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Georgia, Scary Old World and the Return of History (Updated)

Yesterday's post (Marching thru Georgia: the World Just Changed and We Can't Get Off) on the war in Georgia laid out a first round of assessments and evaluations. Now let's add some further reflections for your consideration as well as try to put this, at least conceptually, in a larger context. After the break you'll find an even larger collection of readings grouped into Media reporting/analysis, assesments and diagnosis and strategic consequences. Interestingly this worldwide collection of what could be considered the more thoughtful folks tends to converge on our prior arguments. Which is not to say that if we were just collecting stories and commentaries that a much wider spectrum wouldn't be possible - there's quite a bit of "they had it coming" and "the running dog US lackies should have expected this" or "this is all a vast CIA conspiracy" stuff out there. Since those struck us as ill-founded, distorted and un-constructive they aren't, by-n-large, shown. A partial exception is made of Mihail Gorbachev's Wash Post editorial which parrots the party line to a T; and should see the revocation of his Nobel IOHO.

Hot UPDATEs:

US, allies contemplating action against Russia The United States on Sunday accused Russia of stalling its military pullback in Georgia, but the Bush administration is not rushing to repudiate Moscow for its actions. The White House is struggling to figure out the best way to penalize Russia. It doesn't want to deeply damage existing cooperation on many fronts or discourage Moscow from further integrating itself into global economic and political institutions. At the same time, U.S. officials say Russia can't be allowed to get away with invading its neighbor.

 

Round Two Strategic Assessments

These aren't well formed as yet so this is a testflight to put them out there and see how they work. To recap we have the prior post - the gist of which is there is a large agenda being played out with major geo-political consequences. A correspondent got me/us off on the cultural dna and history of Russia- as in why they'd do this. Because it really doesn't appear to make sense, no matter how well played it is. The answer to which is they see the world entirely differently and more hostilely than we've been seeing it. This is the bad old Russia coming back full force - which will have very bad consequences for us and the world but could lay the groundwork for a future disaster for them.That briefly summarizes a lot of back and forth, 4 pp. of softclips, etc. etc. Here's my 3/4 morning thoughts:
1. Following on - this has immediate benefits for control of energy resources, Central Asia and playing power games with Europe. At least a decade's worth of ripple consequences. But it doesn't do them as much good as developing their oil, bringing in foreign investment, diversifying their economy, building road, schools, etc. etc. On balance they've made a very bad choice but a traditional one.
2. In the long-run they've destroyed themselvs. Population is declining, productivity is down, they've made themselves potential pariahs though the Europeans will wiffle and are no longer as critically important, the Chinese will hold their noses and watch their backs and much of the rest of the world will applaud as the political cartoons (some) illusrated. Including some of our own more benighted and misguided citizens. In the long-run as few will do as little business as they can manage, which will cut them off from the resources required for the future they could have had. Actually a very sad thing to see.
 
3. The biggest danger they create is systemic. Everybody games the system to their own advantage, whether it's the Chinese, the Brazilians, the Indians, the Europeans, or whomever. Nonetheless what all we've spent nearly three decades benefiting from and supporting one way or another, is the architecture of the world system that the US created and supported. And were looking forward to, admittedly difficult, evolution into a new one with greater roles for various players. But nonetheless the emergence of a major adaptation to the rising powers. Now that's in serious question. And Russia's role and reliability even more so.
 
4. Russia's returning to the old way of doing things makes that more difficult and indicts the fundamental assumptions that the prognostication and policies were built on. Begger thy neighbor instead of let's grow the pie and then compete for who gets what piece. If Russia's example is not managed and contained we could end up aborting the international framework that underpins the growing worldwide prosperity we've seen over the last two decades. Collectively we cannot afford to let that happen.
That last point is particularly important and critical. NYC is a fun place - talk to the cabbies and hear the world. One of mine was (claimed) to be an ex-KGB officer and insisted on telling me that the Russian's hadn't given up on the bad old ways but were merely pursuing their old goals with new methods and new guises. I took him semi-seriously but countered that what they wanted to do and what was feasible might be two different things. His words now look like they needed to have been taken more seriously. On the other hand, despite the terrible short-term consequences, and the bad long-term ones Russia needs the rest-of-the-world more than we need it.
 
Back in the day when Russia's non-innovative economy was stealing most of it's technology from the West they managed to have an "oil-field fire" in Central Asia. Actually what happened was that they'd stolen the software from the West and it was planted with some major Trojan horses. Which, when triggered, caused a major refinery/oil pipeline explosion visible from space. Look it up - William Safire covered it in one of his columns.
 
