Lovers Quarrel.

Historians have often examined the tempestuous relationship between Germany and the Soviet Union.[1]  The broad outlines of the story are well known.  They alternate between amity and enmity.  Long before Germany had become a “nation,” the region exerted a powerful cultural influence on Russia.  Russia, Prussia, and the Austrian Empire battled over the “bloodlands” between them in the 18th Century.  Otto von Bismarck, the Chancellor of a united Germany, built his foreign policy on managing the conflict between Russia and the Austrian Empire to avoid war.  After his fall from power in 1890, German leaders succumbed to the “spell of power.”  Their plan for war, the Schlieffen Plan, aimed to destroy Russia and France as major European powers.  German war aims against Russia in the First World War culminated in the 1918 Treaty of Brest-Litovsk, which largely accomplished the pre-war ambitions.  These gains were lost when the Western powers defeated Germany on the battlefield later in the year.  The Allies imposed a harsh, if just, peace on Germany.  It became an outcast, whose chief visible aim lay in restoring respectability.  Meanwhile, the Bolshevik seizure of power, their abandonment of their allies in the separate peace at Brest-Litovsk, their repudiation of pre-war debts, and their attempts to export revolution to other countries made the Soviet Union a pariah country. 

            The two outcasts found a community of interest in evading international restrictions in order to revive their power.  From 1922 to 1932, the German military and the Soviets cooperated on weapons development and military training.  The democratic Weimar Republic chose not to know about this relationship.  Initially, the German aims were short-term.  Many military leaders fantasized that it would be possible to renew the lost war within a few years.[2]  To this end, they encouraged right-wing paramilitary groups like the Nazis. 

            The renewed war in the West did not come, but—in the crisis of the Depression—the Nazis arrived in power.  Adolf Hitler, the anti-Soviet German dictator, ruptured relations with the Soviet Union.  Increasingly, the two countries became at daggers drawn.  In 1935, the Soviet Union formed an alliance with France; in 1936 Germany formed the Anti-Comintern Pact with Italy and Japan; from 1936 through 1938, Germany and the Soviet Union waged a proxy war in Spain.  Some Westerners hoped for a deeper engagement with the Soviet Union against Nazi Germany.  Others hoped that Hitler’s ferocious hostility to the Soviet Union would lead him into a bloody war of exhaustion in the East that would remove the need for the West to fight. 

            Suddenly, in August 1939, Germany and the Soviet Union signed a treaty that left them free to carve up Eastern Europe.  Hitler later chose to attack Western Europe and then, in June 1941, the Soviet Union.  Even in 1941, many Germans regretted this rejection of Russia.   


[1] John W. Wheeler-Bennett, Brest-Litovsk: The Forgotten Peace, March 1918 (1938), and “Twenty Years of Russo-German Relations: 1919-1939” Foreign Affairs Vol. 25, #1, pp. 23-43; Hans W. Gatzke, “Russo-German military collaboration during the Weimar Republic,” American Historical Review, Vol. 63, #3 (1958), pp. 565-597; Walter Laqueur, Russia and Germany (1965); Gerhard Weinberg, Germany and the Soviet Union 1939-1941 (1972); Barbara Jelavich, St. Petersburg and Moscow: tsarist and Soviet foreign policy, 1814-1974 (1974); Harvey L. Dyck, Weimar Germany and Soviet Russia, 1926-1944 (1984); Geoffrey Roberts, The Soviet Union and the Origins of the Second World War: Russo-German Relations and the Road to War, 1933-41 (1995); Aleksandr M. Nekrich, Pariahs, partners, predators: German-Soviet relations, 1922-1941 (1997); Ian Johnson, Faustian Bargain: The Soviet-German Partnership and the Origins of the Second World War (2015).

[2] From 1890 to 1945 Germany’s leaders repeatedly failed to adjust aspirations to resources.  Disasters followed. 

Durable Dictatorship.

            One way of understanding why the 1930s and 1940s were so terrible is to look at the 1920s.  In the aftermath of the First World War, two European governments fell to revolutionary regimes.  The Tsarist, and then the Provisional governments fell to revolution from the left, Bolshevism.  The liberal constitutional Italian government fell to revolution from the right, Fascism.  In both cases, however, the revolutionary movements were stopped short of their radical hopes.  Powerful constituencies were willing to tolerate some change, but rejected anything that harmed their own interests. 

