Streetwise Professor

Obviously an adherent of the view that the best defense is a good offense, Vladimir Putin responded to a question from a British reporter (Richard Beeston) about the continued presence of Lenin’s corpose in Red Square by bringing up–Oliver Cromwell. Huh?

All was well until I asked him about Vladimir Lenin, whose body still lies in state in Red Square, Moscow. Was it not time to bury him?

The Russian leader’s piercing blue eyes narrowed and he lost his composure: “What about Cromwell, was he any better than Lenin? There are memorials to Cromwell all over Britain. The Russian people will in time decide what happens to Lenin.”

Here’s a more complete account:

Richard Beeston: Thank you Prime Minister. Richard Beeston, The Times, London. Last week we talked about the past, about Russian history and especially about the turbulent 20th century which was fatal for many Russians. I am amazed that with seven years to the centenary of the Bolshevik Revolution, Vladimir Lenin is still lying on display in the Mausoleum in Red Square, with guards standing around him. Don’t you think its a good idea to finally bury him before this event, to help Russia turn a new page? Thank you.

Vladimir Putin: Are you from Great Britain?

Richard Beeston: Yes.

Vladimir Putin: Then I have a question for you. Was Cromwell better or worse than Stalin?

Richard Beeston: Probably just as bad. But he is not displayed on Trafalgar Square, but somewhere in Westminster, at the back.

Vladimir Putin: But there are monuments to him all over Britain, everything in its season. When time comes, the Russian people will decide what to do. History is something that avoids hassle. Next question please.”

Although the Irish might disagree, Beeston was wrong to equate Cromwell with Stalin: the latter’s crimes dwarf the former’s.

More to the point, Putin completely ignores the actual question–the continued presence of Lenin on Red Square.  That’s a different thing altogether than the statues of Cromwell scattered across Britain.

Indeed, the historical comparison is quite illuminating.  After the Restoration of Charles II (whose father Cromwell had beheaded), Cromwell’s corpse was dug up from Westminster, hanged, drawn, and quartered; the punishment meted out to traitors.  His head was displayed on a pike for decades afterwards, and then was sold from hand to hand, and displayed as a curiosity for centuries thereafter.

Continued display in a referential way in the capital vs. symbolic repudiation, desecration, and ridicule.  See the difference?  I knew you could.

And let’s say, counterfactually, that the UK continued to let Cromwell rest in an honored place.  Would that be appropriate?  Would this justify the continued honoring of another mass murderer (who also put Cromwell to shame, BTW)?

By going on the offensive (in multiple meanings of the word), Putin avoids answering, in an honest way, the justification for honoring Lenin long after the USSR fell.  As for the “Russian people will decide”: As if.  When have the Russian people been allowed to decide anything?

Seldom does one see such 190 proof, distilled essence of whataboutism.  (Well, sometimes in the comments at SWP.)  It is a low rhetorical dodge intended to allow the whatabouter to escape confronting the issue head on.  It would be better if Putin gave a full-throated defense of Lenin, or of the propriety of keeping his embalmed corpse on display.  You might disagree with his reasoning, but at least if he answered so he would be respecting the question and the questioner, and acknowledging the weightiness of the issue.

But perhaps the whataboutism is telling: perhaps it betrays that even Putin knows that he cannot make a reasoned and reasonable defense, so he feels compelled to stoop to such discreditable rhetorical dodges.

More substantively, reporting from Putin’s Valdai performance almost universally agrees that it indicates he is planning to resume the presidency.

What, this is news?

Of US-Chinese naval rivalry.  Last week there were a bunch of breathless stories about the Chinese DF-21 “carrier killer” ballistic missile.  I’m not that worried about it by itself.  The oceans are large, and carriers are small by comparison.  Target acquisition and tracking are daunting challenges: you can’t hit what you can’t find and follow.  Moreover, electronic countermeasures will create further obstacles that the DF-21 has to overcome.  Finally, US shipborne anti-ballistic missile capability is maturing rapidly.  Indeed, the ostensible justification for the termination of the missile defense efforts in Poland and the Czech Republic was that the Navy’s Aegis system could do the job more effectively and cheaply.

So why the sudden spate of stories about something that’s not really news?  I think it has little to do with any change in the perception of the threat posed by the DF-21, but has everything to do with AMD.  I think that the Pentagon wants to make it very clear that ballistic missiles are a growing threat in all theaters, and that missile defenses are a key component of American military strength not to be bargained away in some dreamy deal with the Russians.  Raised in the context of increased tensions in the South China Sea and Yellow Seas, moreover, it signals Pentagon efforts to draw attention to Chinese investment in its naval and sea denial capabilities, and the strategic implications thereof.

I would therefore not be surprised to see a steady stream of stories on DF-21 and other Chinese naval initiatives.  This is the biggest long-term strategic issue the US faces, by comparison to which Russia or even Iran pale in comparison.

When I gave a talk about the national energy policies of Russia, China, and Venezuela to a group of State Department and intelligence people a few weeks back, my summary on China was: “If you want to understand Chinese policy as it relates to energy, read Mahan.”  Mahan being Alfred Thayer Mahan, late-19th/early 20th century admiral, and the author of The Influence of Sea Power on History, and other influential works.

