The Russian Bear

My generation grew up thinking of Russian/Soviet behavior and motives as reflections of an ideological commitment to communism. With acceptance within Russia and most of the rest of the world that communism and economic central planning are deeply flawed and failed systems, we looked forward to better relations with a better behaved Russia that could finally take its proper place in the world commensurate with the highly respected cultural contributions of its people. Thus Russia’s behavior in recent years is a deep disappointment.

In reality, Russia’s international behavior has always tended to reflect admiration of “the West” and a strong desire to participate in and be respected by the West, despite the continuation of repressive feudal social structures within Russia. This contradiction aggravated an inferiority complex Russia seemed predisposed to anyway. These forces fed Russia’s century’s old impetus toward geographical expansion as the solution to its insecurities with regard to its “near abroad.”

Scott Thompson relates that “In 1980 just after Ronald Reagan’s election, a think tank in Philadelphia held a semi-official meeting with Moscow’s foreign policy elite, starting with Yuri Arbatov, the head of the USA Institute. Mr. Arbatov responded to our challenge—that Moscow was acquiring a vastly greater strategic military force than what America possessed—by saying that Moscow faced hostility along all its borders.  China bristled with might along that border, all the European states disliked it, and on its southern border there were hostile regimes. He contrasted this with the unarmed and peaceful boundaries the USA had with Canada on its north and Mexico on its south. One of us responded, ‘if you treated your neighbors the way we do, you wouldn’t be facing enemies on your borders.’”

With its outrageous attack on Georgia last month, Russia has reverted to earlier form. Tragically, it seems not to understand how respect in the West is earned, starting with the rule of law. One of the speakers at the Mont Pelerin Society meetings I am attending in Tokyo,[1] Andrei Illarionov, chronicled for us Russia’s multi-year preparations for this invasion. Andrei was the chief economic adviser of then Russian President Vladimir Putin from 2000 to December 2005. At lunch he told me that the U.S. invasion of Iraq provided Putin with the example of how great nations behave and he emulated it. Russia’s behavior cannot be easily explained he said. “Putin and his advisors are acting like confused teenagers wanting to be treated like adults. Who can understand it or make sense of it. It makes no sense either economically or politically.”

Andrie, and me,

When Russia sends its fleet into the Caribbean to visit Venezuela’s President Chavez, it will see itself as following the example of the United States Navy steaming into the Black Sea to the coast of Georgia. In many respects they are the same. A Russian visit to our near abroad is no more threatening to our security than our fleet’s visit to the Black Sea and the ports of Georgia is to Russia’s. Yet we are sensitive to such demonstrations, as are they. We should try to understand and respect Russia’s demand for greater influence in its own back yard, but we should insist that it behave in a civilized manner if it wishes to be apart of the civilized world. I would not support going to war to defend Georgia, but I do believe we need to strongly express our strong support of its democratically elected government and its right to its sovereignty and to raise the price to Russia or any other nation that violates broadly accepted international norms of behavior for such behavior. We also need to insure that we observe those norms ourselves.


[1] Other speakers included Vaclav Klaus, President of the Czech Republic, Edward Lazear, Chairman of the U.S. President’s Council of Economic Advisers, Myron Scholes, Nobel Prize in Economics recipient in 1997, Gary Becker, Nobel Prize in Economics recipient in 1992, Junichi Ujiie, Chairman of Nomura Holdings, and William Niskanen, Chairman of the Cato Institute.

About wcoats

Dr. Warren L. Coats specializes in advising central banks on monetary policy, and in the development of their capacity to formulate and implement monetary policy. He is retired from the International Monetary Fund, where, as Assistant Director of the Monetary and Financial Systems Department, he led missions to over twenty countries. Before then, he served as Visiting Economist to the Board of Governors of the Federal Reserve System, and to the World Bank, and was Assistant Prof of Economics at the Univ. of Virginia from 1970-75. Most recently he was Senior Monetary Policy Advisor to the Central Bank of Iraq; an IMF consultant to the central banks of Afghanistan, Kenya and Zimbabwe; and a Deloitte/USAID advisor to the Government of South Sudan. He is currently a member of the Editorial Board of the Cayman Financial Review and until the end of 2013 was a member of the IMF program team for Afghanistan. His most recent book is entitled "One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina."
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6 Responses to The Russian Bear

  1. Warren says:

    I am posting the following email recieved from my Russian friend Denis. My reply to him will follow:
     

    Dear Warren, I hope you are wise enough to use another term instead of “invasion,” it was a SALVATION for Osetian people who were burnt alive in sheds and digged in the soil , bombed by US military weapons given to Saakashvili regime to militarise highly Caucasus and initiate probably third world war later on. I hope also you managed to report on your blog or among these "respected circle" you meet about the 12 yrs old girl from South Osetia who was invited with her aunt for a live programme in Fox News and was disgustingly interrupted all the time when she started to tell American stupid people the truth about who started the war, who is guilty exactly before answering any questions and saying deep thank you to the Russian troops liberating and protecting Russians and Osetians from aggression initiated by Saakashvili with support from American admin.
     