In the case of Russia, the peasantry formed the main stumbling block.  They controlled the food supply, they formed the majority of the population, and they had gained possession of both their own land and that of the aristocracy.  Communism threatened private property, their private property.  So Lenin settled for the “New Economic Policy”: private property in land, private commerce in food, and government control of urban industry and international trade.  There things stood until the arrival of Stalin.   

In the case of Italy, multiple “old elites” formed the stumbling block.  The aristocracy dominated the military and the bureaucracy, the monarchy remained an important focus of loyalty, and big business and big agriculture controlled the economy.  They wanted the Socialo-Communist left and the unions destroyed, but they wouldn’t tolerate anything that threatened their power.  So Mussolini settled for the trappings of dictatorial power for himself and jobs for his followers. 

In the 1930s Stalin and Hitler exploited changed conditions to carry through real revolutions.  For Stalin, it was the death of Lenin and the disputed succession that followed, coupled with the legacy of debates on the best path forward to an actually Communist Russia.  This allowed him to play off factions within Bolshevism while mobilizing the intense enthusiasm of younger Communists.  For Hitler, it was the immense shock of the Great Depression to the society and politics of the Weimar Republic, followed by the commanding needs of mobilization for war.  In both cases, all the old barriers to sweeping change were destroyed. 

These examples may have value in understanding why some authoritarian regimes survive while others fail.[1]  One theory holds that dictatorships born out of revolution endure because the revolution destroys the old institutions, eliminating both enemies and anyone who could provide an alternative; and because the revolutionary movement packs the institutions of power with fanatics committed to maintaining the new order.  This theory may explain why Communist Cuba, Communist North Korea, Communist China, and Islamist Iran all remain standing many decades after their creation.  

One thing not sufficiently emphasized by this analysis is the role of terror.  Right to the end of their lives, Hitler and Stalin commanded police forces that had deeply penetrated the nightmares of their subject people.  Fear compelled compliance. 

Why then did these supreme examples perish?  Hitler lost a war Germany couldn’t win.  The Soviet Union’s rulers lost their nerve at a critical moment in 1989.  Those lessons may have been lost on Western observers.  They aren’t likely to have been lost on current dictators. 


[1] Max Fisher, “How Iran’s Government Has Endured in the Face of Instability,” NYT, 21 June 2021. 

Cosmopolitanism and the Nation State 1.

            Nationalism is the idea that all people who share a common language and a common culture should be organized in independent, self-governing states.  Once upon a time, this posed a revolutionary threat to established boundaries.[1]  “Germany” and “Italy” were geographical expressions equivalent to saying “the Mid-West.”  History had fractured each into multiple independent states.  At the same time, the Russian Empire, the Austro-Hungarian Empire, and the Ottoman Empire were multi-lingual, multi-religious, and multi-cultural conglomerations.  In many places, different “national” groups were mingled together.  Beginning in the later 19th Century, Nationalism spread into all of these areas, leaving havoc and nation-states in its wake. 

            During the First World War, Britain and France agreed on how to partition the Ottoman Empire after victory had been won.[2]  After the war, the peacemakers in Paris tried to craft national boundaries that would gather as large a share of any national groups as possible into a coherent state.  The best will in the world could not disentangle all of the groups, so national minorities grumbled in many parts of Europe.[3] 

            Between the two world wars, predatory states fed on the grievances of national minorities, their own or those of others that created hostilities that could be exploited.  So German minorities in Austria, Czechoslovakia, and Poland; the lands across the Adriatic that had been promised to Italy, but given to the Artist Formerly Known as Yugoslavia; Hungarians in Rumania; Poles in Czechoslovakia; Croatians and Slovenians in Yugoslavia; and all the lands lost by Russia in 1918.  After the Second World War, the peacemakers drew the lines on maps, then shoved people where they wanted them.  The problem of national minorities was solved. 

