Russia a state on the verge of collapse. In the 1990s that would have been the widely accepted theory of Russia, yet the times have changed. Russia is no longer a rusting state in chaos, yet a thriving and rebuilding world power seeking to reclaim the influence it has been loosing. And, unlike many other emerging powers, Russia has one thing they don't. Energy. Oil and gas are the back bone to any developing nations, and ones already developed. Oil prices are not going down anytime soon, and neither is gas. And for a rich and energy hungry West, Russia will more then gladly feed their addictions, at a cost of course. And the West has no firm internal leverage over Russia, so Russia is free of its Western shackles to assert itself as a Great World Power. And regarding the military, despite the author's writings, Russia's military is still a very threatening force for its small and comparatively defenseless neighbors. Tiny Georgia cannot compare in Manpower, Budget, or Equipment level to Russia. Russia's army of one-million strong and Georgia's of only thirty-thousand strong is a very frightening reality for many in Georgia, a country of less then five-million people, to Russia with over one-hundred and forty-two million peoples. And even to countries such as Ukraine, Estonia, Lithuania, and Latvia, who also cannot compare with Russia in military power, are frightened by Russia's resurgence in world affairs. These nations would have to turn to the US or EU for support in the event of the large and brutal Russian military attacking and burning their nations to the ground. Yet, unless the US manages to undo the situations in Iraq and Afghanistan and evades war with Iran, they will not be in any military position to aid Georgia or the EU, and the EU is so institutionally weak, it may also not be in a position to act on Georgia's behalf. So in case, Russia, despite its capabilities being out of shape with the Soviet period, is still the largest, most commanding and threatening force to its smaller and weaker neighbors with unreliable allies in Washington and Brussels. So in case, the West will soon be facing the giant Russian Bear on its horizons soon
Posted by: Julian | June 27, 2008 7:07 PM
@Julian
Nothing you said can be backed up buy any real facts. Your viewpoint of Russia is based on a false negative stereotype. It is that type of dehumanising mindset of Russia being an external that overthrough the Czar and help install ani-Russian communism in the first place. I suggest you research how Russian actual became communism in the first place and you will relise it was a foreign invasion who long before Stalin was in charge tortured and killed millions of ethnic Russians, destroying its culture blowing up churches, etc. As stated in my previous comment Russia has more to fear from the West than vis-versa.
Personally I would like a rival power to keep the US in check. There promise of tyrannical future wars for "demoocracy" are bringing the world to economic collapse.
Posted by: james | June 28, 2008 2:12 PM
Scrolling down a bit, some comments about Edward Lucas' views can be found at this link:
http://talk.guardian.co.uk/WebX?14@191.nr8McyOLanB@.77480649/10054
Posted by: Michael Averko | June 30, 2008 9:04 PM
@james
I'm not quite sure I understand you're criticism. I actually agree that communism was a government forces onto the Russians, it was shoved down their throats at a vulnerable point in their history. Yet examine this; Why did the Russian Revolution begin in the first place? Because life under the Czar was terrible, terrible!terrible!Terrible! Nicolas II was not equipped or trained to be a Czar, he denied his people democratic rights, spent his nation bankrupt in World War I and had nearly two-million Russians killed in the process. During the war, all of Russia's major cities were starving and everyone was forced into the army to fight Germany and Austria. World War I was Russia's greatest military blunder in history. Though it managed to rebuild its reputation in World War II, the mismanagement of World War It is a black mark on Russia's history. Because of the Czar's authoritarianism and his refusal to grant his people A Duma, economic rights, and the deterioration of Russia's standard of living , and soon the mass starvation and murder of World War I caused the people to rise up and overthrow the Czar. Fact Check. If the Czar was so great, why would the people have him overthrown? In fact, the Revolution began in February of 1917, the communists did not take power until October. The fact is a provisional government was created under Kerensky before Lenin and the Bolsheviks took over. Read John Keegan's "The First World War" and Orlando Figes' "A People's Tragedy; A History