High Finance Answering Putin’s Imperial Ambitions: A New Age?

A week and a half after government representatives from Russia, the E.U., the U.S., and Ukraine agreed to deescalate the political instability in eastern Ukraine, the U.S. Government imposed additional “targeted sanctions on a number of Russian individuals and companies” after concluding that the Russian government had not ceased from fomenting violence in eastern Ukraine.[1] With the official numbers on capital flight from Russia at $50 billion a month for the first three months of 2014, this announcement on April 28^th is oriented to exploiting a Russian vulnerability. Moreover, the statement signals a step-wise, “surgical” approach premised on the value of money—a symbol of value. In relative terms, a broad military response looks almost primitive, if not (hopefully) antiquated.

In posing the question of how to stop a government of one country from invading another country ‘in this day and age,” Bill Browder of Hermitage Capital sought to convince the CNBC audience that the morning’s White House announcement could be seen as fit for a new age, even if we are not all there yet. With the Russian president and about a thousand other Russians holding the vast majority of the money in Russia, Browder argued that targeting the financial cost (“pain”) to particular Russians and Russian companies would be the most effective (and efficient) means of constraining Vladimir Putin’s attempts to reconstruct the Russian Empire.

The Russian Empire exactly a century before Putin's invasion of Crimea. 

(Image Source: Wikipedia)

With just such a strategy in mind, the White House announced that the U.S. Treasury Department would impose sanctions (including asset freezes and U.S. travel bans) on seven Russian government officials. Seventeen Russian companies “linked to Putin’s inner circle” would also be subject to economic sanctions; thirteen of those companies would also bear the brunt of a license requirement denying the export, re-export or other foreign transfer of U.S.-based items to those companies.[2]

How would old man Kant deem the UN as a world federation oriented to perpetual peace?

Plato and Kant would doubtless have been pleased to find the exactitude of reason replacing the shot-gun approach of a large-scale military response. A polis, whether a city or the international domain, is just, Plato reasons, only if reason is governing desires rather than vice versa.  Given the pathological nature of human nature itself, Kant reasoned, perpetual peace is possible but not probable. Although Kant advocated a world federation as a means to keep the human pathology from effecting ruinous consequences, he, as well as Plato, would likely approve of strategic reasoning oriented to balance sheets over the passions having the upper hand in the heat of battle. Moreover, the shift from military to financial geo-political strategy would likely fit within Hegel’s perception of progress through human history as the (collective) human spirit becomes increasingly free. 

Even if my inclusion of notable philosophers is too lofty, Browder’s point that countries just don't invade other countries in the twenty-first century may (hopefully) portend a new age following the astonishingly bloody twentieth century. The question facing Putin as he sought to drag the eastern half of Ukraine back “into the fold” of a Russian empire in the wake of the American invasion of Iraq is perhaps whether he could accomplish his imperial goal before the “new rules” go into effect, effectively closing the door on the old way of doing things. Considering the sheer staying power of (pathological) human nature as well as the millennia in which military might established and defended the interests of states and their respective rulers, I have difficulty seeing how geo-politics in international relations could ever reduce to high-finance. Even though this might be possible, I submit it is not probable.

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[1] White House Statement on Ukraine, April 28, 2014.  Also available at: “U.S. Announces New Sanctions on Russia Over Ukraine Crisis,” The Wall Street Journal, April 28, 2014.

[2] White House Statement on Ukraine, April 28, 2014.

Russia’s Putin on National Sovereignty: Political Realism Undone?

On February 28, 2014, Ukraine’s UN Ambassador Yurly Sergeyev informed the Security Council that Russia had invaded the Crimean Peninsula, a semi-autonomous region of the sovereign state. Heretofore, in exchange for Ukraine giving up its nuclear weapons, Russia had agreed in a treaty to respect the territorial borders of the Soviet Union’s former republic. After briefly discussing whether Putin’s land-grab should have come as a surprise to the world, I take a critical look at the Russian president’s rationale for invasion. I argue that political realism (i.e., strategic interests of particular states being the signature feature of international relations) undergirds Putin’s geo-political view. This foundation is problematic as evinced by Putin’s inconsistencies on national sovereignty.

Coming on the heels of the Olympic games meant to showcase Russia to the world, Putin’s show of force must have come as a complete surprise to the world.[1] After all, on the day before the obviously-planned invasion, Vitally Churkin, Russia’s ambassador to the United Nations had dismissed with a burst of haughty laughter a journalist’s question on whether Russia was suddenly conducting its “military exercises” near Crimea as a cloaked precursor to invasion. Indeed, the diplomat even conveyed a sense of having been insulted by the very question! We, the rest of the world, were being played like a sleepy fiddle.

A day or two before the invasion, unmarked Russians brought in by bus (members of Putin’s favorite biker group being among them) took over the provincial legislature. Once the Russian thugs were in control there, the pro-Russian Crimean leader, Sergey Aksyonov, somehow found himself installed as the region’s ruler. He “returned the favor” by asking Putin for help in maintaining peace.[2] The two-step dance by the emperor and his aspiring governor-to-be resulted in a sham referendum quickly followed by a hasty annexation of Crimea as a region of Russia. The sheer speed of these events belied the veracity of the Russian narrative, a mere gloss for the de facto power of possession.