            The peacemakers also tried to freeze their lines in place for all coming time.  In 1945 the newly-created United Nations outlawed “the threat or use of force against the territorial integrity or political independence of any state.”[4]  In essence, countries that existed had a right to continue existing in their original boundaries.[5]  The break-up of the Western colonial empires soon added many new nations to the world and to the rolls of those who accepted the United Nations’ prior decisions as their price of admission. 

            Now changed flows of power erode the established order.  Vladimir Putin decided not to wait on plebiscites that the United States would never allow.  He took back the Crimea and staged a limited invasion of two predominantly Russian “oblasts” of Ukraine.  He has claimed that Belarus, Ukraine, and Russia “are one people.”  Xi Jinping’s flouting of China’s agreement on the status of Hong Kong may be a preface to retaking Taiwan.  In 2020, Chinese publications sent up trial balloons referring to parts of Tajikistan and Kazakhstan as once part of Imperial China’s domains.  Water runs downhill, so lesser powers may soon start dusting off their claims. 

            Should this be stopped?  Can this be stopped?  Will this be stopped? 


[1] The American Revolution can easily be portrayed as the first war of national liberation.  The Dutch will object. 

[2] The Sykes-Picot Agreement (1916) gave France Syria and Lebanon; while Britain got Iraq, Trans-Jordan, and Palestine.  The British made a number of other commitments that did not accord well with reality, notably promising much of Turkey to Italy and Greece, an Arab state to the rulers of the Hejaz, and a “national home for the Jewish people” in Palestine. 

[3] “Sub-Carpatho Ukraine, land that we love.”  I stole that from Alan Furst, Kingdom of Shadows (2000). 

[4] Quoted in Yaroslav Trofimov, “The Dangers in A New Era of Territorial Grabs,” WSJ, 19-20 September 2020. 

[5] This amounted to a return to an established principle of 18th and early 19th Century diplomacy. 

The Asian Century 20.

            Not so long ago, European hopes for a partnership with China looked promising.  At Davos in 2017, Xi Jinping said all the right things about wanting to combat climate change, continue building an open world economy, and working co-operatively with other nations to solve shared problems.  This made an appealing contrast to the Trump Administration’s “America First” stance.  The “China Market” offered both a growing market for high-end European products and cheap source the consumer goods.  China’s “Belt and Road” initiative dangled generous infrastructure spending before countries still struggling out of the financial crisis and recession of the first years of the 21st Century.[1]  European-Chinese co-operation looked like a low-cost or no-cost policy option. 

            Then the Chinese-American split came out into the open.  Then China’s authoritarianism became too blatant to ignore, with the persecution of the Uighurs and the crack-down on democracy in Hong Kong.  Then China started throwing its weight around in Europe to stave off criticism or coerce compliance. 

            Now, the deepening rivalry between the United States and the Peoples Republic of China is forcing other countries to choose sides.  They can back the US, or back China, or try for non-aligned independence.[2]    

            Some in the European Union (EU) want to back the US.  For exponents of an up-dated “Atlantic Alliance,” the US is the only choice: both countries uphold the same values and the US possesses formidable military and diplomatic power.  They choose to see Donald Trump as a destructive anomaly.  They argue that neither the US nor the EU are strong enough alone to counter the PRC, but together than can win.[3] 

One problem here is that the EU is crumbling.  The divide between the original founder countries of the EU and the later additions has surfaced with “Brexit” and the dissent of some of the Eastern Europeans from Franco-German leadership.  The divide between Northern and Southern Europeans revealed by the financial crisis has only been papered over, not solved. 

Others clearly want to pursue non-alignment in a manner that will enable them to hold the ring between the US and the PRC.  Gaining this kind of power involves closer ties with Russia.  Russia has greater military power than do the European countries; Russia has abundant oil and gas flowing to Europe through its pipelines.  The EU and Russia would make a far more impressive bloc than does the EU alone. 

One problem here is that Russia will exact a high price for its co-operation.  Europeans might be willing to see Russia restore order a la Putin to the kleptocratic Ukraine.  How would they deal with Russian irredentism around its Western and Southern frontiers?  Then, Chinese dissidents end up in prison.  Russian dissidents end up dead. 

            Is “Europe” too divided, weak, and even misguided, to chart an independent course in the world? 


