Tory Victory Not Really a Surprise

There is a sense of surprise at the re-election of David Cameron’s conservative party, which won 331 of the 650 mandates in the 2015 United Kingdom General Election.  That is the smallest number of mandates a majority party has won in a British election since after the second 1974 election.

The result wasn’t as big a surprise as one might think.

To be sure, polls had shown a tight race.   Most showed the Conservatives and Labour tied, or with a slight conservative lead at something like 36-35.  Consider the following graphic:

Blue represents the Tories, red Labour, purple UKIP, yellow the LibDems, and green the Greens.  Although the two major parties are nearly tied at the end at around 35%, Labour had been steadily losing support while the conservatives had been slightly climbing.  If there was momentum, it was for the Tories.

Here are the actual results:  Conservatives – 36.9%, Labour 30.4%, UKIP 12.6%, the Lib Dems 7.9%  Scotish National Party 4.6%, Greens 3.6%

From this result here are the mandates:  Conservatives 331, Labour 232, SNP 56, Lib Dems 8, Unionists 8,  UKIP 1, Greens 1 Other 15.

One thing a single member district plurality (SMD-P) electoral system provides is that there can be a large swing in mandates won from a relatively small swing in total percentage of the vote.   SMD-P is a system where people vote in districts for one candidate.  Whichever candidate gets the most votes (known as a plurality) wins the seat.  That’s how we run most of our Congressional elections in the US.

This hurts smaller parties.  The anti-EU party could turn 12.6% of the vote into only one seat.  Yet geographically based parties like the SNP could turn 4.6% of the vote into 56 seats as they swept Scotland.   It also means that a 6.5% differential between the two top parties can turn into a difference of almost 100 seats, or 15% of the seats available.

This was a clear victory for Scottish natinalists who could use this to mount another demand for a referendum on independence

Think of it this way.  If the vote was perfectly even in every district, a party could win 51% to 49% in every district; a close election would yield all seats going to the party with 51%!   Obviously some districts are safe for a particular party and others are contested at various levels.   But the result almost always is that the party that “wins” has a much larger majority in parliament than the vote total would indicate.

(Aside:  If you follow American politics you might counter that even though in 2012 the Democrats earned more votes than the Republicans, the GOP got a majority.  That happens in part due to gerrymandering — designing districts to get the optimum outcome for a party– but also because Democrats rack up huge vote totals in urban districts, while Republicans win closer suburban and rural districts.  In Great Britain the divisions aren’t so stark, so elections behave more like one would expect).

In 2010 Great Britain had its first hung parliament (no party gaining a majority) since 1974.  That’s because the Liberal Democrats got 23% and 57 seats.  The Conservatives only got 36.1% and 306 seats, while Labour got 29% and 258 seats.

The change from 2010 to 2015 for the top two parties was Conservative +0.8%, Labour +1.4%.  Both parties gained, but Labour gained a bit more than the Conservatives.  So why did the Tories gain 25 seats and Labour lose 26?  The answer is due to the smaller parties.  The LibDems went from 57 seats to only 8, while the SNP went from 6 to 56.  In Scotland alone Labour lost nearly 40 seats to the SNP – that means they gained seats in the rest of the country.

The LibDem loss should have been expected.   Small parties are always at risk when they form a coalition with larger parties, unless they can provide something unique that the voters want.  Nick Clegg couldn’t do that.  That loss of support translated to more mandates for the Conservatives.

That brings us to the polls.  The pollsters were pretty accurate for the small parties, and pretty close for the conservatives too.  The only real problem, then, was that Labour totals were inflated by about 3% consistently.   That’s not a huge amount, but still a significant gap given how much agreement existed in the polls.   The most likely reason is that conservative-leaning voters upset with the Cameron government told pollsters they were leaning Labour, but came home to the Conservatives on election day.  Not that they were lying to the pollsters, but there’s something about actually voting that can cause people to stick with a party they thought they might abandon.

Before the elections some conservatives voiced optimism that by moving Labour more to the left, Miliband might inspire higher Tory turnout than expected.  That sounded like the usual wishful thinking but may have actually happened.

Now former Labour Party leader Ed Miliband, who resigned his leadership role after the election.

Polls can be off, and as noted, just a few ticks in one direction can make a major difference in the result.  I am not surprised that the conservatives gained a majority.   The 2010 election was the first since 1974 with no majority, and it was obvious that the Lib Dems were not going to gain many seats this go around.   So it appeared that either the Tories would gain a small majority (which they did), or that Labour would have to work with the SNP.

A change in power to Labour was unlikely for another reason.  Labour leader Ed Miliband had not generated a sense that his leadership would provide a positive change.  Labour had been declining in the polls and people weren’t warming to Miliband.  Late deciders may have been swayed by Cameron’s positive economic results (compared to the rest of Europe).

Cameron has five years now to govern as a majority party, unless he calls an early election.  He has promised a referendum on EU membership by 2017.   The Cameron era continues.

Greece and the EU

Greek protesters in support of the Syriza party, a left wing party that dominated last month’s elections.

In 2008 the global economic crisis unmasked the structural weakness of the economies of southern Europe.  Greece was by far in the worst shape.   In 2010 the EU brokered a bailout deal for Greece, predicated on the country embracing a very painful austerity program.   In 2012 Syriza campaigned against the cuts and urged Greeks to chart a course not dictated by the EU.   Greek voters, skittish about loosening ties with Europe, said no, and Syriza won just 78 out of 300 seats.  Three years of painful recession later and the Greeks have had enough – Syriza won 149 seats, just short of an absolute majority.  The left wing party joined in a coalition with ANEL, a small right wing conservative party to form a government.

Greece has a debt of about $500 billion, 180% of it’s GDP.   60% of that debt is owed to the Eurozone, so a default would have serious, though not disastrous implications.   Very little of that debt is held by Greece.   After the election Greece’s 10 year treasury bond yield skyrocketed to over 10%, meaning rising the debt would be prohibitively costly.