If you’ve been following things for the last several months, you’ll have read that things are getting testy in the South China Sea*, specifically over the issue of the Spratleys, a chain of microscopic islands that are believed to hold large amounts of oil.  China has been quite bellicose in asserting its claims over the Spratleys (against competing claims from Viet Nam, the Philippines and ohter countries).  It has basically told the US and the world that the South China Sea is a Chinese lake, and that any US naval presence in that area is unwelcome.

All of this is taking place in the context of a concerted Chinese effort to bolster its naval forces and strengthen its naval presence along the sea lines of communication (SLOCs) over which raw materials flow to feed Chinese factories.  All very Mahanian.

The US response to this has been, to put it politely, supine.  The limp-wristed US response to the Cheonan sinking–and to the complete lack of any Chinese condemnation–is emblematic of this.

But apparently things are changing.  Hillary Clinton’s recent trip to the region–on which SecDef Gates went as well–represents an effort to reverse this.  This is based on a dawning recognition in Washington that American pusillanimity emboldens China and weakens our position in that area of the world.

For a typically Spenglerian interpretation of the situation, read this Mark Helprin piece in the WSJ.  I think Helprin is great for understanding the worst case, and what must be done to to avoid it.  As a prognosticator, he is too gloomy even for me.

Information Dissemination, a naval blog, is also alarmed, though.  And I must emphasize that ID is NOT a habitual, reflexive anti-administration, anti-Obama source.  Indeed, it has been broadly supportive of Obama policy initiatives.  But it also recognizes that risks have risen in Asia because of the administration’s palpable weak policies:

Beginning in 2010 a lot of folks began to legitimately question whether the Obama administration had the balls to stand up to China. The private jokes that Tim Geithner was hired to kiss ass in Asia are actually very funny – but worse, hard to argue with. In virtually every policy area, at the beginning of 2010 the United States was beginning to look weak and inept, and when the Cheonan was sunk off South Korea – it perpetuated the image of weakness by the United States once it became clear the Cheonan sinking was an attack, but the US wasn’t going to do anything in response – for several legitimate reasons.

By July the US appeared to be on the brink of a serious perception and credibility problem in the Pacific, and at the same time Russia and China was heading to Seoul to discuss the Cheonan sinking. I strongly believe that China made a strategic miscalculation, because had China and subsequently Russia backed Seoul regarding the sinking – it would have been recognized by the region that China’s influence on this major regional security event was greater than the influence of the US. Because China could not support the findings of the international Joint Investigation Group, it signaled to the rest of the region that China is still not a responsible or reliable partner in the security conditions of the Pacific. Despite what the tone of the TIME magazine article suggests, the government of every single major Pacific nation besides Russia and China believes the report that North Korea sank the Cheonan with a torpedo.

In mid-July I heard the questions being asked again – is there anyone in Washington that has the balls to stand up to China? Well, timing is everything, and after a year and a half of attempting a soft approach with China in an effort to open up the relationship – an attempt that had clearly failed - the Obama administration has changed policy in the Pacific.

The announcement by Hillary Clinton that the United States intends to play a prominent role in a new regional effort toward resolving territorial disputes in the South China Sea is the single most important foreign policy action by the United States directed at China in the 21st century. While a lot of serious people have been wondering who has the balls in Washington to stand up to China, it turns out that they have been hiding up Hillary Clintons skirt the whole time. Robert Gates was in the room in Vietnam when Hillary Clinton made this announcement – so this policy change isn’t just some State Department rogue moment by the Secretary of State.

We do not know how this will play out or what is coming next, but this is an enormous change in policy towards China. I don’t think the Obama administration wants a war with China, but they have no longer decided to be nice to China – because China sent the message that nice guys will finish last with them.

It’s about time.  Ditto with the administration’s much tougher line with Turkey.  (A lot of what has happened in Turkey is obviously domestically driven, but US policy towards Turkey has been a disaster since early in the Bush administration.  We are paying the price for this in the Middle East, the Caucasus, and the Caspian.)

In any event, as if we don’t have enough fires to deal with, keep an eye on the South China Sea, and US naval policy and foreign policy towards China.  This is a big deal.

And it relates to bigger themes.  I’ve mused whether the current historical era is more like the 1970s or the 1930s.  In my “optimistic” moments, I think the former, as dismal as that is to contemplate.  But more and more I think the 1930s is the better analogy.  And the events in east Asia are just one thing nudging me to that conclusion.

* Ironically, this morning my wife was doing some genealogy, and listening to recordings of her grandmother reminiscing about her family.  She mentioned one relative, a beauty, who said she would “walk into the China Sea when she was no longer attractive to men.”  The weird part is that her husband died in Taiwan.

Ten years ago today, the Oscar II class Russian submarine K-141, the Kursk, sank with all hands in the Barents Sea.  The incident revealed a great deal about the decrepitude of the Russian Navy, and military more generally.  The Kursk was the pride of the once mighty submarine fleet, most of which was rusting at dock in 2000.  Despite the fact that it was one of the most modern Russian subs, and one of the few remaining operational, it was destroyed almost certainly by the failure of welds and/or gaskets in a test Shkval torpedo that resulted in the leakage of its hydrogen peroxide fuel onto metals and oxides in the torpedo, resulting in a chemical reaction that culminated in an explosion of the fuel and a kerosene tank; other nations had discarded the use of H2O2 as a torpedo propellant due to its extreme volatility.  (Russia did withdraw all high test peroxide torpedoes from service after the Kursk catastrophe.)