Other things that weren't covered were the secret economic war conceived and mounted that helped further the emasculation of the Soviet economy. We didn't win the Cold War with tanks, at least alone. Why would the Russians, who've now chosen to reveal themselves as dangerous opportunists willing to violate the norms of the international system we'd all hoped would help us advance collectively, think the West is any less capable now ? Or more tolerant ?
 
Or, beyond that, why would they think the other major emerging players who's survival depends on continued economic growth in a stable and predictable international system tolerate the Russians breaking this for only their own advantage ? Now that's an interesting question indeed !
 
Let me share an old picture with you that tries to capture some of these issues conceptually. It shows two axis - the horizontal with is the collective attitude of the world's major players toward the maintainence and support of the international system. And the vertical which shows the character of US strategic policies. And the paths and colored regions show the evolution over time of the collective performance and well-being of the world. IF the US pursued an isolationist or chauvinistic policy while the majority of the world acted as free-riders or opportunists the world was likely to coast into trouble. Which would feedback on itself and lead to major problems. Only with the US continuing to support a world system and some active and positive support from other major players could we move into the green. Where do you think Russia's actions take us now ?

Mainstream Coverage and Analysis

For RFE/RL's full coverage of the conflict in Georgia's breakway region of South Ossetia: Crisis in George Full Coverage

Did Russia Plan Its War In Georgia? Less than one month before Russia's armed forces entered Georgia on August 8, they held massive military training exercises in the North Caucasus involving 8,000 servicemen and 700 pieces of military hardware. At center stage in those maneuvers -- which took place in the second half of July, not far from Georgia's border -- was Russia's 58th Army, the very unit that would later play a key role in the incursion. Those exercises are just one link in a chain of incidents suggesting that Russia's military action in Georgia was planned months in advance, awaiting only an appropriate pretext to act. Military analyst Pavel Felgenhauer says the aim, from the start, was to overthrow Georgian President Mikheil Saakashvili and his pro-Western government. "This was prepared long ago," Felgenhauer, a Moscow-based military analyst tells RFE/RL's North Caucasus Service, adding that according to his information, a decision to go to war was made back in April. "A decision was made for the war to start in August. The war would have happened regardless of what the Georgians did. Whether they responded to the provocations or not, there would have been an invasion of Georgia," Felgenhauer says. "The goal was to destroy Georgia's central government, defeat the Georgian army, and prevent Georgia from joining NATO."

Russian headache looms for next US President The next US president, be it Barack Obama or John McCain, is already on a collision course with Russia, as prospects for a great power diplomatic chill are deepened by the war in Georgia. The next US president, be it Barack Obama or John McCain, is already on a collision course with Russia, as prospects for a great power diplomatic chill are deepened by the war in Georgia. Republican McCain and Democrat Obama have bickered sharply over the crisis, both seeking to showcase leadership skills and foreign policy flair. McCain has publicly feuded with Russia for months, and took the sharpest initial line in support of US ally Georgia, while Obama's position hardened against Moscow as the crisis evolved. New US-Russian rifts will pile another foreign policy headache onto the packed agenda awaiting the new president in January, including Iraq, deteriorating security in Afghanistan and the Iranian nuclear crisis. "Whoever the next President is, he will have significant difficulties to deal with in the US-Russia relationship," said Justin Logan, a foreign policy analyst with the Cato Institute. Both McCain and Obama have faulted what they see as creeping authoritarianism in Russia, under former president, now Prime Minister Vladimir Putin, whom President George W. Bush famously tried to mould into a soul mate. McCain has made his mistrust of Russia crystal clear and forcefully condemned Moscow after its troops entered Georgia in response to a Georgian offensive on August 7 to retake the breakaway South Ossetia province. Obama's senior foreign policy analyst Susan Rice is now hinting that the Democrat may also be mulling a complete rethink of US-Russia ties.

·          John McCain’s long war on Russia While virtually every other world leader called for calm in Georgia last Thursday morning, John McCain did something he’s done many times during his career in public life: He condemned Russia.