Syriza’s leader, new Prime Minister Alexis Tsipras, vows to keep this campaign promises, all of which violate the conditions of the bailout.  These include increasing the minimum wage, cutting property taxes, increasing pensions, rehiring fired public sector workers, and giving free electricity to those “suffering the most.”   Since he doesn’t want more debt, the only way to do that is to print money – but Greece is in the Eurozone and monetary policy is controlled by the European Central Bank (ECB).   So what next?

Syriza’s leader Alexis Tsipras

One might wonder if Tsipras is out of touch with reality, wanting to increase spending to get out of debt.   But he makes a good point that austerity simply increased the scope and depth of the recession.  The ‘bailout’ benefited Eurozone banks more than the Greek people.   He believes his policies would stimulate the economy so that Greece will be able to pay back its debts and show itself to be solvent.

Unfortunately the Greek economy was built on sand – debt and public sector employment hid the fact the Greek economy is structurally flawed.  Just ending austerity won’t change that, nor alter the dynamics that created the crisis in the first place.

Last week Tsipras and his Finance Minister Yanis Varoufakis visited European leaders to try to assure them that they weren’t going to rush out of the Eurozone, and to convince them to support a bridge loan to fund the government through September.   On Sunday Tsipras said that the Euro was a “fragile house of cards” and if the Greek cards were pulled it would collapse.   On Wednesday Eurozone finance ministers are meeting to discuss what to do next.

The Euro is not likely to disappear whatever Greece does.

Tsipras is playing a game of chicken – pushing the EU to accept his policies and offer help in exchange for Greece holding on to the Euro.  More importantly, if he were to leave the debt owned by Eurozone banks would become toxic, threatening a banking crisis.

Still, the threat to the Euro is much smaller than it was back in 2010, or even during the election of 2012.   At that point high bond yields threatened a number of countries, especially Spain and Italy.    Today Italy’s bond yield is 1.76%, while Spain’s is 1.38%.   Those are below the US yield of 1.94%!  This suggests the fears of contagion no longer exist and Greece is being treated as an isolated case.   With 19 countries now using the Euro – Lithuania joined last month – it could withstand a Greek departure.

But the Prime Minister does not want to leave the Eurozone, and therein lies the rub.   Greeks know that leaving the Eurozone would put them on a path towards increased isolation and continual crisis.    He’s betting he can arrange a bridge loan through August, and that while Greek debt is high, the Greek economy is small.   The cost to the EU member states would not be prohibitive.

While some European leaders are sounding cautiously optimistic about making a deal with Tsipras, German Chancellor Angela Merkel is having none of it.   While not dismissing anything out of hand, she says it’s up to Greece to come up with a plan.   Tsipras has said he’s working on further reforms designed to mollify EU critics, but it’s unlikely he’ll convince Merkel, who fears this will simply enable Greece to go back to its old ways.

Tsipras and Merkel will meet for the first time this week.

My predictions:

1.  Those predicting the end of the Euro will be disappointed.   Countries are politically committed to monetary union as the best way to assure economic stability.   Businesses and banks – the people who really run the show – are almost unanimously in favor of it.   Now that Italy and Spain are no longer seen as “the next to go” if Greece leaves, the Euro is not in existential danger.

2.   Tsipras and EU leaders, particularly German Chancellor Merkel and French President Hollande, will engage in tough negotiations, but are likely to reach a deal.   It’s in their interest.   The EU leaders do not want their banks to suffer due to the Greek debt they hold, nor do they want instability associated with the first departure from the Eurozone.   Prime Minister Tsipras knows that the Greek economy would be severe crisis if he actually tried to go back to the drachma, perhaps worse than the last few years of recession.

3.  The agreement might work.   Merkel needs to be firm on the need of Greece not just to stimulate their economy, but to restructure it.   Greece needs to develop a productive and sustainable economy.  They do not have one now.  Tsipras has to recognize that reality..

The telling point is that nobody involved wants Greece to leave the Eurozone.   It is in their interest to maintain it, even strengthen it.   It is in the EU’s interest to have Greece develop a sustainable, productive economy.   The bailout and austerity program didn’t work – even though the Greek voters gave it a chance back in 2012.   With some creative thinking, it may be that contrary to expectations, the victory of Syriza may end up being good for the EU.

 

 

Responding to Kissinger’s Argument

Kissinger with current Secretary of State John Kerry – who led a veterans movement against the Vietnam war while Kissinger was Secretary of State

In my last post I talked about Henry Kissinger’s world view, using the example of detente as indicating the strengths and weaknesses of his approach.  His focus on power politics to the neglect of emergent issues across the globe helped put us on a path to the myriad of challenges we face.  Russian and American policies helped breed corruption, militarism and dictatorship in newly independent states, thwarting accountability and rule of law.

Countries in Asia, Latin America and Africa were the biggest losers of the Cold War – and suddenly they are relevant.  So how does Kissinger describe what needs to be done?

First he notes the nature of the changes taking place.  The fundamental unit of the international system, the state, is under pressure.   He very correctly notes a major weakness in our international institutions.  The world economy has become global, but the institutions that govern international affairs remain rooted in the state system.  This means we have an institutional structure not suited for 21st Century conditions.   Prosperity can only be achieved with globalization, he notes, but globalization feeds into the forces challenging international stability.

For realists like Kissinger, global poverty is a local issue – great powers are focused on stability. But in our era they are linked – poverty increasingly is the driver of instability

And, true to his realist principles, he argues that diplomacy is harder now because great powers cannot consult so easily.  In the new multi-polarity there is no equivalent of a Nixon-Brezhnev summit.    Meetings that do happen are less frank and more subject to media scrutiny.  Realists would prefer the public let the experts handle foreign policy, leaders working in back rooms with media blackouts can achieve much more, Kissinger would claim, than a in a public spectacle.

Kissinger is absolutely right that the state is under immense pressure, yet he can’t let go of a vision that is based on the activities of sovereign states.  For a realist the state is the central foundation of the international system.  He sees the EU not as an alternative to the state, but a kind of confederation that has not yet achieved the status of statehood.