Inspections of the type of torpedo implicated in the explosion undertaken in 2000-2001 found corrosion and decayed gaskets.  A torpedo of the type that caused the sinking was dropped while being transported to the Kursk prior to her fatal voyage, but it was loaded nonetheless, and could not be unloaded because the cranes necessary to do so were not working, and had been inoperative for some time. The crew, which had virtually no sea experience whatsoever, had never handled the Shkval torpedoes.

The blast blew off a torpedo tube door that was not closed properly due to a design and/or manufacturing flaw.   This flooded the compartment and caused the ship to being sinking.  The explosion ripped through three compartments of the ship, including the control room, which should have been insulated from the blast by a bulkhead, but was not, because it could travel between compartments via a ventilation shaft.   The blast perhaps disabled the crew in the control room:  many suffered indications of trauma.  Whether it was that, or a failure to react properly to the sinking condition of the ship, they did not activate an emergency blowout procedure to shoot the ship to the surface.  The ship hit bottom at speed, digging a 2 meter hole into the seabed.  The force of the impact detonated additional torpedoes that ripped through all compartments forward of the reactor space.  Some crewmen in the aft spaces survived; for how long is a matter of conjecture.

Although other Russian ships in the exercise heard the explosion on sonar, none reacted, all believing it was part of the drill.  The loss of the sub was not known for some time in part because an emergency buoy did not deploy; if it had, the ship would have been discovered within an hour, instead of the 31 it took in the event.  It had been deliberately disabled to prevent an accidental deployment while the sub was operating in the Mediterranean the prior year.

After some hours, the Navy realized the ship was in extremis, and dispatched a submarine rescue vessel.  The lack of communications between the Kursk and the exercise flagship, the Piotr Velikii, was evidently written off to the fact that communications breakdowns were routine.

It took 31 hours for the submersible to reach Kursk, but it was unable to attach to the rescue hatch on the sub.  The search took so long in part due to the fact that the submersible’s batteries had not been replaced, requiring the vessel to shut down power for extended periods.

It is interesting to note that the Northern Fleet’s rescue equipment had been sold off for scrap or sunk as “redundant” in the mid-1990s.  (I wonder who pocketed the money from the scrap sales?)

All in all, a tragic testament to the state of the Russian fleet in 2000.  And remember, this occurred in the nuclear submarine Navy, which by all accounts was–and should have been, given the extreme technical and operational demands of the service–the most capable branch of the Russian Navy.

But far more revealing—and disturbing—was the mendacious reaction of the Russian military and political establishment.

Most crucially, it refused immediate American and British offers of submarine rescue vessels.   They eventually agreed to British and Norwegian help—but only four days after the accident, by then far too late to do anything, for the vessels could not arrive for two days after the grudging acceptance of the offer.

Even then, the Russian Navy’s actions towards the would-be rescuers was monstrous.  The higher ups actively attempted to sabotage the Norwegians by lying to the rescuers about the Kursk. They said the ship was resting at a steep angle–false.  The said the escape hatch was damaged–false.  They went so far as to state deliberately that the rescue hatch opened counterclockwise, not clockwise as was actually the case.  Imagine, working at 100 meters in the freezing Barents Sea, trying to open a hatch, and turning it the wrong way: would you conclude that the hatch was broken?  How sick is that?  What was the purpose?  The Norwegian admiral in charge was incensed at the Russian behavior, seeing as it endangered his men.

In the days after the incident, the Navy and the government issued a blizzard of non-information, mis-information and dis-information.  At first, the Navy denied that anything was amiss, acknowledging a mere “technical difficulty.”  The government denied the problem for some time; it took two entire days to even admit that the ship “was in serious trouble,” and then lied about when the incident had occurred.  Indeed, the day after the sinking, the Navy commander told the press that the exercise had been flawless.  Yes: flawless.

They never used the word “sink.”  They claimed the entire crew was alive.  They claimed they were in communication with the crew, and that the ship was supplied with air and power from the surface.  The Navy excused its evident lack of preparation for a rescue by bewailing the weather conditions and strong currents, even though the weather was fine and the currents benign.  All complete and outrageous fabrications.

Enraged by the duplicity, at one Navy press conference, the mother of a Kursk officer, Nedezhda Tylik, launched into a screaming denunciation of official dishonesty.  In an event captured on film, a nurse was seen to move up behind Tylik, and inject her with a hypodermic needle.  Tylik collapsed and was taken from the room.  (A still photo is available here; I have not found the video online for free despite a diligent effort; there is a documentary that has the film that can be purchased here.)  She first claimed she had been sedated against her will, and the Navy said that it had indeed given her a sedative; in an Orwellian way, it acknowledged the “solicitous administration of needed tranquilizers.”

