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Thursday, March 02, 2006

Ukraine-Russia Relations
Letter 2


If a hypothetical rent re-evaluation carried no upside potential for Ukraine, then why would Russia resort to stonewalling? Why would the Russian Federation employ the border clause as the last line of defense? I think the jury is still out on the question of whether Ukraine has been shortchanged. In my previous post, I tried my best to pave the way for this question via a historical kaleidoscope based on extreme reductio ad absurdum. Anyway, thanks for calling me a dude/weirdo:) I really appreciate the title. When A applies ad hominem treatment to B in absentia — and in a conversation with C — that sequence may speak volumes to the audience. It might have broken someone’s heart to see the Russian tricolor go that pale — to the point of passing for a white flag:)

Now that we’ve traded shots, can we tackle the substance? Of course, neither Kaliningrad nor the Crimea will ever be on the geopolitical “swap market” again. The Molotov-Ribbentrop transaction cost humanity dearly and must not be repeated in any form. Immanuel Kant, a native of Konigsberg, would definitely have supported this categorical imperative if he had seen all the German soldiers who had met their death in the Crimea. Ditto for the Russians and Ukrainians they had killed; and the Crimean Tartars whom Uncle Joe had brutally banished as scapegoats.

Neither Moscow nor Tbilisi will bid to compensate Gulag and Holodomor graduates for the tortuous odyssey of their lives, directed by the mustached genius of genocide. Still, Moscow would clearly have an edge in this tender, in terms of bona fide qualifications and related experience. To keep the qualifications, Moscow should continue playing gaStalin/gasPutin to Georgia or whatever former Soviet republic it may pick for a playmate.

But as for the whole of Russia, the game of reinventing itself would push it much further up the learning curve. After all, Russia is more than just a clique of KGBremlins from the Kremlin and their business partners. More than a hundred million Russians do not run a single oil or gas well. They have to make a living other than pocketing the lion’s share of the country’s exports revenue.

If you put all Russians living outside major cities, struggling to make both ends meet, on the balance sheet, you will discover that the Kremlin’s imperial ambitions add no value to them. What does add value is the human capital of millions of Ukrainians who have contributed to upgrading the “evil empire” to the “energy empire” it is today. For centuries, the Ukrainians have been among the pioneers of Russia. How many Ukrainian schools do they have in Russia?
That’s why adopting a modernization strategy with a realpolitik component will add more value to Russia than carrying the torch of a retardation strategy with a hardline component.
Do I love Jewish ways? I love German ways! The Germans made no effort to disown their ways. They assumed responsibility for crimes against humanity committed by their fellow men. And they are making a good faith effort to help the victims and their relatives. Eleven countries have laws against denying the Holocaust. Ask David Irving, the British historian who is appealing his 3-year jail sentence in Austria, Hitler’s native land. Moreover, Austria, annexed by Germany in 1938, is looking forward to contributing its share of the compensation payments.

Of course, one might argue that rich countries simply can afford this type of noblesse oblige. In contrast, Russia, which prides itself on being a G8 member, cannot afford to do so. Good point. Despite sustained growth, Russia’s GDP per capita trails the rest of the G8 by a wide margin. Confession may open the floodgates of compensation claims that may dampen growth.
Where did things go wrong? In 1990, Yeltsin had set out to make the Russian Federation a prosperous democracy respected by the international community. By the end of 1999, all he left was a poor kleptocracy fighting a bloody war in Chechnya. His alcohol-powered, blowout privatization policy, along with its scorched-earth income distribution patterns, had led to the demise of the Russian Dream in its embryo. With the wrong pilots at the helm, transition from a paternalistic, command-and-control state eventuated in the birth of a socially Darwinist, crony capitalist monster — with a cavernous income gap and a values vacuum.

Not exactly. Russia’s identity crisis became fertile ground for Nazi–inspired hardliners. Sixty years after the victory in the Great Patriotic War, Der Fuehrer has established himself as a popular, customizable political brand around Moscow. In the streets of Moscow, Mein Kampf is sold as a souvenir; Africans, Asians, and Jews are assaulted on a regular basis.

Why does this keep happening in a country where every family had lost someone dear in the war? In a country that used to sponsor liberation movements in Africa, Asia, the Middle East, and Latin America and welcomed students from these faraway places? How could a country with galaxy of the world’s finest scientists, writers, and composers have its lights turned off?
Uncle Boris’ two terms of office left Russia poor and messed up; Uncle Vlad’s have done little to make it right, except making use of skyrocketing energy prices. Has the value of life appreciated accordingly? Kursk the submarine, 2000. Dubrovka the theater, 2002. Beslan the school, 2004. These benchmark episodes offer bloodchilling evidence to the contrary.