I think he misses the way in which the information revolution has rendered the European style sovereign state – created by the Treaty of Westphalia in 1648 – obsolete.   Only institutions that cross borders and ultimately erode or perhaps “pool” sovereignty can handle the challenges ahead.  After all, it’s hard to argue that the European style state functions well in most of the world.  It was a colonial creation based on fake and sometimes absurd borders and has not been able to establish rule of law and accountability in most of the world.   The only reason the realist state-fetish hangs on is that no one has figured out what could possibly replace it.

The Peace of Westphalia, ending the 100 years war created the sovereign state – a kind of new thinking that brought peace to Europe after the information revolution caused by the printing press led the old order to disintegrate

Accordingly, he turns to the US role as he discusses the possibility of establishing a new world order.  Kissinger’s words:

To play a responsible role in the evolution of a 21st-century world order, the U.S. must be prepared to answer a number of questions for itself: What do we seek to prevent, no matter how it happens, and if necessary alone? What do we seek to achieve, even if not supported by any multilateral effort? What do we seek to achieve, or prevent, only if supported by an alliance? What should we not engage in, even if urged on by a multilateral group or an alliance? What is the nature of the values that we seek to advance? And how much does the application of these values depend on circumstance?

For the U.S., this will require thinking on two seemingly contradictory levels. The celebration of universal principles needs to be paired with recognition of the reality of other regions’ histories, cultures and views of their security. Even as the lessons of challenging decades are examined, the affirmation of America’s exceptional nature must be sustained. History offers no respite to countries that set aside their sense of identity in favor of a seemingly less arduous course. But nor does it assure success for the most elevated convictions in the absence of a comprehensive geopolitical strategy. – Kissinger 

This conclusion seems vague.   It also is rooted in the notion of states and alliances, and doesn’t creatively think about new ways of political organization.   Moreover, the emphasis remains on putting out fires and trying to create stability via power politics.  One gets the sense that his genius allows him to see the situation pretty accurately, but his world view pushes him to a solution that is vague, and cannot work.  The US trying to create a world order, of working with allies to impose values and stability is bound to fail.   The Metternich system discussed in my last post collapsed into 30 years of war and depression.   This order could suffer a similar fate.

My current work is based on trying to figure out what kind of new political structures and organization can handle the vast area of technological change and the power of new media.   We live in an odd time when the old structures still have life – governments can put down rebels, silence critics, and impose their will.  But cracks are evident – no one thought Mubarak or Qaddafi could be brought down, the Arab spring was a shock.   The world is in motion.

The EU is a fascinating example of a system that has morphed into a new kind of political organization.  The states have given up (or some say pooled) their sovereignty in favor of supranational organization.  Yet they are doing so under the concept of subsidiarity – power should be exercised at the lowest level possible – local, regional, state or supranational.   Theoretically the state could lose both to the EU institutions and to local and regional governance.  Given the power of the new information and technology, local governments can handle problems that used to require national action.

Although some protests call for acceptance, it is easier for demagogues to use fear and hate to rile up the masses

What is needed is new thinking – moving away from ideology, nationalism, parochialism and “them vs us” to a recognition that globalization requires pragmatism, openness to other cultures and ideas, and “us with them,” solving problems.  The forces that oppose such new thinking range from nationalists to groups like ISIS, who want to create an Islamic caliphate that contradicts the forces of globalization and change.   Defeating them may require military action, but also requires a new vision that can speak to young Arabs and address the problems of poverty, disease, and oppression.   These are the problems Kissinger’s world view simply dismisses as secondary to the need for great leaders to craft and maintain an order.

Unfortunately, it’s hard for people in government to give up the idea of state dominance and power.   Cooperation is seen as dangerous, and xenophobes are ready to fight against anything that seems to open a state up to new cultures or people.   Kissinger’s piece thus stands as an example of the old thinking – something insufficient in dealing with a changing world.   Unfortunately the new thinking is still a work in progress – and if it doesn’t emerge and get embraced soon enough the future could get bleaker before it gets better.

 

Germany Takes the Lead in Ukraine Crisis

If a peaceful resolution to the Ukraine crisis is to be found, German and French Foreign Ministers Frank-Walter Steinmeier and Laurent Fabius will receive much of the credit

German Chancellor Angela Merkel will visit Kiev this coming weekend, her first visit to Ukraine since the crisis began.  The Germans have been in an active dialogue with Russian President Vladimir Putin Ukrainian President Petro Poroshenko for weeks,  Last weekend German foreign Minister Frank-Walter Steinmeier hosted a meeting with his French, Russian and Ukrainian counterparts to discuss how to end the crisis.

At this point, the Germans have successfully dissuaded Russia from expanding the conflict, even as the Ukrainian army clears pro-Russian separatists from the towns of Donetsk and Luhansk.  Kiev’s forces are rapidly defeating the separatists though fear of a Russian invasion is real.   This is the first real test of German’s ability to take a leadership role in using soft power to try to diffuse a potentially devastating crisis.

Ukrainian troops are making steady progress against Russian separatists

Some might wonder why the US is acquiescing to European leadership here.  Shouldn’t we be pressuring the Russians and asserting America’s role as leader of the western world?   In a word, no.  In fact, the title ‘leader of the western world’ is passe.  While there is a European based civilization generally known as the “West,” it is a cultural construct.  The West as a unified international force ceased to exist with the end of the Cold War.   The world is no longer divided into neat blocs.  Perhaps the point where this became crystal clear was in 2002-03 when France and Germany worked with Russia to stymie US efforts to get UN approval for the Iraq war.  

More to the point, the US has little at stake in Ukraine.  While politicians may wax poetically about stopping Putin, this isn’t the Cold War.  Ukraine was part of the old USSR after all, we’re not about to risk all out nuclear war because of separatists in east Ukraine, or even a Russian invasion.  In 2008 when Russia took South Ossetia, President Bush resisted calls to come to the aid of Georgia (South Ossetia was a Russian part of Georgia wanted to join Russian North Ossetia), even though Georgia actively supported the US in Iraq.   We have no vested interest in the Russian near abroad; for Russia, it’s their primary focus.

