Streetwise Professor

The situation in Ukraine has taken a turn, but not necessarily for the better.  Although the prospect for a major confrontation on the streets in Kiev has abated due to Yanukovych’s decision to repeal the anti-protest laws and offer a form of conditional amnesty to protestors, the opposition has not been appeased.  Moreover, the government has seemingly shifted tactics, targeting individual leaders of the protest movement rather than threatening to assault the barricades.

The most appalling case is that of Dmytro Bulatov, one of the leaders of AutoMaidan, a group that launches quick-strike protests in automobiles.  He was disappeared for a week, turning up yesterday horribly beaten and mutilated: his tormenters cut off an ear, and he claims they “crucified” him.  After he was released, the militia attempted to arrest him in the hospital, where they were thwarted by quick thinking protestors.  But warrants have been issued for other AutoMaidan leaders, and there are report of a rising tide of arrests on the streets.

Furthermore, the regime appears to be relying more on “titushki” thugs who are roaming the streets looking for, and attacking, oppositionists.

Moreover, the opposition is deeply suspicious-and rightly so-of the amnesty, because it is conditional on the protesters evacuating the buildings they have occupied and the barricades on the street.  In other words, the government is saying: give up all your leverage, and trust us.  Needless to say, trust is in short supply and the opposition has rejected this.  Trust is further undermined by the arrests, disappearances and beatings.

And Russia-and Putin-loom overhead, casting a broad shadow.  I was wrong that Azarov was Putin’s man-he has decamped to Austria after having resigned as PM.  But it is clear that Putin is still pulling the strings.  There are continued rumors that Russian forces are on the ground in Ukraine: Bulatov claims that those who abducted him spoke “with Russian accents.”

Mixed signals emerged from Russia after Yanukovych sacked the government. Putin played his typical double game.  Initially Russia claimed that the the departure of Azarov would lead it to revocation of December’s aid package.  Then Putin came out and instructed the government to “honor its agreements to lend Ukraine $15 billion to Ukraine and cut the price of gas it sells to its crisis-hit neighbor.”  But the very same day he said that the $15 billion plus cut rate gas deal would be put on hold until Ukraine formed a new government, a process that could take 60 days.  One has to parse Putin’s statements very carefully.  He will often state a broad principal (“Russia will honor its agreements”) and then walk it back by adding conditions and caveats. This is one of those cases.

Then there was a more ominous statement emerging from Moscow:

An adviser to Russia’s president Vladimir Putin has warned that Ukraine’s president, Viktor Yanukovich, risks losing power unless he suppresses the “insurgency” in the country.

. . . .

Mr Yanukovich “is now in a situation of creeping revolution, and to some extent he functions as the guarantee of the constitution, security and integrity of Ukraine, therefore the president has no choice,” Mr Glaziev said in an interview with the corporate magazine of Russian state gas company, Gazprom, published on the editor’s blog on Friday.

“Either he protects Ukrainian statehood and suppresses the insurgency, which is provoked and financed by external forces, or he risks losing power, and then Ukraine faces growing chaos and internal conflict from which no exit is visible.”

Add to this that the army has issued a similar warning:

After two months of unrest, Ukraine’s army got involved in the ongoing political crisis, when the Ministry of Defense unexpectedly issued  a Jan. 31 statement, asking President Viktor Yanukovych to “apply measures for stabilizing of situation in the country.”

The commanders called protesters’ occupation of government buildings “inadmissible” and said that “further escalation of confrontation threatens to integrity of the country.”

The decision to send Yanukovych a special letter was made at a general meeting of the ministry’s office the day before and, according to Anatoliy Hrytsenko, an opposition lawmaker and former defense minister, the officers had been pressured to support Yanukovych.

“I know for sure that officers, who were not agreeing to the ‘common approval’ are now being pressured by their commanders and chiefs,” Hrytsenko said on his Facebook page. In its separate statement, the Defense Ministry also denied the reports that army was allegedly involved in assisting the police during the ongoing political crisis.

This report suggests that the army is divided, but is under pressure from the top.  And the top is no doubt under pressure from Moscow.

All this suggests to me that a full-blown crackdown is being held in abeyance until the end of Sochi.  In the meantime, the regime will wage a guerrilla war against the opposition.  The opposition-and especially its leadership-will be terrorized by nightriders and roving gangs and “law enforcement.”  Putin will give Yanukovych his marching orders.  And sometime in late February, expect things to come to a climax.  What we see now is a relative calm before a storm.

And what will the storm winds blow?  I fear civil war, largely on regional lines, but not completely.  Even parts of eastern Ukraine are restive.  And if it comes to that, Putin will no doubt find a pretext for a more direct intervention, reprising the role of Nicholas I, “the gendarme of Europe,” who intervened to crush rebellions in Poland and the Hapsburg Empire. I do not think that Yanukovych has the forces to subjugate a country as large as Ukraine, especially if those forces are largely conscripts who will not be enthusiastic about attacking-and killing-their friends and family.  I don’t know if Putin does either, but I cannot see him sitting idly by while Ukraine spins out of control.

Bloomberg Business Week has a long profile of Igor Sechin that illustrates perfectly why Putinism is an economic dead end.  Huge, inefficient state companies run by Putin cronies who have no clue about economics or how to create value.  But you’ll say: “Sechin has a PhD in economics!”  Well, a PhD in economics from a Soviet university is best described as an advanced degree in idiocy.

The piece describes Sechin as having an encyclopedic knowledge of Communist Party congresses dating from before the Revolution. So yeah, that definitely comes in handy in maximizing the value of the largest oil reserves of any publicly traded oil company.