    THE WORLD IS NOT MONOPOLAR ANYMORE AS YOU DREAMED OF, AND RUSSIA PROVED IT, WE CAME OUT HEROES FROM THIS 5 DAYS WAR AND NEITHER ANY SUNCTIONS, NOR ANY THREATS WILL EVER DICTATE US WHAT TO DO AND YOUR COUNTRY SHOULD BETTER RESPECT AND ACCEPT IT, OTHERWISE YOU WILL FINISH BADLY AND ALREADY DO WITH ECONOMY AND CHANGES IN VECTOR OF GEOPOLITICAL SUPPORT IN LATIN AMERICA (BOLIVIA, VENEZUELA, CUBA, NICARAGUA, ETC). I HOPE THAT THE ADEQUATE REACTION AND CHANGES WILL COME IN THE WORLD WHEN RUSSIA WILL START TO RE-BALANCE WORLD’S POLITICS AND SHAPE IT IN A DIFFERENT WAY: ESTABLISHING BASES IN TARTUS (SYRIS), SELLING ARMS TO IRAN, BUILDING NEW MILITARY BASES IN LATIN AND SOUTH AMERICA, SPITTING ON MONROE DOCTRINE AND BUILDING STRONG ALLIANCE IN ASIA WITH CHINA AND SHANGHAI ORGANISATION FOR COOPERATION. REFERING TO "RESPECT" TO THE WEST YOU REFER TO: WE DON;T NEED YOUR RESPECT, WE REALISED AGES AGO THAT YOUR COUNTRY LIED AND DOUBLED-FACED ALL AGREEMENTS AND RELATIONSHIPS INCLUDING NATO EXPANSION TO THE EAST, AGREEMENT ON EU CONVENTIONAL FORCES, WE ARE SELF-SUFFICIENT, STRONG NATION AND EXCEPTIONAL PEOPLE WHICH ALREADY OFFERED YOU "PARTNERSHIP" ONCE AND YOU HAVE DISCREDITATED THIS TRUST THINKING OF GLOBAL DICTATORSHIP AND DOMINATION, THAT’S WHY YOU ARE FAILING AS GOD WILL NEVER ALLOW EVIL TO BE IN POWER.
     
    YOUR CONSULTANT ON RUSSIAN MATTERS-ILLARIONOV, IS A DISSIDENT, WHO LEFT RUSSIA BECAUSE HE DID NOT SUCCEED OR BRING ANY PROSPERITY WHATSOVER TO RUSSIAN PEOPLE BEING IN MINISTERIAL SEAT, THAT’S WHY HE IS BULLSHITING IN THE WEST TO EARN SOME MORE MONEY. THESE PEOPLE CARE ONLY ABOUT THEIR OWN POCKET LIKE KHODORKOVSKY WHO COMMITED MURDER, TAX EVASION AND MONEY LAUNDERING IN RUSSIA.
    ANALYSINING YOUR "DEMOCRATICALLY ELECTED REGIME OF SAAKASHVILI" I MUST REMIND YOU TO REWIND THE HISTROY AND WATCH IN RUSSIAN MEDIA HOW GEORGIAN MILITARY FORCES WERE FIGHTING GEORGIAN CITIZENS IN TBILISI BEFORE ELECTIONS WHICH WERE FALSIFICATED AND ILLEGITIMATE. SAAKASHVILI IS A POLITICAL DEAD BODY AND ALL AMERICA IS DOING NOW IS TRYING TO GAIN MORE POINTS FOR NEO-CONSERVATIVES AND SUPPORT MCCAIN IN POLITICAL MASCARADE IN THE US IN FRONT OF STUPID IGNORANT ELECTORATE WHO CARES ONLY ABOUT THEIR BIG MAC VALUES AND MONEY IN  ITS POCKETS.
    ABOUT VIOLATION OF "RIGHTS"; IT IS YOU WHO VIOLATED INTERNATIONAL LAW WHEN YOU INVADED, OCCUPIED AND MURDERED MANY CIVILIANS IN IRAQ, AFGANISTAN, YUGOSLAVIA AND RECOGNISED KOSOVO WHICH WILL NEVER JOIN ANY INTERNATIONAL ORGANISATION WHATSOEVER! I AM PROUD AND HAPPY THAT NATIONS WHICH DESERVED AND WERE ALWAYS INDEPENDENT AND FREE FROM GEORGIA AND NEVER BEING PAERT OF ITS STATEHOOD GOT THEIR RECOGNITION FROM RUSSIA, NICARAGUA AND HOPEFULLY LATER ON OTHER COUNTIRIES, THEY HAVE SUFFERED A LOT AND I REALLY DONT UNDERSTAND YOUR WAY OF ANALYSING FACTS AND SITUATION. ARE YOU A COMPLETE ANTI-RUSSIAN PARANOIC WITH A COLD WAR BRAINS WASHED DURING YOUR LIFE? US SELF-DESTRUCTIVE POLITICAL AND MEDIA MACHINE WILL FIND ITS END SOON HOPEFULLY AND NEW ERA OF FREEDOM FOR AMERICAN PEOPLE WILL BEGIN. SIMPLY CAN’T BELIEVE THAT YOU THINK IN SUCH A WAY YOU WRITE IT..! WELL, BAD LUCK TO AMERICA AND ALL THE BEST TO HOLY RUSSIA!
     