Europe's (dis)unity over russia This week President Bush promised to "rally the free world in the defense of a free Georgia." But will America's European allies fall in line? Troubling divisions on the continent show just how difficult it may be to present a united front against an overly aggressive Russia. Moscow's invasion of Georgia one week ago, including its bombings, naval presence, and tank incursions in democratic Georgia proper; and its shaky cease-fire and dawdling over a withdrawal – all this presents the greatest test of US-European unity relating to Russia since the cold war. For the sake of democratic and economic freedom in Europe and beyond, and for the integrity of international organizations that support such freedoms, the West must stand together. And yet, European leaders can't agree on how to respond to Russia's calculated crush. The division breaks along familiar lines. Several "new" member states in the European Union, as well as Britain, are arguing for a tough stance against Moscow (though realistically and wisely, no one wants a military one). "Old" influential members such as Germany and France express restraint. Indeed, Russia's got Europe over an oil barrel. Europe gets a quarter of its oil and half its natural gas from Russia, which does not shrink to cut off supplies to get what it wants. Europe's attempt to gain some energy independence via pipelines in Georgia is now at risk. (See story, page 1.) But the passage of a few days has shown that Russia, by putting Caspian oil in jeopardy, is not a reliable energy partner, and by invading a sovereign country, is not abiding by international norms. What may have at first looked like an understandable reaction to a Georgian miscalculation has gone far beyond that. The US is slowly recognizing this. Before she left for France and Georgia this week, Secretary of State Condoleezza Rice said Moscow risks its standing in global clubs which require responsible behavior. She didn't spell it out, but ideas to force Russia out of Georgia include suspending Russia from the G-8 and the NATO-Russia Council, barring its entry to the World Trade Organization, and boycotting the 2014 Winter Olympics in Russia. Not given much consideration yet is Europe's economic leverage over Moscow. The Russian elite sends its cash to Europe and travels there, too. Europe is not without leverage, but it is without will. It will take strong US leadership to get its allies to fly in formation.

Georgia-Russia conflict shows EU's energy vulnerability Russia's invasion of Georgian territory last week, in addition to reasserting Moscow's military strength, has complicated Europe's effort to diversify its oil and gas supplies away from the growing dominance of Kremlin-controlled energy giant Gazprom. In the post-Soviet era, and particularly since 9/11, Central Asia has become a central focus for Western countries looking for more secure energy sources. But this week's offensive, during which British Petroleum shut down an oil pipeline and temporarily stopped pumping gas through Georgia, has called into question plans for a Eurasian corridor free from Russian interference. "The Caspian region is wondering what this means for the future," says Giorgi Vashakmadze, an energy executive in Georgia. "Russia is showing it controls this corridor." The Russo-Georgian conflict is the latest in a series of setbacks for Europe's planned Nabucco pipeline – its best hope of weaning itself off Gazprom, which set off alarm bells by cutting crucial gas supplies to the continent in the winters of 2006 and 2008. Hype surrounding Nabucco has grown more measured in recent months over concerns about the extent of available gas reserves. Barring the construction of a pipeline under the Caspian Sea, the only way for Europe to get gas from the region is to tap pipelines that originate in either Russia or Iran, as Nabucco may have to do. Europe's demand for gas is expected to rise more than 50 percent by 2025, according to the US Deparment of Energy.

A Path to Peace in the Caucasus (Gorbachev)The roots of this tragedy lie in the decision of Georgia's separatist leaders in 1991 to abolish South Ossetian autonomy. This turned out to be a time bomb for Georgia's territorial integrity. Each time successive Georgian leaders tried to impose their will by force -- both in South Ossetia and in Abkhazia, where the issues of autonomy are similar -- it only made the situation worse. New wounds aggravated old injuries.Nevertheless, it was still possible to find a political solution. For some time, relative calm was maintained in South Ossetia. The peacekeeping force composed of Russians, Georgians and Ossetians fulfilled its mission, and ordinary Ossetians and Georgians, who live close to each other, found at least some common ground.Through all these years, Russia has continued to recognize Georgia's territorial integrity. Clearly, the only way to solve the South Ossetian problem on that basis is through peaceful means. Indeed, in a civilized world, there is no other way.The Georgian leadership flouted this key principle. What happened on the night of Aug. 7 is beyond comprehension. The Georgian military attacked the South Ossetian capital of Tskhinvali with multiple rocket launchers designed to devastate large areas. Russia had to respond. To accuse it of aggression against "small, defenseless Georgia" is not just hypocritical but shows a lack of humanity. Mounting a military assault against innocents was a reckless decision whose tragic consequences, for thousands of people of different nationalities, are now clear. The Georgian leadership could do this only with the perceived support and encouragement of a much more powerful force. Georgian armed forces were trained by hundreds of U.S. instructors, and its sophisticated military equipment was bought in a number of countries. This, coupled with the promise of NATO membership, emboldened Georgian leaders into thinking that they could get away with a "blitzkrieg" in South Ossetia. In other words, Georgian President Mikheil Saakashvili was expecting unconditional support from the West, and the West had given him reason to think he would have it. Now that the Georgian military assault has been routed, both the Georgian government and its supporters should rethink their position.

