Streetwise Professor

April 16, 2008

Facts are Stubborn Things

Filed under: Military,Politics,Russia — The Professor @ 9:11 am

The essence of Putin’s argument that the American missile defense system in Europe is directed against Russia is that since the ostensible reason–defense against an Iranian missile attack–is palpably implausible, its only possible purpose is to undermine Russia’s nuclear forces. It will be interesting to see how Putin and Russia respond to this intelligence revealed by Jane’s Intelligence Review:

Avital Johanan, the editor of Jane’s Proliferation, said that the analysis of the Iranian site indicated that Tehran may be about five years away from developing a 6,000km ballistic missile. This would tie in with American intelligence estimates and underlines why President Bush wants the Polish and Czech components of the US missile defence system to be up and running by 2013.

I await Russia’s reaction with baited breath. If the reaction is just more denial and vitriol, it will be clear that the Russian position is pure posturing intended stymie the United States, just another part of an obstructionist foreign policy that aims to profit opportunistically from conflict, especially turmoil in the Middle East–turmoil that just so happens to redound to Russia’s economic benefit (via higher energy prices.) Alternatively, if Russia responds to the information seriously, there just may be some hope that Russia will play a constructive role in corralling Iran.

Overcoming The Constraints of Traditional Society in Iraq

Filed under: Military,Politics — The Professor @ 8:52 am

I just finished an excellent little book by Harvard professor Robert H. Bates titled “Prosperity & Violence.” The book analyzes the impact on development of kin and tribes; private enforcement; honor and revenge; and the transformation of predatory violence aimed at expropriating property rights into “tamed” violence that protects such rights. Bates’s analysis emphasizes similar points to the North, Wallis, Weingast “Natural State” theory. A key paragraph:

Control over the means of violence remains in the hands of private parties; kin, community, and political rivals have yet to be disarmed. In such circumstances, much that is elevated cannot be attained; much that is desirable cannot be secured.

Reading this brought to mind a word that is not mentioned in Bates’s book: Iraq. On the one hand, the implications are depressing; Bates shows that it is very difficult to escape the cramping limits of traditional, tribal, kin-based society. On the other hand, there is hope; societies have escaped these limits. Historically this has been a painful, time consuming process. The question arises whether the process can be accelerated, perhaps through outside intervention. It appears that the Maliki government is taking the first, tentative steps necessary to do so, by taking on the Shiite militias. The Anbar Awakening is part of the process too. These events will not unfold in a straight line, and there will be setbacks aplenty. But it is encouraging that there are signs that the problem has been identified, and the nettle is being grasped. It is doubtful that Iraqis alone could overcome the bounds of tribe and tradition, but with American force that can help the government tamp down the arbiters of private violence, it is possible–just–that Iraq can escape the ties that bind them to a dysfunctional past and follow the developmental path that Bates describes so succinctly, and so well.

April 14, 2008

That’s the Way to Win Jacksonian Hearts!

Filed under: Politics — The Professor @ 8:31 am

I’ve opined a couple of times that the Democrats’ big vulnerability is “Jacksonian” voters in swing states such as Pennsylvania, and that Obama is particularly vulnerable to large scale defections from such voters. I acknowledged that bigotry might be a–small–reason for this. It now appears that the real bigot is Obama; and that he has seriously increased the risk of defection of this key voting block. His disdainful dismissal of the benighted gun loving freaks in Jesusland to an audience of Lotus Eaters in Marin County (!) was a true gaffe–in the Michael Kinsley telling what you really think sense of the word. Given his wife’s more candid remarks; his associations with Reverend Wright, Bill Ayers, Bernadine Dohrn, and other assorted hard lefties; the fact that his mother was an anthropologist; the adoration which he receives from the most “progressive” precincts of academia; it is pretty clear that Obama’s remarks reveal his true regard–or lack thereof–for rural Pennsylvanians and millions of their compatriots in the South and Midwest. He shall reap what he has sown. It may well cost him the election.

Many have noted the condescension dripping from Obama’s remarks. That much is obvious. What has received less attention is how badly this reflects on Obama’s carefully cultivated image as a conviction politician who has the ability to unite America. Contrast Obama’s comments in California to his attempt to persuade Pennsylvania voters that he respects and supports their right to bear arms (in spite of his long history of supporting onerous gun control.) The gun grasping gaffe reveals that Obama is just another politician who will say what the audience in front of him wants to hear; that he will appeal to their preferences and prejudices in order to gull them into voting for him. This is par for politics, but it is especially damaging to Obama because he presumes to transcend politics. Thus, condescension is the least of Obama’s problems.