[1] Chinese management’s reform of half of the shipping facilities of the Piraeus probably delighted Northern Europeans fed up with Greek sloth, fraud, and incompetence. 

[2] Yaroslav Trofimov, “Europe’s Face-Off With China,” WSJ, 29 February-1 March 2020. 

[3] You can see this as Pessimistic in that it implies that the PRC has already gained so much strength that the US alone cannot check China’s course.  Or perhaps it’s just Realistic. 

Advice from a Guy Who Knows a Lot.

            Seen in a somewhat historical longer perspective than one gets in the daily media, Donald Trump’s four years as president aren’t quite the anomaly that they seem.  In terms of foreign policy, the Trump administration identified the key problems, but came up with some wrong solutions.[1]   The duty of the Biden administration will be to recognize where their predecessors saw the target, then figure out better ways of hitting it.  Robert M. Gates stands above the partisan fray, possesses deep knowledge of American foreign relations and of the instruments of those relation, and has exhibited a sense of patriotic duty that should command respect.[2]  While he has discreetly avoided making a direct statement on the Trump administration, he has some good advice for the Biden administration.[3] 

            First, Trump was right: the “friends and allies” don’t pull their weight.  The Trump solution was to deride them and walk away.  The Biden administration should apply serious pressure on burden-sharing.  It also needs to pressure Germany over its own deal with Russia over energy supplies.  It also needs to pressure Turkey over its purchase of a Russian air-defense system and its meddling in Libya.  The United States needs to nudge NATO countries like Turkey, Hungary, and Poland back toward democratic norms.

            Second, Trump was right: many international organizations are messed up.  The Nineteenth Century British radical John Bright described the Empire as “a gigantic system of out-relief for the aristocracy.”  The same judgement applies to international organizations and the European and Europeanized elites of the former colonial countries who staff those organizations.  The Trump solution was to denounce them and walk away.  The Biden administration should apply serious pressure on reform.  The Biden administration also needs to make a serious effort to keep China from gaining a leadership role in all these organizations, because they will just manipulate these organizations to advance China’s national interests. 

            Third, Trump was right: the existing instruments of American diplomacy and “soft power” don’t work well in the new international environment.  The Trump solution was to ignore those instruments, leaving hundreds of patronage positions empty and relying on personal loyalists to deal with foreign leaders or by seeking direct personal contact.  The State Department has been in decline as the leader of American foreign policy since the Kennedy Administration.  The Defense Department, the intelligence community, and—off and on—the National Security Council have all shouldered it aside.  The US lacks the economic resources to compete with China’s Belt and Road Initiative.  America’s “strategic communications” are pathetic.  Just adding one more spending category to the wish-list of money to be raised by making the One Percent pay their “fair share” won’t be enough.  In every case, government partnerships with the private sector offers a better approach. 

            What if we have entered a post-Cold War era in which American leadership isn’t wanted? 


[1] Even that isn’t all that anomalous.  The George W. Bush Administration identified the correct problem in Muslim countries.  They are victims of long-term developments, rather than of brief experiences of Western imperialism.  The Bush Administration then came up with a disastrously wrong solution: knock over Saddam Hussein, declare democracy, put up some big box stores, and leave. 

[2] On Gates, see: https://en.wikipedia.org/wiki/Robert_Gates 

[3] Robert M. Gates, “How to Meet Our Global Commitments,” NYT, 21 December 2000. 

Looking Forward in December 2020 2.

            President Joe Biden will face three chief problem areas in foreign policy.[1]    

            First and foremost, there is the problem of Asia.  “China is sort of the radioactive core of America’s foreign policy issues.”[2]  The phrase “U.S.-Chinese relations” offers an umbrella for two main issues.  The first is economic, covering trade and technology.  The second is China’s current and projected outward reach, meaning—for the moment– Hong Kong, Taiwan, and the South China Sea.  Donald Trump replaced the long-term American policy of co-operation with one of confrontation.  The central pillars of this approach have been tariffs, harassing the Chinese tech giant Huawei, and talking about building up the over-stretched U.S. Navy.  The Chinese government’s crackdown on the Uighurs, Hong Kong, and internal critics of its response to the Corona virus show the direction Zi Jinping intends to take on internal affairs.  Will the same be true in foreign policy?  To what extent will President Joe Biden change course from the Trump administration?