The Americans Arrive in Georgia AMERICA'S George Bush delivered a stark warning to Russia this week that led Russia to begin to pull back its forces in Georgia. Mr Bush sent his secretary of state, Condoleezza Rice, to Georgia and told his defence secretary, Robert Gates, to organise a humanitarian-aid operation. The first American military aircraft landed at Tbilisi airport on Thursday August 14th. This conflict is about more than the two separatist regions of Abkhazia and South Ossetia, or displacing Mikheil Saakashvili, Georgia’s hot-headed president. It is about Russia, resurgent and nationalistic, pushing its way back into the Caucasus and chasing others out, and reversing the losses Russia feels it has suffered since the end of the cold war. The fact that Georgia is backed by the West made it a particularly appealing target. In fighting Georgia, Russia fought a proxy war with the West—especially with America (which had upgraded the Georgian army). All this was a payback for the humiliation that Russia suffered in the 1990s, and its answer to NATO’s bombing of Belgrade in 1999 and to America’s invasion of Iraq.With the smoke of battle still in the air, it is impossible to say who actually started it. But, given the scale and promptness of Russia’s response, the script must have been written in Moscow. The rattling of sabres has been heard in both capitals for months, if not years. Russia imposed sanctions on Georgia and rounded up Georgians in Moscow. In revenge for the recognition of Kosovo’s independence earlier this year, Mr Putin established legal ties with the governments of South Ossetia and Abkhazia. Russia was prepared for the war not only militarily, but also ideologically. Its campaign was crude but effective. While its forces were dropping bombs on Georgia, the Kremlin bombarded its own population with an astonishing propaganda campaign. One Russian deputy reflected the mood: “Today, it is quite obvious who the parties in the conflict are. They are the US, UK, Israel who participated in training the Georgian army, Ukraine who supplied it with weapons. We are facing a situation where there is a NATO aggression against us.” In blue jeans and a sports jacket, Mr Putin, cast as the hero of the war, flew to the Russian side of the Caucasus mountain range to hear hair-raising stories from refugees that ranged from burning young girls alive to stabbing babies and running tanks over old women and children. These stories were whipped up into anti-Georgian and anti-Western hysteria. What Russia was doing, it seemed, was no different from what the West had done in its “humanitarian” interventions. There was one difference, however. Russia was dealing with a crisis that it had deliberately created. Its biggest justification for military intervention was that it was formally protecting its own citizens. Soon after Mr Putin’s arrival in the Kremlin in 2000, Russia started to hand out passports to Abkhaz and South Ossetians, while also claiming the role of a neutral peacekeeper in the region. When the fighting broke out between Georgia and South Ossetia, Russia, which had killed tens of thousands of its own citizens in Chechnya, argued that it had to defend its nationals. The biggest victims of this war are civilians in South Ossetia and Georgia. Militarily, Mr Putin has won. But all Russia has got from its victory so far is a ruined reputation, broken ties with Georgia, control over separatist enclaves (which it had anyway) and fear from other former Soviet republics.

For Russian Armor, Even With Rice in Georgia, Cease-Fire Is Not a Red Light The highway heading west from Tbilisi, Georgia’s capital, has been one of the country’s main development projects under President Mikheil Saakashvili, whose government has been fond of calling it the “Sukhumi Highway.” The nickname is a reference to the capital of the separatist enclave of Abkhazia, which Mr. Saakashvili had hoped to wrest from Russian influence and bring under Georgian control. On Friday, the road flowed the opposite way. Russian armor used it to travel nearly to the edge of the Georgian capital, in defiance of a cease-fire agreement. The unexpected military advance demonstrated anew the powerlessness of Georgia’s security forces, which had no influence over the move even as it coincided with Secretary of State Condoleezza Rice’s meeting with Mr. Saakashvili. As that meeting was occurring, a Russian armored infantry company rumbled to life in Gori, the city in central Georgia that Russia has occupied in the days since the cease-fire was declared. It was a column of armored personnel carriers. Its soldiers said they were members of the 71st Motorized Rifle Regiment and had been deployed from Chechnya. It drove unchallenged, stopping here, about 25 miles from the Tbilisi line. The soldiers then blocked Georgia’s main highway, on which traffic has essentially ceased. It was the closest the Russian Army had moved to Tbilisi, and appeared to be a symbolic military rebuke to President Bush, who has demanded that the Russians withdraw.