Much of the natural gas Europe relies on for heat in winter comes from Russia via Ukraine

Germany, on the other hand, has real interests.  It gets natural gas from Russia, it’s promoting democracy and European stability, and it wants to make sure there isn’t another move to a Europe divided into blocs, even if this time it’s the Russian bloc and the EU bloc.  While the US has little with which to pressure Russia, Germany is a main trade and investment partner of Russia, and the ambiguous relationship between the two countries goes way back.  If Russia’s economy is to grow and modernize, it needs a close relationship with Germany.

The Germans understand that pressuring Putin with tough talk and threats is counter productive.  The American penchant to pull no rhetorical punches in condemning Russian support for the separatists serves no useful purpose other than to create an emotional backlash in Russia – a backlash Putin wants to take advantage of.   The Europeans prefer quiet pressure: the promise of closer economic ties as a carrot alongside the potential stick of increased sanctions.

Will it work?  The odds are better than one might think.   While Russia has the power to invade Ukraine and annex eastern portions, it’s not really in their interest.  Those are poor parts of Ukraine which would be costly to administer, and the already vulnerable Russian economy would be hit by sharper western sanctions.   If they hold back, Putin will have his nationalist bone fides questioned – something which could harm his popularity.  But he’d likely expand economic ties with Europe, which Russia needs.

Russia is tempted to annex eastern portions with a majority of ethnic Russians – yet it’s still very possible to prevent a Russian-Ukrainian war

 

In all of this, it appears likely the EU is ready to accept that the Crimea is again part of Russia.   That allows Putin to claim a victory even as he backs down, and historically the Crimea is more Russian than Ukrainian anyway.  The longer this drags out without a Russian invasion, the better the odds that the crisis will end quietly rather than escalate to an all out Russian-Ukrainian war.

It’s really up to Putin – and no one is sure on what he’s basing his calculus.  In any event, the leading role of Europe in negotiating and dealing with the crisis, with the US in the background, is an example of how the new multi-polar global polity operates.  Europe thought they could deal with Yugoslavia’s breakup in the 1990s and failed.  Now the challenge is clear – find a way out of the Ukrainian crisis without it devolving to war.

What Next in Ukraine

The downing of Malaysia Flight 17 by Russian separatists in eastern Ukraine put the Ukraine crisis back into the world’s attention, and marked a dramatic escalation in the seriousness of the crisis.  295 people were killed, a civilian airliner shot down, and Russia appears to be at least indirectly responsible through its arming of the separatists.   So where do we go from here?

Here’s the situation: Vlad the improviser stumbled into his Ukraine policy with a series of reactions to the downfall of former Ukrainian President Yanukovych.  Suddenly Ukraine shifted from a tilt toward Russia to a strong lean towards Europe, and Putin’s reaction was to grab Crimea, and then foment unrest in the ethnic Russian regions of eastern Ukraine.   Personally, I get the Crimea gambit.  Crimea was traditionally Russian and give to Ukraine by a misguided Khrushchev in 1954.   But the rest?

Plane parts are spread out over a wide area, consistent with it having been shot down. Here people in Grabovka, Ukraine wander among crash remnants.

For Putin, who was losing his luster at home, it was an unexpected political opportunity.   He could play the Russian nationalist anti-American card and watch his popularity grow.   Though the West feared an effort to grab all of eastern Ukraine, Putin instead tried to maintain a balancing act.

Knowing that the Russian economy in the era of globalization needs to keep reasonably healthy ties with the EU, he avoided the massive land grab that could have forced the EU into more draconian anti-Russia sanctions.   However, he also sent units from Russian intelligence there to start/support an indigenous uprising, knowing it might flounder, but counting on it destabilizing the hated Ukrainian government and helping keep his nationalist bona fides in place.

For awhile, it seemed to work.   The West seemed to be losing interest in the conflict, especially as it was clear the Russian separatists were not faring well against the Ukrainian military.  At home his stoking of Russian nationalism kept his popularity high. The balancing act seemed to be a bit of political genius.

However, supporting a rebellion is tricky.   While Putin might have been OK with the crisis dragging out indefinitely, the rebels were fighting for a cause.  Angry that Russia seemed to be “deserting them” (read: just giving them weapons and support, but not actively participating in the effort to build New Russia), they exercised more autonomy and, as we know, brought down Malaysian Flight 17.

Obama on the phone with Ukrainian President Petro Poroshenko after the crash

So what now?  First, the US has to recognize that there are limited options and all require serious cooperation and even leadership from the EU.  While some in the US huff that Obama hasn’t done enough, blaming the American President for what goes on in the rest of the world, the reality is that US power is limited.

The key is that Russian President Putin knows that the Soviet Union fell primarily because its economy was isolated.   Globalization began in earnest in the 80s, and the rapid connections in the West combined with the economic failures of Communism in the Soviet bloc made economic disintegration inevitable.    If Putin severed ties and focused on building his own internal empire, the result would be disaster.

Moreover, Russia’s future is very much connected to the EU, and Germany in particular.   Earlier this month Germans, already incensed by the monitoring of Chancellor Merkel’s phone calls for years, kicked out a CIA agent who was spying on Germany from the US embassy.   German Chancellor Merkel is clearly not an American proxy; the Germans have become more independent in crafting a foreign policy to serve European interests.  The Cold War is long dead.

Putin and Merkel consult in Brazil during the World Cup finals.

It is Germany and the EU that can put the most pressure on Putin, and Merkel’s leverage with the Russian President has been increased by this tragedy.   Not only are the Europeans feeling more pressure than ever to turn up the heat on Russia, but Putin has to recognize that his balancing act is a very dangerous one.