            There is no good solution in sight to the problem of a nuclear armed North Korea.  Plastering the little country with economic sanctions didn’t work.  Trump’s initiative to open direct contact with North Korea didn’t work.  Somehow (or from someone) North Korea acquired ICBM rocket engines and the ability to stop the US from messing up its missile test launches.  Biden has roundly denounced Trump’s appeasement of North Korea, but hasn’t suggested any alternative beyond rhetorical initiatives.  If the Obama administration wouldn’t bomb Iran to stop its nuclear program, would a Biden administration bomb North Korea? 

The second is the Middle East.  For a long time, America’s Middle East policy sought to limit Soviet influence in the area and to gain security for Israel through a resolution of the Palestinian problem.  Events have by-passed by far this policy.  The collapse of the Soviet Union reduced the scale of that danger.  However, the Sunni-Shi’ite civil war[3] took its place. 

The Obama administration negotiated an agreement to limit Iran’s pursuit of nuclear weapons for a time, but left other aspects of Iran’s assertive behavior for some future day.  President Trump abandoned that agreement and restored unilateral, but painful for Iran, sanctions.  President-elect Biden has said that he will reverse course by rejoining the agreement, but he also has said that Iran must commit to additional negotiations.  “Iran is desperate for a deal.”[4]  How desperate? 

Trump’s aggressive stance toward Iran strengthened both Israel and Saudi Arabia, which felt threatened by the more accommodationist policy of the Obama administration.  An Israel-Sunni Arab coalition is well under construction, with knock-on damage to the long-term Two States solution to the Palestinian problem.  Will the Biden administration reverse course on the Sunni-Shi’ite civil war within Islam?  Will it restore support for a Two State solution?  How will it deal with the Crown Prince (and likely future king) of Saudi Arabia?[5] 

            The third is relations with America’s European allies.  In 1949, the United States created the North Atlantic Treaty Organization (NATO) to deter the existential threat from a Soviet attack on Western Europe.  Forty years later the Soviet Union disintegrated.  NATO faced a new existential threat: what was its purpose?  No one has come up with a good answer. 

Trump openly and repeatedly disparaged our Continental European allies, while hoping for better relations with post-Soviet Russia.  Will the Biden administration find common interests with Russia in areas like arms control, even if it means throwing overboard the kleptocracy in Ukraine?  Will the Biden administration bear with the continual post-Trump whining from E.U. leaders to “prove you love me”? 

Seeing Britain’s departure from the European Union (E.U.) through the same optic of “tribalism” and “nationalism” as they saw Donald Trump, both former President Obama and presidential candidate Biden opposed “Brexit.”[6]  Trump thought that he saw a kindred spirit in British prime minister Boris Johnson.  Now Trump will be replaced by Biden, but both Johnson and “Brexit” are still there.  Will the Biden administration really want to make things difficult for America’s most reliable ally now that “Brexit” is a done deal?    

Joe Biden seems adept at dealing with realities as they exist.  It is at least possible that there will be an uncomfortable degree of continuity between the foreign policies of the Trump and Biden administrations. 


[1] Rick Gladstone, “Biden to face a Long List of Foreign Challenges, With the Chinese at the Top,” NYT, 9 November 2020. 

[2] Orville Schell.  On Schell, see: https://en.wikipedia.org/wiki/Orville_Schell 

[3] Essentially this pitted Shi’ites in Iran, Iraq, Syria, and Lebanon against Sunnis everywhere else, with Saudi Arabia taking a leading role. 

[4] Cliff Kupchan.  On Kupchan, see: https://en.wikipedia.org/wiki/Cliff_Kupchan    

[5] The man appears to be a very able psychopath. 

[6] “Brexit” seems to me to be an understandable bad idea with much deeper historical roots than is often recognized. 

Crisis of Democracy.