Assessments 

Europe Wins a Gold Medal for Defeatism The initial reaction is almost always self-blame and an expression of sympathetic explanation for the aggressor's actions. In the Russian case this week, the conventional wisdom is that Moscow was provoked by the hot-headed President Saakashvili of Georgia. It was really all his fault, we are told. What's more, the argument goes, the US and Europe had already laid the moral framework for Russia's invasion by our own acts of aggression in the past decade. Vladimir Putin was simply following the example of illegal intervention by the US and its allies in Kosovo and Iraq.It ought not to be necessary to point out the differences between Saddam Hussein's Iraq and Mr Saakashvili's Georgia, but for those blinded by moral relativism, here goes - Georgia did not invade its neighbours or use chemical weapons on their people. Georgia did not torture and murder hundreds of thousands of its own citizens. Georgia did not defy international demands for a decade and ignore 18 UN Security Council resolutions to come clean about its weapons programmes. And unlike Iraq under Saddam, Georgia is led by a democratically elected president who has pushed this once dank backwater of the Soviet Union, birthplace of Stalin and Beria, towards liberal democracy and international engagement. But we can make life very uncomfortable for Mr Putin. Russia is not the Soviet Union. Its recent (relative) prosperity depends on its continuing integration into the global economy. It sets great store by the recognition that it gains from a seat at the high table with the great powers in the G8. It wants to elevate that status farther by joining the World Trade Organisation and the Organisation for Economic Co-operation and Development. Punitive measures will hurt us too, of course: Russia could cause trouble over Iran and holds an alarmingly large quantity of US official debt. It could play havoc with the West's energy supplies. The Europeans don't much like the idea of any of this. So this week they demonstrated the same sort of resolve that they showed in the Balkans in the early 1990s, when they stood by as genocide unfolded on their own continent. Nicolas Sarkozy, the French President, in his capacity as head pro tempore of the EU, came back from a trip to Moscow and Tbilisi, waving a piece of paper and acclaiming peace in our time.

News Analysis: As Russian Tanks Roll, Europe Reassesses The Russian tanks rumbling across parts of Georgia are forcing a fundamental reassessment of strategic interests across Europe in a way not considered since the fall of the Berlin Wall in November 1989 and the subsequent collapse of Communism. For nearly two decades, European capitals in concert with Washington have encouraged liberalization in lands once firmly under the Soviet aegis. Now, they find themselves asking a question barely posed in all those years: How far will or can Russia go, and what should the response be? The answer will play out not just in the European Union, but also along its new eastern frontier, in once obscure places like Moldova and Azerbaijan. “The reality is that international relations are changing,” said Pawel Swieboda, director of demosEUROPA, an independent research organization based in Warsaw. “For the first time since 1991, Russia has used military force against a sovereign state in the post-Soviet area. The world will not be the same. A new phenomenon is unfolding in front or our eyes: a re-emerging power that is willing to use force to guarantee its interests. The West does not know how to respond.” At stake 20 years ago was whether the Kremlin, then under Mikhail Gorbachev, would intervene militarily to stop the collapse of Communism. But Mr. Gorbachev chose to cut Eastern Europe free as he focused — in vain — on preventing the collapse of the Soviet Union itself.

No Cold War, but Big Chill Over Georgia “The cold war is over,” President Bush declared Friday, but a new era of enmity between the United States and Russia has emerged nevertheless. It may not be as tense as the nuclear standoff with the Soviet Union, for now, but it could become as strained. Russia’s military offensive into Georgia has shattered, perhaps irrevocably, the strategy of three successive presidential administrations to coax Russia into alliance with the West and integration into its institutions. From Russia’s point of view, those efforts were never truly sincere or respectful of its own legitimate political and security interests. Those interests, it is now clear, are at odds with those of Europe and the United States. As much as Mr. Bush has argued that the old characterizations of the cold war are no longer germane, he drew a new line at the White House on Friday morning between countries free and not free, and bluntly put Russia on the other side of it. While the United States and Russia will continue to negotiate out of necessity, as the old superpowers did, cooperation and collaboration — however limited in the past few years — now appear even more remote over such issues as Iran’s nuclear program. The Russian offensive — the first outside its territory since the collapse of the Soviet Union in 1991 — has crystallized a realignment already taking place in Central and Eastern Europe, where the new members of NATO and the European Union have warned of the threat posed by a resurgent Russia. And it is already forcing a reassessment of American strategy toward Russia, as Secretary of Defense Robert M. Gates said on Thursday.

