Tag: Russia
Is Syria like the Balkans?
I have long resisted parallels between the Balkans, in particular Bosnia, and Syria. Here are the notes on the subject I prepared for a recent presentation on the subject:
1. Context counts. One sense in which the context is similar is that the Balkans and Syria were once part of the Ottoman Empire. Their populations were not homogenized into nation states. They preserve distinct ethnic and sectarian characteristics to a far greater extent than in Western Europe.
2. But otherwise the context really is different
• Ethnic nationalism was a cause of the war in Bosnia, among the most important of them. Heightened sectarian and ethnic feeling is a consequence of the war in Syria.
• In Bosnia, the neighbors were actively trying to divide the territory. In Syria, the neighbors are supporting proxies but still trying to avoid getting too involved and fearing division of the territory.
• Russia is supplying and financing the regime in Syria. It was not playing nearly so active role in supporting the Serbs in Bosnia.
• Russia was Yeltsin’s, not Putin’s: it was retreating from the world stage, not trying to force its way on.
• The United States in the 1990s was at the peak of its unipolar moment. Today it faces serious challenges throughout the Middle East and in Asia and war fatigue at home.
3. The Dayton negotiations produced a territorial division of Bosnia along ethnic lines and saved the Serbs from defeat.
• Milosevic came to Dayton suing for peace, because he feared a mass exodus of Serbs from Bosnia along the lines of what had happened a few months before in Croatia.
• The Americans compelled President Izetbegovic to agree to a settlement he regarded as unjust.
• Almost 20 years of effort has not reversed the ethnic cleansing and separation caused by the war, whose territorial dimension is a major barrier to peace implementation.
4. If there is a parallel to Syria in the Balkans, it is Kosovo, not Bosnia.
• There Milosevic was trying to assert control over territory that belonged to Serbia.
• He violated even minimal standards of decency by attacking civilian populations, chasing people from their homes and rendering something like half the population refugees.
• The US took advantage of the unipolar moment to launch a war without UN Security Council approval. Milosevic was indicted at The Hague Tribunal during the war.
• The outcome in Kosovo was not ethnoterritorial, except for a small portion in the north that is now being reintegrated with the rest of the territory.
• Ethnoterritorial separation may look desirable to end a war, but it creates conditions in which a real peace process is difficult if not impossible to implement within the context of a single sovereign state.
5. The military intervention against Yugoslavia was a vital prelude to the Kosovo settlement.
• Serbia became concerned that damage to its infrastructure from NATO bombing would be irreversible, making it difficult for Milosevic to remain in power.
• The Serbian army withdrew from Kosovo, Belgrade lost all control of the situation there, and the refugees returned en masse.
• Though defeated militarily, Milosevic remained in power for another year or so, until his own people brought him down at the polls.
• He fell at an election, having allowed local observers and vote counting at the polling places.
6. Nothing like these conditions exist today in Syria.
• Assad is winning, not losing. From the opposition perspective, leaving him in power is not an option. From the regime perspective, removing him is not an option.
• Military intervention by Iran and Russia continues. Any definitive military intervention on behalf of the opposition seems far off.
• An election in Syria today would unquestionably produce an outcome favorable to Assad, with many people not voting and the polling far from free and far.
7. (only if needed) A quick word also about Crimea.
• President Putin’s playbook there is not borrowed from the Americans in Kosovo, as he sometimes implies.
• The US did not in Kosovo unilaterally occupy and annex a province. There was no quicky referendum, but rather a well-coordinated declaration of independence after eight years of UN administration and several years of UN-led negotiation.
• Kosovo is now recognized by over 100 sovereign states.
• Putin’s playbook is copied from Milosevic, who used military force claiming to protect co-nationals and re-establish full control over territory he regarded as rightfully his own.