Obama was in his element in Venusian Marin County. One can imagine that uniform-obsessed pinhead Matthew Debord nodding vigorously in agreement to Obama’s characterization of his country cousins. (As an aside, what serious paper would even think for a moment of granting one column inch to its wine editor to pontificate on the uniform of a combatant commander when testifying in front of Congress? But it is my mistake to consider the LA Times a serious paper.) Once Obama gets identified with this crowd, a group that makes what Jeane Kirkpatrick called the San Fransisco Democrats look like paleocons–and he will–his chances in the South, the non-coastal West, and states like Pennsylvania, Ohio, Colorado, and Missouri, and even Florida, will sink like a stone.

April 9, 2008

A Tasty Morsel

Filed under: Economics,Politics,Russia — The Professor @ 8:16 am

Churchill said “An appeaser is one who feeds a crocodile, hoping it will eat him last.” Hermitage Capital found out that this hope is a dubious one in Russia. Hermitage and its CEO Richard Browder had long been cheerleaders for Russia, rationalizing and justifying some of the chekist’s most dubious measure, including the Khodorkovsky prosecution. But something went off the rails several years ago, and since then, Hermitage has been in the cross hairs. That something, apparently, was Browder’s call for improved transparency at Gazprom. Bad move. As these stories indicate, the attack against Hermitage has reached a fever pitch; the company has been the subject of an audacious hijacking attempt.

The lessons here? In Russia, the crocodile needs constant feeding. What’s more, there are multiple crocodiles that need to be fed. There is no guarantee that if you keep one sated, that another won’t find you a tasty morsel.

Those who assert that Russia is a great investment frontier often rationalize these sorts of episodes by saying that they are the exception, rather than the rule; that most companies operate in Russia without undue interference from the state. (Of course, what constitutes “undue” is quite subjective.) But episodes like BP-TNK, Sakhalin 2, Yukos, and now Hermitage indicate, investing in Russia is like, well, Russian roulette. Investor beware–even if you feed the crocodile today, you may be dinner tomorrow.

April 8, 2008

Barone on the Democrats’ Jacksonian Dilemma

Filed under: Politics — The Professor @ 9:48 am

Political analyst extraordinaire Michael Barone advances a theme that I explored in a couple of recent SWP posts, namely, that the party of Jefferson and Jackson has a Jacksonian problem. Hillary appeals far more to Jacksonian Democrats than does Obama. Indeed, many Jacksonian Democrats likely despise Obama. Is there an element of racism to this? Perhaps, but it is not the main thing. The main thing that repels them is Obama’s extreme liberalism, not to say left-radicalism, and his caravan of leftist supporters. But, as Barone notes, McCain is more appealing to Jacksonians than Clinton. If the Democrats nominate Hillary, it will alienate the black core of the Democratic party, but may not bring along enough Jacksonians to prevail against McCain. If the Democrats nominate Obama, they risk sparking a flood of Jacksonian defections to McCain.

Given that Jacksonian Democrats are concentrated in states that are in play, such as Pennsylvania, this is a serious dilemma for the Democrats. There is a long way to go, but the battle for the White House will be fought over the Jacksonians who will be the swing voters. It is not a battle that Democrats are well-positioned to win, even though Andrew Jackson was once the very symbol of the Democratic party.

An aside on the last point. Can you imagine a modern Harvard professor and Democratic court historian writing paeans to Andrew Jackson as Arthur Schlesinger Jr. once did? I certainly can’t, and I am sure Barone couldn’t either. And this captures the Democrat dilemma perfectly. Obama’s core support is an academic left that despises Jackson and all he stood for. Barone notes that the Democratic academic “tribe” and its Jacksonian one have very different worldviews. It could be said that the academic tribe is from Venus, and the Jacksonian from Mars. The Venusians will vote Democratic regardless, but the Martians may not. They are far less likely to vote for the Venusian Obama than the Venusian-one-minute-Martian-the-next Hillary, but they are very winnable by the definitely Martian McCain regardless of who emerges from the Democrat Cage Match in Denver.