Vladimir Putin makes Robert Maxwell look small-fry One of the curious trends of recent years has been the Western business community’s enduring love affair with the unlovely Russia. With every passing week, it becomes clearer that this is a country run by and for people little different from gangsters. The tanks rolling into Georgia have reminded us that they are gangsters with keys to a big arsenal. The largest Western companies, Shell and BP included, have been bullied, intimidated and forced into concessions by the Kremlin and its cronies. This week a Moscow court joined in the harassment, targeting the head of BP’s troubled joint venture in Russia. This is a country that defaulted on its overseas debts less than ten years ago; a country that, after its journey from feudalism to kleptocracy via totalitarian communism, has little truck with Western-style capitalism; a country alive with corruption and not averse, it has been suggested, to the occasional state-sponsored murder. Hardly the ideal recipient of Western capital, you might think. But Western companies have rushed to throw money at Russia, both in direct and indirect investment. But the idea that Russia can be seen as just another economy, and its businesses assessed purely in terms of dry p/e ratios, is folly. Western investors are mistaken if they think that Vladimir Putin would hesitate to expropriate their assets if it suited him.

Strategic Consequences 

Weakness Behind Putin's Belligerence Yet the precise casus belli has been rendered irrelevant by the manner and scale of Moscow’s response. If there were ever any doubts about Mr Putin’s plan to re-establish hegemony over the former Soviet space, they were dispelled by the ferocity of Russia’s assault. Mr Putin and his colleagues go through the motions of denying it but the self-evident aim is to annex Georgia to Russia’s sphere of influence. Mr Saakashvili has never accorded Mr Putin the respect the Russian leader assumes is his due. A government in Tbilisi paying homage to Moscow would assure it monopoly control of Caspian oil and gas. The message for Mr Putin’s apologists in Europe – why does Italy’s Silvio Berlusconi always spring so readily to mind? – could not be clearer. Mr Putin’s worldview has no place for the post-modern approach to international relations of his western neighbours. Europe stands for a global order based on co-operative norms and rules. Moscow prefers the use of force. Appeasement invites only further contempt. Much has been said during the past few days of the striking parallels with the behaviour of the great powers during the 19th century. But there are plenty of unappealing echoes too of some of the more dismal moments of the 20th century. Many in the west seem to think there is nothing to be done. Authoritarianism is back in fashion and Russia’s return as a great power is one of the ineluctable geopolitical trends of the 21st century. The west must adjust to the reality, ceding the ground that Mr Putin seeks. This analysis misses one of the paradoxes of Russia’s power. The riches and political leverage provided by gas and oil have restored Russia’s economic and geopolitical standing. Yet, for the medium and long term, almost all the other indicators point to a future of relative decline. Low fertility and high mortality rates hold the prospect of a fast-shrinking population in a country where vast tracts of territory are already empty. Demographers estimate that the present Russian population of about 140m will fall by about 10m within a decade or so. By 2020 Moscow will struggle to find sufficient recruits to maintain its conscript army. Demographic decline is mirrored by crumbling health and education systems and by decaying civil infrastructure. Corruption is rife. The present political leadership is better described as a kleptocracy than an autocracy. Vast amounts of Russia’s wealth are being siphoned off in bank accounts abroad rather than reinvested at home. The price of Mr Putin’s aggressive nationalism has been to starve the oil and gas industry of foreign technology and investment. In spite of the emergence of a Russian middle class, there are few signs that the petro windfall is being used to broaden and deepen Russian prosperity.