One way of telling the history of the Twentieth Century is to describe the Triumph of Democracy.  In 1900, only11 countries that could be described as political democracies: they granted all adult male citizens the right to vote and they applied the same laws to all citizens.[1]  The “War to Make the World Safe for Democracy” only somewhat advanced their cause: by 1920, there were 20 democracies and many of them had granted women the vote.  The interwar crisis and the Second World War centered on the defeat of aggressive tyrannies.  Thereafter, however, democracy advanced by leaps and bounds.  Western colonial empires were dismantled.  Democracy expanded its meaning from the purely political to social democracy, and legal protections for civil rights were greatly extended.  The Cold War ended in the collapse of the Soviet Union and its empire.  By 2003, there were 86 democracies in a world of 190-odd countries.[2]   

            Rather than continuing its advance, however, democracy has been in retreat since the mid-2000s.[3]  Where democracy continues to exist, “democratic norms and institutions” are being hollowed-out.  What has caused democracy to fall into disrepute?  What has caused dictators and would-be dictators to gain a new credibility? 

            The crisis arises both from specific personalities and from larger and more long-term systemic changes.  On the level of personalities, one can point to the interaction of Xi Jinping, Vladimir Putin, and Donald Trump.  Many of the successes for democratization owed at least something to American government backing for democratic movements and institutions from the of Jimmy Carter’s administration through the Reagan-Bush era.  Donald Trump’s administration has largely abandoned the “bully pulpit” on behalf of democracy in the shit-holes of the world.  A host of minor-league wannabe-tyrants draw inspiration from Chinese and Russian aggression. 

On the level of systems, two different sorts of problems exist.  On the one hand. regularly-held elections in which citizens choose their own leaders are not enough to make a country democratic.  Real, living democracy requires also a widely accepted “liberal” mindset.  It requires independent institutions like courts, business, media, and non-governmental associations.  Finally, it requires institutions of government (from the civil bureaucracy to the military to the intelligence services) that serve the nation, rather than any individual leader.  These are the “democratic norms and institutions” that are being hollowed around the world. 

On the other hand, all of these ills arise from the interaction of sclerotic political systems with increasingly indifferent citizens.  Here it becomes difficult to solve the chicken-or-the-egg problem.  Do frozen-up political systems foster citizen alienation?  Does they shift citizens into wavering between solving their own problems through ad hoc means or hoping for a strong-man who can burst the dam?  Does citizen alienation and indifference allow political systems to congeal around dead issues, rather the forcing them to address live issues? 

Neither answer holds much promise for revived democracy. 


[1] This bald definition invites enough qualifications to make your head spin.  For example, women didn’t have the vote; many representative governments hedged-in responsive government to serve an anti-democratic distrust of “the mob”; and democracies ruled over-seas empires in an undemocratic fashion. 

[2] Larry Diamond, “The Global Crisis of Democracy,” WSJ, 18-19 May 2019. 

[3] That is, it began during the years of the Obama-Biden administration. 

Some Ukrainian Background.

The first “Russian” state was Kievan Rus, created by conquering Vikings.[1]  In the 13th Century the Mongols showed up and put a stop to that.  “Independent” Russia came to mean a small territory around Moscow.  Over the following centuries, Ukraine became a contested ground between empires: the “Golden Horde” of the Mongols, the Polish-Lithuanian Commonwealth, the rising Austrian Empire, and an expanding Romanov Russia.  By the end of the 18th Century, the Austrians held Galicia, while the rest of the Ukraine belonged to Russia.

As was the case elsewhere in Eastern Europe in the second half of the 19th Century, local nationalism began to burn.  Tsarist Russia repressed this just as it did every other form of non-Russian nationalism.  Still, Ukrainian nationalism survived.  When the First World War wrecked the Austrian and Russian Empires, Ukraine declared its independence (1917).

Tragedy followed for Ukrainians: the territory and its people were savaged by Poles with an expansive definition of “historical” Poland; and by “Whites,” “Reds,” and a variety of crazy people like the Anarchist anti-semite Nestor Makhno during the Russian Civil War and the Russo-Polish War.  Then Ukraine fell under the hammer during Josef Stalin’s collectivization of agriculture in the 1930s.  About 3.5 million Ukrainians were starved to death during this “Harvest of Sorrow.”[2]

During the drive for industrialization that followed close on the heels of the “terror famine,” Stalin moved in millions of Russians to eastern Ukraine.  Their descendants still form a large part of the population of Ukraine.  Then the Second World War brought both massive suffering and deep divisions, as Ukrainians fought on both side.