The First Casualty

Filed under: Military,Politics — The Professor @ 9:22 am

It is a truism that truth is the first casualty of war. Few things better illustrate this truism than the recent reporting on the events in Basra and Baghdad. Usually it is governments and generals that dissemble and deceive, and reporters assert that their role is to overcome the “bodyguard of lies.” In Iraq, however, it is more frequently the case that the reporters are the deceivers, and papers and news channels are the outlets of war propaganda.

The unseemly speed with which western reporters declared the defeat of Maliki and the Americans, and the triumph of Sadr is truly disturbing. It suggests that the reporters and editors involved have the fixed objective of making things appear as bleak as possible. If they disclaim such malign motives, the best that can be said of them is that they are so convinced of their own powers of observation and analysis that they feel no hesitation to rush to judgment (remember that phrase?) about who won and who lost in a conflict that (a) most of them did not view first hand, and (b) is inherently confusing, and (c) would be incredibly confusing even to someone present on the scene. Warfare is always chaotic. It is especially so in Iraq, and particularly in the warrens of Basra and Sadr City. Only someone suffering from extreme hubris–or advancing an agenda, facts be damned–would confidently make such sweeping judgments about confusing and murky events.

There are many interesting questions and puzzles that deserve honest reportorial treatment. Bill Roggio reports that Maliki launched the mission far ahead of schedule. Why? This could betray desperation–or that he perceived an opportunity. Which is it? MSM reporters haven’t even raised the question, let alone tried to answer it. The Iraqis utilized their greenest brigade. Again, why? There is uncertainty over whether Maliki acted without American agreement or approval, and Roggio’s reports suggest that American logistical and air support had to be arranged on the fly. Is this true? If so, why?

There is much that an honest and intrepid reporter could do to shed light on the confusing situation. The search for one seems as forlorn as Diogenes’s quest. Reading reporting from Iraq would stun even the that most cynical of men.

April 5, 2008

A Chicago Historian’s Acerbic Take on Russia Past, Present, and Future

Filed under: Military,Politics,Russia — The Professor @ 9:14 am

Richard Hellie coordinated the Russian Civilization sequence I took as an Undergraduate at Chicago in 1979-1980, and I attended several of his classes and his lectures to the combined sections of the RusCiv course. He is a well-known historian of early Russia, particularly focusing on slavery, serfdom, and military issues; I am currently reading his Enserfment and Military Change in Muscovy. UC’s alumni magazine has a short piece on Hellie, in which he gives his opinion on Russia, and he leaves the bark on:

Five centuries after Ivan the Great began consolidating the territories that would become the Russian state—first wresting away a swath of northern Novgorod, then absorbing parts of Vyatka, Yaroslavl, Rostov-Suzdal, and Tver, and recapturing land from Lithuania—Russia remains, despite its size and power, says historian Richard Hellie, a backward civilization. Its economy is primitive, its low-tech industry propped up by sales of hydrocarbons and “second-rate arms.” Farming machinery deteriorates faster than it can be replaced. And despite the Iron Curtain’s fall, censorship is still a fact of life. “Almost nothing in Russia works properly,” Hellie says, “other than bribery and extortion.”

Despite “brilliant exceptions”—Hellie noted Russia’s defeat of Napoleon; its 16 Nobel Prizes; chemist Dmitri Mendeleev’s organization of the Periodic Table; and writers such as Dostoevsky, Tolstoy, and Chekhov—he didn’t hold out optimism for Russia’s imminent emergence from backwardness. Property rights “no longer exist,” and censorship is on the rise. Graft has multiplied in the last few years, and Vladimir Putin, in the footsteps of other Russian rulers, replaced Yeltsin-era oligarchs with “Leningrad KGB cronies,” he said. “It does not appear that a middle class or civil society will develop. Backwardness will endure.”

Not much to disagree with here, depressing as it is. Read the whole thing, as they say.

You Read It Here First

Filed under: Commodities,Derivatives,Economics,Exchanges — The Professor @ 8:44 am

According to Bloomberg’s Matt Leising (story not yet online), the CME’s would be competitor ELX is in discussions with The Clearing Corporation (the clearinghouse formerly known as BOTCC) to obtain clearing services. Immediately following the announcement of the formation of the new exchange in December, I surmised that the then-unnamed CME competitor would clear through the Clearing Corp due to the fact that several of the nascent exchange’s founders had just bought stakes in the once and former BOTCC. Although the Options Clearing Corp and ICE Clear have submitted proposals to ELX, I predict that at the end of the day Clearing Corp will prevail.