Paul Krugman: The Great Illusion So far, the international economic consequences of the war in the Caucasus have been fairly minor, despite Georgia’s role as a major corridor for oil shipments. But as I was reading the latest bad news, I found myself wondering whether this war is an omen — a sign that the second great age of globalization may share the fate of the first. If you’re wondering what I’m talking about, here’s what you need to know: our grandfathers lived in a world of largely self-sufficient, inward-looking national economies — but our great-great grandfathers lived, as we do, in a world of large-scale international trade and investment, a world destroyed by nationalism. Writing in 1919, the great British economist John Maynard Keynes described the world economy as it was on the eve of World War I. “The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth ... he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world.” And Keynes’s Londoner “regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement ... The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion ... appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice.” But then came three decades of war, revolution, political instability, depression and more war. By the end of World War II, the world was fragmented economically as well as politically. And it took a couple of generations to put it back together. So, can things fall apart again? Yes, they can. Consider how things have played out in the current food crisis. For years we were told that self-sufficiency was an outmoded concept, and that it was safe to rely on world markets for food supplies. But when the prices of wheat, rice and corn soared, Keynes’s “projects and politics” of “restrictions and exclusion” made a comeback: many governments rushed to protect domestic consumers by banning or limiting exports, leaving food-importing countries in dire straits. And now comes “militarism and imperialism.” By itself, as I said, the war in Georgia isn’t that big a deal economically. But it does mark the end of the Pax Americana — the era in which the United States more or less maintained a monopoly on the use of military force. And that raises some real questions about the future of globalization. Most obviously, Europe’s dependence on Russian energy, especially natural gas, now looks very dangerous — more dangerous, arguably, than its dependence on Middle Eastern oil. After all, Russia has already used gas as a weapon: in 2006, it cut off supplies to Ukraine amid a dispute over prices. And if Russia is willing and able to use force to assert control over its self-declared sphere of influence, won’t others do the same? Just think about the global economic disruption that would follow if China — which is about to surpass the United States as the world’s largest manufacturing nation — were to forcibly assert its claim to Taiwan.

Responding to an aggressive Russia  This brutal and efficient move (see article) was a victory for Vladimir Putin, Russia’s president-turned-prime-minister, not just over Georgia but also over the West, which has been trying to prise away countries on Russia’s western borders and turn them democratic, market-oriented and friendly. Now that Russia has shown what can happen to those that distance themselves from it, doing so will be harder in future. This new Russian imperialism is bad news for all its neighbours. Mr Saakashvili is an impetuous nationalist who has lately tarnished his democratic credentials. His venture into South Ossetia was foolish and possibly criminal. But, unlike Mr Putin, he has led his country in a broadly democratic direction, curbed corruption and presided over rapid economic growth that has not relied, as Russia’s mostly does, on high oil and gas prices. America’s George Bush was right, if rather slow, to declare on August 11th that it was unacceptable in the 21st century for Russia to have invaded a sovereign neighbouring state and to threaten a democratically elected government. Yet the hard truth, for Georgians and others, is that pleas for military backing from the West in any confrontation with Russia are unlikely to be heeded. That does not mean the West should do nothing in response to Russia’s aggression against Georgia. On the contrary, it still has influence over the Russians, who remain surprisingly sensitive about their international image. That is why Western leaders must make quite clear their outrage over the invasion and continued bombing of Georgia. Few have done that so far; the Italians and Germans in particular have been shamefully silent. Above all, the West must make plain to Mr Putin that Russia’s invasion of Georgia means an end to business as usual, even if it continues to work with him on issues such as Iran. America has already cancelled some military exercises with Russia. America and the Europeans should ensure that Russia is not let into more international clubs, such as the Paris-based OECD or the World Trade Organisation. Now would also be an appropriate time to strengthen the rich-country G7, which excludes Russia, at the expense of the G8, which includes it.