    Denis

  2. Warren says:

    This is my reply to Denis in comment (1)
     

    ***********************
     
    Denis,
     
    I was expecting your reply and I did not have to wait long. I know that you are an intensely patriotic Russian, just as I am an intensely patriotic American, but I am surprised that your "analysis" of the Russian-Georgian war is so unbalanced. Let me leave aside that YOU ARE EMOTIONALLY SHOUTING AT ME for most of your note, and ask you to clarify some aspects of your arguments.
     
    Who would benefit from Russia “BUILDING NEW MILITARY BASES IN LATIN AND SOUTH AMERICA”? What would be their purpose? You will argue that the U.S. is doing the same in Russia’s near abroad (Russia’s back yard, as we would say). I can see good arguments for opposing such American bases, as I do, but not for another pointless cold war in which Russia tries to match American mistakes with its own. Such huge and pointless expenditures will lower the standard of living for Russians and Americans alike, while enriching defense related industries and strengthening the dominance and power of already overly powerful governments. Russia’s inefficient economy collapsed under the burden of such military expenditures the last time and would again. America’s economy is much stronger (even with its current problems—Russia’s stock market has fallen much further than America’s this year) but is being and would be further weakened by further military expansion. It is better that we compete to produce better products and services and in the arts and the Olympics. The world and the common people will benefit from such competition. It is win, win, while a cold war, much less a pointless hot one, is loss, loss.
     
    You discount Andrei Illarionov’s criticism of what you and Putin call the “5 days war” and what Andrei calls the “5 years war,” on the grounds that he moved to the west to make money. I know Andrei as a very honorable man who loves his Russia deeply. He is disturbed by what Putin’s men are doing to it. If you hate the West so much, why have you left Russia to live and work in London?
     
    What Chavez is doing in and to Venezuela is tragic and strange to us. He is following the old discredited Soviet model for helping the common man. It did not work in the USSR and carried with it great oppression of the people and the same is happening in Venezuela. Is this your new model of what you want to see in the world?
     
    I am sorry that you wish bad luck to America, though I don’t think you really mean it. I certainly wish good luck to Russia and to all good people everywhere in the world for their sake as well as mine.
     
    Sincerely,
     
    Warren

  3. Warren says:

     This is Denis’ email reply to my comments (2) to his comments (1) on my Russian Bear note:
     