President Obama needs to keep rhetorical pressure on Russia and be in close consultation with Merkel, crafting a plan to both pressure the Russian leader but also give him a face saving way to withdraw support from the rebels.   What we do not need is rah rah Cold War style chest thumping, nor do we need to up the ante by dramatically increasing military aid for Ukraine.   That would force Putin into holding firm – he will not allow himself to be seen as giving in to the US.  At best, it would only deepen and lengthen the duration of the crisis.  At first, things could spin out of control.

That’s in no one’s interest, saving the hyper-nationalists on either side.   A gradual reduction in tension, with action more behind the scenes than in the public eye, is the best way out.   So far, the Obama Administration has behaved admirably, keeping up pressure but not being belligerent.   More importantly, the US has learned that we do not need to lead, especially not when our direct interests are not at stake.

Ultimately it is up to Putin – he is a very vain politician, and the West needs to construct a path to de-escalate the crisis so that he saves face.   Recognizing that the Crimea is part of Russia is perhaps part of the calculus.   Putin giving up on any further annexation of eastern Ukraine must be another.

A New Era in Italian Politics

At age 39, Renzi represents a new breed of Italian politicians

In the early 1990s the Italian political system underwent a complete collapse.  Every party disintegrated or was renamed.  Former Prime Minister Bettino Craxi, once considered the most powerful man in Italy, died in exile in Tunisia.  The cause of the collapse was the Mani Pulite or “clean hands” investigation started by Milan magistrates, which led to the discovery of massive and pervasive corruption callend “tangentopoli” or bribery city.

By 1994 Italy was said to be entering its “second republic.”  From the end of World War II to the 90s the Christian Democratic party dominated Italian politics.   While the country had over 40 governments, making it appear to be in constant crisis and unstable, the problem was the opposite: Italy was too stable.   The insiders shifted coalitions and positions, but the same people dominated, becoming more and more corrupt over time.   Italians knew what was happening – there was real scorn for “la classa politica” – but seemed powerless to stop it.

It’s not surprising that Berlusconi, here shown with corrupt Bettino Craxi in the 80s, refused to seriously combat corruption

The system broke down just as other single party systems fell part – Communism, the LDP in Japan, and the PRI in Mexico.  With the internationalization of global capital, countries had to shed their isolated corruption to be relevant in the world economy.   Yet hope for a new system in Italy faded; while many of the old guard left, the new leaders were still of the old thinking.   Silvio Berlusconi dominated Italian politics and did not institute real change.   Even reformers like Romano Prodi found it hard to take on a system that had been built on kickbacks and inside deals.   By 2009 the glaring deficiencies of the Italian system came into full view as Italy fell into a crisis that threatened its ability to maintain membership in the Eurozone.

In 2013, as the country struggled to implement needed reforms, Enrico Letta became Prime Minister, leading a large coalition.  The idea was that together the parties could do what was necessary to get on track.   Yet progress was slow, people were losing patience, and under pressure Letta resigned in February 2014, allowing the young Matteo Renzi to be named Prime Minister.

John Kerry pays his respects to Prime Minister Renzi

Italy has a multi-party system, and Renzi’s left of center Democratic party controls 293 of 630 seats in the national assembly, and 108 of 320 in the Senat.   In order to govern it has formed a coalition with seven other parties.  Renzi’s task is to implement reform while keeping that coalition together.

Renzi has argued that Italy needs generational change – that the old system will never truly be open and transparent if the old guard remains in power.   His cabinet has an average age of 47, younger than any in Italian history.   He already has forced the resignations of leaders of the largest state owned companies, replacing them with women.  That alone is a culture shift – women never ran any of those companies before, and Italian business has been male dominated.

His ideology is said to be close to Tony Blair’s “third way” – center-left, with an emphasis on the center.   His first three year budget has controversial provisions, but is designed to create long term growth potential.    Italy’s economy is not exactly healthy.   In 2013 its economy contracted by 1%, with unemployment over 12%.   It had a budget deficit of  minus 3.3%, with total government debt at 133% of GDP.   To succeed Renzi has to get the deficit below 3%, grow the economy, and lower unemployment.

A young Matteo Renzi won about $25,000 on Italy’s version of Wheel of Fortune

To do all that he must not only craft a solid economic plan, but more importantly remake “la classa politica.”  For generations the political class has been corrupt.   That has to end.  A new generation has to make links with the other European economies and build a new civil society.   Faced with corrupt leaders, citizens had no qualms about tax evasion, cheating the government, or trying to get for themselves whatever they could.   Civil society was weak.

None of that can be changed overnight.  Renzi offers a breath of fresh air and a sense that a mixture of crisis and impatience may be enough for Italians to now build a true modern democracy based on rule of law and accountability rather than inside deals and kickbacks.

Obama’s Foreign Policy

A recent meme from the right has been that President Obama has failed at foreign policy.    FOX News, Townhall, the Weekly Standard — the usual partisan suspects — say President Obama has a “non-existent” foreign policy and should take the blame when things go bad in Ukraine, Syria or Iraq.   In what President Reagan once derided as a “blame America first” tendency, the critics want to blame Obama for everything that goes wrong in the world.

In reality, his Presidency has been a foreign policy success on a number of fronts, most importantly extricating the US from two costly wars and responding to a new multi-polar international environment wherein the role of the US is different than at any time in our history.   That is what irks the critics; America’s role in the world is changing and they want to blame the President.   That is misguided and hypocritical.

The criticisms from the right (I’ll deal with the left’s critique in a later post) fall in three categories:

1.  Obama is not actively using American power.   Obama is blamed for “enticing” Putin to act in Ukraine because he perceived Obama as weak or unwilling to act.   Syria’s horrible civil war is Obama’s fault because the US has not been able to stop it.   This criticism essentially says that the global villains sense Obama’s weakness and “detachment” from foreign affairs and thus are willing to stir up trouble.