Speaking with U.S. President Barak Obama on the first day of the invasion, Putin stressed “the presence of real dangers to the lives and health of Russians who are currently present in the Ukrainian territory.” Putin stressed that Russia reserves the right to defend its interests and the Russian-speaking people who live in Ukraine.[3] Indeed, the Russian president claimed that Russia’s parliament had explicitly given him the right to intervene in Ukraine militarily. Meanwhile, Ukraine’s acting President Oleksadr Turchynov insisted that any reports of Russians and Russian-speaking Ukrainian citizens in the Crimean region being at all threatened were pure fiction, and thus merely a Russian front or subterfuge for raw military aggression.

Surely international law does not confer Russia, or any other sovereign country for that matter, with the right to invade (not to mention annex) other sovereign states simply because its ex-patriots may find their ethnicity is not fully protected; strategic geo-political interests of a state runs up against the doctrine of national sovereignty. Of course, this doctrine can give way, as a natural rather than state-sourced (and thus delimited!) right arguably exists to intervene across national boundaries if the systematic harm to inhabitants is sufficiently grave (e.g., the Nazi holocaust). As a likely subterfuge for taking the entire eastern half of Ukraine after having conquered Crimea, Putin attempted just this rationale. “If the Kiev government is using the army against its own people this is clearly a grave crime,” he said.[4] It would indeed be, were Ukraine’s government turning against ethnic Russians as Assad’s Syrian government had turned on protesters. Yet ironically Putin had vetoed efforts by the UN Security Council to sanction efforts to intervene in Syria, which unlike Ukraine could enjoy the absolutist variant of national sovereignty. Putin’s inconsistency on national sovereignty undercuts not only his credibility, but also that of his political theory of choice, political realism.

Being based on the primacy of a state’s power-interests, political realism implies a semi-permeable rather than absolutist rendering of national sovereignty. In his seventeenth-century masterpiece, Leviathan, Thomas Hobbes argues that a sovereign ruler should be given the power to do whatever he wants if peace is the aim. A century earlier, Jean Bodin also held an absolutist view of sovereignty, though unlike Hobbes, the sovereign is bounded by divine law while still ruling rather than only in divine judgment in the afterlife. So even within the absolutist camp, discernable differences exist (albeit premised on the belief in divine punishment—which held considerable sway in the sixteenth and seventeenth centuries).

Whereas the state that subscribes to political realism (i.e., the primacy of the country’s own interests) regards its national sovereignty as absolute (i.e., being invaded is not in the state’s geo-political interests), the story is quite otherwise with respect to the sovereignty of other countries (i.e., being invaded may be in the realist state’s interests). This inconsistency with respect to national sovereignty points to a fault-line running through political realism itself. 

At least in Russia's case, the absolutist interpretation is only to be selectively defended (i.e., when violating it is contrary Russia’s geo-political national interests), and with it the right to intervene in another country’s internal affairs. The oxymoron of a state-designated right being somehow valid beyond that state’s borders is itself indicative of the sheer incredulity of Putin’s stance. Perhaps the truly perplexing question bears on why the ruler of a modern empire would suppose that such logical problems can safely be dismissed. Perhaps the answer is that the world is all too willing to comply, being still too comfortable with antiquated ideas and ways.

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[i] See “The 2014 Winter Olympics in Russia: ‘Where There’s Smoke, There’s Fire.”

[ii] Chelsea Carter, Diana Magnay, and Ingrid Formanek, “Obama, Putin Discuss Growing Ukraine Crisis,” CNN, March 1, 2014.

[iii] Ibid.

[iv] Jacob Resneck and Olga Rudenko, “Putin Issues New Threat,” USA Today, April 25, 2014.

Russia Invades Ukraine as World Squashes Anti-Semitism

At a joint EU-US news-conference on 26 March 2014, Presidents Barroso, Van Rompuy, and Obama discussed the problematic Russian invasion of the Crimea province of Ukraine.  The “chairman” of the European Council and the “chief executive” of the European Commission both responded to concerns that the European Union had not stood up to its business interests in order to enact economic sanctions capable of putting Putin back in his pen. Even though the two EU presidents sought to "puff up" the force latent in the sanctions already in place, Barroso insightfully made the more significant point that aggressively sending tanks across a border was no longer tolerable. Perhaps from “lessons learned” from Hitler’s exploits in the twentieth century, global challenges such as global warming (and, relatedly, the species’ over-population), and an internet-enabled closer world in the twenty-first century, a paradigm-shift in international relations may harken some sorely needed progress in international relations (i.e., political development)  in the new millennium. The key would be a stark refusal to tolerate a practice that had been tacitly accommodated, even in opposition, just decades earlier. 

Did President Obama miss a chance to put Putin's exploits into historical perspective? President Barroso may have come out of the news conference as the visionary leader. 