Then, remarkably, in the aftermath of a domestic and international outcry, the Navy denied that it had sedated her, and Tylik also recanted, claiming that she had only been given her heart medication at her husband’s request.  Yeah, sure.  Who you gonna believe?  Them or your lying eyes? (Tylik maintains this version in the documentary.  But why did neither she nor her husband make that statement initially?)

Even worse were the repeated statements by Russian Navy officials and Duma politicians that US submarines were to blame.  Specifically, they mooted the theory that a US Los Angeles class boat monitoring the exercise had struck the Kursk, holing it and causing it to sink.  At the notorious press conference in which Tylik was tranquilized, Northern Fleet commander Admiral Popov claimed he would spend the rest of his days finding out who “organized” the Kursk’s destruction.  I’m sure he and OJ can team up on their investigations.

Those peddling the conspiracy theory gave no explanation at this remarkable result, by which a boat displacing 7000 tons submerged could strike and sink one displacing 24,000 tons.  It would have had to been either a refutation of the laws of physics, or a very damning reflection on Russo-Soviet submarine construction.   (No prior collision between a US boat and much smaller Soviet craft had ever led to such a catastrophic result.)

But of course, they never believed it.  It was all just a typically Soviet reaction in which the evil Americans are responsible for every Russo-Soviet disaster.

They did apparently convince one French filmmaker, who produced a documentary pushing this cock and bull story, with a twist.  The Frenchman–whom I shall not dignify by name–claims that the USS Toledo collided with the Kursk while shadowing the exercise; a trailing sub, the USS Memphis, heard the Kursk open its torpedo doors after the collision, and to defend Toledo fired a torpedo at the Kursk that miraculously hit the doomed sub right in the torpedo room, causing the detonation.  The clinching evidence, according to the film, was a clean round hole in the Kursk’s hull, telltale evidence of a hit by a torpedo with a shaped charge.  Uhm, the Mk 48 torpedoes that US subs carry don’t use shaped charges.  (Air dropped Mk 50s do use such warheads.)  Moreover, Mk 48 torpedoes don’t work by detonating directly against the hull of the sub.  And the Toledo never underwent a long stint in the yard for repairs, as would be required after a collision.  (And what is it with French fellow traveler filmmakers, not only this guy but the one who did the “documentary” claiming that the 911 attack on the Pentagon was actually an American missile strike?)

Putin, then President for a mere seven months and some days, reacted with . . . no, it would be more accurate to say he didn’t react.  But then he engaged in the damage control methods he has employed ever since (and is using again in the fires).  He promised a new apartment and a cash payment to the families of the dead sailors, and gave medals to the dead.  The payment to the Kursk dead was two orders of magnitude bigger than the standard death payment for Russian military dead.  But the ordinary Russian military dead weren’t a public issue.  As a further PR gesture, Putin also decreed the expenditure of an amount equal to twice the Navy’s submarine force operating budget to raise the ship so its crew could be buried, with full Orthodox rites.  So: defuse a crisis by throwing out blood money promiscuously.

In fairness to Putin, it should be noted that the Navy lied to him as shamelessly as it did to the world.

Putin was initially savaged by the Russian press, but surprise, surprise, within days the Russian press uniformly lionized him.  He has been much more effective at managing the press ever since.  They now skip right to the lionizing part, without fail—no matter how badly he fails.

Putin was at his most revealing when, less than month later in an appearance on Larry King Live, he responded to King’s question “What happened to the Kursk?,” by first pausing for some time, and then grunting through a creepy and tight semi-grin: “It sank.” It was a disturbingly bloodless performance.

Although the Kursk sank before I began to follow Russian developments as closely as I do today, I did track the Kursk episode with some interest.   Looking back, it was a very revealing experience.  Much of what I have written on SWP in the past four years was foreshadowed by the Kursk incident, the official incompetence and mendacity most notably.

I think it also heralded the death of any opposition press within Russia, for never again was Putin subject to the kind of open criticism he suffered in the days immediately following the sinking.  He soon launched an attack on all independent media within Russia.  Knowing who he is and from whence he came, it is likely that he would have strangled the press eventually.  But I have little doubt that the attack was accelerated by Putin’s rage at the criticism he received; he admitted that he “did not think about public relations.” Never again, he concluded.  No, not that never again would a disaster of such magnitude occur—for there has been a litany of disasters in the past 10 years (think Beslan and Nord Ost and on and on)—but never again would he permit an honest accounting of them.  It is one thing at which he has succeeded admirably.

You could do a lot worse to learn about Putin and Putinism and the Russian military establishment than by revisiting the sad history of the cursed Kursk.

May her crew rest in peace.

Two stories, pathetic in different ways, out of Russia.

Story 1 is that one of the Russian spies exchanged last month, Mikhail Vasenkov a/k/a Juan Lazaro much prefers being Juan:

But the senior spy among them says no thanks. In a plot twist rare in the annals of espionage, he wants his Juan Lazaro fake identity back.

There’s only one problem. The real Juan Lazaro died 63 years ago in Uruguay at age 3, a relative says. The spy used the dead toddler’s birth certificate to build a persona.