of the Russian Revolution". A have read both of these books, and they quite enlightening . And sir, I might say, you are the one that bases your info on no facts. Though I agree communism was forced, rather then embraced, by the Russian people. But the West was not the one to force it. Please, Russia was a strategic ally to the Allies during World War I, why would the West want it replaced with one that would not support them? Communism was installed because Lenin was an opportunist who had an opportunity of a lifetime. He seized his opportunity and succeeded when Russia was at its most vulnerable. Kerensky failed to maintain control after a Communist coup and after the troops in the army revolted and refused to follow a government, when Lenin was speaking their language on change, reform, and establishing a proletariat control. And I'm sorry to say, you cannot compare the Russian Revolution to the installment of the Shah. The Shah was installed by force, the revolution happened by a popular revolt of the Russian people, big difference. And my facts on Russia's state today are also based on several reports from Russian and Western sources, which I read near daily. Russia, unlike in 1917, is institutionally strong and not susceptible to internal revolt. Russia is a Great World Power, I repeat and will repeat, and will assert itself as its status to all of its competitors. And they do this because, your point, Russia does fear the West more then vice-versa, that is why they are more assertive, and will continue to be more assertive to send a strong signal to its rivals that it will not be taken advantage of and will defend its security interests. And yes,Russia is a large and threatening force to its "smaller" neighbors. Georgia, Ukraine, Estonia, Latvia, Lithuania, ect. To them, Russia is very threatening. And with the US bogged down in Iraq and Afghanistan, they will be in no military position to intervene on their behalf, and the EU is so institutionally divided they will also be in no position to assist its Post Soviet nations. In point, many of your statements are based on no facts, I should know, I study Russian History as a subject, and I have dozens of documents, books, and videos on the subject of Russia's Revolutionary history and so I see many flaws in what you have stated. Though I agree with some of your points, your facts need checking.
Posted by: Julian | July 5, 2008 9:06 PM
@Julian
This is a good article I found that communism was installed on Russia by the West http://www.eaec.org/newsletters/1999/NL1999jun.htm
Russias post communist economy was controled through a rothschild central bank and its five year plan projects were financied by high interest loans from the Federal Reserve in the US. http://video.google.com/videoplay?docid=-7336845760512239683&q=&hl=en
You may study history in college or university but the people who financied and organised the revolution from abroad use there proxy institutes like the Rockefeller, Ford Foundation, etc to set the educational criteria of what is and isn't taught in schools, univeristies, etc. They even have there people like Woodrow Wilson to gain political status and help set there agenda.
The best and most recent example of this is Zbigniew Brzezinski http://en.wikipedia.org/wiki/Zbigniew_Brzezinski
http://www.wanttoknow.info/brzezinskigrandchessboard
In his 1998 book Grand Chessboard it states quite clear what his intentions are for Russia.
He is the one using using chechen terrorism as a proxy to divide Russia into 3. There websites, PR, training are indirectly financied by Western intelligence. This began with the first chechen president trip to Harvard in 92 with the aid of Turkey who then travelled to Bosnia to begin training Chechens in terror camps as well as other international terrorists.
The Wall Street Journal reported in 2001 that:
"for the past 10 years, the most senior leaders of al Qaeda have visited the Balkans,
including bin Laden himself on three occasions between 1994 and 1996. The Egyptian
surgeon turned terrorist leader Ayman Al-Zawahiri has operated terrorist training
camps, weapons of mass destruction factories and money-laundering and drug-trading
networks throughout Albania, Kosovo, Macedonia, Bulgaria, Turkey and Bosnia.
This has gone on for a decade. Many recruits to the Balkan wars came originally from Chechnya, a jihad in which Al Qaeda has also played a part."
The main financier of Chechen terrorism is Abdullah Bin Laden former Harvard graduate and a senior share holder in major US companies Carlyle Group, etc who financies chechen terror camps in Bosnia, Afghanistan and Pakistan which includes chemical and biological weapons training and production.
Posted by: james | July 12, 2008 6:52 PM