Sechin refused to be interviewed for the article (probably a wise idea), but Putin’s Carney, Dmitri Peskov shared this description of Sechin’s penetrating economic philosophy:

“Sechin is a believer in the role of the state in his economic philosophy while at the same time not excluding a free-market approach. And he is firm in pursuing his viewpoint.”

Clear as mud. Problem is, I am sure that  it is an accurate characterization of Sechin’s muddled thinking.

Peskov is actually quite revealing, though almost certainly unintentionally so, in revealing the “thinking” that is propelling Russia into an economic cul de sac:

“For example, in shipbuilding it’s absolutely pointless to carry out privatization,” he says. “You can privatize enterprises, but they won’t be competitive; they will be doomed to failure. So consolidating the assets under the state’s wing is the only way to preserve key sectors of the economy.”

The reason for relying on markets, and privatization, is to determine the industries and firms that are economically viable.  The ones that generate more value than it costs to produce it.  Propping up those that would otherwise fail using state resources-which, never forget, are extracted by force from the citizenry-destroys wealth.   If Russian shipbuilding can’t compete against the Chinese or Koreans, it’s because Russian costs are higher.  Since costs are driven by the value of resources in alternative uses, the losses suffered by Russian shipbuilders in open competition means that the resources the Russian companies use would generate more value if deployed elsewhere.

That is, the success or failure of firms in the market is the mechanism that communicates where resources should be deployed, and where they shouldn’t be.  But that’s not the way statists-and Putinists-think.   Rather than having the market reveal which firms and industries should survive, the Putinists stand things on their head: they decide what industries they think are important, and provide the state resources necessary to ensure their survival. Their determination of the importance of industries is driven largely by history and political economy: the managers (and some workers) of legacy industries importune the state for support, and through personal and political connections largely succeed.  Thus the dead hand of the past rules the present and the future.  Rather than embracing the creative destruction of unviable firms and sectors, Putin embraces the destructive maintenance of legacy companies and industries.

It is a fundamentally uncreative system, because it is bounded by the cramped imaginations and interests of those who benefit from the status quo.  The interests of those who run the state are inherently biased to the status quo.  The more dominant the state becomes, the greater the tendency to stasis, and the greater the resistance to dynamism and change.

This affects even industries that are viable: the Russian oil and gas industries are clearly viable, due to the the capriciousness of nature which has endowed the country with bounteous reserves.  But the statist, Putinist system squanders that bounty.  The statistics don’t lie:

Compared with non-state-owned energy giants such as Exxon, Rosneft is inefficient. Even though Rosneft’s lifting costs — the cost of getting oil out of the ground — are less than a third of Exxon’s, the Russian company’s workforce is less productive.

Net profit per employee at Rosneft was $70,815 in 2012, versus $620,026 for Exxon. Rosneft’s price earnings ratio was 5.4, compared with Exxon’s 13.2 as of Jan. 13. Rosneft shares fell 6.87 percent in 2013, while Exxon shares rose 16.93 percent during the year.

But many find the company’s reserves to be an irresistible allure:

“The main reason to hold Rosneft is the reserves,” Greenwich Capital’s Snykov says.

But the point is that the value of these reserves is radically diminished by putting them under the control of a mullet-headed ex-KGB mouth breather.

The mental world of Sechin and Putin and the like was shaped in the USSR.  They don’t want to recreate it down to every last detail, but they do want to restore its broad outlines.  This is a recipe for stagnation.

And it will only get worse.  There is no mechanism for changing the leadership: indeed, Putin’s priority project in the past several years has been to neuter-or worse-any possible challenge to the incumbents.  So the current gang-and it is a gang, in all essential features-will remain in control for the foreseeable future.  And as they age, they will become even more resistant to change, and more sentimental about the world of their youth.

I still shake my head at those who understood the problems with the existing system, and assumed that Putin would too, and would be forced to institute changes and reforms to prevent the system from lapsing into senescence. How can one be so oblivious to the implications of the interests of the rulers of a system combined with the conservative impulses of aging men? Together, these forces work relentlessly to resist change and reform, and to attempt to maintain the status quo–or even roll back the clock.

Indeed, just this week, one of the few tepid reforms instituted by Medvedev has been rolled back.  The eunuch prime minister announced that state officials will be allowed to serve on the boards of state corporations, reversing a policy instituted a few years ago.  Remember when Medvedev’s original announcement was viewed as a dire defeat for Sechin, in particular?  Hardly.  Medvedev is being kept around to serve as the sacrificial lamb to pay for Putin’s mistakes, and Sechin is the second most powerful man in Russia.

So read the BW profile to understand Russia’s past, present, and future in a single story.  For Igor Sechin is the poster boy for Sovokistan, and Sovokistan is what Putin has created.

Today was a fraught day in Ukraine. The day started with Yanukovych’s offer to the opposition: Fatherland Party head Yatsenyuk as PM, Klitschko as Vice PM, amnesty for Maidan arrestees, a reconsideration of the anti-protest laws.

This was an anti-Godfather offer.  Rather than making an offer Yatsunyuk could not refuse, Yanukovich made him an offer he had to refuse.  The Maidan would have totally rejected Yatsunyuk and Klitschko had they accepted.  If they had gone ahead regardless, they would have been complicit in what has happened and what would happen.

Yanukovych-and Putin-knew this.  And it suits them just fine.  Now they can portray the opposition as obdurate, radical and unwilling to compromise. This allows them to rationalize a crackdown.  Indeed, the Interior Minister foreshadowed this theme:

The interior minister said the opposition was no longer able to control “radical forces” and was putting civilians in danger.