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90 miles from you know where
Politico Magazine yesterday published my piece based on a visit to Cuba last week under the heading “The Dangers of Collapse in Cuba.” Here is the lead paragraph:
Cuba’s 1950s cars and Havana’s crumbling facades have long been its iconic symbols in the American imagination. They don’t disappoint, as I discovered on a trip to Cuba last week. But I didn’t expect zippy Hyundais with Miami FM on their radios or a private collection of contemporary Cuban art, installed floor to 20-foot ceiling in a fabulous apartment with a terrace overlooking the Gulf of Mexico. Both the apartment and the art would put many wealthy New Yorkers to shame.
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Ukraine isn’t over
With the G7 countries issuing a strongly worded statement yesterday against Russia’s annexation of Ukraine, optimists will want to go back to worrying about Malaysia Airlines flight 370. That would be a mistake. Despite President Putin’s disavowals, there is still serious risk to Ukraine from a Russian push into its southern provinces, perhaps as far as the Russian-occupied Transnistria area of Moldova:
Why? Let me count the gains to Moscow:
- Crimea would no longer be cut off from Russia proper.
- The southern provinces of Ukraine are home to heavy industries that cater in part to Russia’s military.
- Having annexed Crimea, pro-Russian political forces are unlikely in the future to win any national elections in Ukraine, so “protection” of Russian speakers requires their incorporation into Russia.
- Ukraine would be reduced to a landlocked remnant with little prospect of being more than a burden to the European Union and the United States.
- Rump Ukraine will find it necessary to make its peace with natural gas supplying Russia.
If thinking along these lines predominates in Moscow, it is hard to imagine anything the EU and US could or would do to prevent a Russian military move. The Ukrainian army is in no position to resist. Washington and Brussels imagine that Ukrainians would mount an insurgency against Russian occupation. That could be a sanguinary affair that could last a decade or more.
It is not easy to come up with reasonable policy options. Deployment of observers from the Organization for Security and Cooperation in Europe, which is already in progress, is a good idea. But if Putin decides to move, they will stand by to document how many tanks and armed personnel carriers have entered and where they are located.
Military options are out. Though the credibility of the Alliance is at stake, NATO has no obligation and few means with which to defend Ukraine, even though it is a member of Partnership for Peace. The Alliance will have its hands full protecting its Baltic and other easternmost neighbors. It may be able to provide some intelligence and logistical support to Ukraine, but that’s about it.
Thoughts fly to the money Kiev owes Moscow. Does it really have to pay its debts if Russia invades? Probably not, but it would then have to worry about where to find natural gas for heating next winter. There is no quick alternative available, so far as I know.
The ruble and the Russian stock market are already down, but that is likely to be a temporary response with no substantial long-term impact. Only if the EU and US come up with sanctions that really bite Russian banks hard is Moscow likely to pay attention. That’s unlikely, as the Europeans export too much to Russia and depend too much on Russian gas to get serious about financial sanctions anytime soon.
It looks as if we are in for a long-term response to the annexation of Crimea and whatever other parts of Ukraine Putin goes after. We’ve been in this situation before. We had no really good policy response to the Soviet occupation of the Baltics at the end of World War II, of Hungary in 1956 or of Czechoslovakia in 1968. Nor have we done anything substantial about South Ossetia and Abkhazia, which declared independence from Georgia in 2008.
What we had going for us during the Cold War was strategic patience. In the 1950s, I was taught in junior high school that the Baltics were “captive nations.” It seemed quixotic at the time to imagine that they would ever be free. But they were liberated at the end of the Cold War and have since become NATO and EU members.
We have wanted to believe that the ideological contest that gave us strategic patience is gone. Unfortunately, a new one appears to be taking its place. Autocrats like Putin are not relying any longer on state-controlled economies. They are not even pretending to read Marx or Engels. They are enjoying the fruits of at least partly free economies, under the control of their favored oligarchs. We may need even more patience than in the four decades or so of the Cold War in order to see the backs of Putin and his like.
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Putin’s playbook
I wouldn’t want to impugn Russian President Putin’s originality, but his playbook does seem borrowed from Slobodan Milosevic. Ukraine is not really a country. Nor was Bosnia to Milosevic. The threat to Russian-speakers in Ukraine (and Georgia and Moldova) requires that they be protected. So too the Serbs in Croatia, Kosovo and Bosnia. Russia did not start what is happening in Ukraine–it was the West that chased President Yanukovich from Kiev. So, too, for Milosevic it was Croatian President Tudjman who precipitated things in Zagreb, Bosnian President Izetbegovic in Bosnia and of course rioting Albanians in Kosovo: “no one should dare to beat you again!”