Oligarchs are as much of a problem for Russians as they are for Ukrainians. In this regard, these nations are brothers in distress. What makes the Russian oligarchs different? They are bigger and badder. They need more space. That’s why Ukraine has become part of their habitat. True, many of the top oligarchs are of Jewish origin. Scattered all over the Roman Empire and Christendom for centuries, the Jews always stuck together in order to survive. Wherever they found themselves, their business skills and goal-orientedness always came to prominence. Once successful, they would set up nepotistic networks probably in the same manner the locals did. These networks created reverse discrimination, amplified existing economic tensions, and brought the sociocultural climate to the boiling point. Branded as the “murderers of Jesus,” members of this tightly knit, geographically mobile, and highly visible ethnic group had their social sins stereotyped unlike any other nation on earth.

What’s right about Israel? After WW II, the Jews have pulled themselves together from all over the world and built Israel from scratch. How many Israelites spoke Hebrew at that time? How many freshly-minted Israelis would despise learning Hebrew in the 21st century? Israel and the Arab Street have been fighting a turf war since biblical times. For decades, America has locked itself in a close relationship with Israel, its longtime client state and, more recently, ally in the woebegone war on terror. Most Arabs view it as a tandem to be destroyed when in fact it’s often the case of the tail wagging the dog. What’s wrong about Israel? There will be no peace until the Israelis find a way to help the Palestinians produce something of economic value to hold on to — other than AK-47s and explosives.

As for the Jewish Russian oligarchs, a good many of them are having the “best of the two worlds.” Keeping their “hard-earned” billions in offshore banks, they cruise the world’s best resorts. Some bluntly admit to plotting to put Puttie out of business, and are willing to put their money where their mouth is. Others are in the British soccer business. Their lifestyle sparks outrage among millions of common folks left behind and cheated out of their future.
That’s why thousands of younger Russians have embraced Hitler, while millions of older Russians can’t let go of Stalin. The gruesome twosome who had slaughtered their fellow men by the tens of millions made a comeback. They are fighting the battle for their hearts and minds of Russia. Can anybody imagine a Jew praising Mein Kampf or an African American sporting a KKK white robe and hood?

As for me, I love being able to know my ways and the ways of others, without falling into the trap of self-serving bias. What are our ways? Crony capitalists and convicted criminals must go. They have no right to run the Ukrainian government — nor any other government, for that matter. That’s why we made it to Maidan, and still haven’t received those CIA paychecks. No anti-Russian folks showed up with us, pro-Ukrainian folks only. Amongst the myriad banners waving out there, one could spot a quite few Russian tricolors. The folks waving them spoke with a strong Moscow accent. Guess how many of them had their banners burned.

With all the ups and downs, we have not come to the end of the road. While convicted criminals have been held at bay, crony capitalists refused to go away. Sad to say, we became the laughingstock of our opponents and supporters because some of the crony capitalists looked orange. That was our fault. We should have worked harder. We should have sworn them to “off-duty mode.”

As we have our values challenged, they become more clear to us. We gain valuable foresights into the challenges lying ahead. One of the them is not losing what we’ve gained. Democracy. Freedom of speech. A better social contract. Convicted criminals riding their Trojan horse in this parliamentary race do not share these values. In 2005, the year the oranges “killed the economy,” it grew at a modest 2.4 percent while earnings rose 20 percent and the budget surged 63 percent. Ukraine received more value for a single state-owned enterprise than the combined value of all past privatization proceedings. If James Carville were to comment on the numbers, he’d probably come out with “It’s the shadowy economy, stupid.”

Finally, how does the WTO come into play? Ukraine is heading for the WTO’s door. And so is Russia. The assumption that the Kremlin sold out to the West makes little sense. Russia’s accession to the WTO will not be a zero-sum game. The Kremlin expects to improve its fortunes and keeps negotiating to get the best deal it can. Neither Ukraine nor Russia should crave jamming fingers in the doorway to extract some first-mover advantages. Synchronized accession could solve that problem.

The Ukrainian economy will not be sold for scrap. It’s the Ukrainian steel makers who will no longer have their sales scrapped by antidumping laws. And most of those steel makers are non-orange. Long-term benefits do outweigh short-term losses. Minimizing the latter and maximizing the former should be the goal. Free trade works better than free aid. Ask China. Of course, the “freer” the trade the better the aid.

That’s why Ukraine and Russia should keep their eyes wide open. And may neither one have its arms twisted — nor its mirrors.

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