“The events of the last days in the Ukrainian capital have shown that our attempts to solve the conflict peacefully, without recourse to a confrontation of force, remain futile,” Mr Zakharchenko said in a statement on Saturday

If negotiation is futile, the only alternative is force, right?

But this was not the most important event of the day.  That occurred at Ukraine House.  A group of troops (presumably Internal Troops, or VV) secreted themselves in the House, apparently in preparation of attacking the rear of the barricades on Grushevsky Street.  Their presence was discovered (How? An informant?) and opposition members rushed to the House and surrounded it.  They broke windows, fired fireworks into the building, and set tires alight in the lobby.

The potential for disaster here was extreme.  What could have happened?  Some possibilities, all of them ugly.  First, the troops (referred to as “cadets” and “conscripts” on Twitter, suggesting they were hardly hardened shock troops) could have been incinerated or died of smoke inhalation.  The deaths of so many troopers would have provided the perfect rationale for the government to go medieval on the protests, on mass scale. (They have gone medieval on a small scale, killing and torturing some opposition members.)  Second, the government could have launched a rescue mission that would have resulted in a bloody clash.  This too would have greatly escalated the conflict, and likely resulted in a full-blown revolution and civil war.

But after a while, the fires went out.  Someone apparently convinced those at the building to cool it, and not risk bringing to pass the foregoing scenarios.  Things devolved into a standoff.  The oppositionists surrounding the building left a path open for those inside to leave, and shouted for them to surrender.  Sometime during this period, Klitschko negotiated the peaceful withdrawal of the troops inside.  The situation subsided 4.5 hours after it began.

This is an important victory for the opposition generally, and Klitschko personally.  It is also a humiliating defeat for the government and the security forces.

And therein lay the future danger.  A humiliation of the regime–which comes after other humiliations in which protestors seized government buildings throughout western Ukraine–can lead to its collapse.  The humiliations embolden the opposition, who will be more willing to risk confrontation because they perceive the security forces will back down.  If they turn out to be right, the humiliations snowball and before long the government collapses.

Or it can lead the government to decide that the time for half-measures is over.  In which case, the blood will flow in earnest.

Perhaps more to the point, it can lead Putin to decide that the time for half-measures is over.  He may push the government for a more aggressive response, or go around the government and push the security forces to attack.  (NB: as elmer notes in his comment, many Ukrainians are already convinced that Russian units are already present in Kiev.)  Or he may decide that the current leadership in Ukraine is too pusillanimous, and decide on the Kabul Option, and order spetsnaz units, and FSB Alpha and Vimpel troops, supported by paratroopers, into Kiev to carry out a putsch, and install a more reliable regime that will crush the opposition.

The wildcard in all this is Sochi–as I mentioned some time back.  If Putin waits to act until after the Olympics are over, things could spin out of his control, and by March his dreams of subordinating Ukraine could become the nightmare of the Orange Revolution on steroids. But if he decides that a whiff of grapeshot is necessary and tries to play the role of Nicholas I (“the policeman of Europe”) and crush the rebellion before or during Sochi, his $50 billion triumph will turn into a fiasco.

Difficult dilemma for our VVP.

It seems to me that he has fallen victim to the typical autocrat’s conceit, believing that he can control events.  But revolutionary situations are never-ever-subject to the control of any will.  The spontaneous events at Ukraine House came within a trice of catastrophe.  But who is to say that it will be so the next time?

And there will be a next time.  If you have followed events, you will note a pattern.  An intensification of conflict, but a pullback by one side or the other or both before full-blown warfare erupts.  But each subsequent peak is higher, more intense than the one before.  And it only takes an accidental shot to cause things to spin out of control.

I don’t know where things are going.  Revolutionary situations are radically unpredictable.  No one controls events, and a sort of spontaneous disorder exists.  The independent actions of many people can lead to a shot that his heard ’round the world.

But if you can’t reliably predict the expected outcome, you can reliably predict that the variance becomes extreme.  Anything is possible, even probable, and many of them are quite horrific.

The dynamic, and the choices inherent in it, are pretty clear though. If the government continues to avoid a brutal crackdown, the dynamic favors the opposition: they will become emboldened, and success will produce more success.  That very fact shapes the thinking of the government, andcracking down to stop the opposition’s momentum becomes more and more sensible as an option, even knowing that it will make the regime a pariah, both domestically and abroad. Better to be a live pariah than dead or imprisoned.

Putin knows that autocracies fall not because they are too brutal, but because they are not brutal enough.  He must have absorbed that lesson watching the collapse of the USSR.  I fear he may be intent on not repeating the experience.

For this reason, Sochi may be a godsend. At the very least, it puts Putin on the horns of a dilemma: no Sochi, and his choice would be quite simple. With Sochi, not so simple.

This may provide the US and the EU with the only leverage it really has.  Both should make plain that unless the regime in Kiev capitulates, and forms a national unity government, that they will boycott Sochi.  They should make it plain that they view Yanukovych’s government to be Putin’s puppet, and that he is responsible for what goes on there.

And irony of ironies: Putin’s triumphalism after browbeating Ukraine into turning its back on the EU and accepting Russia’s loving embrace makes it plain that he is the puppet master. By using his triumphalism against him, judo-like, the US and the EU may take him to the mat.

Alas, I doubt either has the stones to do it.  But they should.  It is the best way  to give Ukraine a chance.