2.  Obama is siding with the wrong people.  In Libya, when Obama did use force to end a civil war, he was accused of helping Islamic extremists who were part of the anti-Qaddafi opposition.   Similarly, when the US didn’t come to the aid of Mubarak to keep him in power in Egypt, the critics said that embracing the Arab Spring would be to embrace Islamic extremism.  Better to keep corrupt dictators in power than risk these rebellions.  They point to the difficult transitions in the region as proof that it would have been better to keep the dictatorships in power.

3.  Obama isn’t as supportive of Israel as he should be; his inability to get the peace process going again is a result of weakness.  Never mind that the peace process fell apart during the Clinton Administration.   While Bush was in office violence suicide bombing and war riveted the region.  Nope, to the critics any lack of progress is all Obama’s fault.   The same group has been vocal about Iran, saying Iran is akin to Nazi Germany, and not allowing Israel to take out its nuclear sites risks a future holocaust.

Uff-da!

 

The first criticism comes primarily from neo-conservatives, people who supported the failed wars in Iraq and Afghanistan.   They do not accept that the world now is one that the US can’t simply shape at will.  That is what they thought we could do in Iraq – use US power to spread democracy and shape a region to better fit our values.    The war against Iraq was won; the effort to reshape the region failed spectacularly.   Many of these critics, such as Charles Krauthammer and the critics at the Weekly Standard, are in denial that their world view have been discredited by history.

Beyond that, the idea that somehow a “tough” President would have scared Putin away from Ukraine borders on the delusionally absurd.   Putin acted out of weakness as his Ukraine policy fell apart with the ouster of Yanukovych.   Rambo could be President and Putin would have felt compelled to take Crimea and pressure Ukraine.   He knows the US and EU have no interest in war.  Yet President Obama has worked with the EU to craft a response more likely to succeed.   Russia’s future depends on connecting with the global economy; the USSR failed because it could not.

It’s important to be on the right side of history as the Arab world begins a difficult transition

It’s also absurd to think the US should have tried to stop the Arab Spring or continue support for thugs like Mubarak.   When a region with 50% of the population under 23, linked through the information revolution, show disgust for corrupt obsolete dictatorships, it would be disastrous for us to side with the dictators.  That part of the world is undertaking a real transition – our best bet is to be on the right side of history.

So the critics have a very weak case against the President.   They fail to offer viable alternatives, which is telling.  Their real problem is an inability to accept that world where the US is no longer the dominant power.   Over the last twenty years globalization has altered the nature of sovereignty and global politics.   The economic crisis in the US revealed structural weaknesses thirty years in the making.   The Iraq war showed the limits of US power and soured the public on interventionism.   The world is fundamentally different than it was in 1994.

If President Bush had accomplished this, he’d have been lauded as a hero.

Obama’s successes – getting Iran to agree to give up its capacity to build nuclear weapons with UN oversight, extricating the US from Iraq and Afghanistan, getting a deal with Russia to destroy large numbers of nuclear missiles, killing Osama Bin Laden while weakening al qaeda, improving economic cooperation after the 2008 catastrophe, and re-orienting US foreign policy for the new multi-polar world – are profound.   Obama’s multi-lateralism, hated especially by the neo-conservatives, is working.  The US is more respected and in a better strategic position now than we have been at any time since the end of the Cold War.  Despite inheriting two wars, the President has avoided any foreign policy debacle.

So all the critics can say is that “bad things happen in the world and we blame Obama.”  *shrug*

John Kerry’s Diplomacy

 

Secretary Kerry’s patient diplomacy continues to win little victories for the Obama Administration.   Though he lacks the tough veneer of his predecessor, Kerry is proving to be an adept and successful diplomat.

The IAEA (International Atomic Energy Agency) claims Iran is ahead of schedule in following the agreement reached last year and took affect on January 20th.    The dilution of enriched uranium means that Iran probably does not have enough to make even one nuclear weapon, defusing what had been a tense situation.   Iran’s President Hassan Rouhani says its in the interest of Iran to assure the world that Iran does not want to have nuclear weapons.   If the process stays on track  sanctions will be lifted and Iran will move towards fully rejoining the international community.

This is a success for the Obama Administration.   The problem of Iran’s nuclear program has been an issue for over a decade, with the potential of doing immense harm to the region and the world economy.   An attack on Iran by the US or Israel could lead to disastrous consequences.  The Pentagon was not happy about how it war gamed out, and there was fear Israel might go it alone.

The deal with Iran remains on track, which is in the mutual interest of Iran and the US

Yet that was then – when Iran was part of President Bush’s “axis of evil,” and the US war in Iraq created intense emotions and anti-Americanism.   Now anti-Americanism has waned and the emotion of the last decade has turned into realization that the Iranian economy is the real problem.   There is no benefit for Iran in maintaining a hard line, and the last election and recent demonstrations show the Guardian Council (the body of clerics that have the most power in Iran) that the public is unhappy.   They need to put the nuclear issue behind them and focus on the economy.

There could still be problems and missteps along the way, but for the first time in a long time concern over Iran’s nuclear program is fading.  Patient diplomacy by Obama and Secretary Kerry is paying off.

Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov make progress

The other place diplomacy seems to be working is in Ukraine – though this is still a very tense and uncertain situation.   Both have agreed in principle to eschew violence.   Ukraine will give full amnesty to all protesters except those who have committed capital offenses, while Russia agrees not to invade or use violence.   More details aren’t yet known, but while it is meant to de-escalate rather than solve the problem, it’s an important step in the right direction.

Those who say Putin wants to recreate a resurgent Russia are overstating the case.   Putin was humiliated by the defeat of Yanukovych earlier this year and it completely unsettled his effort to bring Ukraine closer to Russia.   Putin genuinely believes the new government is illegal, radical and illegitimate.   If an anti-American protest overthrew a pro-American government in Mexico, we might feel the same way.

No doubt Putin wants to find a way to allow eastern Ukraine to, if not become part of Russia, at least have more autonomy from Kiev to pursue closer relations with Russia.   That isn’t necessarily a bad idea; in a divided country, sometimes de-centralized power works best.  But Putin is not stupid.  He knows that in an era of globalization Russia cannot be isolated from the West – that kind of isolation is what caused the collapse of the Soviet Union.   His challenge is to find a way out of this that both maintains Russia’s connections to the West (particularly the EU) and prevents an unacceptable outcome in Ukraine.