Although this will not be formally a vertical relationship, as ELX and CC are formally separate organizations, given the overlaps in ownership it will functionally integrate execution and clearing. Indeed, that is almost certainly one of the virtues of the arrangement to ELX, although I imagine they will not be too vocal about this as that would contradict their criticism of CME’s ownership of its clearinghouse.

This would also represent another move in the direction of more integration in clearing. The trend is clear (no pun intended): SWX, ICE, and LIFFE have already moved decisively in this direction, and LSE has also mooted the possibility. Regulators on both sides of the Atlantic view this with alarm, due to their fixations on the purportedly anti-competitive effects of integration (a fixation derived from bad economics), and their steadfast refusal even to contemplate the potential efficiency benefits of integration. You’d think that such a trend would spark at least a little doubt and reflection among European regulators and USDOJ, but you’d be wrong.

It’s A Feature, Not A Bug, Part II

Filed under: Military,Politics — The Professor @ 8:29 am

Newsweek, font of Liberal Conventional Wisdom–LCW–has put its imprimatur on Campaign Meme 2008: John McCain is too dangerously hot tempered to be president. According to this article by Michael Hirsch, McCain is in the habit of intimidating European diplomats and members of the American striped pants set.

Like I say: feature, not bug.

And a little history is in order. Presumably even some modern liberal Democrats admire Harry Truman. News flash, guys, but Give ‘Em Hell Harry was also known to chew out foreign diplomats. When meeting with Molotov–Molotov!–Truman pressed the Soviet to live up to the Yalta agreements. Truman said: “I gave it to him straight. I let him have it. I gave him the straight one-two to the jaw. ” Molotov replied: “I have never been talked to like that in my life” (a dubious assertion, given that he was Stalin’s henchman for years, but no matter). Truman replied: “Carry out your agreements and you won’t get talked to like that.”

Hear, hear! We need more of that, not less, and if McCain is hardwired to deliver it, all the better.

Truman also dripped with disdain for the State Department, whom he derisively referred to as the “striped pants boys.” Truman particularly disliked their Arabism, and barely concealed anti-Semitism, and realized that they were prepared to sell Israel down the river. Truman put a stop to that. Again: hear, hear! It would be refreshing indeed to have a president that knows how to put the State Department in its place, which, if I understand the Constitution, is in subordination to the president, and charged with carrying out his policies, rather than indulging their own. But I’m just a simple Midwestern guy (like Truman), and perhaps I don’t have the same sophisticated understanding of these matters as the denizens of Foggy Bottom.

Paul Johnson notes: “Truman was not a member of the wealthy, guilt-ridden East Coast establishment [i.e., Newsweek‘s readership, stagnant as it is, as well as the prime recruiting grounds for the State Department and CIA] and had none of Roosevelt’s progressive fancies. He was ignorant, but he learned fast; his instincts were democratic and straightforward.” Our day’s guilt-ridden East Coast establishment tolerates–and sometimes even promotes–McCain when he is useful as a weapon against betes plus noir, but at the end of the day he is as alien to its sensibilities as Truman was to its 1940s predecessor. Consequently, you can expect to see much more of this meme in the next 7 months. And they will be doing McCain a big favor, because the people that McCain needs to win over to prevail in the presidential race will view the criticisms of the Micheal Hirschs of the world as an endorsement, a very badge of honor.

Give ‘Em Hell, John.

April 4, 2008

Hey Germany: They Won’t Respect You in the Morning

Filed under: Energy,Politics,Russia — The Professor @ 10:16 am

Churchill once said “The Germans are either at your throat or at your feet.” (He actually said “The Hun is either at your throat or at your feet,” but (a) some folks might not know “Hun” was a common epithet for “German”, and (b) no need to use old insults, even though this post will hardly be kind to the current German leadership.) At present, Germany is firmly planted at Russia’s feet, doing its bidding at the NATO meetings by opposing Ukraine’s and Georgia’s Membership Action Plans (MAPs). The German arguments are disingenuous at best. Moreover, as this article by Klaus-Helge Donath (translated on Robert Amsterdam’s blog) says, Gemany’s prokynesis will earn it nothing but scorn from the Kremlin:

Behind the Kremlin walls officials are smirking over German Foreign Minister Frank-Walter Steinmeier’s appeasement. That’s why Moscow also does not take the European Union and Berlin seriously. The way Russians understand things making concessions, approaching the rival is a sign of weakness and European softness. . . Even if Russia talks about a “multi-polar world order and “respect” in the international arena that applies exclusively to the respect of others for Russia, not the other way around.