Update: A timeline in the Kyiv Post (which is now offline, which could be ominous, or it could be nothing) contradicts part of the Ukraine House story that I told above.  According to the KP piece, troops had been stationed in Ukraine House since November, and this was known.  Perhaps there were rumors that the troops that were there were about to launch an attack, and that’s what precipitated the storming of the place by protestors.  Or maybe the more confrontational elements in the movement initiated the clash.  Or perhaps provocateurs did.  But it apparently is not correct that the presence of the troops was just discovered and that led the protestors to fear an impending assault on their rear.  Either there developed in the crowd a belief that the posture of the troops was about to change from passive/defensive to aggressive/offensive.  Or perhaps elements in the opposition were looking to precipitate a clash: spreading rumors of an impending attack would be a way of doing that.  All in all, the situation looks more ambiguous to me than it did initially.

But this doesn’t change my judgment about the ultimate outcome.  Whatever precipitated the assault, the retreat of the government forces in the building was a humiliating blow to the government. I have the same opinions about the implications of that humiliation.  Similarly, I still believe that the clash is symptomatic of increasing tensions and escalating violence.

Today’s Twitter stream from Ukraine contained several warnings (including one with a video) claiming that busloads of Berkut had departed from Donets and Odessa, headed for Kiev.  Nine was the number of buses attributed to Donets, 10 in Odessa.

There  are only 3500-4000 Berkut troops in the entire country, so perhaps these were not Berkut.  And whether the rumors are true or not will not be known for some time.  Whoever is on those buses is not going to debark and immediately begin an assault.  Some planning and familiarization with the new surroundings would be required first.  One possibility is that they are to be ready for action by Tuesday, when the Rada meets, and when-according to yet more rumors-Yanukovych may declare a state of emergency.  (The head of the Justice Ministry demanded such a declaration if the protestors do not evacuate her ministry building, which they occupied today.)

Even if that’s all true, it indicates a certain desperation by the regime (and Putin), and also an element of futility.  Protests have spread around the country, and government buildings have been occupied in several towns.  The country is in ferment-not just Kiev.  Reinforcing Kiev makes the rest of the country more vulnerable to protestors seizing government buildings and ousting regime loyalists.  A bloody crackdown in Kiev would likely ignite greater efforts in areas denuded of troops.

I just don’t think the regime has enough reliable manpower to be able to maintain control everywhere. Yes, the capital is the center of gravity and its security is paramount to the regime: holding it is necessary to ensure the regime’s survival.  But holding the capital is not sufficient to quash a rebellion that breaks out in multiple areas of a large country.

Dawn is about to break there now, and things seem quiet.  But things can change rapidly, and Tuesday could be another important day.  The fluidity of the situation, and the lack of reliable information makes prognostication a mug’s game.

The situation in Ukraine has escalated significantly in the last few days, with the deaths of five protestors, two killed by gunshots allegedly fired by Ukrainian security forces (sometimes said to be “snipers”), and one being tortured and left to die in the woods.  An opposition aid station was attacked, and its patients taken away, by security forces.  The security forces are also going through hospitals looking for injured protestors.

A line has been crossed.  The beatings that had occurred periodically before were bad, but the deliberate murder of protestors who did not pose a direct threat to the police is a Rubicon.  Opposition leaders including Klitschko have been trying to negotiate with Yanukovych, but this has only angered the Maidan movement rank-and-file., who now see that compromise with murderers is pointless-and wrong.  Throughout western Ukraine government buildings are being seized, and Yanukovych appointed officials (such as the governor of Lviv) forced to resign.  The country is on the brink of civil war.  The killings have made civil war all the more likely.

The shootings were not something analogous to Kent State: panicked weekend warriors opening fire on rioters/protestors.  They were, apparently, carried out with malice aforethought.

Which raises the question: who decided to pull the trigger?  Who authorized the premeditated use of deadly violence?

The protestors blame Yanukovych, and yes, he is ultimately responsible, in the sense that his intransigence, and his forcing through draconian laws outlawing protest, are a necessary condition for the escalation that culminated in five deaths.

But I have my doubts that he authorized such action.  He seems to me to be an indecisive, temporizing figure.  He does not want to back down, because he knows that if he cedes power he will likely end up in prison, and will lose all of the corrupt spoils that he has gained.  But he seems reluctant to order a full-scale repression.

Which no doubt angers hardliners.  I surmise that those hardliners, disgusted with Yanukovych’s vacillation, ordered the killing of a few protestors to bring the pre-revolutionary situation to a climax, and to eliminate the possibility of any compromise.

The hardliners’ determination to force the issue would no doubt be intensified by dissension within the ranks of the military and the security forces.  There are reports that some officers have refused orders to attack the barricades on Hrushevskovo Street.  This would make it all the more imperative to hardliners to escalate the confrontation.

Which raises the question: who are the hardliners?  Angry colonels?  (I think of the Serbian army officers who supported the Black Hand, and Princeps, in the assassination of Archduke Ferdinand.)  Or perhaps angry colonels acting under the direction of Russia/Putin/the FSB? Or angry colonels acting under the direction of a Ukrainian agent of the Kremlin?

I think this is the most likely alternative.  Moreover, I think it quite likely that the authorization-or orders-originated with the Ukrainian prime minister, Mykola Azarov.  He is not Ukrainian: he is of Russian extraction, born in Kaluga, and has been called “the most Russophile member of the new cabinet.”  He is a latter-day Ukrainian, only moving there in the 1980s.  If he is anything, he is an old school Sovok, and no doubt an eager supporter of Putin’s drive to restore at least a simulacrum of the USSR.  He has employed brutal rhetoric, praising the Berkut for its patriotism.  He is quite the favorite of Putin: a perusal of some of the images of when they are together suggests more than the forced comradery between officials of different nations: there seems to be a real rapport (h/t @libertylynx).  Have you ever seen Putin look that way at Medvedev, let alone Merkel-or Obama?