There is of course some degree of truth–I won’t go into how much–in each of these allegations. In revolutionary situations, there are bound to be bad moments, bad actors, bad provocations. The playbook requires that you overreact: mobilize paramilitaries, occupy territory, saturate the airwaves with justification and crush any hint of violent response on the part of a far weaker enemy. This is Machiavelli, suggesting ways to seize control of territory as quickly and inexpensively as possible and ensuring by whatever means you can get away with that it remains yours.
There is one play missing, so far: ethnic cleansing. So far as I am aware, the Russians are not, yet, expelling Tatars or Ukrainian speakers from Crimea. For the moment they are reported to be taking the soft power approach, trying to convince the Tatars to support them and arresting relatively few Ukrainian speakers and oppositionists, even as they box in or take over Ukrainian military installations. But that may change. With what I anticipate will be an overwhelming victory of the independence referendum in Crimea Sunday, Moscow may see the development of some real resistance to its plan to absorb Crimea into Russia as well as clashes in other parts of Ukraine between Russian and Ukrainian speakers. If it doesn’t happen spontaneously, Moscow can of course make it happen.
That’s when I would expect the next play. It is still early in the Ukraine saga. Things can get much worse and likely will. Crimea is more philo-Russian than other provinces in eastern and southern Ukraine. It already had autonomy and governed itself in many ways. It is not a great leap to independence, or to returning to the Russia from which it originated. The contestants will be more evenly matched in other provinces, requiring removal at least some of those who won’t cooperate.
Russian troops are said today to be massing and exercising near Ukraine’s eastern border. Success in Crimea could well embolden Putin further, tempting him to take a few more provinces piecemeal. If he does, his need to expel Ukrainian speakers and others who oppose Moscow’s rule will be greater than in Ukraine. We are far from the worst that can happen.
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The wrinkles in aid to Ukraine
Columbia University Financial Law Visiting Scholar Jeremy Pam, who did sovereign debt restructuring (including for Iraq) at Cleary Gottlieb and then went off to Baghdad for the Treasury Department and Kabul for the State Department, kindly offers some clarification of points I raised on Tuesday about assistance to Ukraine. He writes:
1. Here’s some insight on the accounting for loan guarantees generally, from an April 2013 CRS report on US Foreign Aid to Israel:
Since 1972, the United States has extended loan guarantees to Israel to assist with housing shortages, Israel’s absorption of new immigrants from the former Soviet Union and Ethiopia, and its economic recovery following the 2000-2003 recession that was sparked by a Palestinian uprising (known as the second intifada). Loan guarantees are a form of indirect U.S. assistance to Israel, since they enable Israel to borrow from commercial sources at lower rates. Congress directs that subsidies be set aside in a U.S. Treasury account for possible default. These subsidies, which are a percentage of the total loan (based in part on the credit rating of the borrowing country; in the case of the loan guarantees in the 1990s, the subsidy amount was 4.1%), have come from the U.S. or the Israeli government.
2. Here‘s a subtle discussion by Simon Johnson and Peter Boone on both the political and policy dynamics of IMF assistance to Ukraine and the larger problems caused by pressure on both the West and Russia to provide large, relatively unconditioned aid to Ukraine.
3. The questionable international law doctrine of “odious debt” seems unlikely to be of much help to Ukraine, particularly as given the numbers that Johnson and Boone provide about Ukraine’s concrete debts (to Russia and to other creditors) that have been coming due it seems reasonable to assume that Russia’s late-in-the-game subscription to $3 billion in Yanukovich-era sovereign bonds mostly went to keeping the ship of state afloat after the EU/IMF deal fell through.
