Day: July 5, 2015
Hangover coming
The folks celebrating the referendum “no” vote in Syntagma Square tonight in Athens are going to have a bad hangover. The Germans will likely stand firm, since doing otherwise would risk undermining the euro’s credibility. If Prime Minister Tsipras respects the referendum, Greek banks are unlikely to have sufficient euros to reopen as scheduled Tuesday.
Athens will need to issue a new currency, which will take time. Once issued, it will fall rapidly in value, making repayment of euro-denominated debt even more difficult. Several debt payments are due during July. The biggest slice is, ironically, owed to Germany (via Aljazeera): 
Sixty per cent is owed to EU member states and the European Central Bank (ECB). The amount is however relatively small from their perspective, so the default is unlikely to affect the euro much, unless nervousness spreads to Portugal, Italy and Spain. The ECB will want to focus its resources on preventing contagion. Negotiation of the “haircut” on the existing debt, which is what Greece hopes for, will take months if not years, making lenders leery of pouring good money after bad.
Out of the euro and issuing its own currency, Greece will theoretically be able to increase its exports and decrease its imports. But austerity will not end. Greece’s government will be insolvent and not creditworthy, making it impossible to stimulate the economy (or even pay government workers and pensions, except by printing money). Russia may ante up, but with far less than the situation requires. It will also insist on tough terms. Religious orthodoxy is no substitute for repayment guarantees.
Politics could intervene at any point, forcing Prime Minister Tsipras out and leading to formation of a new government committed to cleaning up the mess. But it will be years before confidence is restored. Greece has chosen a hard road that leads to an uncertain destination. Greece used to think it could get the Elgin marbles back from London. Now it will be lucky if it doesn’t have to mortgage the Parthenon.
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Is there still independent media in Russia?
On Wednesday, the Carnegie Endowment for international peace hosted A Conversation with Alexei Venediktov, the editor-in-chief of Echo of Moscow, often described as Russia’s last independent journalism outlet.
Venediktov began by describing the state of US-Russia relations. There is still no direct conflict between the citizens of Russia and the citizens of the US, but approximately 78% of Russians now view the US as an enemy, compared with 50% only a few years ago. Any sanctions against Russia and negative statements by American journalists about Russia are viewed as a challenge.
In 2000, Venediktov and Putin talked for a couple of hours after a press conference about the future of media in Russia. Putin described two adversaries:
- enemies, who you fight with, make truces with, and then fight with again and
- traitors, who you think are on your side and then backstab you.
Putin asserted that he has no mercy for traitors, but Venediktov is just an enemy, and not a traitor.
Venediktov believes that the confrontation between the US and Russia was inevitable under Putin, who spent his younger years as a KGB officer, where there were clear-cut friends and enemies. Perestroika unsettled him because it blurred these lines. Now he is back to the days of his youth again. The enemies and the battle lines are clear. This is his comfort zone.
Putin has aptly converted foreign policy into domestic policy. The main claim against him is that he opposes competition in all aspects of life. He is against political, economic, social, and moral competition. Russia is becoming a nation incapable of competing and will therefore lag behind again.
The two main groups in Russia today are nationalists, who believe in the superiority of Russian ethnicity, and post-imperialists, who believe in restoring what they view as the greatness of the Soviet Union. The post-imperialists encompass not only ethnic Russians, but also Tatars, Chechens and Ukrainians. This is a pro-Putin movement. He appeals to young people who want Russia to be rich, powerful, respected and feared once again.
Venediktov discussed the murder of Boris Nemtsov, stating that the investigators proved through technical means that those whom they arrested were the perpetrators. He does not believe that someone ordered the crime at a high level. Venediktov believes that the perpetrators felt that by killing an enemy of Putin that they would be treated with leniency. However, Putin knew Nemtsov personally and had a lenient approach to him. When Nemtsov was killed, Putin was outraged.
Venediktov speculated that it may ultimately be shown that the CIA or the Ukrainian intelligence services ordered the murder to shake Putin’s grip on power, but there is currently no evidence to suggest this. Venediktov has bodyguards because he has been declared an enemy of Islam and of Chechnya.
Venediktov believes that the conflict in Ukraine will not end in the next ten years. It will become like the conflict in Nagorno-Karabakh. There will be daily casualties. Venediktov believes that separatists shot down MH17 by accident but that we will never know for sure. He noted that before MH17 was shot down, Western rhetoric against Russia was not militant but that it became militant afterward.
Venediktov stated that of the hundreds of POWs captured by the Ukrainian Army, only two have been Russian personnel, and they were intelligence officers, not soldiers. He believes we need to be cautious in assessing the extent of Russian military involvement in Ukraine. Venediktov also believes that relations with Georgia will continue to deteriorate because Russia will annex South Ossetia. This will lead to a rise in anti-Russian discourse in Georgia.
Asserting that ISIS is considered to be the top security threat by the Russian government, Venediktov said a high-level dialogue between US and Russian officials regarding ISIS is ongoing. Putin recently held a press conference in which he devoted 3/4 of the time to discussing ISIS. Ukraine is more about public relations.
An audience member if Venediktov is truly an enemy of Putin, or more of a Putin apologist, given some of his positions. Venediktov replied that he is just a journalist, not a politician. He opposes Putin’s policies and he is the only journalist that Putin publicly criticizes. He joked that it would be easier to present Putin with horns and a tail to this audience, but all journalists have horns and a tail so that would just make Putin one of them. Venediktov stated that Echo of Moscow is an open forum for diverse opinions. As such, it attracts criticism from much of the political spectrum.
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