I think Azarov is Putin’s man in Ukraine.  The one who is there to ensure that no Second Orange Revolution occurs.  The First Orange Revolution was a stunning defeat for Putin, and you know that it left a mark: that the hatred and resentment still burns.  Never Again.  He wants any protest movement crushed, but he wants to hide his hand.  Azarov is the natural man to do the dirty work.  A few provocative killings are precisely what is required to ensure that Yanukovych (a venal man, obviously, but one who doesn’t strike me as a hard man like Putin or Azarov–hence the problem for them, and why he must be denied an out) cannot go back.  The orders go from Russia to their creatures in Ukraine.  People die.  The battle lines harden.  Things escalate, and eventually the crackdown happens.

Maybe Azarov is not in the chain.  No doubt the Russians have direct contacts with angry colonels.  But regardless, I strongly suspect the ultimate source of the decision to kill is in Moscow.

Something else struck me.  When watching via the Espresso TV live feed the brief assault of the police/Berkut on Tuesday, when they stormed the barricades and tore them down, and then retreated, I noticed one of the Berkut/police picking up a Ukrainian flag a protestor had dropped.  He carried it back as a trophy, but not with respect.  He dragged it behind him.  Then there is this video of a Berkut/policeman disdainfully hacking down a Ukrainian flag from a vehicle (another @libertylynx h/t).  These are not the actions of Ukrainian patriots.  Most likely they are ethnically Russian Ukrainians, perhaps Crimeans (who @libertylynx says strive to be more Russian-y than Russians), or Russian speakers from eastern Ukraine.  They no doubt would be quite happy with Ukraine being re-united with Russia, or at least its vassal: the good little brother.  Men like these would be more than willing to kill protestors in order to advance that cause.

The die has been cast in Kiev.  The most reasonable explanation is that Putin is the die-maker.  He wants to bring Ukraine to heel, and to someone of his bloody-minded outlook, foreclosing any compromise and forcing a confrontation is the best way to do that.  And murdering a few protestors is perfectly suited to accomplishing that end.

Sadly, there are many in Ukraine who would provide willing hands to do the the dirty work.  Those desecrating the Ukrainian flags are emblematic of that.  But those who pulled the triggers in Kiev (and those who gave the orders) are the real Orcs, doing Sauron’s/Putin’s bidding.

Update: Just saw Edward Lucas’s column from yesterday, in which he states that a source told him last year that Putin had ordered Yanukovych to “dip his hands in blood.” Says Lucas: “Only by forcing an irreversible breach with Europe and America could the Kremlin be sure that its Ukrainian satrap would behave.”  That’s similar to my conjecture: that the killings were intended to foreclose any possibility of political compromise or settlement, though I think this was intended primarily to affect the situation within Ukraine, rather than to affect American or European actions.  The long lag between the alleged order and the actual shootings suggests, moreover, that Yanukovych resisted.  Maybe he eventually capitulated, but I think it is more plausible that the Russians worked through members of the Ukrainian government, or directly with their connections in the security forces.  Putin/the Russians were tired of waiting, in other words, and forced the issue.  From their perspective, it doesn’t matter.  In the popular Ukrainian mind, Yanukovych is responsible, and the any political compromise between Yanukovych and the opposition that would inevitably reduce Russian influence (a la the Orange Revolution) has been fatally damaged.  Yanukovych now realizes he can’t negotiate his way out, and is thus more likely to escalate, seeing that as the only way he can survive. Which is fine with Putin.  Indeed, it makes the Ukrainian government all the more dependent on Putin and Russia.

This article in the American Interest (a fairly middle of the road publication overseen by Walter Russell Mead) presents a useful, if exceedingly depressing, dissection of the Obama administration’s policy in Syria.  I raised many of the same points, in real time.  I think the most important ones are related to Iran: (1) that Syria was of strategic interest to the US precisely because it was Iran’s major Arab ally, and that a primary strategic rationale for intervening in a way that increased the odds of Assad’s downfall  was because it would undermine Iran, but (2) that a major reason that Obama shied away is precisely because he was trying to achieve a rapprochement with Iran.

Strategically misguided, and a humanitarian disaster.

Read the whole thing.

Author Adam Garfinkle’s succinct summary about Obama’s policy also uses two words I have used, on more than one occasion: feckless and incoherent.

Recognizing this doesn’t require penetrating insight.  Just an ability (and perhaps more importantly, a willingness) to recognize the obvious.

And it is only getting worse.  The debacle unfolding in Montreux is so comical (in a tragic way) that it seems befitting, given the town’s most famous resident, Charlie Chaplin.  (Psst. Don’t tell the Russians and the Iranians about the Freddie Mercury statue.  Putin will try to outlaw it as gay propaganda and the Iranians will try to hang it.)

After a quiescent period over the holidays, Ukraine-or more specifically, Kiev-erupted into protest today.  The provocation for the renewed protests was the hurried passage of a set of laws to to crack down on the opposition.  Blockading public buildings, wearing helmets, driving in a line of cars more than five vehicles wide, or engaging in “extremist” activity are now banned.  No setting up tents or sound stages without permission. NGOs that receive any funding from abroad must register as “foreign agents.”  (Sound familiar?)   All this was stitched together in a highly irregular procedure organized by Yanukovych’s Party of Regions.