In 1954, possibly trying to make amends to the Ukraine for the whole unfortunate “terror famine” thing, the Soviet Union transferred Crimea from Russia to Ukraine.  This remained something of a sore spot for the ethnic Russians of Crimea.

When the Soviet Union collapsed in 1991, Ukraine held a referendum on independence.  Overall, 90 percent of those who voted supported independence.   However, voter participation varied a good deal throughout Ukraine.  The Russians weren’t happy with this secession, but there wasn’t much they could do about it because Russia itself was in massive turmoil.

The post-independence history of Ukraine has not been a happy one.[3]  Corruption is endemic.  Mismanagement is widespread.  Bureaucracy is pervasive and stifling.  Investment in productive capacity fell far short of needs.  Where banks did lend, they often made bad loans.  Business law and an incompetent (or corrupt) judiciary make property insecure.  Investors don’t want to risk their capital.  By 2014, Ukrainians were among Europe’s poorest people.

In 2004, Viktor Yanukovych won election as president amidst charges of massive fraud and interference by the Soviet Union.  An “Orange Revolution” turned him out of office.  His “Orange” successors then mismanaged things on a grand scale.  Eventually, in 2010, Yanukovych managed to win election as president without charges of massive fraud.  In late 2013 he suddenly rejected a long-prepared economic agreement with the European Union.  This act sparked a new round of demonstrations that ended with Yanukovych chased from office once again (February 2014).

After that, things got even worse.  By 2015, the conflict with Russia cut Ukrainian-Russian trade by half.  Inflation and unemployment both rose.  Foreign-exchanges reserves at the central bank sank to their lowest point in a decade.  Experts estimated that the country would need $40 billion in financial assistance over the next four years.  In early February 2015, the International Monetary Fund granted Ukraine a $17.5 billion credit.

It was against this background that the Obama administration, the European Union, and the International Monetary Fund began pressuring Ukraine to root out corruption and address a host of other problems.

[1] “In Russia’s shadow,” The Week, 14 March 2014, p. 11.

[2] Robert Conquest, The Harvest of Sorrow: Soviet Collectivization and the Terror-Famine (1986); Anne Applebaum, Red Famine: Stalin’s War on the Ukraine (2017).

[3] David M. Herszenhorn, “Economic Woes Will Test Kiev, Even if Truce Holds,” NYT, 14 February 2015

The Origin of the Russia investigation.

In May 2016, a Trump foreign policy adviser, George Papadopoulos, told the Australian High Commissioner in London, Alexander Downer, that he had heard that the Russkies had “dirt” on Hilary Clinton.[1]  Downer immediately informed the Australian foreign ministry.

Six or seven weeks followed, during which time the Australian government did not inform anyone—officially or unofficially—that a hostile foreign power had breached the security of an American presidential candidate.

Christopher Steele had served in important positions in the British Secret Intelligence Service (MI-6), then had opened a private business intelligence company.  He had served in Moscow and had been the head of the “Russia desk” for MI-6.  In June 2016,[2] the Democrats had hired his company to conduct opposition research on Donald Trump.  Steele began investigating Trump’s Russian connections.  Between June and December 2016, Steele wrote 17 memos.  Steele’s memos suggested that a “well-developed” conspiracy linked Trump with the Russian government.  The Russian would help get Trump elected; President Trump would then end the economic sanctions imposed on Russia for its actions in Crimea and Ukraine.   Furthermore, the Russian possessed compromising personal information on Trump.

However, at this time, the FBI had no knowledge of Steele’s memos.

On 22 July 2016, Wikileaks began publishing the Democratic National Committee e-mails provided to them by the Russkies.  At this point, the FBI learned from the Australian government of the report on Papadopoulos.  [So, the FBI knew that the Russians had hacked the computers at the Democratic National Committee, that Russia was releasing stolen information through Wikileaks, and now had a report that the Trump campaign may have had fore-knowledge.]  On 31 July 2016, the FBI opened an investigation of Trump-Russia collusion: “Operation Crossfire Hurricane.”  The operation was conducted in great secrecy, with no leaks to the press.