4. Boone and Johnson do not suggest any easy solutions. A quick bailout will just defer needed reforms (they’d previously written here about the economic and political need for a more Western-oriented Ukraine to bite the bullet on ending the gas subsidies enabled by the agreement with Russia to discount gas — in part for the extension of the lease to Sevastopol! Putin described the gas bill discount for the naval base extension as “exorbitant”, saying “there’s no military base in the world that costs this much money.”
On the other hand, a “disorderly” debt default is always scary. The best solution implied might be what we used to call an “orderly” debt restructuring, but the problem with that is that there are not that many people around anymore (both inside the official sector and outside) with the skills and experience to do it well. This is what I take to be one of the real lessons of the Iraq debt deal — unless there is a new appreciation of the value of such skills and experience, we may not look upon its like again….
So if I understand correctly, the Congress prefers loan guarantees because only a small fraction shows up on the books. It is not clear to me yet whether guarantees are really an effective way of producing more money for Ukraine, though I suppose without them no one would ante up. Little of the aid is likely to arrive quickly, especially if the EU and US insist on needed reforms. Debt reduction will be difficult because a lot of the money is owed to Russia, putting the West in the awkward position of getting Putin his money. Default could make a messy situation worse. Lots of wrinkles in aid to Ukraine.
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Grading assistance to Ukraine
Larry Summers, not my favorite public persona but a savvy economist to be sure, offers sage advice on aid for Ukraine. But he fails to consider how we are likely to measure up to his “lessons for the design of support programs,” so here are my guesstimates (the proposals in bold are his, the rest is mine):
1. Immediate impact is essential. While Congress has acted quickly to approve $1 billion in loan guarantees and the European Union has in principle approved $15 billion, the International Monetary Fund has not yet acted. Odds are it will take time, not only for the IMF to extract reform promises from Ukraine but also for the bureaucratic arrangements to be made by the EU and US. And the total amount is likely to fall far short of the $35 billion Ukraine says it needs.
2. Avoid “Potemkin money.” I wonder if loan guarantees fall in the category of Potemkin money, as I imagine it is difficult to know how much new money they make available. Perhaps a reader or two who are expert can enlighten me. EU money is rarely quick in my experience. IMF money is real but takes time to get approved. Months rather than weeks before they write a check. Potemkin-like in the meanwhile.
3. Be realistic about debts. Summers wants us to consider rescheduling or restructuring, which is something often done after a revolution (but never quick–it often takes years). Relief from official and private sector debt is often in the 35-60% range. Uniquely Iraq got 80% off its official debt at the Paris Club. Post-Communist Poland got 40% off. But of course much of Ukraine’s debt is owed to Russia, which is unlikely to be cooperative in any effort to reduce, reschedule or restructure. The usual consensus is not likely to be available, unless we strike a deal with Moscow that is likely to be inimical to Ukraine’s interest in Crimea.
4. Honest management is as important as prudent policy. We don’t want the Ukrainians stealing the money we send them, and we should want to recover as much as possible from past abuse. Lots of luck on the latter. Yanukovich and his cronies will have squirreled away a lot of money in difficult to trace places. Some of Ukraine’s wealthy tycoons are prominent supporters of the post-Yanukovich regime. It will not be easy to prevent problems in the future either, as Ukraine clearly lacks the mechanisms required for serious transparency and accountability. Sure we should insist, but it will take legislation and courage to put them in place. Recovery of ill-gotten gains takes years, as does establishment of institutions designed to prevent theft.
5. Countries need to pursue broad polices in a way that benefits Ukraine. There is a pretty good chance the Obama administration will do the right things on the IMF and on energy policy by building the Keystone pipeline and approving natural gas exports. Europe is also likely to do at least some of the right things: continue to pay for the gas it receives through Ukraine, so long as the Russians continue to send it, and help Ukraine develop alternative energy sources for its own use, reducing its dependency on Russia.
The big problems are with immediacy and impact. Ukraine needs a lot of money quickly, much faster than it will get honest management or debt reduction. Washington and Brussels look likely to have won the tug of war for Kiev and any other parts of Ukraine that remain attached to it. They need to do everything they can to avoid financial implosion of their prize.
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