Today’s protests–mainly not in Maidan, but near government buildings some blocks away–resulted in clashes between the Berkut (Ukraine’s interior ministry forces) and the protesters.  Klitschko tried to cool things down, and blamed the clashes on provocateurs. As day dragged into night, a stalemate developed.  The protestors created a barricade of buses and security force vehicles.  The protestors were on one side, the police sheltering on the other.  The protestors lobbed rocks at the police.  (If you look at the live stream now, 20:05 CST, you’ll see the ground littered with stones.)  The police fired back with gas and flash grenades.  Whenever the protestors would approach the buses in large numbers, the security forces would unleash a barrage of grenades and drive back the protestors.  Things see-sawed back and forth for hours.  Eventually the protestors set several vehicles alight with Molotov cocktails.  After some feeble attempts by the police to douse the flames with hoses, eventually a water cannon vehicle was deployed to put out the fire.  The battle ebbed with the flames.  The police withdrew, and the protestors thinned out, with just a few now milling around.

Yanukovych’s move was at the very least inspired by Putin, and plausibly ordered by him.  All of the laws passed are quite similar to those that Putin has put in place in Russia.

Although today’s conflict could have escalated, the security forces did not press the issue.  They did not mount an assault, but contented themselves with lobbing grenades and crouching under their shields close to the bus barricade.

Yanukovych’s middle choice is not sustainable.  It was sufficiently violent to outrage and galvanize the opposition, and will reinvigorate it.  But it was not violent enough to crush it.  Something will have to give.

Ukraine is a divided country.  The eastern part would be quite content if the government cracked now helmet-less heads.  The western part would likely respond by going into outright revolt. Forced to rely on his eastern, ethnic Russian base, and pushed by Putin, on balance it would seem that Yanukovych will escalate the crackdown.  There seemed to be hesitancy today, but perhaps that reflects surprise at the intensity of the protest.  The element of surprise is now gone.  The government is now on notice.   Putin will demand results. The die has been cast.

For better or for worse, this will be decided in the streets.

I wonder how the Olympics will play into this.  The events in Kiev put Putin in something of a dilemma.  He doesn’t want events in Kiev, with which he and Russian are unmistakably implicated, to spin out of control while during the Olympics on which he has staked so much.  But he doesn’t want the the opposition to grow, and become emboldened by government hesitancy, and live on into the spring when better weather can only increase its numbers.

In other words, Putin and his puppet are in something of a delicate situation.   Given this  delicacy, and the fact that things can develop spontaneously due to the actions of individuals in the streets-protestors, provocateurs, or militiamen-it is hard to predict what will happen.  My guess is that sooner or later it will come to a violent climax.

Aside: Watching the live streams, I wondered what similar coverage would have looked like in St. Petersburg in 1905 or Petrograd in 1917.

Marx said that history repeats itself, first as tragedy, then as farce.  The Obama administration is attempting to one-up Marx and compress the process, with its simultaneously farcical and tragic policies on Iran and Syria.

Obama is clearly so dead set on achieving some legacy building agreement with Iran that he is willing to swallow any insult.  Such as the announcement of a Russian-Iranian agreement whereby Iran will provide oil to Russia, in exchange for Russian goods–but more likely, Russian money as well.

Zarif also met with President Vladimir Putin to reportedly discuss an unprecedented deal to barter Iranian oil for Russian goods. Informed sources in the Russian government have confirmed that Moscow is in the process of finalizing an agreement to buy half a million barrels of Iranian crude a day, while Iran will buy Russian goods in exchange. At present, Iran exports only a million barrels a day as a result of United States and European Union sanctions aimed to curtail its nuclear program. Western-imposed banking restrictions have also severely hampered Iran’s ability to freely use its oil revenue. China is currently Iran’s biggest oil buyer, taking in some 420,000 barrels of crude a day in exchange for other goods. If the oil deal with Russia goes ahead, Iran may extend its shrunken oil exports by 50 percent and collect some $1.5 billion in extra revenue a month. This may undermine Western sanctions, which may have forced Iran to consider permanently constraining its nuclear program in the first place; while Russia may become Iran’s main oil buyer

Russia says that there are no internationally agreed upon sanctions, so it is perfectly free to deal with Iran.

That’s probably true in legal terms, but note that was true yesterday, and last month, and last year.  But Putin didn’t do this.  Until now.  Because he sees that Obama is so desperate for a deal that he knows that he can get away with pretty much anything, and that Obama won’t do or say a damned thing. (And no, State Department expressions of “concern” don’t count.)  So Putin and the Iranians are basically doing donuts on the White House lawn, with their windows down and their middle fingers up.  And Obama just draws the drapes in the Oval Office.

Indeed, note that in some respects, this deal is against Russia’s interests: the more Iranian oil on the market, the lower the price Russia gets for its exports.  But either the geopolitical benefits make this worth it to Putin, or he and his cronies take a sufficient cut of the Iranian sales that he can accept the costs to Russia and the government’s budget, or both.

Meanwhile, Iran says that even if it does enter a deal to suspend enrichment of uranium, it can reverse that decision “in a day.”  Asymmetries in commitment are always an impediment to a deal.  Or they should be.  Iran has made it clear that it can walk out on its commitments in a day.  But what if the US and the Europeans suspend their sanctions?  There is no way those can be re-instituted in months, or ever, let alone a day.  So a deal doesn’t lock in Iran to any commitments, but does lock in the US and Europe.