    September 14, 2008, PM
    Warren,
     
    Sorry for my tone, but that is the reflection of modern dialogue between Americans and Russians and there is no other mechanism to communicate left as you simply don’t understand or refuse to understand basics thinking that other part will accept your "point of view", which I doubt is even as a point of view or opinion as it goes beyond any human values and reality of facts. There are two things in my kind: or you really simply do not understand what has happened in south Ossetia and who is guilty and aggressor repeating murdered civilians and used American hired killers to combat or you simply ignore the facts and that is typical US politics, just to say an opposite and develop further reaction. It is disgusting! 1. New cold war: Russia will benefit as we are not looking for WTO or other "partnership" to provide NATO, OSCE, etc with free information about Al Qaeda, partisans in Afghanistan, or accepting greedy rules of WTO for agriculture or sops from IMF or World Bank — that time has gone away forever!
    We are not building any anti-American shield in Latin America now like you in Poland or Czech, dear partner; we are trying to find closer cooperation for protection of these states against rogue state. "Russian insufficient economy…blal bla bla…." partially and mostly due to Gorbachev and raisa sold to the West the best of the USSR for peanuts and luxury furs! Americans are just trying to curve their line, but loosing everywhere: Iraq, Afghanistan, Iran, Latin and South America, Central Asia and hopefully Kyrgyzstan now will kick them out from bases due to double use and inefficiency, Okinawa and raped by American soldier girl and people’s anger on the US, etc.
    Illaryonov: what are the bases for his criticisms and who will listen to him? Only Americans, probably in universities where he will be paid. Regarding me, West and London: I have my objectives and mission and nothing will stop me to realize my goals and dreams and moreover it is not the US for which I refused invitation from the MIT University and one year paid scholarship due to my negligence of American educational standards and values.
    Chavez: FOR GOD’S SAKE! HE IS SELLING TO NEW-YORKERS OIL/PETROL BELOW MARKET PRICE, SO THEY WON’T DIE ON THE STREETS OR WILL BE KNOCKED DOWN ON THE STREES BY RICH DRIVERS WHO DONT CARE AND HAVE NO SOCIAL RESPONSIBILITY, UNDERSTANDING AND BASIC ORTHODOX VALUES WHATSOEVER! Unhappy about US ambassador kicked out from Bolivia and Venezuela due to their NGO’s support and subversive activities? In Argentina also anti-Americanism is growing massively due to Monsanto/Cargill and other American farmers and GM products troubles. About difference between USSR, Venezuela and American values: the world is not all about money and form of capitalism needs adjustment, it is not a sufficient form for the 21st century with growing population, scarce of natural resources and gap between rich and poor and therefore social imbalance and chaos.
    Your last phrase about luck to Russia; just empty words and crocodile tears when I hear which terms you use ("invasion") and trying to discuss with minority and bend your line in minds of other people, which does not reflect and show the TRUTH and FACTS! Good day and re-read Caribbean crisis memoires for a change and think about the meaning of PEACE!
     
    Denis
     

  4. Warren says:

    September 14, 2008 PM
     

    My reply to Denis’ comments (3)
     
    Dear Denis,
     
    Russian and Western press have reported events in Georgia quit differently. You believe the state dominated Russian press and I believe the very diverse and competitive western press. The Economist, a British news magazine, provides a good chronology of events in its August 14, edition: "Russia and Georgia: A Scripted War", which began with “Both sides are to blame for the Russian-Georgian war, but it ran according to a Russian plan.” Georgian President Saakashvili was foolish to launch an attack on rebels in South Ossetia. According to the same article in The Economist “it is impossible to say who actually started it. But, given the scale and promptness of Russia’s response, the script must have been written in Moscow…. Russia was prepared for the war not only militarily, but also ideologically. Its campaign was crude but effective. While its forces were dropping bombs on Georgia, the Kremlin bombarded its own population with an astonishing, even by Soviet standards, propaganda campaign.”
     
    “The decision, Mr Medvedev argued, was forced on him by Georgia’s “genocide” against South Ossetia. But the argument is spurious. It is true that, in the early 1990s, when Georgia was barely a state, its nationalistic leaders committed atrocities in South Ossetia and Abkhazia. But it is also true that more than 200,000 Georgians were driven out of Abkhazia, and that Russia backed Abkhazia militarily.”[1]
     
    Subsequent to Russia’s invasion of Georgia, it recognized the independence of Abkhazia and South Ossetia. Almost no other country followed Russia’s lead. This rash act upset even China and Belarus, who have not recognized Abkhazia and South Ossetia’s independence.
     
    You turned down and invitation from MIT with a full one year scholarship? You never mentioned this when you asked for my help a few years ago to get a visa and job in the U.S. MIT is one of the world’s greatest Universities. It might not be right for you, but my impression is that your strong emotions over Russian weakness are interfering with your judgement.
     
    My statement that I wish Russia well is totally sincerely. My impression of what you see as resurgent Russian greatness is what I would call a bully state. As you will recall, I have criticized my own country for behaving too often like a bully in resent years. I am an economist. I have spent my life trying to explain to people that economic well being does not need to be, and should not be, as zero sum game. Improved technology, investment, and more efficient use of resources will make every one that achieves them better off without making anyone else worse off. We can all become materially better off. As you have noted, material wealth is not everything. The good society is populated by people who are spiritually wealthy as well and who thus respect each other and each others space (rights) and live to do good. I believe very deeply that such spiritual wealth exists most fully in free societies, whose citizens take responsibility for their own and their families and their community’s lives. Collectivist, and repressive societies (which generally go together), such as the Soviet Union, stifle the development of spiritual wealth. The wealthier Russia and every other country become materially and spiritually the more secure America and the world will be. The Russia you seem to wish for would be an unwelcomed adversary instead of the friend it could be.
     
    Sincerely,
    Warren

    [1] "Russia and Georgia: The Cost for Russia" The Economist Aug 28, 2008.

  5. Warren says:

    An email comment from Jim Kolbe
     
    Warren:Interesting exchanges!  Your Russian friend is really over the top, but I fear it is a fair reflection of how many Russians are thinking these days.Regards,Jim

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