(Image Source: Reuters)

The turn from one century to another is admittedly artificial as far as empirical (i.e., observed) change is concerned. Indeed, the internet actually took off during the last decade of the twentieth century, rather than in the new millennium. Even so, a temporal benchmark, especially one involving a new millennium, can spark a moment of reflection “taking stock” of gradual shifts that would otherwise go unnoticed in their accumulated significance. This “product” can in turn leave its own imprint, such that a new paradigm is “born” (i.e., recognized). On the individual level, while turning 60 does not instantaneously turn a person into an old man or woman, the milestone can prompt a person to re-evaluate previous lifestyle choices and thus have a real impact on the person’s life as well as self-identity. Additionally, the “big picture” reflection that a benchmark birthday triggers can easily enable recognition of the many gradual changes in the aging process that would otherwise go unnoticed and thus without conscious effect. The same dynamic can occur at the societal level, especially when a new millennium is in the mix.

Considering the dramatic technological advances that took place in the twentieth century, the relative dearth of political development in or out of the nation-state system is telling. The American invasion of Iraq and the Russian invasion of Crimea in the first and second decades, respectively, of the twenty-first century dispelled any hope that the internet revolution might make the increasingly integrated world a “kinder and gentler” place in which nations can play together. Yet I suspect something subtle had changed between the two invasions, as evinced in Barroso’s statement at the EU-US news conference in 2014. “The real problem is this,” he said. “(I)n the twenty-first century it’s just not acceptable that one big power takes part of another sovereign country recognized by the United Nations.” Hearing this, I could not remember such a “new epoch” statement having been made by a country’s president as the U.S. military was toppling statues in Baghdad. Something had changed—but what exactly?

To be sure, the status-quo dies hard. Obama essentially reinforced it by serving up a warmed-over dish. “It’s about the kind of world in which we live,” he said, citing the familiar respect for national sovereignty and international law, both of which Russia violated in invading Ukraine. At least as far as the U.N. Security Council is concerned, Putin was well aware of the concept of national sovereignty. Obama’s response does not begin to get at Putin’s belief that his legislature had given him the right to invade Ukraine. As political rights apply only within the polity that grants them, Putin’s avowed right would have to be natural, as in the right of the strong to subdue the weak by sheer might. Barroso’s line in the sand effectively says that the world had moved on from tolerating the law of the jungle.

Generally speaking, a person used to doing something as it’s always been done will need to feel the considerable force of the “new rules” for them to have any effect. Such is the force of habit, and the presumption that goes along with it. The muted force of the European and American economic sanctions fall short from effecting a course correction in line with new standards. Resorting to the (also antiquated) knee-jerk military response would have only meant that the E.U. and U.S. government officials had decided to reaffirm “the old way.” Instead of being countered, Putin would feel the added confidence of a paradigm reaffirmed.

It thus appears that a new paradigm making invasion a heretofore relic of an early epoch in history had not sufficiently gelled. Another way of seeing this is by looking at a more firmly established post-twentieth-century paradigm: one forged by the horror of the Nazi holocaust.

As unmarked Russian military men were fomenting civil unrest in the eastern parts of Ukraine, masked men handed pamphlets to Jews leaving a Passover service in Donetsk. The Jews were presumably to register and provide a list of their respective properties and pay a registration "fee" of $50. The pamphlet read in part, "ID and passport are required to register your Jewish religion . . . as well as documents establishing the rights to all real estate property that belongs to you."[1] Noncomplying Jews would “be deprived of their citizenship and deported outside the republic and their property confiscated.”[2] Denis Pushilin, the leader of the Donetsk People’s Republic (the newly declared pro-Russian government) had signed the leaflets, giving them the connotation of authoritative legitimacy. 

Not surprisingly, it did not take long for scathing reactions to come in from around the world. US Secretary of State John Kerry (who once tried to convince me that he is a fiscal conservative because he believes in efficient government) issued a statement saying, "This is not just intolerable--it's grotesque."[3] A rabbi who had received one of the leaflets told NBC News, "[I] couldn't believe it was real." Such reactions as these indicate that the anti-semitic paradigm that had held such currency in prior centuries, including the previous one, was essentially "dead on arrival" in the twenty-first century. 

That is to say, the intellectual "blown away" aspect of the ensuing international condemnation eviscerated any semblance of credibility for the leaflets; the anti-semitic paradigm had been so resolutely discredited by the world's discovery of the Nazi holocaust some seventy years earlier that the stunt fell flat on its face in the Ukraine. Barroso’s reaction to Putin's invasion could easily apply. Registering one's Jewish religion just isn’t done anymore. Not today. Not in our world. Considering all the bloodshed in WWI and WWII, Barroso's clarion call of a paradigm change has just as much merit as Kerry's statement. Both the leaflets and Putin's presumed prerogative can leave onlookers around the world saying to ourselves, I can't believe this is happening. So why is one essentially being allowed while the other was stopped in its tracks? The explanation probably lies with the respective paradigms--one of the two still having some residual currency in our collective mentality.

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1. Oren Dorell, "Outrage as Jews Told to Register in East Ukraine," USA Today, April 18-20, 2014.
2. Andrew Kramer, “Demands That Jews Register in Eastern Ukraine Are Denounced, and Denied,” The New York Times, April 17, 2014.
3. Dorell, "Outrage."