Why does Germany grovel? Gas, gas, and gas. Did I mention gas? But is appeasement on NATO enlargement an effective way of obtaining future Russian forebearance on gas pricing, access, or shutoffs? Will its carrying Putin’s water ensure Russia’s future goodwill and the steady, reliable flow of gas at reasonably competitive prices? Not bloody likely. Russia will take Germany’s gift today, and do exactly what is in its economic and political interest tomorrow. So Germany has sold out NATO, stiffed Ukraine and Georgia, and handed Russia a victory, and will be lucky to get a mess of pottage–or borscht–in return. And the Kremlin will figure it rolled Germany once, so it might as well try it again. And again. And again.

Donath also makes a point I’ve emphasized at SWP; Russia’s fears about NATO’s military threat are fantastical. (Stephen Blank has made a similar point.) (One can debate whether they are the result of paranoid delusions, or whether the expressed fears are merely intended to manipulate Russian public opinion.) So why does Russia protest so much?

If NATO expansion does not threaten Russian territory in the slightest, it does sharply constrain Russian freedom of action in Ukraine and Georgia. That is, Russia does not oppose NATO expansion because it legitimately fears that this would threaten the territorial integrity or political independence of Russia; instead it fears NATO expansion because that jeopardizes Russia’s ability to threaten the territorial integrity and political independence of the countries in the near abroad, Ukraine prominent among them.

Russia portrays NATO as aggressively absorbing new states. Its characterization of NATO is analogous to Sparta’s description of the Athenian empire. But NATO does not collect tribute from its members under the threat of force. Georgia, and to a lesser degree Ukraine want to join. Earlier joiners from the old East Bloc–such as the Baltic states, the Czech Republic, Bulgaria, and Romania–also wanted to join. They volunteered–and in some cases clamored–to join NATO. NATO did not force them to join.

This should raise the question in Russian minds: why are our former satellites so eager to join what we consider an aggressive alliance? Perhaps the answer lay in centuries of history and very long memories of suffering–and at times, suffering quite cruelly–under Russian domination.

The irony of the situation is that current Russian behavior only reinforces the desire of Eastern European states to deepen their NATO ties, and for Ukraine and Georgia to enter the alliance. The Russians have apparently not learned that (as my grandfather used to say) you catch more flies with sugar than gall. Blustering, bullying, manipulating, supporting breakway provinces, using gas as a political weapon, poisoning presidential candidates etc., is no way to win friends and influence people. But that’s the kind of things the Russians have done consistently in the near abroad, and continue to do today. Like an abusive husband driven to rage by his wife’s attempt to leave home, the chekists’ thuggery only further alienates those it wants to control.

This reflects an attitude that noted American scholar of Russia, James Billington, describes in his book Russia in Search of Itself:

Seeking to preserve unity and maintain control over a vast and exposed territory, the Russian empire was frequently at war with its neighbors. The Russian’s basic understanding of all this recurrent conflict has been diametrically opposite to that of their principal neighbors. Russians have generally seen themselves as perpetual victims of foreign predators, building on the fact that rival empires have invaded their lands from the Mongols and Teutonic Knights to Napoleon and Hitler. Most of Russia’s immediate neighbors however have seen themselves as victims threatened with conquest by the relentless expansion of a much larger power armed with unlimited ideological justification for extending its empire.

The eagerness of former satellites to join NATO provides ample evidence that Russia is still perceived as an aggressive power. Russia’s actions only justify this perception.

To turn around Putin’s insult of the US, the Russian wolf is just doing what wolves do. Its behavior is of a piece with its actions over centuries. The sad thing is that Germany enables this behavior, and like most codependents, will gain nothing for its current humiliation but more humiliation in the future.

« Previous PageNext Page »

Powered by WordPress