Today’s de-escalation agreement could allow a transition to talks on constitutional reform in Ukraine to keep the country unified, but allow autonomy on some economic fronts.   That may seem like a victory for Russia – and in the short term it would be.   But ultimately if the western part of Ukraine develops faster thanks to their EU ties, provinces in the east would have the power to look west.   They won’t be tied to Russia.

The situation in eastern Ukraine is tense

The US and EU has to use their clout to get Kiev to recognize that they won’t achieve a perfect outcome – Russian power and influence is real; compromise is necessary.   They then have to work out an arrangement with Russia that avoids any military action, and will allow for a peaceful resolution of the tumult in the east.    Even if the short term result allows the east to drift closer to Russia, as long as Ukraine is one country and the regions in the east remain autonomous from Russia, it’s an acceptable result.

Those who say Putin and Russia are “winning” and the US has lost its foreign policy edge are in the land of the absurd.   Not that long ago Russia controlled not only all of Ukraine, but the 15 Soviet Republics and a bunch of east European states.   That day is long gone.  Russia’s position vis-a-vis the US is severely weakened, and the best Russia can hope for is a little more regional influence.

For those who like to think about power and conflict, messy diplomacy may seem dissatisfying.   Better to bomb the Iranians to be sure, or risk war to stop Putin from Russian expansion!   But in reality both Russia and Iran have very strong motives to make sure they are connected to the global economy.  In the 21st Century, international isolation is defeat.   That’s why patient diplomacy can work.

Time To Seriously Consider a Divided Ukraine

Crimea’s location on the Black Sea has been of historical strategic importance to Russia.

The reaction to Russia’s invasion of Crimea has been swift and harsh.   The EU and the US have unambiguously condemned the military action, and have talked of serious sanctions and consequences should Moscow not back down.   However, as time passes and it becomes clear that there is no easy way to get Russia to back down, it may be necessary to seriously consider dividing Ukraine.

Its almost surreal how there is a kind of collective amnesia about the 2008 war in which Russia attacked the independent state of Georgia, a close US ally and participant in the Iraq war, taking the Russian-speaking territories of Abkhazia and South Ossetia.   Those are still occupied by Russia almost six years late.   The events on the ground, outside the control of the US, created a situation where Russian action was virtually inevitable no matter who was in office.   Blaming Obama (or Bush in 2008) is ridiculous.

Second, this war represents the weakness of the Russian position.   While critics want to paint Putin as Hitler incarnate, planning to swoop next into Poland, the reality is that he is struggling to keep Russian influence in places where Russia has been dominant for quite some time.    When the USSR gave Crimea to Ukraine in 1954, there was no doubt where the power really lie – in Moscow.   Kiev, like Tbilisi, was subservient to the Kremlin.   That they can’t keep a fraction of their influence without using the military shows a country still in decline, not one resurgent.

Gates, a Republican told his party to tone down it’s criticism of the President and “try to be supportive of the president rather than natter at the president.”

Third, Republican attacks on the President are counter productive,  shallow and objectively wrong.   The response to Russia’s invasion of the Crimean peninsula has been vitriolic among a few on the right.   Senator McCain said the US had a “feckless foreign policy” and Senator Graham claimed that Obama is “weak and indecisive” and “invited aggression.”

Driven by talk radio, Fox News, and the right wing blogosphere, the right has convinced themselves that Obama is a bumbling idiot with no experience, who does everything wrong, and maybe should be impeached.  That hyperbolic inbred Obama-phobia plays well among that group, but is both absurd and harmful to the country.   We need to have a serious domestic discussion about our options, interests and goals in dealing with far away crises like this one.  Consider:

1.  What options does the US have?  In reality, we’re not going to go to war over Crimea.   Neither are the Europeans.  Russia has troops on the ground and it’s in their backyard – their “near abroad.”  This means that the only feasible response involves economic, symbolic and diplomatic action.   This cannot be unilateral.  Such actions are only effective if they are multilateral and enforced.  That means the US has to work with the EU for a common position.

The 1854-55 Crimean War is remembered as a military disaster, even if it did yield the Red Cross and “the charge of the light brigade”

2.  Is it wrong to consider having the Ukraine give up territory?   Besides Georgia, Yugoslavia is another state where ethnic differences caused parts of that country to want independence from the core.   The international community opposed separatists in Yugoslavia for a long time, but ultimately realized that the country was untenable as one state.   Might it be untenable to have a Ukraine so divided between East and West – or Europe and Russia – that internal conflicts are unable to be settled?  Might it not be better to have a clearly western Ukraine whose people support NATO and EU, and a new state representing parts of the east that want to be closer to Russia?   Do we support existing lines on maps, or self-determination?

3.  If Russia is in decline with Putin acting desperately, shouldn’t we also consider not just “piling on” like the international community is now doing, but giving Putin a way out?  The Russians have a tradition of isolation from the West, and if Putin sees no choice he’ll play into that cultural history to keep a firm grip on power and assert regional Russian power.   Russians often have seen “being Russian” as a spiritual identity that is exceptional and must not be sacrificed for western norms.

The problem with not giving Russia a way to save face or gain something is that more regional conflicts could emerge, spreading instability.   Moreover, if Russia is isolated, any effort by the Russian people to try to open up their society would be endangered.  If isolated, domestic oppression would grow.   The hope of having economic interdependence ultimately open Russia’s politics would be dashed.   Finally, sanctions and enmity between Moscow and the West would have economic costs; it’s ultimately in nobody’s interest.

US Secretary of State Kerry and the EU’s equivalent to a foreign minister, Catherine Ashton.

Americans have to accept that the world doesn’t run by idealistic legalism, and geopolitical events overseas often reflect the local realities that can’t be countered with simple slogans.