Only suckers enter into deals like that.  Or those who are so intent on creating a legacy achievement that getting a deal is all that matters, even if it is a sham that will collapse in due course.  (And looking back, at the way Obama gave the back of his hand to Iranian protesters in 2009, it is evident that he had his mind on this from day one: or perhaps more accurately, Valerie had her mind set on this.)

The fact that Russia is so willing to provide Iran with an escape from any sanctions also indicates that they have calculated that Obama has already capitulated.  He will swallow anything–any insult, any concession–in order to get an ayatollah’s signature on a piece of paper that the Iranian regime will disregard the instant it is in its interest to do so.  Most smugglers try to hide their activities.  Putin realizes he needn’t bother.  There are no consequences for flagrantly carrying on right in front of Obama’s eyes.

And then there is Syria.  Today Kerry gave a droning statement (but I repeat myself) begging the opposition to attend Geneva II.  He reiterated that Geneva II is intended to implement Geneva I.  Which, if you even remember it, was adopted in June, 2012.  18+ months ago.  During which time 100+ Syrians have died every day.  Say 60,000 in round numbers. And they will continue to die, for an indeterminate time, because as Kerry is at pains to emphasize, Geneva II is just the beginning of a process.  And the process requires agreement between Assad and the opposition.  Which means never.

Recall that in September, Kerry compared Assad to Hitler.  Now, he does not condemn him at all, except for “playing games” with relief convoys.  Barrel bombs, torture, mass killings (as long as they aren’t with chemical weapons!) are totally fine.  Just no game playing!

Like I said: a tragical farce.  Or is it a farcical tragedy?

But of course the Iran-Russia story and the Syria story are connected.  By making the deal on chemical weapons with Assad, we essentially became his partner.  What’s more, since Iran, Russia, and Syria are tightly allied, Obama knows that doing anything that increases the odds of Assad’s downfall will scupper his overriding objective: a deal with Iran (no matter how fleeting and ineffectual that deal will be).

Translated: Sorry, Syrians. You have to die in your thousands, while the “process” of reconciling the irreconcilable drags on, and Obama sacrifices you–and the interests of the United States and its allies–to his narcissistic ambitions.

Syrians are paying a dreadful price for Obama’s narcissism every day.  The entire region is paying a price, because the festering sore in Syria is the host to myriad jihadists who range from the bad (the Islamic Front) to the terrible (the Al Qaeda affiliate Al-Nusra Front) to the utterly bestial (ISIS/ISIL).  The US and its allies (notably Israel) haven’t paid the price yet, but Obama has sowed the wind, and we will reap the whirlwind in due course.  An empowered, messianic Iran, with Russia providing money and cover, and convinced that the US is a paper tiger, is likely to take actions that will unleash a devastating sequence of events.  It’s a matter of when, not if.

But Obama will have secured peace in our time: or his time, more precisely. His legacy will be secured, and any malign consequences that occur in 2017 and beyond, well, those will obviously not be his fault.  He gave us peace, after all, and if war comes, it will be because some lesser being screwed up.

Farcical tragedy.  Tragical farce.

I have studied manipulation for going on 25 years now, and one of my pet peeves is the promiscuous and imprecise use of the term.  I often quote a cotton broker, William Clayton, who in Congressional testimony said “The word ‘manipulation’ . . . in its use is so broad as to include any operation of the cotton market that does not suit the gentleman who is speaking at the moment.”

Case in point: a story from a couple days ago about the FBI investigating the trading of interest rate swaps:

Wall Street traders may be manipulating a key derivatives market and front running Fannie Mae and Freddie Mac, hurting the US-owned mortgage giants in the process, according to an FBI intelligence bulletin reviewed by Reuters.

. . . .

Disclosure of the suspected manipulation and front running came in an FBI intelligence bulletin that was distributed last week by the bureau’s field office in Charlotte, North Carolina, to security officers at financial services firms.

Front running  is not manipulation.  Manipulation distorts prices, and causes them to move away from where they should be (at least temporarily, although the effects can be highly persistent).  If anything, front running causes prices to move where they were going to go anyways, but faster.   Front-running is a source of information leakage.

Front running raises the trading costs of the entity that is front run–allegedly Fannie and Freddie in this case.  It results in a redistribution of wealth away from those who are front run to the front runner.  But these effects are notably different from real manipulations, like corners and squeezes, or banging the close/settle, or the release of false information.

In the stock and futures markets, front running by a broker or specialist is a violation of the agency relationship with the client.  In securities markets in the US it is a violation of Section 10(b) of the 1934 Securities Exchange Act.  I don’t know, and don’t have time to research at the moment, whether front running of interest rate swaps falls afoul of any law or regulation.

But it ain’t manipulation, as the term should be construed as conduct that distorts prices.  Although everything that is manipulative is bad, not everything that is bad is manipulative.  But as William Clayton noted 80 odd years ago, that distinction is almost universally overlooked.  Especially now, in media coverage of financial markets.

The most recent Snowden revelation, courtesy of the NYT-go figure-is that the NSA has used trade craft and high technology to penetrate offline computers.

Note  the headline and the first couple of paragraphs, which are oh-so-vague about just what computers are penetrated.  It could be yours!!!!!!

Not really.

And look at this, from the first paragraph: the NSA’s actions “also create a digital highway for launching cyberattacks”.   The targets of said attacks are not named, leaving it for suggestible minds to conclude that the NSA is targeting the innocent.  The insinuation–a NYT speciality–is that the intent of the NSA action is aggressive, and therefore somehow illegitimate.