From a Moscow apartment where Russia’s government has him lodged out of public view, the veteran agent has sent word that he and his wife, deported together in the spy swap and separated from their 17-year-old son, want to use their Peruvian passports to return to Peru in the coming weeks and rebuild their lives as the Lazaros.

“He doesn’t want to stay in Russia,” says his American lawyer, Genesis Peduto, who talks to him on the phone.

“He says he’s Juan Lazaro and he’s not from Russia and doesn’t speak Russian. He wants to be where his wife is going, to her native country, where it will be easier for Juan Jr. to visit” from New York. “His family comes first.”

I recall reading (can’t find the article) that one of the spies was quite militant and proud of his actions during his pleading–I thought it was Lazaro/Vasenkov, but maybe I was wrong.  Whatever, he ain’t militant now.

I would agree that a future in Russia would be pretty bleak.  As Lazaro, he cut a somewhat macho figure.  Not quite the Dos Equis Most Interesting Man in the World,  but “Latin” and a little exotic and romantic.  He lived in New York and could travel.  The idea of growing old in a land that is now foreign to him, speaking a now unfamiliar language, far from his beloved son, would be extremely oppressive, I’d think.  Karaoke with Putin is small compensation for that–especially in the knowledge that it’s all downhill from here.  Oh, what a tangled web we weave, when first we practice to deceive.

Update (8/10/10 1548) h/t Mossy. Yes, my memory was correct: “Lazaro” had made a militant statement to the FBI:

He also said that his house in Yonkers, outside New York City, had been “paid for by the ‘Service’ and although he loved his son, he would not violate his loyalty to the ‘Service’ even for his son,” according to the document.

That didn’t last long.  Maybe he was posing for some reason, such as trying to get on the good side of the SVR figuring that it would stand him in good stead in the event of a swap.  Or, maybe he meant it when he said it, but now he recognizes the reality of the situation.  I sense that he believes that “the Service” has betrayed him, and is discarding him now that he is worse than useless to them–that he is an embarrassment.  The Chekist karaoke, and Putin’s promise of a bright future, look even more like propaganda now.  It’s also worth noting that “Anna Chapman” is royally peeved at the loss of her UK passport.  Living on the SVR’s dime in the US or UK makes it easy to be “patriotic”: living on your own in the RF, not quite so attractive.

Story 2 is about a famous seed bank in Russia, the Pavlovsk Experimental Station.  A seed bank that 12 scientists starved to save during the horrific Siege of Leningrad.  But now the bank stands in the way of real estate development.  It sits on state property, which has been granted to developers.  The tale is incredibly Orwellian.

Orwellian feature #1:

On December 25, 2009 the Federal Agency for Public Estate Management under the Russian Ministry of Economic Development issued two resolutions (Orders No. 2058-R and No. 2061-R). They sanctioned termination of perpetual (irrevocable) tenure over lots 2 and 18 granted to VIR’s Pavlovsk Experiment Station and conveyance of this land to the Federal Fund of Residential Real Estate Development no later than in three months.

Uhm, how to you terminate “perpetual (irrevocable) tenure”?  Not so irrevocable or permanent, I guess.

Orwellian feature #2.  The Station is trying to contest its eviction in court.  The real estate developers have advanced a novel argument to fight the claim:

In what appears Kafkaesque logic, the property developers argue that because the station contains a “priceless collection”, no monetary value can be assigned to it and so it is worthless. In another nod to Kafka, the government’s federal fund of residential real estate development has argued that the collection was never registered and thus does not officially exist.

It is priceless, so it is worthless.  Wrap your head around that enigma, riddle, puzzle combo meal.  It’s been there for 85 years, survived the most horrific siege in modern history, has an unparalleled collection of genetic material, and an “irrevocable lease,” but because some piece of paper was not filed, it doesn’t exist.  And how do you give a perpetual lease to something that doesn’t exist?

I wonder who got paid how much to make this happen.  The whole episode is truly revolting.

My recent post on the Russian wheat embargo, which I considered rather benign, drew the ire of a reader who emailed me to say that I’d written “another BULL SH*T Russia post” (caps in original–but not the asterisk).

Thanks so much for writing!  I’m really looking forward to your Christmas card!

Rereading the post, I found nothing exceptional.  The title was the most inflammatory thing about it.  But I think the gist of the post is correct, including the title.  And I have a very strong historical basis for my claim that embargoes such as this one are highly damaging to a nation’s commercial reputation, with long term economic consequences.

So, wait for it . . . SWP is about to say “whatabout!”  As in “whatabout Nixon’s 1973 soybean embargo?”  An absolute charlie foxtrot, like most of Nixon’s economic policies (e.g., wage and price controls).  God spare us another such “conservative.”

In 1973, demand for soybeans spiked due to an El Nino of unusual severity that devastated the Peruvian anchovy catch and central African peanut production.  (Can’t blame global warming or CO2 for that!  Indeed, that was a time when Global Cooling was becoming the angst du jour.)  These were major sources of protein for animal feed.  The only real substitute was soybean meal, so the loss of anchovy and peanut production drove up demand for soybeans, and the price with it.  Meal prices doubled, and soybean prices increased 81 percent.  The US livestock industry was hurt by the higher prices, and so Tricky Dick imposed an embargo on US exports of soybeans and soybean meal.