I believe negotiations should start aimed at allowing Russian speaking regions of the Ukraine vote on autonomy or remaining with Ukraine.  Right now this is not a popular position – the international community is piling on Russia, and domestic political name calling makes it hard to deal with the ambiguities and nuances of this case.   But I doubt that a divided Ukraine is sustainable.  Given globalization, there is no real benefit to controlling a bigger chunk of territory – whatever the nationalists in Kiev might say.  That kind of thinking is obsolete.

This map, shown in the post yesterday, shows the stark division. The places with blue or dark blue could well choose to leave Ukraine.

 

Untangling Ukraine

Russian soldiers reportedly control the Crimea, a part of Ukraine

Last week Ukrainians celebrated as their corrupt pro-Russian President, Viktor Yanukovych, fled Kiev in the face of a popular revolt.  The Parliament met to ratify the popular uprising as Ukrainians celebrated – at least in the western part of the country.The eastern portion is mostly ethnic Russian, however, and while they don’t like Yanukovych, they reject the revolution in the West.  The current hot spot is the Crimea, which is over 85% ethnic Russian with very few ethnic Ukrainians.   Russia’s parliament gave President Putin approval to send Russian military forces to protect the interests of ethnic Russians in the Crimea.

So, what’s going on?

The Ukraine is a split country.  The eastern party is heavily ethnic Russian, while the west is primarily Ukrainian.  Moreover, the Crimea itself was given to the Ukraine by the Soviet Union in 1954, when it didn’t seem to matter what was actually in Russia.  13% of the Crimea’s population are ethnic Tartar, who were brutalized under Stalin and oppose being annexed by Russia.

Former President Yanukovych spoke from Rustov on Don (in Russia) calling the new interim government illegitimate, saying he should remain President until December per an agreement with the EU

In recent years the EU and Ukraine were working on an free trade and association agreement that would have brought Ukraine closer to the West, and yielded nearly $30 billion of aid and grants.  This was seen by many Ukrainians as a way to start needed economic and political reform.  Putin pressured Yanukovych to reject the EU agreement in favor of a closer trade relation with Russia, as Putin builds his own customs union, currently including Russia, Belarus, and Kazakhstan.  If Ukraine joined that group, it would increase Russia’s economic clout in the region and stymie EU efforts to democratize and modernize Ukraine.

The Customs Union allows travel between the three states with just an internal passport, as well free trade.  It appears less a move towards free trade than an effort by Russia to piece by piece re-create as much of the old USSR as it can.   Putin has said the collapse of the Soviet Union was a catastrophe and a mistake.   In August of last year Ukraine became an “observer” to the customs union, a first step towards joining.

The biggest obstacle to Russia’s plan was the imminent agreement between Ukraine and the EU.  To prevent Ukraine from signing the EU deal, Putin used a carrot and stick approach on Yanukovych.  Russia cut natural gas costs, promised $15 billion aid to Ukraine, but also closed the borders of the custom union to Ukrainian goods for a time.   Yanukovych ultimately scuttled the EU deal.

In early December protests started after Yanukovych announced there would be no deal with the EU

That act triggered a wave of protests that ultimately grew to a revolt forcing Yanukovych to leave the country.   Ukrainians in the West were horrified that the country would turn its back on the west in order to cozy up to an authoritarian regime in Russia.   What seemed a victory for Putin has suddenly turned into a crisis.   His response has been to invade Ukraine, but so far limited to the Crimea.

To Russian nationalists, the Crimea is an integral part of “Mother Russia.”  Yes, Ukraine has internationally recognized borders, and allowing Russia to change them with force violates fundamental tenets of international law.  However, the alternative might be civil war and bloodshed, for a conclusion that probably is no better.   The Crimea has been part of Ukraine for only 50 years, has hardly any ethnic Ukrainians, and would be a small price to pay to get true independence and the capacity to move towards the West.

Still, hardliners in Kiev do not want to give up any sovereignty, and there is fear that this could spiral into other conflicts.  If other former Soviet Republicans disintegrate into ethnic fragmentation the result could be cascading instability.

Yet when Abkhazia and South Ossetia broke from Georgia in 2008, it ironically made it easier for Georgia to pursue its own path without constant crises with Russia.  A Ukraine without the Crimea may be “freed” to turn to the west.   If Ukraine resists to try to keep the Crimea, that could be an incentive for Putin to up the ante, and take more of Ukraine – the places where ethnic Russians still make up a large part of the country.   So would Russia be satisfied with just the Crimea, or might it demand Ukraine be split on broader ethnic grounds?

The 2010 Presidential vote shows a bifurcated country; Yanukovych won the areas in blue

Compare that map to this map of Ukrainian ethnicity – it is clear that the vote followed ethnic lines, meaning that Ukraine is an ethnically divided state.  It is not at all clear that it will be possible to avoid some kind of division, given that there appears to be no compromise between tilting west to the EU, or east to Russia.

Russians are a majority in the Crimea (brown area in the south)

The US and the EU have limited options.  While some hawks want to chug the 7th fleet into the Black Sea and announce complete support for the interim government in Kiev, it’s hard to see how escalating the affair would be American or EU interests, and easy to see how that could set up a path to an even more dangerous and volatile crisis.   It’s also almost impossible to envision Russia simply giving up on control of the Crimea.

I think a division of Ukraine in some way is the best solution.   Both parts of Ukraine have important pipelines, each have oil shale deposits which could be potentially lucrative.  The UN should call for a cease fire recognizing de facto Russian occupation of the Crimea.  If it becomes obvious that Russians in other parts of eastern Ukraine do not want to be with the western portion of the state, talks on a peaceful divorce from the Ukraine should begin, overseen by the UN.   While some will see that as a victory of Putin – Russia forcing the division of a sovereign state to expand its sphere of influence – it is it.  It shows that there are real limits to Putin’s goal of asserting regional hegemony; the western portion of Ukraine would over time be stronger and more prosperous.  That would bring western influence deeper into the region.

One thing is for sure, an escalation of the crisis and violence is not in anybody’s best interest.