You have to read four paragraphs into the story to find this:

The radio frequency technology has helped solve one of the biggest problems facing American intelligence agencies for years: getting into computers that adversaries, and some American partners, have tried to make impervious to spying or cyberattack. In most cases, the radio frequency hardware must be physically inserted by a spy, a manufacturer or an unwitting user.

The N.S.A. calls its efforts more an act of “active defense” against foreign cyberattacks than a tool to go on the offensive.

So we are attempting to penetrate the computers of “adversaries.”  Like China and Russia.  Good of the NYT to acknowledge we actually have adversaries.

But of course, what the left hand giveth, the lefter hand must take away.  The very next sentence:

But when Chinese attackers place similar software on the computer systems of American companies or government agencies, American officials have protested, often at the presidential level.

And you thought moral equivalence was dead!

If you read the article carefully, you will conclude-despite the efforts of reporters David Sanger and Thom Shanker to obfuscate-that the NSA is engaged in defending the United States against malign countries that have long waged asymmetric combat against us, and which could be military adversaries in open conflict in the future.  Not likely, but possibly.

Shocking, I know, that an entity called the National Security Agency would be engaged in such outrageous efforts to defend US national security.  The nerve.

Look, the NSA and other intelligence agencies spend boatloads of money.  This is actually something that is worth paying for.

And just how, exactly, does this revelation advance the interests of the privacy of US citizens, which I though was Eddie Snowden’s big concern?  Hell, how does it advance the interests of privacy of private citizens of China and Russia, for that matter?  This is directed at the governments of those countries.

Can we just get over the pretense that Snowden is a whisteblower concerned about privacy issues?  That’s just the candy coating on a huge poison pill–an information operation directed against the United States.  This whisteblower persona gives Snowden immunity from scrutiny, and from behind this cover he lobs info bomb after info bomb against US national interests, compromising extremely sensitive operations intended to protect the US against nations that bear it very, very ill will.

Imagine if during WWII, prior to June 4, 1942,  someone had revealed the the US had broken the Japanese JN-25 Code.  Or if someone had disclosed the Ultra secret–that Britain and the US had broken the Enigma cipher.  I really can’t find any meaningful distinction between those hypotheticals, and the reality of what Edward Snowden–and the New York Times–has done, and will be continuing to do.

Update: The article mentions submarines, but it doesn’t draw the best submarine analogy.  During the Cold War, the US Navy’s submarine force engaged in highly clandestine, dangerous, imaginative and largely successful efforts to penetrate Soviet communications.  For instance, US subs tapped underwater telephone cables in Soviet harbors. (Read the book Blind Man’s Bluff for the details.) This was of vital importance during the Cold War.  What the NSA is doing now with Chinese and Russian computers is not different, in any material way.

Robert Gates has set off a mini-frenzy in DC, with leaks from his memoir Duty. Some of the frenzy relates to his slamming of Joe Biden, which led the White House to respond that Joe is a great “statesman.”  Thereby revealing that in the White House Thesaurus, “statesman” is a synonym for “buffoon.”

But the most explosive opinion that Gates expresses is that Obama did not believe in his strategy in Afghanistan in 2009-2010, was deeply suspicious of the military, and devised a military strategy that attempted to straddle two stools.  That Obama chose to surge (but with a sell-by date) for political reasons.  He did this with no conviction about the rightness of the policy, except for domestic political considerations.

It’s not like this was news.  Type in “Afghanistan” in the search bar, and scroll through my posts–including those which discuss Gates specifically–and you’ll see that was the gravamen of my criticism in 2009-2011.  For instance:

In other words: go large, or go home.   (Holt wrote this, note well, in 2003.)   Half measures, like those in Obama’s plan, are likely doomed to failure.   This is especially true inasmuch as Obama’s “other path” (building on Bush’s “other path”) depends heavily on transferring responsibility and control to an Afghan government and army in a period of months; Holt provides chapter and verse on how this is almost certainly an exercise in futility, given Afghan history, and the nature of its society (or more accurately, societies).

As I’ve written before, there are no good options in Afghanistan.   But by far the worst is the “middle path,” especially when it is not sold to the American people honestly.   The “time line” has short-term, domestic political considerations written all over it.

There’s more.

And it’s not just Afghanistan.  As I posted a few days ago, riffing off a WSJ article, this was Obama’s MO in Syria.  He didn’t want to take decisive action, but he didn’t want to make it look like he was abandoning the opposition.  So he took half-measures to support the rebels, and ostentatiously drew a red line–until Assad called his bluff, and left Obama scrambling for a face saving exit, which Putin oh-so-graciously provided.

This is beyond dispiriting.  The office of president carries with it awesome burdens and responsibilities.  Obama shirked those burdens, attempting to avoid politically unpalatable choices by deciding not to decide, or taking middle paths that were doomed to failure.  And doomed to cost thousands of American lives for no purpose in Afghanistan, not to speak of many more thousands of Afghan lives.  And doomed to cost tens-of-thousands of lives in Syria, not to mention the imponderable costs associated with making the United States appear hopeless and feckless in a region where such appearances encourage the wolves. (Not to mention the effect this has on, say, China.)

Obama has not taken his awesome responsibilities seriously, treating them instead as ancillary to his domestic political concerns.  Tens of thousands are paying the price in Southwest Asia.  Who knows what price is to be paid in the future.

Gates has only had the temerity to call attention at this very late date to what was obvious to those that had been paying attention, but which the political class had collectively decided to avert its eyes from.  Note the attacks that are being directed his way.  Such are the wages of lèse-majesté, no matter how deserving the majesté is of the lèse.