US prices dropped substantially, but prices elsewhere, notably Japan and Europe, skyrocketed.  Japan in particular was deeply disturbed, and lost confidence in the reliability of the US as an exporter.  Japan imported 92 percent of the soybeans it consumed from the US, and was seriously injured by the loss of this source of protein, and the resulting rise in food prices.

It actively sought alternative sources, and identified Brazil as the most attractive source.  The Europeans similarly considered Brazil a desirable substitute for the US.  There was a considerable increase in investment Brazilian soybean production and infrastructure.  Although there is some dispute as to the exact contribution of the US embargo to Brazil’s becoming a  leading soybean exporter, it is widely agreed that the embargo materially contributed to Brazil’s rise to leadership in this commodity.

More generally, the embargo damaged US-Japan relations.  Agriculture Secretary Earl Butz admitted that the embargo was a serious policy error (while at the same time defending Nixon over Watergate).

As a general rule, I oppose embargoes.  The 1980 embargo was a bad idea.  So was Ford’s 1975 mini-embargo.

So this isn’t a Russia thing or a Putin thing.  It is an economics thing.  Restricting trade is a bad idea.  And one of the effects of an embargo is that it harms the commercial reputation of the country imposing the embargo.  Indeed, imposing embargoes at exactly the time when importing nations are most in need of the commodity is particularly damaging; fair weather suppliers, like fair weather friends, are not friends at all.  Once you get that rap, people will find ways to reduce their reliance on you, which will have long term consequences.

And given Russia’s track record on trade and embargoes, it has precious little reputational capital to draw upon in such circumstances.  It has even less now.  It wants to build up its ag export business in a big way.  It just made that a whole lot harder.  More Putinist short-termism that will impose long term damage on the Russian economy.

What’s more, the conjectures in the post about Kazakhstan and Belarus were more than fair, and were indeed echoed by a highly respected independent source.

So, Walter: not BULL SH*T at all.

Here are the effects of an embargo.  It helps domestic consumers, but hurts domestic producers.  The domestic consumers’ gains are typically short lived, but the impact on domestic producers can be long lasting due to the reputational damage.  It is especially harmful to foreign consumers, like the Japanese in 1973, and like Egyptians, Africans, etc., today who are major importers of wheat and who will be greatly harmed by the higher prices resulting from the embargo; so if you’d like to hurt very poor Egyptians and Africans to help relatively well-off Russians, this is a policy for you!  Foreign suppliers are helped–North Dakota and Kansas and Texas should send Putin a Candygram.

But when you net the losses against the gains, the former are bigger.  Embargoes create deadweight losses.  They make the world poorer.  That’s why I don’t like them, whether imposed by Jimmy Carter, Richard Nixon . . . or Vladimir Putin.  (Although, it is interesting, don’t you think, that this something these three have in common, besides being execrable national leaders?)

The visitors’ center at the Waterloo Battlefield plays clips from the 1970 Sergey Bondarchuk film, Waterloo.  The museum gift shop has DVDs of the movie in French, Dutch, German, and some other languages, but not English.  But I saw an English copy on Amazon (with Chinese subtitles!), so I bought it and watched it over the weekend (subtitles off).  I’d seen the movie as a 10 year old when it first came out: I haven’t seen it since.  It was cheesy in spots, and Rod Steiger was over the top as Napoleon, but the battle scenes were pretty amazing even 40 years after they were filmed.

The movie was an expensive collaboration between the Soviet Bondarchuk and the Italian producer Dino De Laurentiis.  The battle scenes are immense and elaborate.  And the interesting thing is that 15,000-odd Soviet infantrymen were the combatants on film, and that Cossacks were among the 2,000 cavalrymen.  The Soviets reengineered the landscape at the shooting site in Ukraine, building replicas of buildings like Hougoumont and Le Haye Sainte, constructing hills, planting fields as they were at Waterloo. and installing an elaborate underground irrigation system to create the mud that was an important feature of the Waterloo battlefield and battle.  At the time, it was a hugely expensive movie, and would have been more so if it had been filmed anywhere but the USSR.

So if Russians playing Frenchmen lose a big battle, who gets credit for the win?

Watching Waterloo motivated me to revisit Amazon, where I bought another Bondarchuk epic with a reputation for its elaborate battle scenes, War & Peace.  With English subtitles, which will be on.

On 22 July, 1864 occurred one of the most remarkable battles of the Civil War, but one that has not received the attention it deserves.  It is sometimes called “The Battle of Atlanta” but it was also known as the “Battle of July 22nd.”

The battle was part of newly appointed Confederate commander John Bell Hood’s effort to smash back Sherman’s relentless approach to Atlanta.  On the 21st, Leggett’s division of Blair’s XVII corps took Bald Hill on the Confederate right in a bold assault.  In moving forward to occupy the line Leggett’s men had seized, the left flank Sherman’s Army of the Tennessee was in the air.  Perceiving the chance to mount a second Chancellorsville, Hood endeavored to strike the vulnerable flank.

Hood’s plan was a good one (especially for Hood), and tolerably well executed.  He placed three strong divisions on the vulnerable Federal flank, advancing north.