Some Things Change, Some Stay The Same In fact, each of these perspectives captures something important, even while ignoring other things that may prove equally significant. Because of what Russia has done in Georgia, the future is not going to be just like the past, but regardless of what has taken place and continues to take place in that Caucasus republic, the future is not going to be entirely different either. Any accurate assessment must reflect both the anger and emotions that inform the first set of predictions and the sometimes bloodless and values-free realpolitik that defines the second. This combination of change and continuity is very much on display in three concentric circles around Georgia: first, in the former Soviet republics of which Georgia is a part; second, in the Russian Federation itself; and third, in Russia's place in the broader international system -- particularly its relations with Europe and the United States. If the first victim of this war like of all wars was the truth, the second victim was Russia's unquestioned dominance over the post-Soviet space. Not only has Georgia announced it is leaving the Commonwealth of Independent States (CIS), an action Ukraine is likely to take as well. Russia's actions have horrified the Baltic countries, which have joined with Poland in taking some of the most effective actions to call attention to Russia's misbehavior. The Georgia incursion even prompted Belarusian President Alyaksandr Lukashenka to back away from Moscow and explore the possibilities of new contacts with Western governments. Consequently, even if the CIS survives -- and it is likely to in some form or another -- it will not be the institution it was, because Moscow has demonstrated something that many in the region have not wanted to face: the Kremlin does not believe the rules that apply to others apply to itself. Consequently, some, if not all, of the CIS countries will take measures, calling them "a balanced foreign policy" or whatever, to defend themselves as best they can from Russian pressure. The second circle in which the Georgian events are changing some things while leaving others in place is inside the Russian Federation. On the one hand, the events in Georgia are contributing to a further destabilization of the North Caucasus and thus creating another security challenge for Moscow, one that almost certainly will prove far more intractable and threatening than even NATO membership for Georgia could possibly mean. Russian actions in Georgia -- which violate the international rules of the game every bit as much as did the Soviet invasion of Afghanistan in 1979 -- have generated new suspicions in Europe about the Russian bear, which they have never embraced but have wanted to cooperate with both because of energy supplies and to gain greater independence from the United States. And these same actions have particularly infuriated Americans first and foremost because the United States under the last three presidents was so committed to integrating postcommunist Russia into the international system that Americans were willing to ignore some obvious continuities in Moscow's behavior. Russians must recognize that they have violated international law in Georgia and that their own interests at home and abroad require that they back down. The non-Russians need to insist -- and the Russians (and the West) need to recognize -- that the CIS was only a divorce court and that all of them need to find a place in the sun that includes the others but is not dominated by any one power. And finally, the Europeans and the Americans need to recognize that hoping for changes in Russia's approach to the world is admirable but that these won't happen if the West continues to defer to Russia's insistence that the rules that apply to others do not apply to it.

Is Russia morphing into another USSR? It's not only the South Ossetians who are back in the USSR this morning. Other Georgians; countries in Russia's "near abroad" from the Caucasus to the Baltic; "national minorities" such as the Chechens; the West; and even Russians themselves now have to deal with a country and political leadership that bear an eerie similarity to Soviet models. They are authoritarian, militaristic, greedy and not overly concerned about where their borders end. How lucky we should all feel about this is another matter. In recent years, the Russian state has been credibly accused of murdering an exile in London; expropriated foreign investments on behalf of an energy company controlled by itself; cut off energy supplies to states as a means of political intimidation; assisted secessionist rebels in neighbouring states in order to keep their newly independent governments off-balance; and in the past few days - no more Mr. Nice Guy - invaded and bombed the sovereign state of Georgia. Sometimes, these actions have worn a thin disguise of tax law enforcement or "peacekeeping." "Democracy" has been a similar camouflage for an authoritarian system in which power and wealth increasingly gather in the hands of Prime Minister Vladimir Putin and other siloviki (or former intelligence bureaucrats). But although the siloviki know how to seize property, they have no idea how to create wealth. They generally mismanage what they seize - and so eventually need to seize more. This parasitic system has been exported profitably to the "secessionist" regions of Georgia, which the Kremlin claims to be protecting. Almost all the senior officials in the South Ossetian "government" are former KGB officials from various Russian provinces. The longer term is another matter. If Russia is morphing into another USSR, then the West will have to defend the post-Cold War international structure and the independence of post-communist nations against Mr. Putin's neo-imperialism. Any outright conquest of Georgia would lead to a new Cold War and Western economic sanctions. It would also pose risks for Russia locally, since the entire Caucasus is unstable and the Russian army increasingly reliant on Chechens and other national minorities for recruits. The combination could be catastrophic for Moscow - remember Afghanistan. Even lesser Russian actions invite serious political responses. Thus the Central Europeans angered by the Georgia crisis might immediately accept the missile defence system opposed by Mr. Putin. His attack on Georgia would then be seen to have backfired drastically. Wider economic sanctions should probably be held in reserve. They are more powerful as a threat than as a reality. So the West could warn that if Russia reacted violently to its political measures, they would impose economic sanctions, beginning with expulsion from the G8. Given Russia's overdependence on energy, its fast-declining population and its need for Western capital and markets, it cannot treat such threats lightly. Of course, Russia has an economic sanction of its own - cutting off its energy supplies to leave Europe sitting in the dark. But if that's in the cards, maybe we should know it sooner rather than too late?

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