After the launching of “Crossfire Hurricane,” the FBI sought a FISA warrant to surveil the communications of Paul Manafort,[3] Michel Flynn, Carter Page,[4] and George Papadopoulos.[5]  All four had varying degrees of prior contact with Russia.  [The warrant application was denied as “too broad.”]

In September, Steele shared his memos with the FBI.

[In late September, Michael Isikoff reported that a Trump campaign adviser was being investigated over contacts with the Russians.  The report was based on leaks.]

In October 2016, the FBI obtained a FISA warrant to surveil the communications of Carter Page.  A part of the supporting evidence for the warrant application came from the “Steele dossier.”

Thus, William Barr’s investigation isn’t likely to turn up compromising information.

[1] “The origins of the Russia investigation,” The Week, 28 June 2019, p. 13.

[2] Apparently at the time when the Australian government was not informing the American government of the remarks by Papadopoulos.

[3] The FBI had begun an investigation of Manafort after his candidate, the pro-Russian Ukrainian Yanukovich, had been ejected from power in early 2014.

[4] Page had been investigated by the FBI in 20013-2015 and found blameless.

[5] But not Jared Kushner or Donald Trump Jr. or Donald Trump Sr.  Why not?

Default Setting II.

Between 1775 and 1825, the revolts against the British and Spanish Empires in the Americas created a host of new nations.  In the minds of European leaders, formal “empire” sold at a deep discount.  However, the “empire of free trade” arose as a far more appealing idea.  If non-European countries would pursue Western economic[1] and legal[2] policies, then you could get the same benefits of empire without the costs and heartbreak.  The Western capital generated by industrialization could then safely flow toward the economic development of the rest of the world.[3]  All would benefit.

The world of international investment brimmed with challenging opportunities in the later Nineteenth Century: Latin America, the United States, the Ottoman Empire, Japan, and China for example.  However, a willingness to fulfill commitments to Western economic and legal doctrines in exchange for Western investment varied from society to society.

Russia came late to industrialization and wanted to hurry the process forward.  Russia possessed rich natural resources, but its primitive agriculture generated little wealth.  Where to find the capital for rapid industrialization?  Two solutions offered themselves.  Either the country could borrow from rich foreign lenders or the peasantry could be squeezed very hard.  Fearful of peasant unrest, Russian leaders sensibly opted for foreign borrowing.

Foreign lenders could discern positive and negative features in Russian borrowers.  On the plus side were two essential factors.  Russia’s gigantic territory housed vast amounts of minerals and other natural resources.  In the middle of the century, the Tsar Alexander II had shoved through a series of “Great Reforms” intended to begin the modernization of Russia.  Those reforms had not yet taken full hold, but they provided a foundation for further progress.  On the negative side the “Great Reforms” had compounded the turmoil inside Russia.  Rapid industrialization would intensify the strains.  Then, Russia remained an absolute monarchy.  After the death of Alexander II, the quality of leadership declined markedly.

Between 1890 and 1920 political considerations, rather than purely economic ones, exerted a growing influence over foreign investments in Russia.  First, seeking escape from the diplomatic isolation into which it had been forced by Bismarck’s diplomacy, the French government encouraged lending to the Tsarist regime.  This lending supported the eventual Franco-Russian alliance that surprised and alarmed German statesmen.  Second, during the First World War, the French and British tried to prop up their tottering ally by ample credit.  Third, the Bolshevik regime repudiated the Russian external debt.[4]  The Bolsheviks understood the Red default as a stroke against global capitalism.  It would—and, in France, did—gravely weaken the middle class savers who formed a vital support for bourgeois democracy.

At the same time, default contributed to making Soviet Russia an international pariah.  Within a decade, the Soviets turned to the alternative strategy of squeezing assets out of the peasantry.  As late Nineteenth Century leaders had foreseen, the human cost would be terrible.

[1] Raise no barriers to imports and exports; pursue “sound” money.

[2] Practice Western notions of the rule of law, especially the sanctity of contracts.

[3] See, David Landes, Bankers and Pashas: International Finance and Economic Imperialism in Egypt (1958).

[4] See: Hassan Malik, Bankers and Bolsheviks: International Finance and the Russian Revolution, 1892-1922 (2018).