But Hood was not facing the dodgy XIth corps of Chancellorsville infamy: the Army of the Tennessee was a much sterner opponent.  Indeed, in my view, this force was the most effective body of troops, man for man, to fight in the Civil War.  It had experienced plenty of combat, and so was tough and battle tested.  But it had not suffered the shattering losses of men and officers that other forces, like the Army of the Potomac or the Army of Northern Virginia had.  It had never suffered a serious reverse, and was highly confident.  Its men were highly self-reliant.

So rather than running when finding a large force on their flank, the Federals fought fiercely.  A small brigade of Iowans directly on the vulnerable flank stood and splintered the assault of Cleburne’s vaunted division.  Other parts of that division swept on, and attacked other elements of the XVIIth corps from the rear.  But while Civil War units would typically break when attacked from the rear, the Federals just jumped to the other side of their earthworks and beat off the attack, at times in hand-to-hand combat.  The commander of the 15th Iowa, William Belknap (later disgraced in a scandal in the Grant administration in which he served as Secretary of War), grabbed the 45th Alabama’s Col. Harris Lampley by the lapels, pulled him over the earthworks and shouted in his face: “Look at your men.  They are all dead.  What are you cursing them for?”  When another assault came from the direction of Atlanta–their former front, their new rear–the Federals just jumped back to the right side of their breastworks and beat off that attack too.

The Rebels eventually pushed back the Federals to Bald Hill, where a vicious, muskets in the face fight broke out over the embrasures of a small fort on its summit.  The Confederates assaulted again and again, but were beaten back by Leggett’s men.  The fight came so intense that when the commander of the brigade holding the hill, Manning Force, wounded terribly in the face, asked for a flag, his frightened aide brought him a white rag, thinking that Force intended to surrender.  Force cursed the man–”I meant an American flag.”  Force’s men fought on.  (Force was awarded the Medal of Honor.)

Another Confederate assault further north gained a temporary lodgement in the Federal line, but a smashing counterattack pushed them back.

By the end of the day, the Confederate assault had been crushed everywhere.  Exact casualty figures are in doubt, but best estimates are that Hood’s army suffered 4 times the casualties as the Army of the Tennessee.

One Federal casualty was the AotT’s commander, James Birdseye McPherson.  He was beloved by many, most notably Grant and Sherman.  Sherman cried when McPherson’s body was brought to his headquarters on a makeshift stretcher fashioned from a door.  McPherson was bright and engaging, obviously, but something of a disappointment as a battlefield commander.

But to me, one of the most interesting and tragic casualties of the battle was someone you’ve probably never heard of, Lucien Greathouse, the commander of the 48th Illinois.  He died leading a local counterattack to save Gay’s Iowa battery. He must have been a remarkable leader.  Sherman and Logan (McPherson’s replacement as army commander) eulogized him, as did Gay and his replacement as commander of the 48th.  All did so in terms that were remarkable, compared to the mention that most deaths merited by that time of the war when so many had already perished.

He was 22 years old.

Today the field of the 22nd is an urban neighborhood.  You can trace some of the action, and see some markers, but the battlefield is essentially obliterated.  Bald Hill–named “Leggett’s Hill” afterwards by the veterans–is no more. It is now an interchange on the interstate.  During the 1930s, the government decided that it had enough money to preserve one battlefield from the Atlanta Campaign.  The choice came down to the field of the 22nd, and Kennesaw Mountain.  The latter won out, and the field of the Battle of Atlanta was swallowed by the city that gave it its name.

The field is gone, but the battle should not be forgotten.  It was one of the most remarkable feats of arms seen in a war that featured many.

I won’t testify to Conrad Black’s ethics or business acumen, but he is a good writer and a decent historian who has some interesting takes on things.  Something in a recent Black piece caught my eye as a counterpoint to Lavrov’s claim that it is Russia’s “historic mission [to save] Europe from forced unification” (a thinly-veiled jab at NATO, btw).  Black argues that the world would have been a better place had Napoleon prevailed in Russia:

These lamentations of what might have been are generally fruitless and tiresome, but can be useful, because the perverse topiary work of historians often needs questioning. I will not agitate the horses in this stable with further reflections on the American Revolution. But the defeat of Napoleon in Russia, from which Britain more than made up for its échec in the New World, is generally reckoned a good thing.

Apart from a few obscure Frenchmen, I am the only historian I know of who recognizes what a disaster the defeat of Napoleon in Russia was for the world. As a result of it, the Russian nativists prevailed over the Western-emulating successors of Peter the Great and traditionalist myth-makers led by Tolstoy put over the fraud of the nobility of medieval, barbarous, yet somehow Holy Russia, with its hopeless serfdom, mindless oppression of the dull Slavonic masses, pogroms, and indifference to Dostoyevskyan, not to say Stalinist, violence.

Napoleon, as Goethe and Beethoven famously decided, was no great agent of democracy. But by his lights, and certainly by the primitive standards of Eastern Europe, he was an agent of enlightenment. If he had been able to assert any influence at all on Russia, as he did on most of the rest of Europe, he would have ended serfdom, created some sort of legislative tradition, and modernized the creaking Russian state. He would have anchored Russia in the West, as Churchill, Roosevelt, Truman, Eisenhower, de Gaulle, Kennedy, Nixon, and Reagan, working with Adenauer and Kohl, anchored Germany in the West. The lives of Lenin and Trotsky would have been the longer and less violent annals of Ulyanov and Bronstein, and the life of Stalin, the Siberian bank robber Djugashvili, shorter and less consequential. Charles XII was an adventurous, swashbuckling Swedish parvenu, Hitler a genocidal maniac; Napoleon was the only serious invader Russia has had who would actually have improved the country, however inexcusable his presence in the country at the head of the Grande Armée was (and inexcusable it was).

Interesting, and provocative.  I too am no real fan of counterfactual history.  It is an ill-posed problem.  But it cannot be gainsaid that massive social and legal change followed in the train of Napoleon’s armies.  Many of the changes were modernizing and salutary.  (Which is why aforementioned Goethe and Beethoven were originally supporters of Napoleon.  Beethoven composed the Eroica Symphony in Napoleon’s honor, only to rip Napoleon’s name from the title page after he declared himself Emperor.)

I’m not going to spend too much time on this, because considering the might have been is for the most part an idle endeavor.  But it is a quite contrasting take to Lavrov’s.  Whereas Lavrov adopts an almost Nicholas I-esque attitude of Russia as the savior of Europe from its own demons, Black argues that at least one of those demons would have done Russia some good, and made the world a better place.

Feel free to discuss among yourselves.

While doing her research at Heritage, Renee came across this 2000 article in Regulation by Thomas Oatley. It discusses the Basel capital standards, and is amazingly prescient:

Faced with this simple risk classification scheme, banks altered their lending behavior in ways that  regulators did not expect. For example, the risk classification provides incentive for banks to hold riskier loan portfolios than they would have held otherwise. Because the regulations assign the same risk  weighting and capital costs to all loans within a given category, banks have incentive to shift toward higher-risk, higher-interest assets within each category. For example, a loan to a triple-A rated corporation receives the same risk weighting as a loan to a heavily indebted start-up firm, even though the loan to the start-up has a much higher probability of default. Because the banks charge higher interest to the start-up, they are more inclined to make that loan than to lend money at a lower interest rate
to the secure corporation.

The risk classification scheme also offers incentive for banks to engage in regulatory capital arbitrage. When capital requirements are not based on a standard like the probability of insolvency, banks can often restructure their portfolios in order to reduce their regulatory capital requirements without reducing their risk. By securitizing assets, banks can unbundle and repackage risks to transform on-balance sheet assets into off-balance sheet assets that fall into lower risk weight categories. While reliable information on the scale of regulatory capital arbitrage is not available, the Federal Reserve has estimated that securities used to engage in regulatory capital arbitrage account for more than 25 percent of total assets of the United States’ ten largest banks. In several individual cases, those securities account for close to 50 percent of total assets.

The problems created by regulatory capital arbitrage pertain less to the off-balance sheet assets and more to the on balance sheet assets. Banks can only securitize high quality assets at acceptable cost; thus, regulatory capital arbitrage moves higher quality assets off banks’ balance sheets in operations referred to as “cherry picking.” This causes the average credit quality of banks’ on-balance sheet assets to deteriorate as high quality assets disappear and low quality assets remain. Against this lower-quality  balance sheet, the Basle Accord’s eight percent capital requirement may be insufficient and banks’ capital ratios may provide a misleading measure of banks’ true financial condition. Because market participants use capital ratios to determine the health of lending institutions, the weakened quality of this information may harm market discipline. [Emphasis added.]

That is an eerily accurate description of a process that accelerated in the 2000s, and culminated in the Financial Crisis.  Whether it was AAA CDOs or Greek government debt, banks loaded up on investments that received highly favorable capital treatment under Basel.  And it was those things that blew up the banks–and could blow them up again.

Ironically, Basel was intended to increase the rigor of capital regulation to make banks safer.  But as I’ve written repeatedly over the past year, capital requirements essentially impose price controls.  In this instance, the prices relate to risk.  But the price controls underprice some risks, and those are the ones that attract financial institutions like moths to the flame.

Enhanced capital requirements are again being touted as a way of preventing the next crisis.  But the Basel Rules were a response to a crisis–the Latin American debt crisis–that paved the way for the next one.

If the incentive system encourages financial institutions to take on tail risks (due, for instance, for implicit government guarantees), those institutions will find the vulnerabilities in the capital requirements through which they can smuggle such risks onto their balance sheets, like hackers identifying and exploiting each new vulnerability in Windows.

The existence of vulnerabilities is inevitable–no centrally created set of risk prices will be even close to right.  Which means that enhanced capital requirements provide a false sense of security.

The problem is that the ability of the institution that can price risks more accurately–the capital markets–is fatally undermined by the very real prospect of bailouts of institutions that fail.  That is the Original Sin, and as long as we remain in that fallen state, a future crisis is almost inevitable, capital requirements or no.  Indeed, the main effect of capital requirements as implemented will be to determine exactly what causes the crisis, not the likelihood of its occurrence.